And so it was that on the morning of April 4, 2012, Dimitris Christoulas, age seventy-seven, whom we met at the beginning of this book, killed himself in front of the Greek Parliament. He had paid into his pension for years, running his pharmacy. But ironically, he could no longer afford medicines for himself. His pension was cut, and his retirement benefits slashed. He saw no other way out.
PART III
RESILIENCE
For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horse shoe nail.
(Proverbial rhyme)
6
TO CARE OR NOT TO CARE
Diane was forty-seven years old when a splinter ruined her life.1
She had been a teacher at a charter school in California. Because of $8.1 billion in education budget cuts the state enacted in 2009, she lost her job. Without her job, Diane lost her health insurance, so she had to purchase an individual coverage plan and pay the monthly premiums out of pocket. Diane signed up to the best plan she could afford, but that came with a high deductible: typically she would have to pay $5,000 before her insurance company covered any significant medical bills, making her think twice about whether she really had the money to seek medical help.2
One afternoon, about a year after she lost her job and signed up for this high-deductible health insurance plan, Diane was walking on the floor-boards of her old apartment and got a large splinter in her foot. Because Diane has diabetes, her minor wound became a large gash, then an ulcer that wouldn’t heal.
Diane felt that she couldn’t afford to pay the fee for a doctor’s office visit, nor for prescription antibiotics. So she tried to treat her leg herself—hoping that the redness creeping up her leg would go away if she strictly followed instructions she had found online: hot baths, soap, scrubbing, and over-the-counter antibiotic creams.
After a few weeks, Diana started to feel feverish and sweaty. Then she passed out. Luckily, a neighbor heard the shatter of glass when Diane’s head broke the coffee table. The neighbor called 911, and the police broke down Diane’s door and called an ambulance.
That’s when Sanjay met Diane—in the intensive care unit of the local hospital. Her leg was so badly infected it had to be amputated—something that could have been avoided if the infection had been treated earlier. Worse still, the infection had spread to her bloodstream. It was so overwhelming that it was causing her to become septic—causing her blood pressure to drop below 80 over 40. To stop it from dipping any lower and leading to a potentially fatal cardiac arrest, Sanjay inserted a catheter through her jugular vein and into the right side of her heart, so he could pump intravenous fluids into her system and give her medicines that increased her blood pressure. Her kidneys were failing because of the infection, so a dialysis port had to be sewn into her groin. But the dialysis machine created its own problems. Diane suffered a stroke when the dialysis caused a second precipitous drop in her blood pressure.
Diane now lives in a nursing home. At the age of forty-seven, she is unable to speak or walk or move the right side of her body. Like hundreds of uninsured or underinsured patients, she delayed medical care because of fear of the cost. But ironically, her one hospitalization cost over $300,000. Her stroke left her disabled, and she will cost the state of California tens of thousands of dollars a year for the rest of her life. She requires twenty-four-hour nursing care to turn her in bed, clean her when she soils herself, and spoon her food into the left side of her mouth so she won’t choke on it.
Diane’s story is an extreme, tragic example of an everyday occurrence in the United States: the deferral of essential medical care among Americans who simply can’t afford it.
Her case is particularly tragic because if she had encountered that splinter a few years later, Diane might have been covered under the new healthcare law, the Patient Protection and Affordable Care Act (PPACA), passed by Congress and signed into law by President Barack Obama on March 23, 2010. Before the law, about 20 percent of Americans with high-deductible healthcare insurance plans like Diane skipped preventive doctor’s visits because of the cost. The new legislation helps ensure that everyone has affordable healthcare coverage, even if they are unemployed. While it is impossible to say with certainty that Diane’s tragedy could have been avoided, had she been covered by an affordable plan, she probably wouldn’t have let cost come between her and her doctor. That meant she would have been able to go out and seek work again in an economy slowly recovering from the Great Recession.
While the United States under President Obama began taking urgently needed steps to help prevent the Great Recession from leading to more avoidable tragedies like Diane’s, the UK’s National Health Service (NHS) began doing the opposite. Initially its universal healthcare system had been a great protector of its people—and no one lost healthcare access due to the economic crash. But now, under the politics of austerity, the UK Tory government is trying to mimic the US model by introducing competition, markets, and private contractors into the NHS. To understand what these privatizing reforms are likely to mean for the UK, it’s first necessary to trace why the US healthcare system was in such dire straits during the recession.
Before the Great Recession, the US healthcare system failed to provide coverage for many of its people. Although two-thirds of Americans received health insurance through their employer, the rest—those whose employers wouldn’t cover them, part-time workers, and the self-employed—were on their own, if they couldn’t qualify for federal insurance programs. These Americans had to buy health insurance on the private market, but many could not afford the high monthly payments (premiums) and high deductibles. What’s more, before the passage of the PPACA, insurance companies were able to restrict coverage on the basis of pre-existing health conditions, like diabetes or high blood pressure—so many who could afford private insurance were nevertheless not fully covered. All in all the US system left about 40 million Americans—almost 13 percent of the population—without health insurance.
