$3.5 Trillion: Where it Comes From and Where it Goes

In the time it takes to read this $4 million will be spent on healthcare. Here’s where it went.

You don’t need to be an economist to understand that in the time it takes to finish this sentence $4 million will be spent on healthcare.  On average, this is the amount of money that will trade hands as you read each and every sentence.

Where does this money come from? Well, mainly from you and people like you.

Today the annual price tag for the American healthcare system is $3.5 trillion.[i]  This is what $3.5 trillion looks like:

$3,500,000,000,000

That’s an average of $10,739 per citizen per year to provide some, but not all, Americans with access to health services.

To put this number in perspective, about eight trillion dollars a year is spent on healthcare worldwide.[ii] This is roughly ten percent of the world’s Gross Domestic Product (GDP). By comparison, healthcare in America currently consumes 17.9% of its GDP and climbing.

No other industrialized country has similar healthcare costs. We spend two-and-a-half times more than other developed nations.

By any standard these are big numbers. Perhaps if the United States had the healthiest citizens with the best longevity our investment in healthcare would represent a bargain.  But, as noted in other posts, we put more in but get less out compared to other nations.

Imagine putting more money into your 401k retirement plan than your neighbors only to learn they were much better off with a larger nest egg because they invested in things that provided a higher return. The challenge for reforming healthcare is not much different.

While the dialogue around healthcare is complex, the goal of reform is simple: Where should we make investments in keeping with a set of goals that provide the best returns we seek to achieve with the health system?  As you consider this question, let’s start by looking at where all money for the health system comes from and where it goes. 

Where money comes from

To start, it’s important to understand that the majority of resources for health come directly from government-run health and medical programs funded through taxes paid by employers, employees and retirees.

The government also influences how private funds from employers and citizens are collected and spent through a complex series of laws, regulations and tax incentives. These include things like coverage mandates, payroll taxes and medical savings accounts.

Explaining the intricacies of how the healthcare finance system works would fill volumes of books. For now, we’ll keep things simple by using a view from government accounting known as “Type of Sponsor”.  Type of Sponsor is the entity that is ultimately responsible for financing the health care bill, such as private businesses, households, and governments.  These sponsors pay health insurance premiums and out-of-pocket costs, or finance health care through dedicated taxes and/or general revenues.[iii]

In using this approach, we see that the federal government accounts for the largest share of health spending at 29%, followed by households at 28%, private businesses at 20 % and finally state and local governments at 17%.

Today, almost half of all funds used in healthcare (45%)  come from government sources including the federal government which funds programs such as Medicare (healthcare for seniors) as well as state and local governments which contribute funds to support programs such as Medicaid (healthcare for low income).

The second largest category is “households” which is really all of the “out-of-pocket” expenses consumers like you spend on everything from healthcare co-pays to the costs of over-the-counter and other items purchased to manage health and medical conditions.

Where the money goes

Now that we have a sense of where money comes from to fuel today’s the health system, let’s shed some light on where we all this money goes. Here is how $3.5 trillion is spent:

A quick glance at where the money goes shows that more than half of all funds go to support hospitals and physicians. Almost a quarter of all funds are used to support the cost of administering health systems and programs.  This leaves roughly one quarter of all funds for everything else such as home health, school and workplace health, dental and other clinical disciplines such as chiropractic and physical therapy.

Within these numbers are other issues to be understood and addressed. As an example, the Institute of Medicine reports that up to one third of all expenditures, about $750 billion, is spent on unnecessary administrative services, inefficiencies and care that doesn’t actually improve health.[iv]

For most of us, it’s easy to get lost in these numbers. To better understand what’s going on, and formulate our own views on how we spend on healthcare, let’s look at four trends driving how money is spent which start to shed light on why we have some of the performance issues we’ve already noted. 

It’s Sickcare not Healthcare

While we euphemistically talk about the reform of “healthcare”, the numbers above show that that the majority of the systems and expenditures today are heavily weighted towards treating people once they become ill or injured. While this may seem like stating the obvious, it’s a fundamental issue when it comes to the debate around spending more than any other country only to have our comparative measures be lower than other countries spending less.  

When you “follow-the-money” you see that today’s health care system is mainly a disease-management system. It’s rooted in financial incentives for treating medical problems once they occur as opposed to helping people maintain or regain their health.

This brings us to a fundamental question critical to the health reform debate: What is the purpose and goal of our health system?

