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The Twenty Percent Solution « Ian Morrison

The Twenty Percent Solution

I was always taught that America spends too much on healthcare and we could reallocate resources to cover the uninsured, increase wellness and health promotion activities, and improve the quality of clinical care. That may well be true, but, as we have found out over the last thirty years it is simply impossible to achieve […]

By Ian Morrison

I was always taught that America spends too much on healthcare and we could reallocate resources to cover the uninsured, increase wellness and health promotion activities, and improve the quality of clinical care. That may well be true, but, as we have found out over the last thirty years it is simply impossible to achieve in the American political context. To reallocate requires someone’s income has to go down, not going to happen.

In my rattling around American healthcare I have come to realize that the only thing that unites doctors, hospitals, drug companies, the elderly, academic medical centers, the safety net, the public health community, health plans and medical equipment manufacturers is that they all want more money spent on them. So that’s the answer, let’s build a coalition of all the actors who want MORE. Can you imagine drug companies, doctors, hospitals and the AARP unleashing their enormous lobbying power, marching arm in arm to the Capitol singing kumbaya?

Here’s how it would work. Let’s assume we are spending $1.5 trillion on health care this year and it’s about 15% of a $10 trillion economy. The new MORE coalition demands that we increase health spending immediately by 20 percent, approximately $300 billion a year, and we make it a national goal to have healthcare account for 20% of GNP within five years (or two trillion in today’s dollars). Hey we will be there anyway in 2020 so why not start now, we need the practice.

How would we spend the money? We would pay people to eliminate disparities and variation in healthcare. We would cover prescription drugs. We would improve long term care. We would cover the uninsured. We would invest in public health infrastructure and we would embark on redesigning healthcare finance and delivery from the ground up for when we baby boomers really need it, twenty years from now.

If we spend two-thirds of the increment on labor costs that’s $200 billion worth of new jobs. You could have half a million jobs at $100,000 a year, 2 million at $50,000 and 2 million jobs at $25,000 a year. Or you could give invasive cardiologists a big raise.

Ok, you’ve spotted the problem, where does the money come from? Let’s assume there are 100 million tax-paying households (there’s actually more, but I don’t know how to work the calculator on my laptop so the math is easier this way). Ultimately, they pay whether in taxes, as part of wages, or as out of pocket costs. It comes to about $15,000 per household already spent on healthcare by all the actors (business, government, and households), we are just asking for $3,000 more per household per year. The top third of households by income would pay for the bottom third ($6,000 versus zero), seems fair. What else would you spend it on anyway, Britney Spears albums and dinner out.

Crazy idea, eh? No crazier than spending $1.5 trillion on a system of uneven quality and huge disparities , having 40 million uninsured, and nobody doing anything meaningful about it.

Ian Morrison is an author, consultant and futurist based in Menlo Park, California. This column was published in the June/July 2002 Health Forum Journal .