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Gavin Russell

Professor Morean

Eng 1201

11 April 2021

How America’s Healthcare System is Failing to Support the Poor.

America showcases some of the least and most healthy people in the world, but why is it

related to wealth. In America where healthcare has not become universal, wealth plays as much

of a role in someone’s health as the amount they exercise. Additionally, America has a very

capitalist approach to hospitals. Because lower-income areas do not have as much money,

quality healthcare does not inhabit these areas. Medicare, a government-funded healthcare

system that helps three major groups; elderly over 65, those with disabilities, and those in End-

Stage Renal Disease (Kidney Failure), still does not cover all costs for medical insurance. In

order to get help paying for prescription drugs, a person would have to pay a monthly premium -

something that should be accounted for in the funding for Medicare. The Veteran’s Health

Administration, a system meant to support veterans who cannot afford medical insurance, can be

more costly than privatized health care. During the Covid-19 pandemic, the quality of health has

dropped significantly in the United States, especially for the lower class. Although Medicare

helps mainly the poor and elderly with affording healthcare, the American Healthcare system

only serves to harm the poor through underfunded hospitals, a lack of funding for Medicare, and

a poorly functioning VHA system, all of which have been tested by the Covid-19 pandemic.

Medicare has not always been a part of the United States healthcare system. In 1912,

President Roosevelt ran on a platform that included health insurance. Although Roosevelt lost

the election to President Wison, the idea of government-funded healthcare had been implanted in
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the minds of Americans. In 1945, a national healthcare system gained support. President Truman

began the effort to create a government-funded healthcare system that would pay for typical

health visits; doctor’s appointments, hospital visits, or even dental visits. Under this system,

everyone would be covered for typical healthcare services. Although Truman’s plan failed, a

national healthcare plan was created 20 years later. This plan, although not as expansive as

Truman’s, would help elderly citizens over 65 to pay for their medical expenses. The need was

so great for Medicare that 19 million elderly citizens registered in the first year. Prices for

Medicare have quickly risen since 1965. When Medicare Part B was first introduced in 1966, it

only cost around 3 dollars a month. By the early 2000s, prices rose to 50 dollars a month. In

2021, the cost of Medicare Part B has skyrocketed to 148.50 dollars a month (Anderson, Steve).

Medicare was originally meant to help those who were below the poverty line, unable to afford

health insurance, however, it has quickly become a relatively expensive insurance program. In

the past 20 years, Medicare has lost its purpose: instead of providing expansive health insurance

to the poor, it instead can sometimes be too costly for the poor to afford - Medicare is now

unable to support the group it was intended for.

Wealth and health are closely related in the United States. Simply put, healthcare in the

United States is very expensive. Because of this, different social classes are inherently affected

differently. For example, someone in the low class may not even be able to afford Medicare Part

B, a facet of Medicare that helps beneficiaries pay for prescription drugs, while someone in a

higher class can easily pay for multiple superfluous surgeries. This monstrous disparity in

healthcare is exacerbated by the ever-increasing costs of medicine. Between 2001 and 2018, the

annual cost of insulin increased by 11 percent. If the cost of insulin continues on this trend, it

will reach an annual cost of over $12,000 by 2024 (Hayes, Terra). Keep in mind that this cost
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and many other medicine-based costs are not avoidable. This example does not only relate to

people with diabetes. Throughout an average life, a person will have to buy medicine. For

healthcare to be universally fair, it would need to be entirely government-funded, not paid for

monthly by beneficiaries. The cost of insulin is just a small anecdote in the book of problems

with our healthcare system. The United States spends the most on pharmaceuticals per capita in

the entire world. On average, a United States citizen spends 343.8 more United States Dollars on

pharmaceuticals than any other country in the world. Relative to GDP, the United States comes

third, behind Japan and Bulgaria (”Health Resources - Health Spending”), both of which are

known for expensive healthcare. Pharmaceuticals aren’t the only thing that the United States

citizens are overpaying for. United States citizens also pay an abnormally high cost for health-

related costs.
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The graph above helps further elucidate this point. When hearing that a United States citizen

343.8 more dollars on pharmaceuticals annually, it is hard to understand. The graph shows just

how much more United States citizens spend on healthcare in total. Although pharmaceuticals

are just a part of the total health spending, this incredibly high number helps show just how much

the United States is overpaying for every part of their insurance. With the ever-rising cost of

healthcare, the system that was intended to help support the bottom-classes needs is losing its

purpose.