Should it focus on treating illness and injury once these occur or should it be geared towards prevention and health maintenance?

To put this into perspective, in 2015, thirty two percent of all funds spent went to hospitals while two tenths of one percent of all funds went towards things like maternal/child health services and school health programs.[v]

The simple answer is that the system should do both. The deeper question to ponder is what the balance should look like in terms of priorities, expenditures and desired outcomes.


For Consideration:

  • What is you view on the balance of where funds come from and how they are allocated or spent?
  • If you could change things, how would you balance investments in treating people who are ill or injured versus investing in prevention and wellness measures?

Resources:

Americans Remain Dissatisfied With Healthcare Costs is a report by Gallup on the results of a recent poll showing that most Americans consider healthcare costs and access to be a major issue. Provides a breakdown of the issues along with useful charts to explain details surrounding the issues.

The National Health Expenditure Accounts (NHEA) are the official estimates of total health care spending in the United States. Dating back to 1960, the NHEA measures annual U.S. expenditures for health care goods and services, public health activities, government administration, the net cost of health insurance, and investment related to health care. This is one of the best starting point sites for researching or understanding health expenditures in the United States.

Download this brief from CMS which highlights National Health Expenditures for the most recent year data is available. A concise resource that serves as a great handout or reference guide to understanding health expenditures.

Explore and compare Global Health Expenditures through this site sponsored and managed by the World Health Organization. Includes data updated to 2018 and reflects health financing reforms taking place in Member States, between 2000-2016.


References:

[i]https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html

[ii] World Health Organization. Global Health Expenditure Database (GHED) [

[iv] http://www.nationalacademies.org/hmd/Reports/2012/Best-Care-at-Lower-Cost-The-Path-to-Continuously-Learning-Health-Care-in-America/Infographic.aspx

[v] National Health Expenditures by type of service and source of funds, CY 1960-2015. CMS.   https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/NHE2015.zip

The High Cost of Self-Inflicted Disease

The role of citizens vs. government in managing health goes beyond the current health reform debate in Washington.

An issue as big as healthcare is the environment. And so, what if there was a way to dramatically improve the health of all Americans while decreasing our consumption of fossil fuels by a billion gallons a year?

Transformational new technology? Innovative legislation from Washington?  The answer is simple. We would achieve these goals by reducing the weight of the average American to what it was in 1962. [1]

Sheldon Jacobson is a computer science professor who has studied the effects of obesity and fuel consumption.  His work points to a simple matter of physics. Heavier drivers increase fuel consumption. Car engines use more energy to move more weight. The added weight Americans have packed on since the sixties costs motorists an estimated $4 billion a year.[2]

Supersizing America

Americans are being “supersized” at an alarming rate as part of a global obesity pandemic that is driven by a variety of lifestyle and environmental factors. Around the world today more people now die from obesity than malnutrition. It has overtaken tobacco as the largest cause of preventable disease.

Obesity is a real disease recognized by the American Medical Association, World Health Organization and others. Like smoking, overreliance on alcohol and drugs, it is a non-communicable disease.

Communicable diseases, like flu, malaria and measles are caused by forces in nature. Most non-communicable diseases may be influenced by things like genetics or exposure to hazardous materials in the environment, but in some manner, are self-inflicted by choices we as consumers and as a society make.[3]

Let’s use obesity to illustrate how self-inflicted diseases impact both our health and our wallet.

Today, more than two-thirds (68 percent) of American adults are either overweight or obese.[4]  Since 1980 adult obesity rates have more than doubled.[5] [6] If nothing changes 42 percent of U.S. adults will be obese by 2030 with more than ten percent of Americans being severely obese. [7] 

And while obesity is an “equal opportunity” disease affecting all walks of society, it is more pervasive and impactful among low income Americans and minorities. [8]

Beyond its direct impact, obesity is also a “gateway disease”. It dramatically increases the prevalence of diabetes, cardiovascular disease, cancer, osteoarthritis, infertility, sleep apnea and other health conditions.[9]   For example, as the prevalence of obesity grows, new cases of type 2 diabetes, coronary heart disease and stroke, hypertension and arthritis are on track to increase 10 times between 2010 and 2020 — and then double again by 2030.[10]

Over the next twenty years it is estimated that obesity will be a causal factor in 8 million cases of diabetes, seven million cases of coronary heart disease and stroke and a half million cases of cancer.[11]