The Great Recession turned this bad healthcare situation into a full-blown crisis. When Americans lost their jobs in the recession, another 6 million people lost their health insurance. Losing healthcare coverage is extremely dangerous. A 2009 study found that people who lacked medical insurance were 40 percent more likely to die prematurely than those who had it. During the Great Recession, before the PPACA came into effect, there were approximately 35,000 avoidable deaths due to the lack of healthcare insurance.3
Americans who lost insurance through their jobs had few options during the recession. Some tried to seek insurance on the private market, but about a third of them were refused coverage for a variety of reasons, including preexisting medical conditions. Others simply couldn’t afford the cost of a private healthcare insurance plan, which could be up to $25,000 per year for a two-person family. The recession exaggerated these costs further. Across America, on the pretext that the recession made it harder to operate, insurance companies were increasing their premiums—the monthly amounts people paid in to their insurance plans. Anthem Blue Cross in California, a subsidiary of WellPoint, raised its premiums by as much as 39 percent. The American Medical Association, the largest association of doctors in the country, officially condemned this practice (commonly known as purging), but they could do nothing to stop it.4
Some people were eligible for public insurance (if they earned under about $23,050 house hold income for a family of four). These people could qualify for Medicaid, the US government health insurance program for the very poor. But as enrollment in the program jumped 8.3 percent every year since 2009, some politicians and officeholders, mostly Republican, grew increasingly vocal about “out-of-control” government spending on Medicaid.5
&n
bsp; All over the US, state officials began finding ways to cut Medicaid budgets. They introduced higher deductibles and co-payments (out-of-pocket fees) for prescriptions and doctor’s visits, cut benefits, levied new taxes on care providers, and instituted hiring freezes, furloughs, layoffs, and salary cuts to Medicaid workers. Since the peak of the recession in 2009, forty states have cut their Medicaid budgets in at least one fiscal year. Twenty-nine of these states subsequently cut their budgets a second time, and fifteen states did so a third time.6
While it is too early to determine the full extent of the long-term impact of these cuts, there are already signs that people’s health is suffering. Among the Americans who switched to high-deductible plans to save money, many began forgoing medical care as Diane had done. Families on health insurance plans with high deductibles were 14 percent less likely to see a doctor when they needed to, compared with those who stayed on lower deductibles.7
Much of the care that people stopped paying for was preventive in nature. For example, about 500,000 fewer Americans who had health insurance undertook colonoscopy screening for colorectal cancer during the recession. A survey conducted between March and April 2009 found that of those Americans who had a chronic illness, two-fifths did not fill a routine prescription to keep their illnesses under control because of cost pressures.8
Just as in Greece, recession and austerity in the US resulted in people having to wait longer to see doctors and access necessary treatment. Emergency rooms in the United States were already operating at or over capacity before the recession. Patients increasingly used emergency rooms more than outpatient clinics as they ended up in situations like Diane’s—avoiding preventive care when they could no longer afford it. Doctors described being “overwhelmed” or “close to the breaking point.” For patients, overcrowded emergency rooms meant longer waiting times, inattention to real emergencies, and lower overall quality of care.9
In short, the US healthcare system failed to protect its people during the Great Recession. Americans were doing without needed care that they could no longer afford—and sometimes, like Diane, they suffered tragic health consequences.
But there was one group that benefited. Profits of health insurance companies soared during the Great Recession. In 2009 the top five US health insurance companies reported $12.2 billion in profits, a staggering increase of 56 percent over the figures for 2008. In 2009, a year that saw 2.9 million people lose coverage, insurance companies’ profits rose by 56 percent. And again, during the first nine months of 2010, profits increased by an average of 41 percent, breaking all-time industry records despite the recession. These windfall profits came at the expense of patients. As insurance companies were purging people from their ranks, they were paying out less for patient care, making more money in the process. While it was once thought that high enrollment was the key to successful insurance, WellPoint’s CEO Angela Braly rephrased the new objective in 2008: “We will not sacrifice profitability for membership.”10
So, the rich got richer, and the sick got sicker. That in a nutshell was the perennial problem of the US healthcare market.
It has long been well known that markets don’t work well in healthcare. The Nobel Prize–winning economist, Kenneth Arrow, had found in a seminal 1963 paper that markets often fail to deliver affordable, high-quality healthcare. That’s because healthcare is different from other market goods like cans of tuna. One major reason is that healthcare needs are difficult to predict and extremely expensive. People do not know when they might have a heart attack and need a coronary bypass surgery, for example. So they can’t anticipate when to save money and, even if they could, a major operation would break the bank for most people. That means people have to buy insurance—and in turn that means having someone else make decisions about what care is available and what is not.11
But private insurance companies are in the business of making profit. There are only two ways to increase profit: take in more revenue, or cut costs. Revenue comes from people’s monthly premiums, while costs come from paying for people’s healthcare. So insurance companies have perverse incentives to sign up the healthiest people who need the least amount of care, and purge from their ranks the sickest people who need the most care.
