Health Care in Crisis: How We Got into This Mess

In the first of a series, Ed Wallace explains why the U.S. doesn't have the world's best health care but does have the most expensive

While the debate over health care and its inherent costs rages on, what is being left out of the discussion is how the U.S. got to the point where medical treatment could bankrupt the nation in our lifetime.

Often in the media, America's health care is called "the finest in the world," yet today the average American's life span is shorter than those of citizens in almost all other industrialized nations. As a comparison, the CIA's World Factbook shows the average life span of an American at just 78.06 years. That is only good enough to place 45th on the list. Fourteen countries have life spans averaging more than 80 years, including Canada, Iceland, Australia, Sweden, Switzerland, France, and Japan. Macau takes the top spot, with an average life span of 84.3 years.

The irony here is that while the per-person cost of health care in the U.S. is more than double that of other developed nations, these higher costs don't translate into longer lives.

It is true that the practice of medicine worldwide focuses on altering the effects of only four primary causes: accidents, lifestyle, genetics, and age. But since medicine is considered an advanced science, the discussion these days is not about waste in the system; nor does it focus on the reality that some cannot be saved. Instead it is an emotional debate, addressing the financially problematic position that ability to pay should not be a consideration in medical treatment and outcome.

Old Prescription: Run for the Hills

Until relatively recently, advanced medical care and disease control simply didn't exist. Often the best course of action when frequent pandemics broke out was simply to quarantine our largest cities; naturally, their residents rushed into the countryside to avoid contamination and likely death. In 1793, when yellow fever scourged many East Coast cities, half the citizens of Philadelphia, then the capital of the U.S., fled; one of those who escaped painful death was President George Washington. In the end it is estimated that between 5,000 and 10,000 Philadelphians succumbed to the virus.

Yellow fever would strike again in 1878, starting in New Orleans, where an estimated 20% of the population deserted their homes. As the New Orleans Picayune would write: "Only our mosquitoes keep up the hum of industry." In retrospect, that's an ironic statement; doctors didn't know yet that mosquitoes carried the disease. Before that epidemic was over, as it moved up the Mississippi, half of the city of Memphis stood empty, its citizens as far away as they could get. Throughout that region, the outbreak of yellow fever took the lives of more than 20,000 people.

In the days before advanced medicines, you just hoped you didn't get gravely ill or injured; the majority of doctors usually couldn't do much for you if you did. It is no wonder, then, that this time was also the era of the traveling snake oil salesmen, whose concoctions were merely narcotic or alcohol-based painkillers. These so-called medicines couldn't cure the sickness, but they did mask the pain—so it was also the first era of the addicted American. Such was the level of the nation's accidental addiction that the Pure Food & Drug Act of 1906 was passed in part to end the patent medicine business.

By the early 20th century, modern medicine was starting to make great strides, but this too created a problem: It was widely known that the best health care went to the richest or the most indigent Americans. The rich would be forced to overpay for their care, but that allowed their doctors to spend one or two days a week in the charity hospitals that sprang up in our major cities. In essence, as in one proposed plan today, the rich subsidized the cost of health care for the poor.

Members of the growing middle class were too rich to apply for charity, but not rich enough to get the best possible treatment at the time. It would take Henry Ford to alter that equation with his most radical vision of all: health care for the masses.

A Better Medical Idea

It started in 1908, the same year in which Henry Ford gave his Model T to America to mobilize the country. That year he was asked to become chairman of the Detroit charity that promised to bring the city a new modern hospital. Ford made a sizable contribution, but for the most part that charitable organization was falling behind on its financial promises, and by the spring of 1914 it was in shambles. At that point, Ford decided to take over the hospital project completely. Paying back everyone who had previously contributed to the hospital's construction, Ford decided to remake modern medicine according to his own ideas.

Ford's ideas turned out to be not only pretty good but also ahead of his time. For in the same year he published a pamphlet titled The Little White Slaver, warning Americans of the risks of smoking cigarettes. In fact, when the Henry Ford Hospital was finally opened to the public in 1919—it had been used by the government during the war years—smoking was not allowed anywhere in the facilities. Many of his doctors considered the ban unfair.