A heavy price paid by all

Obesity is not only bad for our health, it’s also very expensive. Worldwide, obesity has the same economic impact as smoking or armed conflict.[12]

Within the United States, obesity-related illness treatments cost Americans an estimated $190.2 billion annually and will add another $550 billion in additional costs between now and 2030. [13] [14]

On average Americans who are obese spend more on medical services and medications than smokers and heavy drinkers. [15]  They incur 40% higher inpatient hospital costs, 27% more physician visits and outpatient costs and consume 80% more prescription drugs.[16]

Beyond direct medical, obesity impacts the productivity and competitiveness of America’s employers and workforce. A study by the Society of Actuaries estimates that U.S. employers are losing $164 billion in productivity each year due to obesity-related issues with employees.[17] The Robert Wood Johnson Foundation predicts that annual economic productivity loss due to obesity is likely to reach $550 billion by 2030.[18]

Without significant change, obesity-related costs will rise dramatically with increases being absorbed by employers and goods and services they provide. Consumers will be increasingly impacted by larger out of pocket expenses as well as higher taxes to support programs such as Medicare and Medicaid which are already teetering on the brink of disaster because of their national price tag. Obesity-related medical expenditures already cost these programs an extra $62 billion annually.[19]

Solving for Obesity is simple and complex

When it comes to understanding what is driving obesity and what can be done to slow or stop this epidemic, the answer is both simple and complex.

At a simple level the obesity epidemic is caused by Americans consuming more calories through food and beverages than they expend.

But the deeper answer to why this is occurring is rooted in a myriad of issues that have unfolded over the past four decades.

Today we live in a world where inactive lifestyles are the norm and inexpensive, high calorie foods and drinks are readily available 24 hours a day.

There are fewer safe places to walk or play. Parts of our communities (especially low-income neighborhoods) lack food outlets offering affordable, healthy foods. We are constantly bombarded by advertisements for unhealthy foods and beverages.

While we are all affected by these trends, our children are at greatest risk. Today, one in three American children is overweight or obese. The prevalence of obesity in children more than tripled since 1971 and is now the Number One health concern among parents in the United States, topping drug abuse and smoking.[20]

If you are a parent and want your child to be healthy, it would seem reasonable that there are simple things to do to ensure that they are not overweight or obese. For example, a study from the American Journal of Preventive Medicine found that eliminating just 41 calories a day could halt rising body weight trends in children and teens.[21]

Unfortunately, a variety of forces make it difficult to achieve such a simple goal.

Today the majority of children in the United States are high in added sugar and fat and too low in fruits and vegetables, whole grains, and low-fat and nonfat dairy products.[22]

Children are less active today than at any point in our history. On average, kids consume 7.5 hours of screen or media time a day.  In 1969, half of all children walked or biked to school. Today about 13 percent walk or bike to school.[23]

Fast food companies are specifically marketing to children and adolescents. In one study by the Robert Wood Johnson Foundation, McDonald’s was found to have the strongest emphasis on the children’s market, with 40 percent of 44,062 ads studied aimed at kids.[24]

Beyond the blitz of airtime focused on children, the fast-food companies use free toys and popular movies to appeal to kids by focusing on promotions, brands, and logos—not on food.[25]  

As a result, on any given day, more than one third of U.S. children eat fast food.[26]  French fries are now the most common “vegetable” that kids eat, making up 25% of American children’s total vegetable intake.[27]

And so, can something like regulating fast food advertising to children (like advertising bans and warning labels for tobacco products) impact the obesity epidemic in children, which in turn, may improve health and lower medical costs?

The province of Quebec banned fast-food advertising to kids in electronic and print ads 34 years ago. And while Canada is seeing as similar explosion in childhood obesity like the United States, Quebec has the lowest childhood obesity rate in Canada.

Researchers from the University of British Columbia who studied the impact of the advertising ban in Quebec concluded two things. First, the ban resulted in a 13 percent reduction in fast food expenditures.  At the same time, they estimate that 4 billion fewer calories were consumed by children in the province.[28]

In the end, childhood obesity has many consequences for our kids and our country. The most dire is that obesity may lead to a shorter life span for our children than that of their parents.[29] Children who are obese are more than twice as likely to die before the age of 55 compared to non-obese children.[30]

Solving for the Obesity epidemic brings us face-to-face with the need to better understand and make decisions as part of the health reform debate. Like other self-inflicted diseases (think smoking/vaping, alcohol/drugs), highlighting the consequences of Obesity illustrates the need to broaden the health reform discussion to include a view towards creating new paradigms and models to prevent or mitigate many of the health issues we now face.   Failure to do this means such medical and health conditions will continue to fill hospitals beds, cost more in dollars and deaths that would otherwise be prevented.


