The United States runs the by far biggest and most bloated healthcare sector in the world when measured as a share of the total economy. Its annual value was $3.7 trillion, amounting to 17.9% of GDP (2018). That is nearly double the average of developed Western countries (as a share of GDP). The enormous expense does not buy Americans any better health than the Europeans get for half the price, in fact the health outcomes are far inferior in the US. In life expectancy, the US has fallen down to 33rd place, even overtaken by Cuba.
Exorbitant prices on drugs, medical treatment and health insurances are crushing consumers. Half of working age American adults have either no insurance at all or only an inadequate insurance and therefore risk being financially ruined for any kind of medical treatment – even just checking in at a hospital and leaving the same day could land you with a five-figure bill. Studies have shown that two-thirds of Americans are not able to afford a $500 unexpected cost for medical emergency, a sum which will not get you even past reception at an American hospital. According to the American Cancer Society, 137 million Americans suffered medical financial hardship in 2018. They then had to resort to borrow a total of $88 billion only to cover their necessary medical expenses. Medical bills are now the primary factor in two-thirds of all personal bankruptcies in the United States.
In a unique study covering the entire US healthcare sector, Awara Accounting https://www.awaragroup.com/ has dug into the problems of the US pharma and healthcare industries, and the findings are shocking. The Awara study shows https://www.awaragroup.com/blog/us-healthcare-system-in-crisis/ that in addition to the original sin of corporate greed, the exorbitant costs of the US healthcare system stem from layers upon layers of distortions with which the system is infested. Each part of the healthcare industry contributes to what is a giant monopoly scam: the pharmaceutical companies, medical equipment manufacturers, drug wholesalers, drug stores, group purchasing organizations, health insurance companies, doctors, clinics and hospitals, and even what should be impartial university research. And on top of that, there’s the government as a giant enabler of monopolized corporations running roughshod over the American consumer and patient.
But it is worse than that. All the monopolists (in official parlance, oligopolies) are in turn owned by the same set of investors in what is called horizontal shareholding. The same some 15-20. investors have the controlling stake in all the leading companies of the entire pharma and healthcare industry.
That’s not all. Two of the investors, BlackRock and Vanguard, are the biggest owners in almost every single one of the leading companies.
Furthermore, BlackRock is owned by Vanguard, BlackRock’s biggest owner being a mystical PNC Services, whose biggest owner in turn is Vanguard. Vanguard itself is recorded directly as BlackRock’s second biggest owner. Moreover, BlackRock and Vanguard are the two biggest owners of almost all the other 15-20 biggest investors, which most are cross-owned and together own the entire US pharma and healthcare sector. Ultimately, then we might have the situation that the whole healthcare sector and Big Pharma are controlled by one giant oligarch clan (and the very real people who stand behind them), one single interest group of oligarch investors.
Besides, it’s the same for the entire US economy. Those two investors control almost all major US companies.
Incredible? Read on, the evidence with charts and details is below in the text.
Now, this means that we are not exaggerating when we talk about an oligarch takeover of the US pharma and healthcare industries. It’s real. And very real people suffer for real.
As far as we know, this is the first report to reveal this mind-boggling extent of monopolization and concentration of ownership in US pharma and healthcare. This monopolization is fast approaching Soviet levels, with the same lethal consequences.
Another particularly important thing in the Awara report is that the US healthcare crisis and global comparisons serve as a marvelous case study to show what is wrong with neoliberalism and how the so-called free-market is not necessarily better than a mixed economy. At the very core of the US healthcare crisis, is the American ideological precept that healthcare must be a private corporate for-profit business – never mind any level of predatory monopolies. But compared with European countries the US loses hands down on every parameter. European life expectancy and health outcomes are far better at half the cost. In a European-style system all citizens have nearly equal access to general health services without having to incur financial hardship in a medical emergency. It has then been clearly shown that, the European mixed system of universal healthcare with public insurance and public hospitals, coupled with government regulation of drug prices and their availability, works best. And there’s a lesson for the wider economy, too.