The United States’ capitalist approach to hospitals has destroyed health equality in lower-

income areas. Because hospitals can be privatized or government-run, different business models

behind hospitals exist. Additionally, these business plans change from hospital to hospital. Some

hospitals may be competitively priced, while others are knowingly price-gouging their patients.

The amount of money a hospital is able to earn directly affects the quality of service a hospital is
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able to provide. Research has found that hospitals built in lower-income areas do not have as

high of a reinvestment rate as those built in high-income areas (Himmelstein, Gracie). These

hospitals located in lower-income areas are not able to invest as much money into themselves

simply because they do not make as much money. Because these hospitals are a mix of

privatized, not-for-profit, and government-funded, they do not have the same funding. This leads

to health inequality in lower-income areas.

Hospitals are also known for price-gouging their patients. A study conducted by Ge Bai

and Gerard F. Anderson analyzed the price-gouging tendencies of the 50 highest charge-cost

ratio hospitals. This study scrutinized the prices charged by these hospitals compared to the cost

of the services. It found that these hospitals charge between 9.2 - 12.6 times the maximum

Medicare allowed prices (Bai, Ge). These insane markups beg the question; why aren’t all

healthcare prices regulated? Because the government has a set Medicare charge, these incredibly

high prices are not a concern for the government. Prices like these are clearly hospitals price-

gouging consumers, but the government has not stepped in to stop it. On top of these high prices,

healthcare costs are not transparent to the patient. The charge-cost ratio does not have to be

legally stated anywhere. Proponents of healthcare transparency show strong support for the

posting of the charge-cost ratio either in the hospital information or on the Medicaid website.

They know that if they can publicize the ridiculous prices these hospitals charge, patients would

be less likely to be taken advantage of. Hospitals intentionally hide their costs because they know

the patient often has no choice when it comes to health-related services. Hospitals also hide the

cost of their services and products. After a visit to a hospital, patients can request an itemized

bill. This bill is a list of all of the products and services used and their prices. Patients can dispute

charges with the hospitals, and even lower their bill by thousands. This seems like a great way
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for patients to correct their bill and attain a more reasonable price, however, hospitals do not give

patients this bill automatically and they instead have to ask for it. The patient must ask for an

itemized bill, wait for it to come in the mail, review it, and dispute it. This process can take a lot

of time - something a poor person may not have. This process is intentionally kept difficult to

stop people from utilizing it. The harder it is to do something, the less likely people are to do it.

Hospitals keep their prices high and hidden so they can intentionally charge people ridiculous

prices for their services.

Applying for Medicare can also be a lengthy process. In 2014, my grandmother had a

stroke and did not have money to pay for her treatment. As soon as it happened, my mother

began applying for coverage under parts B-D, which would have covered most of her hospital

bills. Although she was over 65 and coverage could have saved her tens of thousands, she did not

receive coverage until October 23, 2016, a day after she had died (Russell, Laura). The long

waiting period also applies to those with disabilities. For people with disabilities, Medicare has

an almost two-year waiting period for coverage. When Medicare was expanded in 1972, it began

including people with disabilities, however, Congress also required that you must be on Social

Security Disability Insurance for 24 months. While SSDI helps individuals pay their bills, it does

not include medical insurance. Instead, individuals with disabilities have to find insurance

through Medicare if they already qualified or through their former employer’s health insurance

plan under COBRA (“End of the Two-Year”). This long waiting period can drain people’s bank

accounts, which further leads to poor healthcare. Although my grandmother was on SSDI since

the 1990s and over 65, she still had to go through the long process.