Additionally, Ford evangelized the concept first advanced by Michigan's John Harvey Kellogg that, for most people, "You are what you eat." Yes, 51 years before the U.S. Surgeon General made smoking Public Enemy No. 1, Ford was trying to warn the masses of the dangers of cigarettes. Today's trendy health diets were a bedrock of Ford's beliefs almost a century ago.

For his hospital, Ford poached some of the most respected physicians from Johns Hopkins and brought them into his medical establishment on fixed salaries, instead of fees per patient. On admission, a patient was examined by one of the senior physicians, then passed to specialists in the medical field that treated his or her problems. Ford believed in efficiency; it did not go unnoticed that he appeared to be adapting his moving assembly line concept to suit the practice of medicine.

Henry Ford's goal with this plan was to make the best possible medical care affordable for everyone, and here he succeeded. Of course, just as Ford was not the original inventor of the automobile, he didn't invent medical treatment; he simply set out to make it work better and be more affordable. But Ford was so famous by then that his concept of health care for the masses started to become America's new medical mindset. Within a decade, when foreign doctors would travel the U.S. looking for the latest advances in medicine, such was the Ford Hospital's reputation that it was ranked with the Mayo Clinic and Johns Hopkins on the visitors' schedule.

Still, it was a long leap from Ford's "affordable health care for the masses" to "all Americans are entitled to free health care."

The Forerunner of the HMO

The great American industrialist, Henry J. Kaiser, took society the next step forward in medicine. Having turned his construction firm into an industrial giant with assets approaching $3 billion, he refocused his building acumen into ship production during World War II. As the war moved toward its conclusion, Kaiser came to believe that the upcoming middle class would make demand boom for automobiles, housing, and medical care. He had started to provide health care for his own employees in 1942, but three years later he rolled out his private health-care plan for the public, and the predecessor of the modern HMO was born. The United Auto Workers would soon make health care one of their major demands.

The die was cast. In just one generation, Americans had gone from having merely affordable health care to massive, privately owned health-care insurance companies—and on to demanding health care as part of compensation for employment. Now, 60 years later, the cost of health care in the U.S. has hit nearly 18% of our total gross domestic product. The Centers for Medicare & Medicaid Services' published costs suggest that as of 2007 we were spending $2.1 trillion, or nearly $6,000 per person per year. In 1998 a New York Times article on health-care costs showed the nation spending $1.1 trillion, or $4,094 per person. This financial trend is unsustainable.

But the most critical factor is the looming retirement of the nearly 80 million baby boomers and the pressures they will put on the nation's health-care system. It is a recipe for financial disaster.

Stories from Today's Health System

Now the discussion in Washington, and its likely outcome, is that this medical financial mess will be partially federalized. That will not improve medical care, although it will bring coverage to many uninsured Americans. Instead, the correct course is isolating the known waste in the system that causes our health-care costs to be so hideously expensive, meanwhile extending all Americans' life spans, and not just those of the well-insured, to equal those of other civilized countries. But given the direction the debate is going, it seems we are hell-bent on maintaining health care's expensive status quo.

This is the first in a series of five columns that helps explain how costs have spun out of control in American medicine. You will read stories of surgeries that never should have been attempted, missed diagnoses, expensive and possibly fatal treatments recommended for nonexistent diseases, medical malpractice—and one promise of advancement in oncology.

It is not a scientific survey. It's a personal retelling of the last major medical experience of immediate families among my 50 closest friends, advisers, clients, and employees. Nor is the series intended to diminish the incredible work of the many dedicated health-care professionals in the U.S., who do in fact save millions of lives each year. But it did not go unnoticed that of the three individuals in this group that underwent open-heart surgery in the past 24 months, all died as a result of their operations.

Likewise, in one 18-month period, I lost seven friends to cancer, exposing as myth the belief that we are winning the war on that dreaded disease.

More than anything else, I hope, these case histories will point out certain isolated and costly financial failures of medicine today. And they will make clear why health care in the U.S. is so expensive—and what we can do to lower health-care costs and improve the quality of our lives.

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