Health Care food for thought…

I have a Facebook friend who I sort of knew via High School.  He was a really great guy, and we had several friends in common, but he was a few years ahead of me, and he graduated before I started HS.  Anyway, through common friends, we became Facebook buddies.  He’s been talking once in awhile about the Health Care issue, one that he clearly feels passionately about, as do many people on both sides of the argument.  I’ve made my admittedly emotional points already, but since A doesn’t have a blog, I thought I’d let him guest post here.  He sent me several emails full of his thoughts on the matter, and I’m copying and pasting them here for your thoughtful consideration.  There are quite a few links included, and I recommend clicking them if you have time.  It’s a serious issue that deserves thoughtful consideration, on both sides. So, here’s guest blogger A, who has asked to remain anonymous because he doesn’t blog:

Recently I had a brief conversation with someone in which I mentioned the US’s poor health care system, and he asked “if our system is so bad, why do people from all over the world come here for treatment?” It’s a fair question. His implication was that we indeed do have an excellent system. He’s a smart, well-educated guy and his reply mirrors what I thought for quite a while. I think this is a hugely important topic for our nation, so I’m sharing this with you. My earnest desire is to not spread misinformation so if you see any factual errors please don’t hesitate to let me know. Also, I know this is a long email but please click the various hyperlinks I’ve included. Even if you don’t read the full articles, at least briefly skim them.

I want to address 3 questions:

1.      How does American health care stack up when compared to other nations?

2.      Are our costs in line with other nations?

3.      Can the problem, if one exists, be solved by mandating insurance for everyone?

Let me start with an important distinction: I’m not talking about the health care you can get here, which is indisputably the best in the world, I’m talking about our national health care system in which an increasing percentage of the population has no coverage at all, costs as a percentage of GDP are the highest in the world, insurance costs are increasing at an unsustainable average of 7% a year, and people with pre-existing conditions like diabetes have no chance of getting insurance if they leave their job. We’re also the only major nation in which you can be bankrupted by a health crisis. Out of the 1.5 million bankruptcies in the US expected in the US this year, more than 60% will be caused by health care costs. Out of those 900K medical-driven bankruptcies, 78% of them will have insurance but have coverage gaps. (Scary!) In other advanced nations no one goes bankrupt due to medical costs, but it happens regularly in the world’s richest nation.

So how does America’s system stack up overall? Measuring all the aspects of a nation’s health care system is complex. Fortunately there are think tanks, NGOs and academic studies that analyze and report on this issue. For example, in 2000 when the World Health Organization ranked national health systems the US was #37, just below Costa Rica, and just above Slovenia. In 2008 the Commonwealth Fund sponsored a study that analyzed 37 metrics of national health care in 19 countries, the US came in dead last. I’ll be happy to read any study you can point me to that ranks the US as having the best health care system in the world. I certainly haven’t been able to find one. The primary reason we come out so low on these studies is that other nations have figured out how to provide affordable universal coverage. In our country, an increasingly large percentage of the population has no health insurance and that drags all the numbers down. For example, our infant mortality rate is the nearly the worst of any industrialized nation (we beat Latvia though!) primarily because in many uninsured families the mother gets no pre-birth care or education.

Perhaps you have insurance and you’re thinking “I feel bad for the folks who don’t have coverage but I don’t want to change the system because I like my insurance.” The problem here is that the costs of health insurance continue to climb faster than inflation. Your employer may cover you now, but the increasing costs are not sustainable. In 1987 70% of workers had employer-provided health insurance. By 2007 that number had fallen to 62%. Not a good trend. This is an issue everyone should be concerned about, currently insured or not.

The bottom line is we spend the most (not just a lot, but literally the most) but get poor results when measured across our entire population. Go click that link in the previous sentence. Check out how much of GDP Germany and France pay for their health care. Americans like to ridicule France, that high tax society that is seemingly run by powerful unions. How is it that we spend 1/3 more than France while getting worse results? Did you realize that France does not have socialized medicine (as I always assumed it did)? Could it be their system is better than we think it is?

The answer is not simply to expand coverage to our entire population and declare the problem solved. The two problems here are access and cost. If you only address access by mandating coverage but do nothing about cost control you get a mess like Massachusetts has. In this the Republicans and blue dog Democrats are absolutely right. The problem is that most of them aren’t proposing meaningful cost reduction measures; that would mean taking on the insurance lobby, the pharmaceuticals lobby, and the AMA. They’re just complaining that the cost controls in the current plan aren’t sufficient without proposing real solutions. But it’s not as if methods of reducing cost are a mystery. Countries all over the world with a myriad of different systems have shown different ways to do it. Even in this country the VHA is a shining example of a turnaround, going from the butt of jokes to a system that delivers very good results. Why are politicians not talking about the lessons this government-run bureaucracy can teach us?