Although Medicare claims to provide medical insurance to elderly over 65, those with

disabilities, and those with End-Stage Renal Disease, it does not completely cover these patients.
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Medicare beneficiaries can get Medicare Part A for free, however, parts B, C, and D are not free.

These facets of Medicare fill in the gaps that Part A does not cover (Prescription Drugs, other

health services such as dentistry, and costs of things such as ambulances.). These gaps should

also be considered and covered for all Medicare beneficiaries. Because these services cost

money, they affect different classes differently. It should also be noted that Medicare costs

increase as income increases to help subsidize the cost of Medicare. Although the prices change,

it does not have the same effect on each class. For Medicare to affect all classes equally, a

universal healthcare system would have to be created - one that is entirely tax-funded.

A common misconception about Medicare is that it is the only government-funded

healthcare system that the United States could afford. According to an analysis of UK healthcare

spending conducted by James Cooper, citizens of the United Kingdom spend 2,989 Euros

(3577.92 USD) on healthcare whereas the average United States Citizen spends 7,736 Euros

(9260.22 USD) annually (Cooper, James). American citizens pay significantly more for

healthcare, however, receive some of the worst results. Of the countries in the OECD

(Organization for Economic Co-Operation and Development), the United States currently has the

highest spending per person (Cooper, James). The results of Medicare clearly are not working,

and a change is needed. A system similar to European countries would be a Universal Healthcare

system, a system that would ensure that every citizen has access to medical services without

significant financial damages (“Universal Health Coverage”). A system under Universal

Healthcare that could be used in the United States to lower medical bills would be Socialized

Medicine, in which the government owns all hospitals. This would decrease costs because the

hospitals would not need to be run for profit, and would instead be paid for through taxes.

Another system that could be used under Universal Healthcare to lower medical costs is a
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Single-Payer healthcare system. This healthcare is the most similar to the current system,

however, it would require the government to cover all citizens. Under this system, all facilities

are privately owned but regulated by the government. Although this system would initially lower

costs, if the government regulations become too loose, it could cause a problem similar to

student loans in which institutions drastically increased prices after the government took over the

student loan system. While these systems could still go awry, a change is necessary to improve

our healthcare system.

The Veterans Administration health insurance is another form of healthcare often used by

low-class veterans. A study was done to determine what type of veterans were most likely to use

the VA as their main form of health insurance. This study was done by giving veterans a survey.

The study concluded that 6.2% of veterans use the VA as their main form of healthcare.

Additionally, another 6.9% of veterans use the VA to supplement another form of health

insurance. Minorities and lower-class groups often utilize the VA more than other groups.

Although the VA system helps millions of veterans annually, the system is still unintuitive and

slow. When interviewing my grandfather, a soldier in South Korea and a long-term Va user, he

explained that he is still occasionally fronted with a bill, even when going to a VA site. This is

because of the VA’s system for closing health-related cases. When my grandfather went to the

VA for medical services, he was covered for the cost of the services, however, when the bill for

the doctor’s time came, he was told that the case was already closed and that he would have to

pay for the bill (McCarty, Robert). Because the VA services mainly minorities and lower-class

veterans, the confusing system affects these groups disproportionately. On top of being a

confusing healthcare system, the Veteran’s Healthcare Administration does not provide high-

quality services for the cost. A study was done between 2001 and 2007 to measure the quality
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and cost of VHA healthcare in comparison to private sector healthcare. The study elucidated that

it costs roughly 33 percent more than if it were purchased in the private sector. Additionally,

services done in VHA facilities cost roughly 56 percent more. While the VHA still maintains

high-quality outpatient healthcare for the price, inpatient healthcare has become worse with time.

It is important to note that this is not a comparison between veterans utilizing Medicare and

VHA but instead is a comparison of veterans using entirely private sector healthcare and veterans

using VHA healthcare. A solution considered by the study was for the VHA to outsource

inpatient services to high-performing private sector hospitals in order to lower costs. This

solution would reduce the cost of inpatient services, however, it could have the same problem as

Single-Payer healthcare - loose regulations. Just like Single-Payer healthcare systems, if the

VHA is unable to keep strict regulations, the system could be abused and prices could increase.

