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4. Healthcare Expenditures under CHA: Potential for Increased Costs Offset by Multiple Opportunities for Savings

Medicare for All and CHA would be likely to cost less overall than the current system. Yet cost predictions vary from more to less depending on what assumptions are used.Reference Cai, Runte, Ostrer, Berry, Ponce, Rodriguez, Bertozzi, White and Kahn47 The expected impact of CHA on overall healthcare expenditures is the projected difference between increased costs and increased savings (as for Medicare for All plans).

The bottom line is, if we can afford the current system with all its waste and inefficiencies, we can afford a simpler, more efficient system: Medicare for All.

Eliminating the private insurance system would have saved $245 billion in 2019 (see Figure 5). To this needs to be added the nearly $200 billion in savings from provider administration, because under Medicare for All hospitals and physician practices will no longer need so many bill collectors. An uncounted benefit: nurses and doctors will be able to spend time providing patient care instead of negotiating with insurance companies, and Americans will live longer and healthier lives.

Health inequities are a drain on the economy and are linked to an additional $320 billion in annual health care spending, which may grow to $1 trillion by 2040 if nothing is done about it, according to a report from the Deloitte Health Equity Institute.

“That is an urgent call to action,” said Jay Bhatt, DO, MPH, the institute’s director. “It’s not just the right thing to do, there’s a business imperative.”

Last week, the Department hosted several members of the Organization for Economic Cooperation and Development (OECD) at USDA headquarters in Washington to highlight the findings of a new report, Promoting Growth in All Regions, that says investments in rural places are vital for aggregate national economic growth and in many cases, such investments have found that rural regions have, on average, enjoyed faster growth than urban regions.

For an OECD policy brief that outlines the report’s findings visit this link.

America’s economic well-being depends on the health of our farmlands and rural communities. As the nation’s fifth largest agricultural producing state, Minnesota is home to 67,500 farms that contribute almost $17 billion to our state economy each year. Rural communities that rely on an agriculture economy often see disproportionate impacts from natural disasters, market volatility, and global pandemics. These communities have unique needs, ranging from housing and infrastructure to health care and broadband access. We must give rural communities the tools they need to spur innovation, create jobs and opportunities, and confront these challenges.

The cyclical nature of agriculture means that farmers make large financial investments in their crops, livestock, buildings, and equipment and sometimes face heavy losses due to natural disasters and market circumstances beyond their control. As our weather becomes more extreme, farmers need greater support to survive climate-related disasters that have cost the farming economy hundreds of millions of dollars in recent years. I am committed to maintaining a strong, fair safety net for our farmers to help them get through disasters and periods of low prices.

The fates of rural and urban Americans are intimately intertwined. Rural communities account for a significant portion of the U.S. population and economy. Approximately one-fifth of Americans live in rural areas, and 10 percent of the country’s gross domestic product is generated in nonmetropolitan counties.1 Moreover, rural areas are crucial sources of water, food, energy, and recreation for all Americans. Rural areas constitute 97 percent of America’s land mass, accounting for a large portion of the country’s vital natural resources.2

Despite the importance of rural communities to the health of the nation overall, federal policy has left many rural communities behind. Though some are thriving, rural areas overall have yet to match the employment levels reached prior to the 2008 recession, and deep poverty3 persists in many rural communities.4 Beyond barriers to jobs and economic opportunity, some rural areas also lack access to crucial services such as health care or the internet.5

Wealth and its relationship to health has long been understood and relearned over the past few centuries. In the United States, increasing wealth is associated with better health. Both income (earnings and other money acquired each year) and wealth (net worth and assets) are associated with better health and less likelihood of disease and premature death.7,8 Conversely, US counties that experienced high degrees of economic shock from globalization and exogenous trade in the 2000s saw declines in manufacturing employment and increased mortality rates.9 More recently, in Greece, following the national economic downturn and six years of social welfare austerity, total mortality rate increased nearly three times the 2000 to 2010 rate.10 This relationship holds a gradient across the entire income level spectrum, not only when comparing the very rich to the very poor.

Connecting Health Inequities to Economics

Rural hospitals are often the economic heart of a community. Worse, when minutes mean the difference between life and death, every hospital that closes leaves patients in danger. Since 2010, 113 rural hospitals have closed their doors, leaving more than 30 million Americans an hour or more away from critical care. As many as 700 more are in danger of closing.

Meanwhile hospitals that remain open are often cutting services to survive. Since 2000, 33 of 118 rural and small-town hospitals in Iowa have closed their birthing units.

New research shows that the economic burden of health disparities in the United States remains unacceptably high. The study, funded by the National Institute on Minority Health and Health Disparities (NIMHD), part of the National Institutes of Health, revealed that in 2018, racial and ethnic health disparities cost the U.S. economy $451 billion, a 41% increase from the previous estimate of $320 billion in 2014. The study also finds that the total burden of education-related health disparities for persons with less than a college degree in 2018 reached $978 billion, about two times greater than the annual growth rate of the U.S. economy in 2018.

The findings from this study by researchers from NIMHD; Tulane University School of Public Health and Tropical Medicine, New Orleans; Johns Hopkins Bloomberg School of Public Health, Baltimore; Uniformed Services University, Bethesda, Maryland; TALV Corp, Owings Mills, Maryland; and the National Urban League were published in JAMA.