This creates a situation that public health researchers commonly refer to as the Inverse Care Law. First identified in 1971, the law can be summed up succinctly as: those who need care the most get the least, while those who need care the least get the most. The Inverse Care Law was found to operate most strongly in healthcare systems where people’s ability to access care depended on their ability to pay—the market principle that underpinned the US healthcare system.12
And despite common misperceptions, the market-based system isn’t more efficient. Although the US healthcare system excludes large swaths of the population, the US spends more on healthcare than any country in the world—totaling 19 percent of its GDP during the recession. Other advanced industrialized nations spend anywhere from 7 to 11 percent. It is a situation that continues to get worse and worse. In 1970, total healthcare spending in the United States was $75 billion, or just $356 per person. In 2010, those numbers reached $2.6 trillion and $8,402 respectively. That increase was over four times the rate of the inflation. If the price of a dozen eggs had risen at the same rate, they would cost $15 today; a gallon of milk would fetch $27.
All this excessive healthcare spending is not because the United States has an older or sicker population. Rates of smoking, for example, are higher in Europe and there are more elderly people per capita in Japan. Obesity, technology, or higher utilization didn’t explain the historically high costs either, nor did prescription drug research and development.
Rather, the US simply gets less bang for its buck. Instead of spending wisely on preventive care, it runs a more expensive “sick care” system. Those able to afford it can get high-quality care—but their doctors don’t necessarily use the most cost-effective treatments. Instead, they often prescribe expensive tests and procedures, like CT scans and knee replacements, that are not always medically necessary but are highly profitable. The prime beneficiaries of the US healthcare system may not be, as it turns out, the patients, but the providers—insurance companies, hospital corporations, and drug companies.13
Despite ranking first in the world on healthcare spending, the US healthcare system is underperforming on nearly all measures of quality. Compared with Europe, Americans tend to have higher rates of in-hospital infections, deaths from medical mistakes, and avoidable hospital visits. US avoidable mortality death rates are 40 percent higher than the European average—amounting to almost 40,000 extra deaths per year because of poor healthcare quality for Americans. Overall, the World Health Organization ranked the US healthcare system among the worst in developed countries in terms of death rates and reducing suffering.14
That was the healthcare system in America before the Patient Protection and Affordable Care Act, Obamacare, passed in 2010. And it was woefully inadequate in the face of an economic crisis.
Other countries’ approaches to healthcare made them more resilient to economic shocks like the Great Recession. Canada, Japan, Australia, and most European countries rejected market-based approaches to healthcare, providing state-sponsored care for all. They recognized the trappings of the Inverse Care Law, and the evidence that markets don’t work well in healthcare.
While millions of Americans were losing access to healthcare during the Great Recession, there were fewer signs of people skipping doctor’s visits or preventive care in the UK, Canada, France, and Germany. That’s because these countries did not treat healthcare as a market good but as a human right—so losing a job or income had no effect on a person’s access to healthcare. When the Great Recession struck their economies, people were not forced into choosing between bankruptcy and their health.15
The evidence can be found in the data on healthcare access across countries. One survey compared people’s access to healthcare during the r
ecession in the US, UK, Canada, France, and Germany. Using representative samples of people from each country, the survey asked more than 5,000 people whether they had increased, decreased, or had no change in their use of routine health care since the crisis. Sadly, but unsurprisingly, about one in five Americans reported neglecting routine medical care during the recession. The figures were rosier in Europe. Healthcare systems that were funded by taxpayers rather than employers were better able to protect their populations from losing access to medical care during the recession. In Canada, for instance, there was no change in people’s access to healthcare during the recession, and in the UK there was even a slight (0.3 percent) increase in access to medical care.
Countries whose healthcare systems had patients pay more out-of-pocket for their healthcare were more exposed to the shocks of the Great Recession. France and Germany were two examples. While everyone had state-provided health insurance, people were responsible for co-payments of 10 euros per doctor visit in Germany and 16–18 euros per hospital visit in France. Meanwhile, in the UK people could visit the doctor or hospital free of charge. Even this modest amount made a difference. Germany and France saw a 4 percent and 7 percent drop in access, respectively—worse than the UK, but still better than the United States, because no one was left uncovered.
During the Great Recession, the British health system performed the best at preventing people from losing access to care. This is exactly what the founding fathers of the UK National Health Service had designed it to do: provide healthcare not based on people’s ability to pay, but according to their healthcare needs.
The Body Economic Page 13