Recently, the Covid-19 pandemic has exacerbated the problems created by the United

States healthcare system. Lower-income hospitals have fewer beds than those in higher-income

areas. Additionally, because lower-income area hospitals do not have the same funding as high-

income area hospitals, Covid-19 has put a disproportionate strain on these hospitals (Cabin,

Williams). Price gouging was also common during the Covid-19 pandemic. In New York, the

high demand for gloves and masks caused prices to rise abnormally. Whereas before the

pandemic, masks cost on average less than 50 cents, they now cost nearly 7.5 dollars. Although

this may be chalked up to the law of supply and demand, New York passed a law declaring it

illegal for prices to rise 10% or more since the declaration of the State of Emergency (“Price

Gouging is ILLEGAL”). Covid-19 was like a stress-test that the United States healthcare system

could not overcome - the United States healthcare system needs a change.
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It is evident that America’s healthcare system inadequately supports the poor through

underfunded hospitals that utilize malicious tactics to price gouge their patients, a lack of

government funding for basic services, and a failing VHA system which is progressively getting

worse with time. It is a shame that health and wealth are so closely related in America, but this

relationship is supported through hospitals that use aggressive tactics to maximize profits with

little regard for the patients. Additionally, Medicare, a system designed to make healthcare

affordable for low-income individuals, does not cover all expenses an average individual will be

charged. Finally, the VHA insurance program claims to help save veterans significant amounts

of money but instead can cost more than private-sector healthcare.

Works Cited

Anderson, Steve. March 24. “A Brief History of Medicare in America.”

Medicareresources.org, 24 Mar. 2021, www.medicareresources.org/basic-medicare-
information/brief-history-of-medicare/.

Bai, Ge, and Gerard F Anderson. “For-Profit Hospitals Lead the Way in Price Gouging.”

PNHP, June 2015, pnhp.org/news/for-profit-hospitals-lead-the-way-in-price-gouging/.

Cabin, William. “Pre-Existing Inequality: The Impact of COVID-19 on Medicare Home

Health Beneficiaries.” Home Health Care Management & Practice, vol. 33, no. 2, May
2021, pp. 130–136. EBSCOhost, doi:10.1177/1084822321992380.

Cooper, James. “How Does UK Healthcare Spending Compare with Other Countries?” How
Does UK Healthcare Spending Compare with Other Countries? - Office for National
Statistics, Office for National Statistics, 28 Aug. 2019,
www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthcaresystem/
articles/howdoesukhealthcarespendingcomparewithothercountries/2019-08-29.
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“End of the Two-Year Wait for Medicare.” Medicare Rights,

www.medicarerights.org/pdf/two_year_waiting_period_fact_sheet.pdf.

Hayes, Tara O'Neill. “Insulin Cost and Pricing Trends.” AAF, 2 Apr. 2020,
www.americanactionforum.org/research/insulin-cost-and-pricing-trends/.

“Health Resources - Health Spending - OECD Data.” TheOECD, 2019,

data.oecd.org/healthres/health-spending.htm#indicator-chart.

Himmelstein, Gracie, and Kathryn E. W. Himmelstein. “Inequality Set in Concrete: Physical

Resources Available for Care at Hospitals Serving People of Color and Other U.S.
Hospitals.” International Journal of Health Services, vol. 50, no. 4, Oct. 2020, pp. 363–
370. EBSCOhost, search.ebscohost.com/login.aspx?
direct=true&db=edo&AN=145238606&site=eds-live

McCarty, Robert. Personal Interview. April 18, 2021.

“Price Gouging Is Illegal.” Emergency Rule: Price Gouging Is Illegal, 2020,

www1.nyc.gov/site/dca/media/Face-Masks-in-Short-Supply-Due-to-COVID-19.page.

Russell, Larua. Personal Interview. April 18, 2021.

“Universal Health Coverage.” World Health Organization, World Health Organization, 6

Apr. 2018, www.who.int/healthsystems/universal_health_coverage/en/#:~:text=Universal

%20health%20coverage%20is%20defined,the%20user%20the%20financial%20hardship.