America’s Greatest Economic Failure

The healthcare system is the greatest economic failure in American history.

That may seem like a very strong statement to make, but look at the evidence. In 1960, the U.S. spent 5.2 percent of its Gross Domestic Product (GDP) on healthcare. In 2010, the U.S. spent 17.9 percent of GDP on healthcare — that’s almost one dollar of every five dollars in our economy.

Okay, some might say, it may cost a lot but doesn’t the healthcare system keep people healthy? Only a very small sliver of the $2.6 trillion — yes, I said trillion — that we spend on healthcare goes towards keeping this nation’s workforce healthy and productive. And despite the fact that America spends far more of its GDP on healthcare than any other nation does, a whopping 86 percent of all full-time workers in the U.S. are obese or suffer from a chronic health condition that raises employer costs.

And what do we do about it? We pull up at the bottom of the cliff with an expensive ambulance and wait for people to fall off.  Then, we make money treating the injuries from the fall. Falling off a cliff can hardly be considered a contribution to our country’s wealth and it certainly adds no value in our efforts to compete in a worldwide economy.

Remember, as healthcare went from consuming 5 percent to almost 20 percent of our economy, that means that the productive part of our economy was dropping from 95 percent down to about 80 percent. That represents a 15 percent loss in the relative productivity in the economy.

The irony, says author and health-care industry thought leader Joe Flower, is that “We could have better health care at half the cost, without denying care to anyone, just by driving economic incentives back into the system.”

The U.S. has built the most sophisticated medical treatment machine in human history. There is no other place I would rather be if I fall off the cliff, than right here in the USA. Our failure, instead, is an economic one.

If the president were to announce a $1.5 trillion loss in our economy, it would be the biggest news story since the Great Depression — bigger even, since the U.S. lost only about $300 billion in GDP during the Great Depression, although that represented a larger share of our GDP at the time.

What must be done?

In the new book, The Future of Health-care Delivery – Why it Must Change and How It Will Affect You,  author Dr. Schimpff writes the following:

“In the past, illnesses tended to be ‘acute,’ meaning that they occurred and were treated, and the patients either got better or died. But today, most illnesses are chronic and complex. Although smoking has declined, obesity and lack of exercise have led to rapid increases in diabetes, heart disease, stroke, and high blood pressure . . . and many other chronic illnesses that last a lifetime. Unless  and until we as a society deal with our behaviors, our health status will not improve. [We must] accept more personal responsibility for our health and for our health care, [and] our insurance should be tiered so that we pay more if we persist in our health-adverse habits, like smoking and obesity.”

We as Americans are no longer falling off the cliff. Like a herd of sheep, we are jumping off the cliff due to our lifestyle choices. Until CEOs who buy healthcare for their employees start incorporating accountability for lifestyle into their benefit designs, nothing will change. In addition, economics need to be inserted back into the healthcare system itself. Instead of making more money by providing more treatments, providers should be held accountable and make more money as they keep people healthy.

In my next post, I will discuss how employers can do this by partnering with providers. Accountability Care Organizations that are being organized around the country to care for the indigent and the elderly but also represent tremendous partnership opportunities for employers.

[Darrell Moon is CEO of Orriant, a wellness program provider serving companies nationwide.]

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