For Consideration:

  • What is your view in how to balance the responsibility of a citizen to manage their own health with the role government plays in legislating or regulating products and services in an attempt to create healthier environments and citizens?
  • Should drinks containing high amounts of sugar be regulated or taxed in an effort to reduce obesity (similar treatment to how alcohol and tobacco are taxed and regulated)?
  • What other actions might be taken by state and local governments to put forward legislation or regulations to create healthier environments which encourage a high level of health status or mitigate the effects of personal choices leading to a growing number of Americans who are destined to have costly health and medical conditions that could be avoided?

Additional Resources:

“Sugar: Consumption at A Crossroads” by the Credit Suisse Research Institute

Get the Facts: Sugar-Sweetened Beverages and Consumption from Centers for Disease Control and Prevention (CDC)

Learn more about Noncommunicable Diseases with news and information from the World Health Organization.


References:

[1] Sheldon Jackson (2006,2008), The Engineering Economist. “The Economic Impact of Obesity on Automobile Fuel Consumption,” published in The Engineering Economist (Volume 51, Number 4, 307-323, October –December 2006)

[2] Ibid

[3] Noncommunicable diseases fact sheet, (2013), World Health Organization, http://www.who.int/mediacentre/factsheets/fs355/en/

[4] Flegal KM, Carroll MD, Ogden CL, et al.  Prevalence and Trends in Obesity among U.S. Adults, 19992008. Journal of the American Medical Association, 303(3): 235-41, 2010.

[5] National Center for Health Statistics.  “Prevalence of Overweight, Obesity and Extreme Obesity among Adults.”

[6] Ogden CL, Carroll MD, Kit BK, Flegal KM.  Prevalence of Obesity in the United States, 2009-2010.  NCHS data brief, no 82.  Hyattsville, MD: National Center for Health Statistics, 2012.

[7] Ibid

[8] Trust for America’s Health and Robert Wood Johnson Foundation.  F as in Fat: How Obesity Threatens America’s Future — 2011.  http://www.tfah.org/report/88/ (accessed July 2012).  Based on data using the previous BRFSS methodology in use from 2008-2010.

[9] Y Claire Wang, Klim McPerhson, Tim Marsh, Steven L. Gortmaker, Martin Brown. Health and economic burden of othe projected obesity trends in the USA and the UK. The Lancet. 2011. 815-827

[10] F as in Fat: How Obesity Threatens America’s Future. Trust for America’s Health (TFAH) and the Robert Wood Johnson Foundation. 2012.

[11] Y Claire Wang, Klim McPerhson, Tim Marsh, Steven L. Gortmaker, Martin Brown. Health and economic burden of other projected obesity trends in the USA and the UK. The Lancet. 2011. 815-827

[12] Overcoming Obesity: An Initial Economic Analysis, McKinsey Global Institute, November 2014 http://www.mckinsey.com/Insights/Economic_Studies/How_the_world_could_better_fight_obesity

[13] John Cawley, Chad Meyerhoefer. The medical care costs of obesity: An instrumental variables approach. Journal of Health Economics, 2012; 31 (1): 219 DOI: 10.1016/j.jhealeco.2011.10.003

[14] [14] Ogden CL, Carroll MD, Kit BK, Flegal KM.  Prevalence of Obesity in the United States, 2009-2010.  NCHS data brief, no 82.  Hyattsville, MD: National Center for Health Statistics, 2012.

[15] Sturm R.The Effects of Obesity, Smoking,and Problem Drinking on Chronic Medical Problems and Health Care Costs.Health Affairs.2002;21(2):245–253.

[16] Ibid

[17]  Overweight and obesity study. Society of Actuaries. 2009. https://www.soa.org/Research/Research-At-A-Glance.aspx

[18] Trust for America’s Health and Robert Wood Johnson Foundation.  F as in Fat: How Obesity Threatens America’s Future — 2011. 

[19] Finkelstein, Trogdon, Cohen, et al.  “Annual Medical Spending Attributable to Obesity”.

