HCI3 Update from the Field: Percentages Often Mask Reality

Submitted by francois.debrantes@hci3.org on Friday, December 14, 2012 - 12:30

Newtown, CT – December 14, 2012

Percentages often mask reality even when they reflect it, especially when they're about the impoverishment of Middle America – A new report this week from the Commonwealth Fund includes a powerful infographic that reflects a percentage reality. We quickly see how in seven years the vast majority of Americans has come to devote more than 20% of family income to healthcare costs (combination of premiums, deductibles and co-insurance). Twenty percent…one out of every five dollars earned. Add to that the increase in utility costs, homeowner's and car insurance, local and state taxes, and you're likely at two out of five. Of course there's also food, and the mortgage, and perhaps some car payments. And what about the college tuition that keeps rising? In the "old school" of home economics, one used a simple rule of thumb to parse out expenses from earned income: about a third for housing, a third for all living expenses, and that left a third for savings and leisure. Well that went out the window a couple of decades ago, and whatever breakeven point might have still been achievable in the first part of this century is now gone. Rising healthcare expenses, which now consume TWENTY percent of household income, have impoverished Middle America, and led to involuntary rationing of other goods and services. It's a vicious cycle that has benefited the few at the expense of the many. And as Arnie Milstein describes it in this week's NEJM, if the cycle isn't reversed, we're facing forced healthcare rationing and more general impoverishment.

What this means to you – We've sat around and listened too long to the siren song of the medical-industrial complex touting that better quality comes at a price, that the next pill will surely be the miracle one, that the titanium-plated implant will do the trick, that paying more for services will improve patient outcomes. And it's all garbage. Higher prices are just that, nothing more. Better quality healthcare costs far less than the average care received every day in America. Simply look at the high value performers in this country. They deliver at a discount of 15% to 30% relative to others. Device manufacturers in other countries are giving warranties with their implants, not titanium plating, and for less than the non-warrantied implants sold here. Health care in the US hasn't improved the lives of average Americans, it's impoverished them. And the cure is simple: Shift at least 80% of payment to something else than fee-for-service, provide full, timely and relevant price transparency on every episode of medical care to every plan member, and calibrate plan benefits to enable plan members to shop for value. Failure to act means another kid might not graduate from college, another teacher might lose her job, another family's future will be bleaker. Isn't it time to stop sacrificing the many for the few? 


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org