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Fabio Buffa

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How does the sum total of ALL US healthcare costs compare to the sum total of ALL US health insurance premiums paid by Americans, annually?

The problem of healthcare in America is often sold as an issue of scarcity, touching on political ideology. My question aims to see whether that scarcity(at least in terms of funding) is real or perceived.

If all of the premiums collected by US health insurance agencies were totaled, would the sum exceed the sum of all US healthcare expenses? If so, then wouldn't we have our solution to healthcare in America? at least in terms of Dollars and cents? Wouldn't it then become a matter of policy and reallocation of existing resources?

Must we also account for the untreated health issues that would have been included in the sum, if only those individuals could afford treatment?
IF we did account for those costs as well, how might that new sum compare to the Sum of Health Insurance Premiums?

Also, when we're talking about healthcare, at the core, aren't we talking about human rights? Our commitment to saving lives seems evident in the Hippocratic oath, and the laws mandating emergency care regardless of patient wealth. If we feel this way about human life; if we believe people deserve to be saved, then why don't we believe that all people deserve preventive and life sustaining healthcare? Why do we treat healthcare as a commodity, instead of as a civil right?

Whose interests are served when it is treated as a commodity and whose interests are jeopardized? Whose interests are served when healthcare is treated as a basic human right? Are anyone's interests not served by treating healthcare as a human right?

Doesn't a healthy society flourish? Doesn't a healthy society seem more likely to produce doctors, scientists and technicians who can further improve healthcare and life in general?

Your advice on where to seek these statistics would be of most immediate use. But perhaps more illuminating will be your perspective on health care as a commodity versus a civil human right.

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  • Mar 28 2013: Good questions. I may venture into the statistics another day. For now, I'm interested in the rights aspect of the subject. First, my presumptions...there is a difference between a right, and the right thing to do. Civil rights and human rights are by nature different. Of course these often overlap; human rights inform civil rights, and civil rights can illuminate human rights. Human rights are innate, based upon the intrinsic worth of human beings. We accept that we do not grant these rights, and are not to restrict them by any means, but especially political force. One back-of-the-envelope rule I use is that exercising human rights have costs, but we automatically bear them without weighing the trade-offs. Civil rights are dependent upon the society of origin, and are granted by that society. We base many civil rights on human rights, but this is not a rule. Civil rights also incur costs, and we do weigh them against the costs of alternatives. Marriage, for example, is at its heart a contract. It is not necessary for human happiness, healthy relationships, reproduction, self-determination, et al. It simply isn't a human right as all its...spiritual benefits, shall we say, can be attained without it, and barring it for homosexuals only robs them of the social mantle of legitimacy. The contractual elements, however, such as division of wealth, power of attorney, tax implications, insurance, etc., are very much in the domain of civil rights. There is simply no good argument against granting this civil right and its benefits to homosexuals; the costs to society are ethereal at best, and if I don't count psychological harm against homosexuals by denying marriage, I certainly won't give credence or weight to psychological harm incurred by granting it. I'm running out of characters, and this is only the set up. I feel it essential to lay out my first principles before jumping into commodity versus right. Too often I find people start from different presumptions.
    • Mar 29 2013: Neil,
      Great hearing from you. And here of all places. LOL
      So we have it:

      Civil rights=
      not needed for human health and happiness, BUT helpful in establishing/maintaining societal equilibrium, social justice
      acquired by citizens through political action, (at least in a democracy)
      can be withheld from citizens through political action by opposing factions
      enforced/by government once established


      Human Rights =
      unalienable,
      protected by the constitution, (in theory)
      absolutely required in order to have health and happiness
      Not bestowed by any power or authority other than shared human experience,

      This is a hasty and rudimentary attempt at defining the two kinds of rights, based partially on your post and my thought responses to it. there is probably some overlap. Revisions from any viewers are welcome. Just copy and paste it into a new comment with your revisions.

      I think I will make this a new question for discussion and post the link here later.
      Stay in touch!
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    Mar 27 2013: Fabio

    You may find the following reference useful - it delves deeply into this matter. Particularly note the necessity of using a PPP (purchasing power parity) model, when trying to understand effective health care delivery models among widely differing economies. This might even be true of regional differences within the US due to marked variability among States.

    Jonas and Kovner's Health Care Delivery in the United States, ... - Page 68 - Google Books Result
    books.google.ca/books?isbn=0826106870
    Anthony R. Kovner, James R. Knickman, Steven Jonas, M.D. - 2011 - Medical
    A better alternative is to compare total health care spending per person (per capita), adjusted to achieve purchasing power parity, or PPP. ... Economists generally prefer to compare different countries' total spending on health care as a percent ...