[20] Overweight in Children, American Heart Association. http://www.heart.org/HEARTORG/HealthyLiving/HealthyKids/ChildhoodObesity/Overweight-in-Children_UCM_304054_Article.jsp#.WGavuWwzWbg

[21] Wang YC, Orleans CT and Gortmaker SL.  Reaching the Healthy People Goals for Reducing Childhood Obesity: Closing the Energy Gap.  Am J Prev Med, doi: 10.1016/j.amepre.2012.01.018, 2012.

[22] Ibid

[23] The National Center for Safe Routes to School, 2011.   http://guide.saferoutesinfo.org/introduction/the_decline_of_walking_and_bicycling.cfm

[24] Fast-Food Television Ads Use Toys, Movies to Target Kids. Robert Wood Johnson Foundation. April 2013. http://www.rwjf.org/en/library/articles-and-news/2013/08/fast-food-television-ads-use-toys–movies-to-target-kids.html

[25] Ibid

[26] Caloric Intake From Fast Food Among Children and Adolescents in the United States, 2011–2012. Centers for Disease Control. September 2015. https://www.cdc.gov/nchs/data/databriefs/db213.htm

[27] Obesity in Infants to Preschoolers. American Heart Association. http://www.heart.org/HEARTORG/HealthyLiving/HealthyKids/ChildhoodObesity/Obesity-in-Infants-and-Preschoolers-Infographic_UCM_467593_SubHomePage.jsp

[28] Fast Food Consumption and the Ban on Advertising Targeting Children: The Quebec Experience. Tirtha Dhar Assistant Professor, Division of Marketing, Sauder School of Business, University of British Columbia. April 2011. http://www.marketingpower.com/aboutama/documents/jmr_forthcoming/fast_food_consumption.pdf

[29] American Heart Association, 2010; Olshansky et al., 2005

[30] Franks PR, Hanson W, Knowler M, et al.  “Childhood Obesity, Other Cardiovascular Risk Factors, and Premature Death.”  New England Journal of Medicine, 362(6):485-93, 2010.

Two Important Numbers in Health Reform are 5 & 50

5 & 50 are two numbers that explain where half of all healthcare expenditures go in America today and represent a key area health reform must address.

We often here about the $3.5 trillion we invest annually for Healthcare in the United States. Breaking this down further, this means we spend an average of  $10,739 per citizen.

This last number demonstrates how statistics can sometimes be misleading. As noted, we spend an average of $10,739 per citizen.  But, understanding where the money is actually going provides a key insight as to why our investments are high but results are often lower than other countries spending less.

Look closely at where the money goes you see that five percent of people account for 50 percent of total health spending.

Think about these stats for a moment.

Health-care spending represents almost one-fifth of the United States’ economy.

In digging further into these numbers, the data from the National Institute for Health Care Management suggests that the health problems of about 15 million Americans consume almost one-tenth of the Gross Domestic Product (GDP) of the United States — around $1.7 trillion.

Those citizens in the “five percent” group are known as “super users” of the health system.  They include the “sickest-of-the-sick” or have multiple chronic conditions requiring intense and continuous care regimens.

We are bombarded with stats that show, on average, the United States spends more on health per citizen than any other country on the planet. The reality is that most of these expenditures are concentrated on fewer people entering the health system once they are very ill (including being admitted to expensive, technology rich environments when nearing end-of-life).

Ethicists often ponder the issue of distributive justice…How do we use a finite amount of resources to do the most good for the most people?

To raise the question above is not to suggest we turn our backs on those women and men who are members of the medical “super-users” group whose lives (including quality of life) are dependent on utilizing the system in place today.  

If we are serious about true reform, the deeper issue to consider is how we change the systems super-users are dependent on to better serve their needs while becoming more effective stewards of the resources required to meet the needs of this vulnerable population.

As we look ahead, these questions are worth considering by anyone in, or touched by, the current healthcare system.


For Consideration:

  • What is your view on whether half of all resource expenditures should go towards supporting the needs of a small group of people?
  • The rapid growth of the elderly population (a baby-boomer now turns 65 every 15 seconds and will for the next decade) will expand the size of the “super-user” group requiring intensive & costly services. What alternative or innovative ideas would support the needs of this population while making better use of our resources?
  • Do you know someone who is a “super user” of the health system? What services are they dependent on? What might you change to better serve his or her needs while make better use of resources?

Resources:

If you want to go deeper in exploring this topic:

There is a great article in the Atlantic by writers Karen Weintraub and Rachel Zimmerman. Fixing the 5 Percent is a thoughtfully-written piece that explores both the problem as well as solutions others are pioneering to improve the effectiveness of services and costs.

