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POLICY: And while it’s Jon Cohn week….Health Care Like The Europeans Do It

Here’s his New Republic piece called Health Care Like The Europeans Do It republished on CBS news. Personally I think that he gives the American system too easy a ride, even though Ezra beats up the Cato boys on this too. When I looked at this issue of performance on particular disease categories a while back I found this quote.

Contrary to popular belief, the health care here isn’t always the best. Many other industrialized countries provide health care that is just as good and sometimes better. For instance, 30-day acute myocardial infarction case-fatality rates are below 7% in Denmark, Iceland, and Switzerland, compared with almost 15% in the United States. Incidence of major amputations among diabetic patients in Finland, Australia, and Canada is less than 10 per 10,000 compared with 56 per 10,000 in the United States. And Australia, Canada, England, and New Zealand all have a better 5-year kidney transplantation survival rate than the United States.

You’ll never hear that in a Cato/Manhattan/PRI/AEI press release—and it defies belief that they want to go down that path.

But the overall point is that health and medical services are only distantly related, and talking about outcomes in the context of different health systems is stupid. But there are two outcomes that it is not stupid to talk about, and those are the two on which America leads the world. High costs across the system, and poor (and middle income) people losing all their wealth due to medical care costs.

After spending his whole piece beating back the silliness about individual disease outcomes, Jon does get to the real point:

Not even conservatives dispute the one clear advantage other countries have over us: You don’t see their citizens choosing between prescriptions and groceries, or declaring bankruptcy, because of medical bills.

And that is the point. Universal health care insurance is not about health, it’s about wealth. As in not losing it when your sick because you didn’t have good health insurance. Because as I’ve said before on THCB good insurance is mostly a function of good employment, which is mostly a function of good education, which is mostly a function of how you choose your parents.

As John Edwards put it when he announced his health care plan, "It doesn’t have to be that way."

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Matthew HoltJohn R. GrahamjdspikeBarry Carol Recent comment authors
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Matthew Holt
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Barry. you answer this question/statement (which you pose) “We cannot give people complete or near complete insulation from out of pocket healthcare costs and expect utilization to be contained.” with this one “Leaving the UK and Canada aside, are the other countries employing age cutoffs for certain procedures or do they just have a different definition or conception as to what constitutes good sound medical practice or this there some other factor?” My take is that culturally it’s the second factor. Only the UK really does formal tech assessment, although it clearly does informal age rationing. But as you say… Read more »

Matthew Holt
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John–I’m awaiting an article from Cato/Manhattan/PRI/AEI, etc, admitting that care in several aspects in the most free market of all health care systems is worse than in some of the socialist paradises. As I’ll explain tomorrow again; I think the comparison of outcomes across countries is a foolish game to play, and to be fair you & PRI don’t play it much. But many others do. The lives cost by over-regulation comment is a cop-out, as that’s all about not allowing drugs on the market quicker….and of course that can be played both ways. Don’t 500,000 a year die from… Read more »

John R. Graham
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As sure as I am that Cato can stick up for itself, I can’t help but note that you can see similar statements in a “Cato/Manhattan/PRI/AEI press release” (me being PRI). If you look at at the paper by Chris Conover that Cato published on the cost of over regulation in U.S. helath care, he states a body count of 22,000 annually.

Barry Carol
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Barry Carol

My other line of objection to your argument is that I think (1) and (2) should be put in play. There are obvious, and large, practical and political barriers to changing physician incentive systems, and to giving payers more power to limit prices and/or control utilization. Nonetheless, other nations do these things and they manage to make it work. So long as we can see the success of the German, French, Japanese, Dutch, etc., systems I will not believe that the only option available to us is greater cost-sharing. I absolutely agree with this. I would be interested in more… Read more »

jd
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jd

Spike, I tried to find the study again, too, and failed. I remember two versions of the press release, one which said that costs associated with claims and billing were 33% of total health care costs, and the other said that 33% of health care costs went towards admin, “including” costs for insurance functions like billing and claims. That’s a big difference, and only the latter phrasing makes sense given the other data. As for the general point about efficiency, I completely agree that from a cost perspective a significant benefit of a single payer system is that it simplifies… Read more »

jd
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jd

Barry, You wrote: We cannot give people complete or near complete insulation from out of pocket healthcare costs and expect utilization to be contained. It’s not an easy balancing act. In the current system, I agree. So long as (1) providers have a financial interest in providing more and more costly care, (2) price and utilization controls by government or private payers are ineffective and (3) patients are insulated from the costs of care, then (4) costs will continue to rise faster than inflation. If we assume that (1) and (2) are not going to change, or that we don’t… Read more »