One in five Americans lives with a mental illness, according to figures from the National Institute for Mental Health. But Prof. Barbara Biasi says these illnesses are too often treated as secondary to the types of physical conditions that can be straightforwardly assessed with a stethoscope or blood-pressure cuff—by policymakers as well as by doctors.

“Mental health conditions have also received less attention from policymakers,” Biasi says. “It’s still a little contentious as to whether access to mental health treatment should be part of people’s insurance plans, for example.”

Providing universal health coverage is a key way to address increasing global inequality, the head of the World Health Organization said Tuesday.

WHO Director-General Margaret Chan made the comment—which echoes previous comments she’s made—during a keynote address on the first of a two-day conference on universal health coverage taking place in Singapore.

An overlooked aspect of the health care debate is how “Medicare for All” could reduce the income inequality that separates America’s rich from the poor and middle class.

In the presidential campaign, attention has been focused on well-publicized, important questions of patient care: Will I lose my company- or union-sponsored health insurance? Will I have my choice of a doctor or be forced to wait for care from a narrow network of health providers, making a visit to a physician as harrowing as a trip to the Department of Motor Vehicles? What about pre-existing conditions? Will rising deductibles and copays bedevil me? Will my family be able to afford medical care, or will a serious illness bankrupt us?

Medicare for All doesn’t just provide everyone with the care they need, free of charge. It’s also a potent anti-poverty program, reducing poverty by over 20 percent and increasing poor people’s incomes by 29 percent.

People march at a Medicare for All rally in Los Angeles in February 2017. (Molly Adams / flickr)

From the perspective of the more than 150 million Americans who receive health insurance through their employers, health care costs may, in fact, be widening inequality. Economists generally agree that employers for the most part treat workers’ compensation in all forms—wages and benefits—as a single expense. When health insurance premiums go up, employers may reduce take-home pay to keep overall compensation in check.

Because health costs have grown so quickly over the past several decades, an increasing share of workers’ total compensation has gone toward health insurance premiums. These higher premiums partly explain why middle-class wages have stagnated, lagging productivity gains. Rising health care spending—both on premiums and out-of-pocket costs—totally erased wage gains for a typical family from 1999 to 2009.

For most people, a single doctor’s visit can be a financial obstacle course.

Many patients throughout the year pay hundreds or thousands of dollars in premiums, most often through workplace contributions. Then, at the doctor’s office, they are faced with a deductible, and they may need to pay coinsurance or make a copayment. If they have prescriptions, they’ll likely fork over cash for those, too.

The U.S. manufacturing industry is at its lowest level in modern history, now at 11% of GDP. The cause is the growth of the healthcare Industry and how the U.S. pays for it. A simple comparison of the percentage change in GDP of the healthcare industry versus the manufacturing industry shows a direct correlation between the growth of one and the shrinkage of the other, percentage point for a percentage point. No other industry besides manufacturing has seen such a decline during this time period.

The cause is simple: the U.S. is the only industrial country where the employer directly pays a substantial share of employees' healthcare benefits. In other nations, for the most part, citizens themselves and businesses foot the bill, through income taxes.

Small businesses created $5.9 trillion, or 43.5%, of the $13.6 trillion private non-farm US economy in 2014. This followed 16 years of uneven nominal growth averaging 3.3% per year. SGDP stagnated briefly in 2001, declined $213 billion during the great recession, and did not recover to pre-recession levels until 2011. The small business share of the economy fell from 48.0% in 1998 to 43.5% in 2014 due to faster nominal growth for large businesses of 4.8% versus 3.3% for small businesses.

Figure 1 displays SGDP over time, the shaded bars highlight recessions. SGDP stagnated briefly in 2001 and declined steeply between 2007 and 2009. SGDP did not recover to 2007 levels until 2011. SGDP was $3.4 trillion in 1998 and grew 71.9%, or 3.4% annually, to $5.9 trillion in 2014. The full series, including industry-level breakdowns, is provided in the Appendix A. 2.2

Big tech companies and large corporations tend to steal the spotlight, however, small businesses are the backbone of the American economy. According to recent data, not only are the majority of jobs in the U.S. created by small businesses, but they are also a major source of innovation, economic growth, and national prosperity. But the top small business statistics for 2022 do more than unveil insights on what works and what doesn’t. They shed light on the direction of the future—vital information for those looking to start and run a business.

Small Business Employment Statistics

Issue: For years, small-business owners have faced rapidly escalating health care coverage costs, which affects their employees, their business, and the economy.

Goals: To better understand employers’ perspectives on health care costs and to develop a targeted strategy for engaging and mobilizing to drive down costs and improve health outcomes.

The powerhouse of America’s economy — small business — is being sabotaged. Yes, sabotaged — not by taxes, but by our health care system.

Take it from Warren Buffett, chief executive of Berkshire Hathaway, who referred to our health care system as “the tapeworm of American economic competitiveness.” He asserts that medical costs harm the economy much more than taxes, and he and Berkshire’s vice chairman Charlie Munger (a Republican) favor a single-payer solution, sometimes referred to as “Medicare-for-all.”