If you want to delve deeper in the actual data and trends download this PDF from the Agengy for Healthcare Quality and Research


References:

National Health Expenditures by type of service and source of funds, CY 1960-2015. CMS.   https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/NHE2015.zi

“UNDERSTANDING U.S. HEALTH CARE SPENDING”. National Institute of Healthcare Management, July, 2011. http://www.bcnys.org/inside/health/2011/HealthCarePremiumsNIHCM0711.pdf

“The High Concentration of U.S. Health Care Expenditures”. Agency for Healthcare Research and Quality. https://archive.ahrq.gov/research/findings/factsheets/costs/expriach/

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/19/the-two-most-important-numbers-in-american-health-care

Health Reform: What a Long Strange Trip it’s Been – Part 1

Implementation of health reform poses formidable challenges for Democrats, Republicans, and the political process itself. What can the past teach us about what to do now?


“What is old is new again”


Today’s health reform debate is deeply rooted in the ideologies and legislative efforts of the past 75 years.

Should Social and Environmental Determinants of Health be part of reform efforts? In 1945, President Harry Truman proposed solutions to these issues as part of comprehensive health reform. Can we legislate “healthcare for all” while maintaining a private system that allows consumers to choose their own physicians? In 1962, President John F. Kennedy championed such an approach.

Sound like familiar issues relevant to today?

Understanding past struggles helps to shape our current efforts for positive change by providing useful perspectives on the similarities of issues as well as the politics of reform that have persisted for decades.

And so, here’s a short history on the “roots” of today’s issues and efforts to improve health systems in America.

This installment (Part 1) begins in the 1940’s and culminates in 1969 with the landmark passage of both Medicare and Medicaid.

In Part 2, we’ll look at reform efforts from the 1970’s leading up to the passage of the Affordable Care Act and what’s happening today.


1933-1945: Franklin D. Roosevelt Administration

While health reform as a movement in the United States goes back to the early 1900’s, a national effort supported by a significant political party emerged in the 1940’s. President Franklin Delano Roosevelt believed in the concept of “healthcare for all” as part of his broader view on the role of government to create and manage “social programs” to benefit all Americans.

His key push to provide Healthcare for All was part of what would become known as “America’s Second Bill of Rights.”

President Roosevelt taking his case for Universal Health Coverage to the people as part of his initiative known as America’s Second Bill of Rights.

As World War II was coming to a close, it had been rumored that Universal Health Care was to be President Roosevelt’s next big political crusade. Unfortunately, he died just before the end of the war and so the world would never really know what might of come from President Roosevelt’s resolve to make healthcare accessible to all.


1945-1953: The Truman Administration

In November of 1945 President Harry Truman called on Congress with a special message recommending passage of a Comprehensive Health Program.

President Harry S. Truman

You can access the full speech here which enumerates the vision, issues and opportunities to deliver universal coverage to all Americans.

While the full speech is worth reading, there are two areas that are especially relevant to the challenges of today.

The first area of importance is where the Truman administration puts forward the tenent of healthcare as a “right”:

“In my message to the Congress of September 6, 1945, there were enumerated in a proposed Economic Bill of Rights certain rights which ought to be assured to every American citizen. One of them was: “The right to adequate medical care and the opportunity to achieve and enjoy good health.” Another was the “right to adequate protection from the economic fears of sickness.”

Millions of our citizens do not now have a full measure of opportunity to achieve and enjoy good health. Millions do not now have protection or security against the economic effects of sickness. The time has arrived for action to help them attain that opportunity and that protection.”

Harry S. Truman in a speech to Congress advocating healthcare as a right.

The second area that is especially noteworthy to today’s challenges and struggle for comprehensive reform is this: Long before contemporary experts began championing the notion of Social and Environmental Determinants of Health, Harry Truman nailed the correlation of these factors to the health of a nation. His proposal tied social and environmental issues to the macro view of what “systems of health” should include:

” If we agree that the national health must be improved, our cities, towns and farming communities must be made healthful places in which to live through provision of safe water systems, sewage disposal plants and sanitary facilities. Our streams and rivers must be safeguarded against pollution. In addition to building a sanitary environment for ourselves and for our children, we must provide those services which prevent disease and promote health.”

Harry S. Truman advocating that Social and Environmental Determinants of health be part of a national health plan.