Yet when you mention government regulation, price controls and universal healthcare, US politicians from both parties and most analysts (of the type that make it into mainstream media) pull out the socialism card. But this is not a question of the free-market vs. socialism. There can be no such question because, first, a mixed economy is not socialism. And, second, there is no free market in the United States any longer. What used to be a free market aka Capitalism, is nothing but a crony capitalist monopoly ridden system almost exclusively controlled by an ever more consolidating group of oligarchs. The choice is not between socialism and capitalism, but between a real market economy and the present oligarchy.[Note. Wherever the original Awara Accounting study on US healthcare https://www.awaragroup.com/blog/us-healthcare-system-in-crisis/ contain the source references and links, they have as a rule not been duplicated here.]
A Healthcare System Run Amok
Drug prices in the United States are the highest in the world, American prices for prescription drugs being two to six times higher than those of the rest of the world. Prescription drug prices in the US increased nearly 100% in only the past six years. Before that, between 1997 and 2007, drug prices had already tripled.
Notorious cases abound, like Mylan Pharmaceuticals raising the price of its Epipen by 450% since 2004 by exploiting its 90% monopoly market share. It could cost $600 to buy that pen for treating acute allergic emergency although the manufacturing cost would be as low as $1.
The extent of price gouging really hit home when it became known that the drug maker Gilead sold its Sovaldi (a medication used for the treatment of hepatitis C) on foreign markets for a fraction of the cost it charged domestically in America. The drug was sold in the US for $1,000 per pill, amounting to $84,000 for a full 12-week regime, while in India it sold for only $4 per pill when produced there by a Gilead licensed.
But being hospitalized in the US is the real killer. There are horror stories galore of astronomical charges for medical care: A patient bitten by snake being charged $68,000 for lifesaving antivenom, $160,000 for a hip joint replacement, or a million or two for cancer treatment. As if drug prices were not high enough, hospitals profiteer from applying enormous markups on medicine dispersed to patients in care – as well as on medical devices and all the common items used – that’s on top of the in itself outrageous costs for the hospitalization. Like a hospital charging $13,702 for one injection of 660 mg of Rituxan, the cancer drug, which the hospital acquired for $3,000. Or getting a cut of $30,000 by charging $49,237 for a Medtronic neurostimulator for which the hospital’s outlay was $19,000. Even the smallest items can be blown up to cosmic proportions by the hospital money scam, when patients are charged $134 for a saline solution which can be bought online for $5, or $7 per every square cotton pad used to sterilize the skin prior to an injection.
Hospitalized 32 days for pneumonia one patient got a medical bill of $474,064, including $132,000, or more than $4,000 a day, for routine blood, urine and other laboratory tests, on top of being charged $2,293 a day just for the room-and-board, in total $73,376. Notwithstanding the already exorbitant room charge, the patient was charged colossal amounts for care which should normally be included in the hospital room charge, like $94,799 for the routine supplying of the patient with oxygen and testing the breathing. Included were also multiple charges of $134 per day for supervising oxygen inhalation.
Oh, you would think that is not a big problem, because Americans have insurances. Think again. About 10 % of Americans – 27 million people – have no health insurance at all. Worse yet, among those formally insured, it is estimated that 45% of all adults are inadequately insured. Another study puts the number of Americans without adequate health insurance at 52 million.
There is also an increasing age gap in insured employees. Recent college graduates have been less and less able to find jobs that provide health insurance. The share of young college graduates who have employer-sponsored health insurance coverage fell from 61% in 1989 to 31% by 2012.
The healthcare death spiral is complete when you consider that on top of monopoly prices on drugs, and monopoly prices for hospital treatment, the insurance companies take their monopoly cut as well. They have raised health insurance premiums by 242% from 1999 to 2016, whereas nominal wages over the same period increased only by 60%.