Pelosi Goes "All In" On Public Option

By Lindsay Beyerstein

Nancy Pelosi is going all in to support a public option that would hold down costs by setting reimbursement rates at Medicare plus 5%. The CBO's latest cost estimates for various House health care reform options have galvanized Pelosi in favor of a Med+5 public option, Brian Beutler reports. 

Pelosi has always favored some kind of public competition for private health insurers, but she has previously been non-committal about how hard a line a public plan could take to hold down costs.

The House Democrats are in negotiations to combine the various bills that passed their respective committees this summer. Chris Bowers has a good discussion of how Pelosi is using the CBO numbers and the Med+5 proposal to outmaneuver Blue Dog Democrats in the House and Senate. Basically, the stronger the public option the House bill proposes, the bigger the cost savings it will project. Fiscal conservatives will be hard-pressed to vote against a public option that's projected to cost less than the alternatives.

Rep. Raul Grijalva, the co-chair of the House Progressive Caucus, told Bloomberg that the caucus is gravitating towards the Med+5 plan, as opposed to a weaker proposal that would have the government negotiate rates with providers.

It's cheaper for the public to negotiate reimbursement rates for the entire plan because the massive bargaining power of the federal government drives down prices. Whereas, the public invariably gets a worse deal when rates are negotiated piecemeal. There's really no reason not to negotiate in one fell swoop, except as a gimme to vested interests.

Naturally, drug companies and health care providers want piecemeal negotiations. However, Obama has said he won't sign a bill that adds to the deficit and the House is looking for ways to save money. Letting the government drive a hard bargain is an attractive way to cut the costs of health care reform. Piecemeal negotiations would hobble one of the most powerful cost-control features of a public plan.

Comments

[Sebastian]

"It's cheaper for the public to negotiate reimbursement rates for the entire plan because the massive bargaining power of the federal government drives down prices. Whereas, the public invariably gets a worse deal when rates are negotiated piecemeal. There's really no reason not to negotiate in one fell swoop, except as a gimme to vested interests."

The problem is that you are no longer using market forces at that point. You are in a monopoly situation with all of the regular problems that you get from monopoly situations: non-responsiveness, lack of innovation, lack of choice.

Also there is the potential problem that Medicare (already so horribly inefficient that it spends as much per capita as Canada while covering less than 27% of the US population) is still foisting costs off to the private market. You can see this when doctors refuse to take Medicare patients because they feel they aren't getting their costs reimbursed.

"Naturally, drug companies and health care providers want piecemeal negotiations."

You know that you are talking about doctors right? Because drug companies aren't actually a very big piece of the pie. Squeezing them down to the price of other nations wouldn't even save you 3% of total health care cost and would destroy pharma innovation unless you had massive government expenditures in research, which kind of destroys the 'savings' and which no other country in the world has been able to pull off in any case.

So you're basically talking about slashing doctor's salaries. Which may be the solution, may be totally necessary to get where we want to be, but you should be aware of what you are proposing.

Framing it as plausibly workable by cutting drug company profits is like Republicans claiming they are going to attack the budget crisis by going after earmarks. It either shows a complete lack of understanding about the scale of the problem compared to the scale of your proposed solution, or it shows a willingness to embrace substanceless rhetoric.

[John Miller]

"You are in a monopoly situation with all of the regular problems that you get from monopoly situations: non-responsiveness, lack of innovation, lack of choice."

Evidence please. Are you saying there has been no innovation in treating the elderly? Are you saying the elderly have no choice in their physicians? Are you saying that the elderly cannot appeal reimbursements? Because, obvioulsy, you are wr4ong on all counts.

"You can see this when doctors refuse to take Medicare patients because they feel they aren't getting their costs reimbursed.'

Granted there are some. Can you provide figures on what percentage of doctors do so?
And, btw, most really don't refuse to see Medicare patients. They just refuse to accept Medicare assignment and charge the patient for the difference between what Medicare pays and their billed charges.

Personally, I have no problem with Medicare plus 10%. That would actually result in a raise for probably a majority of physicians out there as many insurance companies pay less than that now, and those that pay more have such stringent requirements that the administrative costs for physicians eat up a lot of the difference. Additionally, Medicare is highly liked due to the fact that they reimburse the providers far more quickly than regular insurance companies.
Finally, any doctor that wanted to could chose not to accept the public option, like some doctors do not accept Medicare. The final result would probably be much like it was with Medicare and even HMOs. Many doctors refused to join, saw a major decrease in their patient loads and realized they actually would make more money by being part of the system rather than fighting it.