The issue that ultimately became the lightning rod for Turman’s proposal was a provision that called for universal health insurance coverage to be administered and paid for by a National Health Insurance Board. The American Medical Association, quickly decried this to be “socialized medicine,” with a Congressional subcommittee labeling the approach “communistic.” The bill died, but Truman continued pushing for expanded access to health services right up to the outbreak of the Korean War which then took priority.


1953-1961: The Eisenhower Administration

President Dwight Eisenhower was known from his military career as a brillant strategist who then became an effective and savy politician.

In reviewing the impact of Truman’s push for health reform, Eisenhower came forward with a more modest approach and a very clear message for Congress, voters and special interest groups to hear:

“I am flatly opposed to the socialization of medicine. The great need for hospital and medical services can best be met by the initiative of private plans. But it is unfortunately a fact that medical costs are rising and already impose severe hardships on many families. The Federal Government can do many helpful things and still carefully avoid the socialization of medicine.”

President Dwight Eisenhower
National television broadcast to promote Eisenhower proposal for national health reform.

President Eisenhower proposed a four-part plan to increase access to affordable care for more Americans that included:

  • Federal funding to increase number of hospitals in the United States.
  • Legislation and funding increase services to those with “disabilities.”
  • Greater flexibility in allowing states to utilize federal funds for public health services.
  • Private health insurance reform to encourage new types of plans to cover more Americans.

To pitch this plan to the American public, and make very clear the differences compared to the proposals made by the Truman Administration, President Eisenhower made use of the new political tool of television (social media of the 1950’s) to make his case for health reform.

Sidenote: While the clip above is worth watching for the sake of understanding what was being proposed, it is most noteworthy in that the majority of the broadcast features one of America’s first female cabinet members Oveta Culp Hobby.

Like so many woman leaders whose contributions are lost in history, Hobby was first female secretary, of the new Department of Health, Education, and Welfare. In this role, she made the (then controversial) decision to approve Jonas Salk‘s polio vaccine. She was also the first women to receive the Army’s Distinguished Service Medal for her leadership efforts during WWII, including serving as the head of the Women’s Army Corps which was created to fill the gaps left by a shortage of men. The brilliance and contributions of Oveta Culp Hobby comes through in this short clip.


1961-1963: The Kennedy Administration

Under President John F. Kennedy, a proposal for expanding access to health services included health insurance coverage for those 65 years and older as part of a Social Security benefits package.

While this work began laying a foundation for what would ultimately become Medicare, it was met with strong opposition by special interest groups. Frustrated by the efforts of special interests to kill a bill making its way through Congress, President Kennedy went on the road to make the case for his proposal directly to the public in a series of public rallies. This effort culminated in the spring of 1962 with a rally in New York City.

Madison Square Garden: President Kennedy making the case for expanding access to health care.

Eighteen thousand citizens packed Madison Square Garden with Kennedy’s speech being televised nationally. Despite public opinion being in favor of Kennedy’s proposal the bill was defeated in Committee. President Kennedy vowed to press forward but did not live to see his plan come to fruition.


1963-1969: The Johnson Administration

Following the death of President Kennedy, Lyndon B. Johnson (LBJ) was sworn in as the President of the United States. He then won a landslide victory to be elected to a full term as President in November, 1964.

President Johnson was purposeful in visibly picking up the social programs that President Kennedy had proposed in order to “keep a promise made to the American Public.” With a Democratic majority in both houses of Congress, President Johnson had a receptive body for extensive social reforms that came to be known as the Great Society.

Even with control of Congress, there was strong opposition from the American Medical Association, conservative Republicans and congressional leaders within his own party.

With President Johnson working behind the scenes to build a coalition to support both Medicare and Medicaid programs, the Social Security Amendment was introduced in the House Ways and Means Committee in March of 1965, gained final approval by the Senate on July 28, 1965 and was signed into law by President Johnson on July 30, 1965.  It is noteworthy that such landmark legislation was passed within the first six months of President Johnson taking office.

“No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime.

President Johnson on the signing of Medicare into law

As originally enacted, healthcare coverage would now be provided to those 65 years of age and older, and to the poor, blind and disabled. It covered healthcare services provided by hospitals, physicians, nursing facilities and home care providers. 

A behind-the-scenes look at what it took to make Medicare a reality.

Medicare was milestone legislation that guaranteed healthcare as a right for seniors. It showed that major reform is possible with the support of the public, and the alignment of the powers in Washington.

