Health Care Costs – Billions and Billions

Health Care Costs – Billions and Billions


February 23, 2012
Thomas J. Mackell Jr.

In the U. S., $2.6 trillion is spent on health care annually! The common questions that come up are who is to blame and what can be done to slow down and control these skyrocketing costs?

These questions have been asked and not answered by anyone for decades. President Teddy Roosevelt was the first president to attempt to deal with this issue and failed. It has only been over 100 years since his attempt and NOTHING has been done to effectively deal with rising costs! A hundred years!


Health care spending increases about $100 billion per year.

The Republicans blame it on lawyers and frivolous medical lawsuits that encourage doctors to order unnecessary tests and procedures and the Democrats blame it on greedy drug companies and for-profit corporations and their excessive CEOs' compensation.

The country's five largest for-profit health insurance companies-United, WellPoint, Aetna, Humana and Cigna-had combined profits in 2010 of $11.7 billion. That's billions!

Many health and welfare plans in the public and private sectors use these firms as their service providers. When will trustees of these plans and other fiduciaries come to terms with this issue with their providers? An aggressive and dramatic push-back is imperative.

Let's stop the blame game and recognize that today health care represents almost 18% of our GDP and by 2050, if costs continue to rise at the current rate, it will represent 50% of our GDP and will gobble up our nation!

One of the biggest money wasters in our health care system is the billing process. Administration of medical claims accounts for roughly 14 % of what the U.S. spends on health care. Somehow we have to develop a more efficient and cost-effective system to reign in these costs.

Additional factors that are contributing to increases in health care costs are:

An aging population: boomers in their sixties who are growing dramatically are alreadying drawing heavily on the system as well as the fact that over the next 10 years 80 million more Americans will turn 50. The impact will be enormous since roughly 75% of dollars spent on health care  are for those over the age of 50.

Prescription drug costs: they are increasing by 20-25% annually, faster than any other health care costs

Expensive new technology: advances in surgery, medical devices and diagnostic techniques are raising costs for doctors, hospitals and health plans

Liability concerns: exposure to legal liability and the overall risks for health care providers are greater than ever resulting in higher premiums for coverage

If you look at our Medicare system where the costs are staggering, there are several areas that are blatantly wasteful and contribute to rising costs: the overtreatment of patients, the failure to coordinate care, the administrative complexity of the health care system, burdensome rules and, finally, fraud.

Clearly, one thing is for certain, the 1 %ers who occupy the heath care space are the benefactors. They don't want a national health care plan for all. They are all waiting with bated breath for the justices of the Supreme Court's decision on the constitutionality of the Obamacare program. Watch this one closely. Their decision in June could radically change our health care system and throw millions of Americans under the bus.

It is apparent that a more effective and bold methodology must be created to deal with this issue.

When will the American electorate rise up? For how much more can the 99% deal with being dampened down and trod upon by the elites?

Thomas J. Mackell, Jr. Ed.D., Senior Partner, Black Thorn Lynch Associates, Inc., former Chairman of the Federal Reserve Bank of Richmond and author of: "When the Good Pensions Go Away: Why America Needs a New Deal for Pension and Health Care Reform."

February 23, 2012

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