    The Economist Magazine also ran an issue focussing on this topic about 5 years ago that might be worthwhile digging up.

    I am astonished that this issue is not more vigorously argued in the US. Perhaps it is being argued, and I am in a state of denial when I cannot comprehend why the current flawed model that is expensively delivering poor results to so many people is so vigorously defended. I also confess to never being a fan of either Horatio Alger or Ayn Rand.

    Bernie Amell
    • Mar 29 2013: Thank you for your research and your data. I hope to have some meaningful understanding come from all of your comments.
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    Mar 25 2013: According to Forbes, Americas total Healthcare costs (insurance and Federal spending combined) total to roughly $2.5 Trillion.
    Approximately $1.13 Trillion paid by the Government (40%).

    http://www.forbes.com/sites/carolynmcclanahan/2011/11/28/how-much-should-we-spend-on-health-care-the-big-picture/
    • Mar 29 2013: Thank you for your research and your data. I hope to have some meaningful understanding come from all of your comments.
  • Mar 27 2013: Favio,


    I found that 17.6% of GDP in 2011 were costs attributed
    to health care. With 40% paid by the government.

    How true the figures are, I don't know. They were taken
    from an online newspaper, and I only believe half of what
    I read.

    Health Insurance Corporations may have had only little
    costs to acquire their 27 to 30 million new policy holders.
    Back in the 1970's costs to acquire, were running about
    25% of the first year's collected premiums.

    Many states today allow unrestricted Healthcare Billings.
    In the 1970's, California had a Relative Value Schedule for
    medical procedures. Much like your auto mechanic has today.
    California stopped using it.

    I used to have a copy. As soon as it was no longer required,
    surgeons had assistants coming out their ears, billing the same
    amounts, or a bit lower as the surgeon did. That caught on fast.

    Overnight anyone and everyone seemed to grab an invoice and
    mail it to the poor unsuspecting insurer. What a heartless bunch.
    I am sure the insured patient had no idea. lol.

    Health Insurance regulators used to require Health Insurance
    Corporations to submit actuarial data to support applications
    for premium price increases. But we never got to see that data.
    It seems like "commerce" is a big, big secret to anyone who
    wants full disclosure.

    State regulators are generally picked from Insurance Corporations.
    It was a "good ole boy club" then, and may still be.
    • Mar 29 2013: Frank,
      Thank you! your data is somewhat consistent with what I have come across also. I would like to discuss this further when I have fully digested all of the comments from this question. Thanks and I look forward to continued discussion.
      • Mar 30 2013: Favio, Thank you.

        Health starts to decline in the US at about age 54.
        Premiums, earlier structured, provide monies to pay increasing costs.
        US government has publications showing the increasing costs.
        Actuaries structure increases in premium incomes.
        Providers invoice patients, or insurance companies, or the US Gov,
        and prices increase for increased tests, services, and medications.

        Were you to research, state insurance regulator's archives, usually
        stored in some dusty dank, cotton webbed area, you could put together
        the whole deal. Perhaps under a state capital's dome? lol
        ===
        A Story
        Each state is "supposed" to regulate Insurance Corporations.
        But sometimes the US Congress preempts state laws.
        The ERISA Act of 1974 has a health insurance component.

        With the Employee Retirement Income Security Act of 1974, older
        Keogh and Pension Plans were enhanced by IRA's and 401k's.
        There's a 10% Penalty for early withdrawal before age 60 of ERISA funds.

        After ERISA passed, Banks, took out full page ads to gather in the monies.

        The Banks acted like vacuum cleaners. There wasn't a dime left
        out there for any new business venture capital. They got it all.

        The law (at the time) prohibited Banks from investing more than 15%
        of retirement accounts into "risk" investments.

        There was an explosion of Financial Banks, Mutual Funds, Insurance
        Corporations, Retirement and Financial Planners.

        Cities, Counties, States, Federal Governments, and Corporations, all
        created Pension Plans. Regulation was sparse, allowing for the
        creation of funded, and partially funded Pension Plans.
        ===
        Banking Lobbies got busy and slowly the Banks were deregulated,
        a bit at a time. Over 20 years, freed in the 1990's only to be suckered
        by Wall Street at 40 to 1.

        You know the "rest of the story".