It should also be noted that such progress was made because elected leaders made healthcare access a legislative and executive priority. Even then, reform was a hard-fought battle.

The clip above from CBS’ Washington Unplugged is an exceptionally candid behind-the-scenes look at what President Johnson went through to make Medicare a reality. It demonstrates the kind of resolve and types of action needed today to enact meaningful reform going forward.

In Part 2, we will look at health reform events in the 1970’s leading up to the passage of the Affordable Care Act in 2010.

All videos used in this story provided via links to original content on YouTube. Full attribution and copyrights property of the original content owner who post to YouTube.

Does Sugar Addiction Impact $1 Trillion in U.S. Healthcare Spending?

This article looks at the explosion of added sugars in our food and drink supply and reports on the health and cost consequences to all.

It is clear that the obesity epidemic is a key issue in the health reform debate as research conclusively shows that it drives significant increases in chronic diseases like coronary heart disease and diabetes.

What is less clear from a science and public policy perspective is the role sugar plays in both obesity and chronic diseases and what, if anything, should be done to regulate or manage its presence in our food and drink supply as part of the health reform debate in the United States.

“Sugar: Consumption at A Crossroads” is a groundbreaking report from the Credit Suisse Research Institute that explores the medical, economic, consumer and public policy implications of global sugar consumption.

Amongst the many data points and in-depth content in the report is this estimate of the economic impact of sugar in the United States:

“30% – 40% of healthcare expenditures in the USA go to help address issues that are closely tied to the excess consumption of sugar.”

The consumption of added sugar (sugar not contained in natural products like fruit or milk) or high-fructose corn syrup (HFCS) has increased dramatically over the last few decades. According to this report:

  • The world daily average consumption of sugar and HFCS per person now averages 17 teaspoons per day, up 46% from 30 years ago. This is the equivalent of 280 calories per day.
  • In comparison, Americans now consume an average of 40 teaspoons per day. As a benchmark, the American Heart Association recommendation for daily sugar intake is six teaspoons for women and nine for men.
  • Added sugars now represent 17% of a normal US diet with 43% of added sugars coming from sweetened beverages.

The report also includes a survey of physicians in the US, Europe and Asia. Key points from the physician view include:

  • 90 percent of the doctors surveyed believe that the sharp growth in type II diabetes and the current obesity epidemic are strongly linked to excess sugar consumption.
  • 82% of the doctors surveyed in the U.S. and Europe believe that sugar calories are handled differently by the body. 
  • On the question “is sugar addictive,” 65% think this is the case.

While medical research has yet to prove conclusively that sugar is the leading cause of obesity, diabetes type II and metabolic syndrome, the balance of recent medical research studies are coalescing around this conclusion. Advances in understanding the negative effects of refined carbohydrates on blood sugar regulation and cholesterol, and the metabolic impacts of fructose, are changing the traditional view that all calories are the same.

From a public policy perspective, governments and regulators have done little to address the impact of sugar consumption. Typical options often discussed, but rarely acted upon, include higher taxation as an attempt to reduce sugar intake while helping to fund healthcare costs related to obesity and diabetes, as well as increased spending on educating and explicit product labeling and warnings.

Worldwide, obesity now kills more people than starvation and malnutrition. The rapid growth of obesity, diabetes and related nutritional issues is arguably America’s top social health concern for which solutions can be devised to slow the growth and improve both health outcomes and costs.

And so, there is an opportunity to bring this social determinant of health into the mainstream of the health reform discussion. It’s a great example of the choices we can make to either continue to spend more money caring for the those medical maladies that come from the over-consumption of added sugars, or investing in a thoughtful response to increasing public awareness to deal with the root causes to slow the trend and improve the health of citizens.


For Consideration:

  • As part of health reform, what role, if any, should government play to address the growing implications in how the rapid rise of sugar impacts health status and eventually health costs?
  • Should sugar be regulated in ways similar to the treatment of other items that impact consumer health such as tobacco products?
  • Do you look at, or monitor, the level of added sugars found in the items you and your family consume? How does personal responsibility come into play when it comes to reducing the impact of sugar becoming a significantly higher portion of the average Americans caloric intake?

Additional Resources:

To go deeper on this topic:

“Sugar: Consumption at A Crossroads” by the Credit Suisse Research Institute

Get the Facts: Sugar-Sweetened Beverages and Consumption from Centers for Disease Control and Prevention (CDC)