[nous]

And since we are on the subject of rhetoric...

"You can see this when doctors refuse to take Medicare patients because they feel they aren't getting their costs reimbursed."

Are doctors refusing to take Medicare patients because they are not able to keep their practice open otherwise or because private insurance schedules allow them to generate more revenue? What is "cost" here? Is it bankruptcy or just smaller income?

[Spiny Norman]

There are very many assertions in Sebastian's comment above. Some are opinions and some are claims about facts (none of which are referenced). It is particularly notable that administrative costs, and profits extracted by private insurers, are not mentioned at all.

All of this leads me to conclude that Sebastian is not making a serious argument.

[Sebastian]

"Is it bankruptcy or just smaller income?"

If you think it is the latter, you made my point for me. Which was: "So you're basically talking about slashing doctor's salaries. Which may be the solution, may be totally necessary to get where we want to be, but you should be aware of what you are proposing."

[Michael Cain]

...and realized they actually would make more money by being part of the system [Medicare] rather than fighting it.

A friend who is a doctor (although this is more of an accounting issue) says that he estimates the costs of (1) loaning insurance companies money for 3-6 months and (2) staff time spent arguing with the insurance companies reduce the net payment from private insurance to about the Medicare level. There's an interesting dissertation topic somewhere in his statement...

[Jay Jerome]

OH goody, good... Medicare +5%

Now the Medicare cost-curve will only have to be bent to save $871 billion over a decade, and not $905 billion. Seniors can now rest easy -- instead of waiting three months to see a specialist, they'll only have to wait two months, 26 days, four hours; instead of having 30% of their benefits curtailed, it'll only be 28%; and instead of having to pony up $40 co-payments, they'll only have to pay $38.50. Whew... that's going to be a load off their minds.

And mine too... because my premiums aren't going to continue to rise over the next decade with this 'robust' option. No, indeed not... because, because, because... ???? Humm. Anyone know how adding 40 million uninsured to the Medicare rolls is going to check the rising costs the rest of will be paying for our health care insurance, over the next decade?

[Sebastian]

Spiny is there some particular claim that you personally find implausible? I don't want to have to guess and accidently defend things that are of the earth-is-round level of understanding.

[Jesurgislac]

The problem is that you are no longer using market forces at that point. You are in a monopoly situation

But how is this any different from the current system in the US, where health insurance companies are a protected monopoly, with all of the regular problems that you get from monopoly situations: non-responsiveness, lack of innovation, lack of choice.

Except that in the current situation, the US fails to provide healthcare to about 40% of the population, while spending far more on healthcare than any other country in the world.

If a private monopoly is changed to a public and universal monopoly, costs go down, plus everyone gets healthcare, which will save 22,000 lives each year.

Medicare ... spends as much per capita as Canada while covering less than 27% of the US population

Cite your sources.

[Sebastian]

"Cite your sources."

I did. On the thread just before this. Which you are aware of because you are commenting on it. There elm cited sources that additionally supported what I said, though he initially misread them and didn't realize it.

So now that sources have been cited, do you have further comment or was the request for citing sources just cite-trolling?

[Sebastian]

"Except that in the current situation, the US fails to provide healthcare to about 40% of the population, while spending far more on healthcare than any other country in the world. "

And I'm pretty sure you meant 15-16%. Which is bad enough, but we don't need to accidentally double the size of the problem. cite

[Jesurgislac]

I did. On the thread just before this.

You didn't comment on the thread just before this, but the only source you cited on the thread before that was your own post from June 11, 2009.

So now that sources have been cited, do you have further comment

No, I think everyone said everything necessary to you back in June, and as that's your only source, well, there's not much point repeating the points that were made to you then.

[Jesurgislac]

Herostratus: Jesurgislac, your point is also well taken. But technically that is an oligopooly, not a monopoly.

Picky, picky. It is effectively a monopoly for the customers who can't choose between health insurance companies, even if the situation across the whole of the US is an oligopoly.

[nous]

Me - "Is it bankruptcy or just smaller income?"

Seb - "If you think it is the latter, you made my point for me. Which was: "So you're basically talking about slashing doctor's salaries."

Granted, except for the way that framing it in terms of "cost" implies that the doctors are opting out because using Med+5 means "not getting their costs reimbursed" i.e. expenses exceed income. If you want to remove the spin here you need to be careful that your own language isn't overstating the implied effect of these cuts on the supply of qualified medical care by conflating optimal return with cost.