For example, most of our doctors get paid via a fee-for-service system (podcast version here). This doesn’t reward them for health outcomes, it rewards them for doing procedures, tests, and having office visits. How much of a difference does this make? The Mayo clinic, world-renowned for the quality of its care, is one of the lowest cost providers in the US. All its doctors are on salary. That frees them from thinking of how to maximize revenue and shifts them to thinking about how to maximize health. The first link I included in this paragraph is particularly interesting because it highlights that there are actual health detriments to the fee-for-service model, not just high costs.

And because I haven’t inundated you with enough links, here is a recent discussion (podcast version here) with a Nobel Prize-winning liberal economist and a conservative policy specialist from a think tank on funding health reform. I especially like it because it’s an actual discussion, not a typical cable TV shouting match.

My conclusions:

1. Though we spend more than any other nation, the US has a health care system that consistently ranks low when compared to other industrialized nations primarily due to our large number of uninsured.
2. There are examples around the world and here in the US for us to learn from that will enable us to expand coverage and reduce costs.
3. Any reform proposal that expands coverage without comprehensive cost reduction measures is doomed to fail.

~A

PS

Many of us have seen that ad featuring Shona Holmes in which she said she had a brain tumor that would kill her but the Canadian system refused to pay so she came here for treatment. That ad scared and angered me, but digging deeper it proves to be classic insurance industry scare tactics. I resent being manipulated so I want to talk about this ad even though it’s not central to this discussion. First, no Congressional plan is proposing a Canadian single-payer system despite what the commercial asserts, which makes her entire story irrelevant. She’s also lying about having had a life-threatening brain tumor. “But Andy,” I hear you saying, “even if the details were wrong surely her story is a cautionary tale illustrating the horrific care that Canadians receive!” The Canadian system certainly has its problems, but Canadians live longer than Americans, have lower infant mortality, etc., and their system costs a little over half what ours does per capita while covering everyone, and no one goes bankrupt from medical expenses. Sounds like a nightmare, doesn’t it? The bottom line: if you see a commercial on TV that appears designed to scare you, don’t take it at face value. Do some research and decide for yourself.

Then another friend wrote back to A, and he replied with some more points:

I had someone reply to me and I made a few additional points in my reply that I wanted to send to some of you:

For some of us, it’s practically a statement of faith that “government involvement is always costly and ineffective.” But the existence of various government plans around the world proves that they can be effective and affordable. Remember “government plan” does not automatically equate to “socialized medicine.” Germany, France, and Australia all have government options but also have private insurance.

Another public/private comparison: how many private US insurers have lower overhead than Medicare? As far as I can tell, there aren’t any. This seems to fly in the face of conventional wisdom because they’re lean mean private companies competing against big government. And in this case the cards are stacked against Medicare because it deals with the absolute most costly segment of the population in terms of health care. Let me stress I’m not saying that we should change our health care into a single payer system. What I am saying is that it’s a mistake to dismiss out of hand any solution that involves government as a provider. Just look at the example of the VHA that I linked to in my previous email. That went from being an example of “government can’t do it right” to “government is doing it better than the vast majority of private systems.”

Why is it that market forces work so well in other areas of our lives to drive down costs and increase efficiency but that is not happening in health care? Some economists assert that market forces are ineffective in this area. That is not a universally held belief but it can’t be dismissed either.

One easily proven fact is that market forces don’t work in any system in which costs are externalized, the classic case being pollution. If you make widgets in your factory, and I make competing widgets in my factory but if mine are cheaper even though I use a process that emits horrid noxious pollutants I will beat you in the market place. While my pollution has a cost to society as a whole, it’s externalized in the case of my widgets competing against your widgets. This is why government has to step in to curb pollution. In the case of externalized costs, market forces will NEVER work “correctly”.

Of course, there are dumb government solutions and there are smart ones. A dumb solution would be for government to step in and mandate a specific solution. A smart government solution can use market forces to change an externalized cost into an explicit cost. Then market forces work as efficiently as ever! That’s how they fixed the acid rain problem in real life—this isn’t hypothetical, it really worked. They created a market in which companies could trade pollutant allowances. It’s a great example of government involvement spurring the very best aspects of the private sector.

Given the concept of externalities, reforms should aim to turn externalities into explicit costs in order to provide the societal benefits we’re all striving for. Here’s concrete example: hospital readmission rates. They’re higher here than any other advanced country because we’re pretty bad at something called “transitional care”. In a nutshell, you get ejected from the hospital and you’re on your own. In other countries if you have high risk of complications post-release you get a nurse or health aid helping you and making sure you get back on your feet. Here, usually not. Therefore some people end up back in the hospital within a month of being released and many of these would be avoided with better transitional care. But look at this from the hospital’s point of view: they make money every time you’re admitted. Where’s their financial incentive to provide transitional care? The cost to society of the readmission is completely external from the hospital’s point of view. What if you changed the system such that reimbursements would be less or fines would be applied if a readmission was deemed to be avoidable? Then you’d instantly have aggressive transitional care. The result is better health outcome and a net decrease in spending.

~A