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US Health Care Reform Targets Costly System

U.S. President Barack Obama has vowed to reform the country's costly health care system, which he has called the biggest threat to the nation's economy.

In a public health clinic in Washington, D.C., Delcy Suarez flexes her elbow, showing a nurse how she hurt her arm in a recent fall.

Suarez works as a nanny, a job that pays just enough for food and rent, but does not provide health insurance. She often lives in pain because she cannot afford a doctor.

"Like this time I fell in the street. All my body was on top of my arm,” said 58-year-old Suarez. “I didn't have insurance. I spent the whole night thinking, where am I going to go? Crying, and I didn't know."

A friend finally persuaded her to go to the hospital emergency room, where an X-ray revealed a fractured arm. The cost of the brief visit? More than a thousand dollars. There is no way Suarez can pay the bill.

Hidden costs

Under federal law, hospitals have to treat all emergency cases regardless of insurance. But they cannot afford to give free care. So they pass the cost of treating patients like Suarez on to those who can pay, thus raising overall health care fees.

Ron Pollack, the executive director of the health care advocacy group Families USA, said that is a major reason why the U.S. health system is so expensive.

"There is a hidden cost shift so that the person or the family that has health insurance and needs care winds up paying more money for the services that are provided," Pollack said.

As a result, the insurance premiums, or fees, rise. At a recent national health care forum in Washington, President Barack Obama raised the alarm about these skyrocketing costs.

He noted that in the last eight years, premiums have grown four times faster than wages, and an additional nine million Americans have joined the ranks of the uninsured.

“The cost of health care now causes a bankruptcy in America every 30 seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes," the president warned.

World's most expensive health care

The U.S. has the highest health care costs in the world, yet it is the only Western country that does not provide medical coverage to all of its residents.

Across the United States more than $2.5 trillion will be spent on health care this year, about 17.6 percent of the Gross Domestic Product. That is $8,160 per U.S. resident.

Pollack said a lot of that does not even go toward care.

"There are very high administrative-related costs associated with our health insurance system to pay for agents' fees, advertising and marketing, and profits," he said.

The rising price of medical technology and prescription drugs also are factors. Pollack said inefficient treatments further add to the costs.

"A lot of the care that people get actually provides them with little improvement in their health care, and some actually even harms their health care," Pollack said.


Physicians in the U.S. are paid for each service they provide. The more procedures or tests they conduct, the more they are paid.

Sara Collins, an economist and assistant vice president of the Commonwealth Fund, a private foundation that supports research in health issues, said the U.S. could save money if it changed this system.

"There's really no consideration about the quality of those services provided, or an overall look at what happens to people when they're in the hospital and paying on the basis of outcomes," Collins said.

Cutting Costs

President Obama has made slashing health costs a major part of his economic policy. He has proposed a $630 billion reserve fund over the next decade to start reforming the system. Experts agree the overhaul will probably cost closer to $1 trillion.

Collins says Mr. Obama's plan to invest in electronic health records to prevent duplicative care will help bridge the gap.

"Accelerating the spread and use of health information technology could save up to about $261 billion over a 10 year period," she said.

The government also has renewed and expanded a program to insure 11 million children, an investment in preventive care that should help families avoid more costly emergency room visits.

There is a general consensus in Washington that the health system is broken, but agreeing on the cure will be difficult. Despite that, leaders from Mr. Obama's Democratic Party hope to rally enough support to pass a reform bill in the next few months.