In 1960, health care represented 5% of the gross domestic product (GDP) of the United States. It has now risen to 18% and continues to increase.

This increase in medical spending is not inherently alarming. The percentage of GDP devoted to various expenses has steadily increased or decreased, sometimes substantially, as the economy evolves.

In 1900, average Americans spent around 43% of their income on food, but that number has dropped to around 10-12% today.

In 1900, no one was spending anything on plane tickets, radios, televisions or computers, technologies that had not yet arrived. Obviously, these items now represent a significant percentage of GDP.

The cost of air travel in constant dollars has fallen dramatically since World War II, while the costs of housing, medical care, and college education have increased dramatically.

It’s no surprise that spending on medical care has increased. People are willing to devote a significant portion of their income to the pursuit of good health and longevity. And medical technology – antibiotics, imaging, surgery, vaccines – has advanced so much since 1900 that money spent on medical treatments can often produce dramatic results.

The magnitude of the increase should raise eyebrows, however. It is impossible to determine the total amount of GDP that should be spent on medical care. But when we examine the medical system today, we find disturbing examples of blatant ineffectiveness.

Today’s medical system has evolved step by step. Each step had meaning when it was taken. But the end result is a system that no one in their right mind would design if they started from scratch.

Since medical systems, like all institutions, have inertia – a strong tendency to stay the same – the American medical system is very resistant to change despite not being well suited to today’s conditions.

The biggest problem with today’s medical system is its multiplicity of insurance companies and government programs. Each has different coverage and paperwork that doctors, hospitals and other healthcare providers face after treating an insured person. It costs the average doctor about $ 80,000 to $ 100,000 per year just for the staff needed to handle this complicated billing.

A single insurance agency, public or private, that covered everyone in the country with a standard policy would eliminate a high percentage of that administrative cost. However, today’s private insurance companies would lose out if such a “one-payer” system were adopted, and they are employing an army of lobbyists to prevent Congress from passing such a thing.

Lobbyists have a huge advantage. Many Americans receive health insurance as part of their work and mistakenly believe that the so-called “employer’s share” of the cost is costing them nothing. But employers divert money for insurance from the kitty from which employees are paid, so that substantial sum is actually paid by workers in the form of reduced wages.

If we emulated other advanced countries and implemented a single-payer insurance system (like Medicare For All), the tax increases it would require would be very noticeable. But what workers currently pay in the form of lower wages is largely invisible to them, even if it is shown in line 12 – code DD – of each worker’s annual W-2 form.

Lobbyists for insurance companies who oppose a single-payer system would use this widespread misconception to convince people that the single-payer system would cost them more. And if people think single payment is a bad idea, Congress won’t pass it.

If Congress passes a single payer, it will have to require employers to add the amount they currently pay for insurance to each worker’s salary.

Reformers therefore need to educate everyone to understand how much they are actually already paying, so that people can make an educated comparison of the costs (higher taxes) and benefits (higher wages) of moving to a single payer system.

Paul F. deLespinasse is Emeritus Professor of Political Science and Computer Science at Adrian College. He can be contacted at [email protected].


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