Universal Health Care

HEALTH CARE EXPENDITURE

the US medical expenditure totaled $1 trillion in 2007 (7.2% of GDP), or $4082 per person. The 65- age group spent $3239 per person on average, up from $1838 in 1997 with a CAGR of 5.8%. Based on Medical Expenditure Panel Survey 2007, medical expenditure increases exponentially with age. Those aged 65+ spent on average $9074, up from $5957 in 1997 (CAGR 4.3%). Half of the amount is covered by Medicare.

In 2007, 18.8% of medical expenses were paid from pockets, 41.6% by private insurance, 21.1% by Medicare, 11.2% by Medicaid, and 7.2% by other means.

HEALTH INSURANCE

Most people’s health insurance coverage is through some kind of private insurance plan through their employers. While large size corporations usually provide coverage for almost all employees, small businesses on average cover less than half. The Government covers 65+ through Medicare, a federal insurance program, and the low-income and their children through Medicaid and SCHIP, two joint federal and states programs.

While most other developed countries have universal healthcare, the US does not. In 2007 1/H, 18.2% of the U.S. civilian non-institutionalized population (53.8 million) was uninsured. Among those under age 65, 20.6% (53.5 million) were uninsured.
Health insurance premium has been shooting up the sky for years. In 2006 average private sector single premium was $4118 per employee (a crazy CAGR 7.5% from $1992 in 1996), and a family plan cost $11381. State and local government programs had a price tag of $4860, no much better. the mean annual personal income was a bit above $46,000.

There are various parsing on the reasons of skyrocketing healthcare cost / insurance premium, as well as over a dozen of universal healthcare proposals, most mentioning that the US spends more but cares less and some seemingly more realistic than others. But I haven’t seen any comprehensive (and maybe necessarily lengthy) explanations, except believing that aging is a big time driver. Let me know if you find anything.

GOVERNMENT PROGRAMS

The 2007 total healthcare outlay of the federal government is estimated to be $740 billion ($347 billion in 1997, CAGR 7.9%), the big tickets being Medicare and Medicaid.

Medicare insures the aged and disabled through two trust funds: HI (Medicare Part A) and SMI (Part B and Part D), which are funded by 2.9% of wage earning (50/50 for employer and employee).

In 2007, Medicare covers 44.1 million (36.9 million 65+ and 7.2 million disabled). Total benefits paid were $425 billion and income was $462 billion. Assets held in special issue U.S. Treasury securities grew to $369 billion.

The funding status seems a bit irking. According to the soothsayers of 2008 Medicare Trustee Report, HI trust fund (Part A) will exhaust in 2019. For the 75-year period, the actuarial deficit is -$12.4 trillion (equivalent to 3.4% payroll or 1.6% GDP). The present value of Part B expenditure is $21.4 trillion (2.7% GDP), and Part D 10 trillion (1.3% GDP). If that is what’s gotta happen, we have some bad news - keeping the programs running requires an additional 12% payroll tax. It’s a tall order.
Medicaid, the health care for the poor, enrolled 59 million people and spent $303 billion in 2006 (federal $172 billion vs. states $131 billion). SCHIP, health care for the poor children, enrolled 4.4 million children and spent $8.7 billion (federal $6 billion vs. states $2.7 billion) in 2007. Googling forecasts for Medicaid or SCHIP, I found nothing.

HEALTH CONNECTOR OF MASSACHUSETTS

The landmark health insurance reform is MA’s Health Connector, aiming for near-universal healthcare. It was signed into the state law in April 2006. The program subsidizes below 300% FPL (federal poverty level) and pools insurance into not-for-profit private health plans, selected by competitive bidding. It enrolled 440,000 in a year and work-age uninsured dropped from 13% to 7%. The state budged $625 million for FY08, with tax of close to $20 billion and revenue of about $30 billion.

HEALTH CONDITION

Does the higher healthcare expenditures pay for better health? It’s irrelevant. Although life expectancy keeps rising and child mortality rate keeps falling, the public health condition (hence medical demand) relates more to insufficient exercises, overweight and risky behaviors like smoking, binge alcohol, illicit drugs or suicides.