Two studies out. Not exactly new news. I did a study looking at laproscopic cholecystectomy between Japan and the US for my master’s thesis in 1992. The result then was that it cost twice as much here, when in those days everything else in Japan (land, food, cars, golf club memberships, hookers) cost twice as much. Outcomes seemed to be similar even though patterns of care were very different overall.

Now a similar study (albeit done in a major journal and not for some punk’s masters thesis) is showing the same thing about the costs of CABGs between the US and Canada. They cost twice as much here too. Outcomes again seem to be similar.

The in-hospital cost of CABG in the United States is substantially higher than in Canada. This difference is due to higher direct and overhead costs in US hospitals, is not explained by demographic or clinical differences, and does not lead to superior clinical outcomes.

Finally, in a repeat/update of an article he wrote with Uwe Reinhardt a while back called "It’s the prices, stupid" Gerald Anderson shows that we spend more money here because in general we pay more for the same thing.

U.S. citizens spent $5,267 per capita for health care in 2002—53 percent more than any other country. Two possible reasons for the differential are supply constraints that create waiting lists in other countries and the level of malpractice litigation and defensive medicine in the United States. Services that typically have queues in other countries account for only 3 percent of U.S. health spending. The cost of defending U.S. malpractice claims is estimated at $6.5 billion in 2001, only 0.46 percent of total health spending. The two most important reasons for higher U.S. spending appear to be higher incomes and higher medical care prices.

So we’re shopping at Nordstroms and the rest of the world goes to K-Mart. Of course if you can’t "afford" Nordstroms, you’re SOL.

Joe Paduda has an article about Steve Case’s determination to piss away $500m changing health care. In it he correctly notes the problem with Colin Powell’s argument that buying health care services and buying TVs are about as simple as each other. (Actually I think buying a TV is very complicated but that’s another discussion). Joe has a very interesting case study about his own decision when concern for his daughter’s health over-rode concern for his pocketbook.

We are insured under a high-deductible MSA plan, so any charges would come out of our pocket. I thought about it for a few seconds, than agreed. I also agreed to have her brought over in an ambulance for the fifteen minute trip. I knew full well that the risk was minimal, the costs would be over $2000 for this “preventive” measure, and I would pay all that out of my own pocket. Was the very small risk worth the outrageously inflated cost? You bet your life it was.

Now the next question is, what if Joe were not a well educated and (I guess and I’m sure he’ll tell me if I’m wrong) a relatively wealthy consultant, but a single mother to whom that $2000 would mean not being able to pay the rent or put food on the table. That’s where the fallacy of an at the point-of-care economic decision by the consumer is demonstrated. And that’s where this isn’t like buying a TV.

Rational consumer-choice advocates (i.e. Alain Enthoven) tried to push this level of selection back up to the "sponsor" level. That meant that the health plan made the decision about treatment based on some level of cost-effective assessment about what was the best thing to do in each case. The UK now has a central body (the NICE) that hands down these guidelines. But no one who’s well versed in health policy seriously believes that these judgment should be made at the point of care, because the situation is totally uncertain, and the consumer almost always knows less than the provider and half the time is not in a coherent enough shape to make the decision.

There are plenty of places where there is a need for much better consumer-ist focus in health care — notably health plan and provider customer service.  But making these types of decision at the point of care is not one.

The NY Times had a pretty decent article on what a pain in the ass the individual insurance "market" is and it also reminded me of one reason why the eHealthinsurance study last week was so flawed.  That study compared apples to oranges when it looked at rates for 30 year olds in New York versus California. To wit:

In some ways, Mr. Forst was lucky because he lives in New York. It is one of the few states with guaranteed-issue laws, which basically ensure that all residents can buy coverage. In New York, the law means that if you have been turned down by the big national companies, any H.M.O. operating in the state would be obligated to sell you a policy. New York also has community pricing, meaning that everyone who applies from the same part of the state pays the same premium for the same plan, regardless of age or health. So it is easy to see why insurance tends to be more expensive in New York – at least for the young and healthy – than in other states. But the flip side is that some people living in other states cannot buy insurance.

