What the Government Doesn’t Want You to Know About High Healthcare Costs

IN SUMMARY: With health-care firms making excess profits of $65bn a year the worst offenders are not pharma firms but an army of corporate health-care middlemen. Total excess profits amount to only about 4% of America’s health-care spending. But this still makes health care the second biggest of the giant rent-seeking industries that have come to dominate parts of the economy. The excess profits of the health-care firms are equivalent to $200 per American per year, compared with $69 for the telecoms and cable TV industry and $25 captured by the airline oligopoly. Only the five big tech “platform” firms, with a figure of $250, are more brazen gougers.

Per the Economist: “As the drug industry has come back down to earth, the returns of the 46 middlemen on the list have soared. Fifteen years ago they accounted for a fifth of industry profits; now their share is 41%. Health-insurance companies generate abnormally high returns, but so do the wholesalers, the benefit managers, and the pharmacies. In total middlemen capture $126 of excess profits a year per American or about two-thirds of the whole industry’s excess profits. Express Scripts earns billions while having less than $1bn of physical plants and no disclosed investment in R&D. This year the combined profits of three wholesalers that few outsiders have heard of are expected to exceed those of Starbucks”.

But let’s blame pharma

According to the most recent National Health and Nutrition Examination Survey (NHANES), 18.5 percent of children and 39.6 percent of adults had obesity in 2015–2016. These are the highest rates ever documented by NHANES.

The medical care costs of obesity in the United States are high. In 2008 dollars, these costs were estimated to be $147 billion. The annual nationwide productive costs of obesity obesity-related absenteeism range between $3.38 billion ($79 per obese individual) and $6.38 billion ($132 per obese individual)1.

Now, to help the public avert blame, HCP’s want to classify obesity as a disease. I understand that there are a lot of reasons for obesity but I also believe that each one of us has to take personal responsibility for maintaining our health. I can’t tell you how many times I have seen obese people order the biggest and most unhealthy foods at restaurants and now fast food places like Taco Bell are delivering right to our door.

Politicians are quick to blame pharma but they are ignoring the real reasons that our healthcare costs are going through the roof: unhealthy Americans and middlemen who want a slice of the cake.

Politicians like Ms Warren and Mr Sanders are ignoring the real facts about our healthcare costs. It’s time to come back to reality if we really want to get healthcare costs under control.

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