Imagine walking into a cafeteria. You present a card to a person at the door, are directed to a room and instructed to wait for half an hour. Finally someone comes out and leads you to another room, gives you a piece of paper and then rushes on to the next client. You go down to another part of the building, exchange the piece of paper for a sandwich, and leave the cafeteria. For this service, the bill runs to $100, but your employer pays for $70 of that amount. Now let’s imagine another scenario. You’re hungry, but your employer doesn’t help pay the costs of your food and you lack enough money to buy it outright. Knowing this, you put off eating as long as you can. Ultimately, however, you are malnourished and starving, and must be rushed to the emergency section of the cafeteria. There you wait with all the other people who have been putting off eating, until finally receiving attention an hour later. You are given a large amount of food, and billed for $1,000, sending you into the cafeteria’s debt. If such a system were employed to distribute food in this country, there would be widespread bankruptcy and starvation on the part of those without food insurance. Outraged citizens would demand change, and the government would be forced to step in and eliminate the wasteful, harmful system. Thankfully, food is not distributed in this fashion. Unfortunately, this is how our healthcare network operates. Healthcare and food are analogous in one important way. Without food we die, and without healthcare we live far shorter lives, as one untreated disease can prove fatal. However, we tolerate enormous inconveniences, inefficiencies and inequalities in our provision of healthcare, none of which would be acceptable in the context of food. The way our society disperses food encourages low prices. Agriculture is heavily subsidized by the government, to the tune of over $143 billion from 1995 to 2004, according to the Environmental Working Group. Moreover, the nature of government aid encourages overproduction: subsidies impel farmers to produce as much as they can, and the government insulates them against the lower prices they receive. As a result of these factors, food in this country is cheap and plentiful. Healthcare differs in the nature of competition. The system works in the following manner: every doctor tries to raise prices and pass costs on to its clients. This starts with the major pharmaceutical companies, which create and patent drugs, then charge large amounts for them. These astronomical costs are not fully absorbed by the consumers, with health insurers and government programs like Medicare and Medicaid shouldering much of the burden. Doctors and hospitals also try to pass many of their high costs on to insurers and government programs. Insurers pass their costs on to the companies and individuals that hold their policies, in the form of higher premiums. Consumers, particularly those without health insurance, are left holding the bag for the system’s costs. The result of all this inefficiency is massive inflation in healthcare spending. Insurance premiums have risen over 57 percent since 2001, according to an Oct. 2005 USA Today article. These towering costs have severe consequences: a 2005 Harvard University study found that half of all filings for bankruptcy stemmed in part from medical bills. One of the chief sources of this inflation is the pharmaceutical industry, which overcharges on a massive scale. Pfizer, the largest drug maker in the world, had enormous profits last year, totaling $8.1 billion on revenue of $51.3 billion, according to the company’s annual report. Very few companies post profits that amount to nearly 16 percent of total sales. Drug companies like Pfizer claim they need to charge massive amounts for their drugs because they need funds to further research into new drugs. But much of those funds go to profits, administrative expenses and marketing – Pfizer spent $668 million in 2004 on advertising to consumers – with only $7.4 billion in 2005 going to research. High priced drugs cause hospitals and insurers to charge more to recoup their costs, impacting consumers and companies that provide health care. This is just the most obvious form of waste in the healthcare system. A 2005 Boston University study estimated that 50 percent of the $1.9 trillion spent on healthcare that year would be wasted on administrative expenses and corporate profits, among other expenses. We wouldn’t tolerate such corruption if it made food so expensive – why do we allow it for healthcare? We need to redesign our economy to make healthcare as plentiful, affordable and accessible as the food we eat, because both are essential to a healthy life.
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Medicine too expensive
April 17, 2006
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