Of course the other side of that is that individual insurance in New York is so expensive that many uninsured who could afford the cheap California policies can’t buy it. (And don’t forget employer group insurance is not covered by state laws because of the wacky world of ERISA). So the free marketers (like my commenter Greg Eric Novack) say, let them buy a California policy. (This is the basis of the AHP movement that our Dear Leader is so keen on). That would then immediately lead to the remaining healthy New Yorkers getting out of their state-regulated policies and buying cheap ones from out of state, with the result that those remaining in the New York plans — who couldn’t buy those out of state policies because they’re old or sick or both and the AHP’s wouldn’t be forced to sell to them — would be unable to afford their premiums and the plans would go belly-up.

So is community rating like New York’s a good idea?  Well only if you enforce it on everyone, including groups and the uninsured — otherwise known as universal insurance. But it is a risk pool of sorts and the efforts of the so-called "free-market" lobby are helping to destroy what’s left of it, when what we need is everyone into it.

Meanwhile over at Signal Health Tom Hilliard spent the time that I didn’t in my post on the subject to really deconstruct the McKinsey study on CDHPs.  And he comes to the same conclusion I did about whether it can be trusted.

UPDATE: Brian Klepper tells me that I’m being too tough on eHealthinsurance.com and should be thankful for baby steps.

I think you’re dwelling a little too much on the obvious by complaining that the eHealthInsurance study is flawed. Of course the costs are significantly different in states that have or do not have guarantee issue. And of course the market dynamics are completely fouled up by the games that every insurer plays in trying to limit exposure.Maybe I don’t get it, but I see the real value of the eHealthInsurance study in the fact that it shows clearly what the rates are for a particular type of individual. Typically, we don’t have this knowledge. You’re bellyaching because the underlying forces aren’t balanced, but that’s only a nuance to the analyst; the purchaser doesn’t have this luxury. And until we’re able to SEE the damned rates for what they are, controlled for who they target, we can’t do anything to course correct.That’s why its useful.

Tom Hillard — a new contributor over at the transmuted SignalHealth (which is in someway an offshoot of John Rodat’s Health Signals New York) — has this beautiful line about the managed competition versus single payer argument.

For aficionados of universal health coverage, arguing over competing models is a zestful yet strangely abstract pastime, kind of like theologians debating over who takes out the garbage in heaven.

Or as they say in Australia, at the moment it feels like we’re two fleas arguing over who owns the dog.

Back with more a little later (Typepad’s been a bit problematic today) but to start, just a quick note to those who say that there’s rationing in Canada and the UK and that we’re so lucky it doesn’t happen here. You need to amend your statements to "it doesn’t happen here — to nice people like us". But if you’re poor, good luck on getting the rest of us to help out.

For those of you too lazy to clickthru, the story is about Mississippi limiting Medicaid recipients to 5 prescriptions each. Something similar was tried back in the early 1990s with anti-psychotic drugs in New Hampshire, and I seem to remember that the result was that whatever was saved on the drug side was wiped out by the consequent increase in nursing home admissions.  So if this is the future (again) of rationing for the poor — and Medicaid covers 25% of the population in Mississippi — it’s not too clever a way of going about it.

(BTW This isn’t an argument in favor of Medicaid’s continued existence in its present form–it needs serious reform and in fact abolition. I’m just crying bullshit on those who say there’s no explicit rationing in the US–again).

This weekend we celebrate our nation’s birthday and its proud heritage of freedom and justice. It seems that the most important freedom left in America is the freedom to push the limits of laws, especially those designed to protect the interests of investors and taxpayers. In addition in the last couple of decades and, especially the last five years, corporations and other powerful interest groups have re-written countless laws and influenced several government agencies to ignore or change their application of regulations.

Now the health care industry provides the best example of the ultimate freedom. A corporation can break the law, defraud taxpayers and investors, and still stay in business. And best of all if you run such a corporation you can now use the ultimate excuse that has failed schoolboys the world over — "It wasn’t me sir!". And you can get away with it. Not a strategy I’d recommend, but it seems to work if your name is Scrushy. Perhaps Thomas Jefferson needs to revisit those lines about "all men being created equal".

Happy Independence Day.  See you here next Tuesday