Healthcare spending in the US reached 19.7% of GDP in 2020 (the US has been the world’s number one for many decades), and the US accounted for almost 50% of global healthcare spending
This is more than the US share of global military spending (39%).
If we look at healthcare as a sector of the US economy, it has almost equalled industry, with a 21% share of GDP. In 2019, the healthcare sector accounted for 11% of all people employed in the US economy and 24% of all government spending.
The figures are impressive, but it turns out they do not guarantee the health of American citizens: almost half of all health care spending is in the US, and they also accounted for more than a quarter of all covid cases worldwide and almost a fifth of deaths diagnosed with covid in New Year’s Eve.
In 2019, experts from US health insurance company Humana Inc. and the University of Pittsburgh assessed the cost-effectiveness of the US healthcare system. The results of the study were laid out in the report “Losses in the US healthcare system. Estimated Costs and Potential for Savings” (Waste in the US Health Care System. Estimated Costs and Potential for Savings), published in the Journal of the American Medical Association. The report contains the information about six directions, which were identified by the National Institutes of Health (NIH) as the most critical in terms of “excessive” (“unreasonably high”) expenses.
The most significant unreasonable expenses take place in the area of “administrative procedures” and are estimated at $265.6 billion per year.
In second place are losses from overpricing of treatment and medicines (pricing failure), estimated at $230.7-240.5 billion per year.
In third place are inappropriate health care delivery costs (failure of care delivery), which range from $102.4 billion to $165.7 billion per year.
Overtreatment or low-value care accounted for $75.7 billion – $101.2 billion of unnecessary costs.
Fraud and abuse accounted for between US$58.5 billion and US$83.9 billion of losses.
Failure of care coordination led to $27.2 billion in overspending, from $2.2 billion to $78.2 billion.
Total unnecessary spending on health care across the six pathways reached $760-935 billion a year in the US, or around 25% of total industry spending. The authors proposed a set of urgent measures that would cut losses by about half. For example, to abandon the purchase of excessively expensive drugs (for many there are cheaper analogues). This could result in annual savings of $81.4-91.2 billion. However, complete elimination of losses from inflated prices requires more drastic measures, namely, restoration of antitrust price controls, but this already concerns the entire U.S. economy.
Negative consequences may take the form of deterioration of people’s health and additional deaths (money is spent while quality health services are not provided).
The authors of the report “US Health Care Losses…” avoided the word corruption. But everyone is well aware that “excess costs” are caused by corruption. Corruption involves relations 1) between state authorities and private pharmaceutical companies; 2) between state authorities and medical service providers (hospitals, clinics, trauma clinics, outpatient clinics, various health centres, etc.); 3) between pharmaceutical companies and medical service providers; and 4) between citizens and medical service providers.
A more detailed picture can be given for each of these areas. Here, for example, is corruption in the area of relations between the state and private pharmaceutical companies. Firstly, state authorities issue approvals for private companies to bring their products to market. Often, many products get the green light from the FDA (US pharmaceutical regulator) illegally (e.g., clinical trials have not been conducted to the required extent or they have been conducted with serious irregularities). Secondly, government health authorities make huge purchases of pharmaceutical products. Often the volume of purchases exceeds the real needs. Even more importantly, the prices are unreasonably high. Third, the US Department of Health has a network of research institutes and centres (National Institutes of Health – NIH), which spend tens of billions of public money each year. The results of their research can be donated to private companies working in the field of pharmaceuticals and biotechnology.
Health care is proving to be one of the most corrupt areas of public life in the US. Perhaps even more corrupt than national defence. Here is an aggregated structure of spending on American health care in 2020 ($ billion, the share in % in brackets): spending on direct medical services to citizens – 3,357.8 (81.4); government and state health insurance agencies’ administrative spending – 349.8 (8.5); government’s public activity in the health sector (scientific research, education, mass media, international projects, etc.) – 223.7 (5.4); investments in the health sector – 192.7 (4.7). Total: $4.124 billion.
And here are some more figures. Hospital spending has risen to $1,270.1 billion in 2020. These are bills paid by insurance companies or citizens themselves. By the way, the total sales of medicines in the US retail market in 2020 is $539 billion. It turns out that prescription drugs accounted for 64.6% of all pharmaceutical sales on the US market.
Corrupt schemes are identified in each of the named spending blocks. Here, for example, are prescriptions written by doctors to patients. No one particularly hides the fact that Big Pharma has established control over US medical institutions, treating them as its sales agents. Doctors are instructed to write prescriptions for drugs issued by the pharmaceutical “handler”.
Numerous lawsuits on corruption schemes in healthcare are filed in US courts every year, countless hearings are held in the US Congress, Big Pharma executives are invited “to the carpet”, and still it remains the same. The situation is only getting worse.
In March 2020, the Carnegie Endowment published Corruption Vulnerabilitiesin the U.S. Response to the Coronavirus. Its author, Jodi Vittori, doubted that the huge bailout would have much effect on the economy and stop the coronavirus from spreading across the country. The level of corruption in the state is very high and the generous budget allocations will go to the wrong places. The US government has thrown two trillion dollars of “emergency aid” into the economy in 2019. Approximately $150 billion of this amount went into the health care system, where much of the money was stolen (mostly through the mechanism of overpricing medical services, equipment and drugs)
Transparency International (TI), an international non-profit organisation, annually calculates rankings on the level of corruption in countries. At the end of 2020, Denmark and New Zealand shared 1st and 2nd place (lowest corruption). Finland, Singapore, Sweden, Switzerland, Norway, the Netherlands, Germany and Luxembourg are also in the top 10. The United States ranked only 25th with a score of 67 on the Corruption Index. The higher the score, the lower the corruption; the maximum possible score is 100 (zero corruption). According to TI, a score of 67 is the lowest the US has ever scored on the index. In the TI report, the reason for the increased level of corruption in the US was, on the one hand, the “pandemic” and, on the other hand, the dramatically increased level of public funding. This includes financing of the healthcare system. Note that in 2020, total health spending in the US has increased by 9.7% compared to the previous year. Including the federal government’s spending on health care increased by 36%. This is a record annual increase in the post-war history of the US.
A COVID-19 vaccination campaign is now underway around the world. Washington has decided to lead this campaign by promoting US-made vaccine products (products from Pfizer, Moderna and Johnson & Johnson) around the world. There have been many scandals related to the products of these US companies in 2020, and every scandal has necessarily had a corruption component.
First, the FDA pharmaceutical regulator gave the green light to these drugs in violation of all laws and principles of medical science. Secondly, the US government is forcing vaccinations on citizens in the US and other countries using these drugs, which are “experimental”, i.e. do not have the status of legal vaccines. Third, these “vaccines” are sold at prices that are many times higher than the cost of their production. At the heart of all these violations is corruption. And its effects are not just to make someone poorer, and someone else even richer. Such corruption kills.
Valentin Katasonov