Published on Friday, April 6, 2007 by Inter Press Service

Health Care Crisis: Number of US Uninsured Soars, Along with Big Pharma Profits

by Adrianne Appel

BOSTON - The U.S. is said to offer gold-standard health care, but as the most expensive health system in the world, some here say that only people with a pot of gold can get that care.Drug prices, health insurance, doctor visits and hospital stays are too expensive for many people to afford, while insurance and drug company profits continue to climb.

The nation is entering a health care crisis, many leaders and experts say. An estimated 46 million people do not have health insurance because they cannot afford it, and the U.S. has one of the poorest health profiles of the developed world.

Meanwhile, in 2005, pharmaceutical giant Johnson and Johnson earned profits of 10 billion dollars and Pfizer had profits of eight billion dollars, according to Fortune Magazine.

Health care is bankrupting even well-to-do U.S. citizens, especially people who have the misfortune of becoming seriously ill.

“The reason our health system is so crazy is we treat health care as a commodity. That really doesn’t work. Most countries see it as part of their job to take care of their people,” Meizhu Lui, executive director of United for a Fair Economy, told IPS.

The U.S. system is mostly privatised, which means that individuals alone or through their employers must buy their health care and health insurance on the open market. The government provides subsidised health care for the elderly and some of the poor and disabled.

Prices of many health services have soared in recent years and today individuals and the government spend 2.3 trillion dollars annually to purchase health insurance, doctor visits, medicines, hospital stays and special tests, according to Families USA, a health advocacy group.

“Our health care is in a car that is accelerating toward a cliff,” Alan Sager, co-director of the Health Reform Project at Boston University, told IPS.

The U.S. has a high rate of untreated diabetes and high blood pressure, which fall disproportionately on African Americans, Lui said.

“Unless you’re extremely wealthy it’s almost impossible to buy insurance. I’m in my fifties and it would cost me 6,000 dollars a year, and for a family it costs 12,000 dollars,” Steffie Woolhandler, an associate professor of medicine at Harvard University, told IPS.

The U.S. system today has created strange incentives, so that high-tech care is abundant for those who can pay for it while preventive care, like annual check ups, is not encouraged, Woolhandler said.

“It is remarkable we spend so much and yet fail to cover so many people,” Sager said.

Health care companies wield tremendous political power, Lui noted.

For years, health activists, organisations of the elderly and labour unions have tried to convince Congress to allow citizens and the government to negotiate bulk prices for drugs or to purchase them from Canada, rather than paying full price on the open U.S. market.

Congress has not budged on this or other health care reform issues.

Behind the scenes, drug companies, hospitals, insurance companies and doctor organisations spent 400 million dollars in 2005 and 2006 lobbying Congress and federal candidates to enact policies the companies favour, according to Opensecrets, an organisation which tracks the records.

“Our government, instead of helping people, is being held hostage by these profit-making companies,” Lui told IPS.

According to the Centre for Public Integrity, drug companies recently lobbied against strong safety regulations, and successfully lobbied to include patent protection in trade negotiations with other nations

Drug companies also benefit because they receive favourable tax treatment from the U.S. government, Bob McIntyre, director of Citizens for Tax Justice, told IPS.

“They get to write off their purchases of equipment. They get a big break for anything considered research,” McIntyre said.

All this adds up to big profits for the companies involved. In 2005, the drug companies Proctor and Gamble, Merck, Amgen, Abbot and insurer UnitedHealth Group were among the 50 most profitable Fortune 500 companies in the U.S., according to Fortune Magazine.

Many large drug companies richly reward their chief executive officers with salaries and bonuses. Johnson and Johnson’s CEO received salary and bonuses in 2006 of 28 million dollars, according to Dow Jones. And Merck CEO Richard Clark received 10 million dollars in compensation, according to AFL-CIO Corpwatch.

When former Pfizer CEO Henry McKinnell left the company in 2006, he was given pension, stock and other benefits worth 180 million dollars, according to AFL-CIO Corpwatch.

But CEO William McGuire, of UnitedHealth Group, a health insurance company, stands alone. His annual salary in 2005 was 124 million dollars and he has been provided stock options worth more than 1.7 billion dollars, according to Forbes.com. As part of his retirement package, he and his spouse will receive free health care for as long as they live, according to AFL-CIO Corpwatch.

This is not the case for the average U.S. family, Woolhandler said. If a parent becomes too ill to work, they may lose their salary and be unable to pay their health insurance.

“We found that three-quarters of people bankrupted by illness had insurance at the beginning,” Woolhandler said.

People who have an existing illness, like asthma, are charged double the price for insurance or may be refused altogether, said Woolhandler, who founded Physicians for a National Health Programme, which wants the U.S. to switch to a government-run health care system, as in Canada.

A number of companies made headlines recently by trying to boost their profits through illegal drug marketing schemes, cheating on their taxes or skimping on safety, according to Peter Rost, former vice president of marketing for Pfizer and author of the book “Whistleblower”.

Pfizer was recently fined 430 million dollars for attempting to defraud a government programme. Schering Plough paid a 500-million-dollar fine for manufacturing violations, and 345 million dollars for improper marketing of Claritin, an allergy drug, Rost says.

The U.S. tax authority, the Internal Revenue Service, has demanded that drug company GlaxoSmithKline pay 7.8 billion dollars in back taxes while Merck may be facing two billion dollars in back tax payments.

Copyright © 2007 IPS-Inter Press Service.

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