Why Your Health Care Is in Jeopardy

If 24 months ago, someone had predicted a catastrophic real estate price collapse, auto company bankruptcy, stock market decline, bank failures and rising unemployment, that person would have been called alarmist. At risk of being called histrionic, we are predicting that health care in the United States is in danger of collapsing within 24 months.

Eighty years ago, in 1929, as hospitals tried to find a way to stay in business in the face of a failing economy, Blue Cross was founded by a group of Dallas teachers who agreed to pay about 12 cents a week for up to 21 days of hospitalization a year at Baylor University Hospital. The American Hospital Association supported the origination of Blue Cross because it was a way to guarantee regular revenue during hard times.

For the schoolteachers, paying $6 per year for insurance was a way to assure they would receive at least minimal care if they became gravely ill. Since then, expectations and costs for payer-provided health care have grown dramatically.

In our current period of reduced expectations, most Americans continue to expect high-quality healthcare at affordable prices when they walk into a doctor's office or if they are admitted to a hospital. But that is changing.

Hospitals in Trouble

More and more, Americans have to wait for insurance company permission before receiving life-saving medical treatment or, if they are on Medicaid, they have to go to specific city and county hospitals to be treated. Hospitals are in financial jeopardy, reimbursements to doctors discourage preventive medicine and there is a severe and growing shortage of nurses.

The U.S. Food and Drug Administration, which has the responsibility to assure that drugs are safe and effective, is in disarray, and pharmaceutical research and development has become a singularly focused quest for blockbuster drugs, those that create $1 billion or more of revenue per year.

The U.S. hospital system is currently the weakest link in the health care chain. The total number of hospital beds in the U.S. has dropped since 1981and the number of beds per 1,000 people has declined from more than four per 1,000 to a little over 2.5 per 1,000 in 2006.

Hospital finances are precarious. More than half of hospitals are technically insolvent or at risk of insolvency. According to the American Hospital Association, in 2007, uncompensated care costs were $34 billion, with an additional $31.9 billion gap between costs and payments to hospitals for Medicaid and Medicare patients. In addition to philanthropy, some hospitals are forced to rely on unpredictable sources of funding, such as gift shop revenue or parking fees.

Hospitals now spend nearly $100 billion per year to provide uninsured patients with health services. During the 2008 election, the total number of uninsured in the U.S. was between 40 million and 50 million people. That number is growing, and uncompensated hospital care continues to increase as the number of uninsured goes up.

Money Woes

For every percentage of increase in the unemployment rate, 2.5 million people become uninsured. With the unemployment rate jumping about 3 percent since mid-2007, that translates to another 7.5 million uninsured.

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