Eric Novack
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I tried to glue one of those jaguar hood ornaments to my Honda, but it would not stick…
Neither apparently did my comment as no national health care supporter has answered it…

spike
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Try as I might, I couldn’t track down the original study, only more and more press releases about the study. I agree that it might be a little inflated a number. Ok, so total admin costs account for 2X as great a percentage in the U.S. as they do in Canada, and once you factor in the fact that the U.S. spends 2X as much on health care per capita than Canada, that means that we actually spend 4X as much per capita on admin costs than do Canadians. Basically, you’re telling me that if we adopted Canada’s system, we… Read more »

Barry Carol
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Barry Carol

jd, I appreciate your comments about the working class, though I’m not sure how you define it in terms of income. The point I was trying to make is that a high deductible plan (which under HSA rules can mean anything from roughly $1,000 to $2,700 per person) is far superior to no insurance at all and might be affordable whereas a low deductible plan may not be. It doesn’t completely insulate them from financial risk in the event of a serious illness, but it’s a lot better than nothing. Ideally, we should be able to develop an insurance system… Read more »

jd
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jd

As much as I like to agree with you Barry, I take strong exception to something you wrote on universal health care as wealth protection: The wealth protection argument could probably be best addressed by high deductible catastrophic coverage for the upper half of the income distribution. The lower half, especially the 55 million people on Medicaid, don’t have much wealth to protect. I don’t mean to be harsh, but that is about as in-touch with America’s working class as Giuliani’s belief that a gallon of milk costs $1.50. People earning less than the mean don’t have much wealth to… Read more »

jd
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jd

Sorry Spike, Barry has it right: the admin cost of insurance for public and private combined is around 7%, with 4-5% going to private insurance and 2-3% public programs. The 7% total insurance figure for the US comes from taking into account that private insurance only pays for about 35% of all healthcare expenditures, while government programs, out-of-pocket payments, philanthropy and other sources cover the rest. This does not include the cost of billing and claims for providers, but those costs, as Barry says, are a small fraction of total admin costs. Anyone familiar with a hospital can tell you… Read more »

Barry Carol
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Barry Carol

A recent study generated some buzz when it claimed that 33% of healthcare dollars go into doctors submitting and insurers paying claims. And the only reason it didn’t generate more buzz is because that number was pretty much in line with what everybody thought already!! Most people would be wrong! The California Healthcare Foundation estimates total administrative costs at 7% of total healthcare costs. Doctors who outsource their billing are charged 5% of revenue actually collected (somewhat less for high billing specialists). For hospitals, where even a routine procedure can generate a bill into four figures, billing and claims related… Read more »

gjudd
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gjudd

JAM wrote:

Universal coverage is indeed about “wealth protection”: health insurance provides coverage against the financial risk of sickness.

Just so: and now, for universality’s sake, all we have to do is define things like “what level of wealth”, how much “protection” (and what “protection” is), which kinds of sicknesses merit this protection, what level of risk against which to protect….
Of course all of these things are done now – sloppily, clumsily, harshly and arbitrarily in varying degrees within and across populations. Just not ‘universally’.
But it sounds like you may have a different course of pursuit we all should consider.

spike
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Why add money to a failing system just so more people can be covered by the failing system? A recent study generated some buzz when it claimed that 33% of healthcare dollars go into doctors submitting and insurers paying claims. And the only reason it didn’t generate more buzz is because that number was pretty much in line with what everybody thought already!! The system we have is riddled with perverse incentives (like rewarding expensive specialty surgeries instead of early care that removes the need for the surgeries), inefficiencies (like doctors having to bill to 25 different insurers, on a… Read more »

Barry Carol
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Barry Carol

Matthew, The wealth protection argument could probably be best addressed by high deductible catastrophic coverage for the upper half of the income distribution. The lower half, especially the 55 million people on Medicaid, don’t have much wealth to protect. Medicaid beneficiaries, however, who have comprehensive coverage on paper, have a hard time finding providers that will see them because reimbursement rates are generally poor. My bigger frustration with the healthcare debate, however, is the disconnect between people who tell pollsters politically correct answers like everyone, whether rich or poor, should have access to high quality healthcare when needed. Of course,… Read more »