Over the past few decades, healthcare economists have offered four distinct ways to reduce system costs: eliminate unnecessary use; lower prices; reduce administrative overhead; and foster a healthier society.
The latter approach—addressing the root causes of ill health or what healthcare wonks call the social determinants of health—draws the least attention for a simple reason. It’s hard to do.
It requires being honest about the extent and location of the poverty, inequality and despair in our society. It requires being honest about how hectic work lives, chronic stress, sedentary lifestyles, poor diets and deteriorating social institutions are undermining the health of the middle class.
It also requires humility on the part of the healthcare sector about what it can actually accomplish. Will investing in housing and food pantries ever make up for the ongoing evisceration of federal and state programs that address social problems?
The bottom line is that improving the nation’s health is a political agenda.
It’s well-known that the U.S. spends more than any other advanced industrial country on healthcare and gets inferior outcomes. Per capita spending, now over $10,000 a year, is 25% more than the next nearest country and 2½ times the average for Organisation for Economic Co-operation and Development member nations.
What goes virtually unmentioned is that at the same time, the U.S., compared to its peers, spends the smallest share of GDP on social services other than healthcare and pensions. The U.S. spends about 4% of its economy on programs that provide housing, food, child care, income support and job training for the less fortunate. Denmark spends the biggest percentage, at 15%. The OECD average is halfway in between.
We pay a hefty price for our failure to provide a hand up for the poor and people down on their luck, the stressed out and young families, and the communities ravaged by opioids and suicides—the “deaths of despair” that have reduced longevity in the U.S. for two straight years. These are the people who are disproportionately among the 5% of the population that accounts for 50% of all healthcare costs.
Yet instead of addressing the underlying issues that contribute to ill health, the White House this month proposed a budget that would further reduce U.S. spending on social services. Many statehouses are feverishly developing programs that would make it harder to access services or enroll in Medicaid.
Don’t they recognize that beaten down people will eventually wind up on the doorstep of the healthcare system at a time when their illnesses are further along and more expensive to treat? Enlightened self-interest doesn’t seem to be part of their vocabulary. The “tough love” crowd doesn’t understand that the unreimbursed costs of the uninsured will be spread across the bills of every other customer, driving insurance rates and government spending higher.
As we move deeper into a political season where healthcare spending will again be hotly debated, I’m mildly hopeful the debate will move beyond shorthand slogans. Right now, it’s Medicare for All and Medicare as Public Option from the Democratic side. It’s skimpy or catastrophic plans with health savings accounts from the GOP.
What we really need are specific proposals. How can we lower drug prices and administrative overhead? How can we eliminate waste and make care delivery more efficient? How can we lower hospital prices and specialist salaries? How can we reduce patients’ out-of-pocket costs?
Most of all, we need an honest discussion about the root causes of ill health in our society and how they help drive our outsized healthcare costs. What can and must be done if we’re going to address the social determinants of health?
You can join that discussion by attending Project Japan’s in Cleveland on June 6.