[nous]

i.e. It's the crucial difference between "doctors can't make enough money if..." and "doctors can make more money by..." that is elided by your use of cost and reimbursement above.

[Sebastian]

"No, I think everyone said everything necessary to you back in June, and as that's your only source, well, there's not much point repeating the points that were made to you then."

You never made points then either. I've repeatedly asked you to link them, or make them again, and you just continue making assertions. But if you want a confirming source, is the OECD good enough for you.

It shows for example that in 2004 Canada spent $3,320 per capita on health care with 70% of it being government expenditures for a total per capita government expenditure on health of $2,324.

For that they cover their entire population.

It also shows that in 2004 the US spent $6,194 per capita on health care with 44% of that being government expenditures for a total per capita government expenditure on health of $2,725.

For that ($401 per capita more) they only cover 27% of the population.

I happily look forward to your further refutations. Thanks.

[I Hate Chavs]

It shows for example that in 2004 Canada spent $3,320 per capita on health care with 70% of it being government expenditures for a total per capita government expenditure on health of $2,324.

Lol wut?

[Jesurgislac]

I happily look forward to your further refutations.

Somehow I doubt that's true. But see October 21, 2009 at 03:32 PM.

[I Hate Chavs]

This site is like a reverse Fox News, where the conservatives hire people like Alan Combs just to beat on.

[Jay Jerome]

"Even by picky, picky standards you're right that in some states one company has enough market share to be deemed a monopoly under U.S. antitrust laws. "

That might be changing:

"Oct. 21 (Bloomberg) -- The U.S. House Judiciary Committee voted to repeal the insurance industry’s federal antitrust exemption in a move aimed at spurring competition and controlling the cost of premiums"

If, that is, Obama would sign that kind of legislation:
Axelrod remarks:

[Jesurgislac]

A man with a 14-year-old daughter and a wife who may be dying of cancer should not have to join the army in order that his wife should get to have chemotherapy. cite

And a swine flu victim shouldn't be told to leave the ER because he's lying on the floor. cite

And - this is the New Yorker article that was among the sources cited to Sebastian in June - healthcare systems should not be run on a for-profit basis.

[Nombrilisme Vide]

@Seb:

Also there is the potential problem that Medicare (already so horribly inefficient that it spends as much per capita as Canada while covering less than 27% of the US population) is still foisting costs off to the private market. You can see this when doctors refuse to take Medicare patients because they feel they aren't getting their costs reimbursed.

Cite please. And no, you haven't given one - not by a long shot. You gave a cite for the claim that the federal government spends as much per capita on health care as Canada, and here you're trying to pass it off as a cite that Medicare spends as much per capita as Canada. Your own bloody source in that June post makes it very clear that they're talking about total government spending on health care, not just Medicare, Medicaid, or military health coverage.

Disingenuous hardly begins to describe your argument here.

[Nombrilisme Vide]

He's arguing that since the US government already spends more on health care than the Canadian government, there can be no reason to adopt a single-payer system (or even expand existing government programs).

His argument neglects to provide any argument for why we're benefiting from having a private monopoly (or near cousin) instead of a public monopoly (or near cousin); it starts and ends with "the US gov spends more per capita on health care than Canada's public system, so we'd be fools to expand government health coverage". It's a very narrow, myopic 1-D argument against reform that pretends a per capita spending figure is the alpha and omega of reform rationales.

[Sebastian]

"You gave a cite for the claim that the federal government spends as much per capita on health care as Canada, and here you're trying to pass it off as a cite that Medicare spends as much per capita as Canada."

What in the world are you talking about? Medicare and Medicaid are essentially the same program for different groups of people. Together they represent more than 90% of the government expenditures on health care in the US. Together they cover about 27% of the population. Together they spend more per capita than Canadian care.

Precisely which of those facts do you not believe?

Are you concerned because I didn't say Medicare+Medicaid every time? Seriously? Do you think there are enormous economic efficiencies hidden in Medicaid alone that aren't available to Medicare alone such that I was being tricky by only mentioning Medicare?

If that is your only bone of contention, please understand that when citing the federal government expenditures I certainly intended that Medicare and Medicaid both be considered. That doesn't change any of my numbers because that is what I was saying all along (27% covered by both)

Is there some important distinction between Medicare and Medicaid that you think I'm overlooking by treating them together?

[Sebastian]

"Is he really using the fact that the U.S. spends more on health care than Canada to justify keeping a for-profit system rather than a single-payer system like Canada?"

Not at all. I'm using it to justify the belief that Medicare-for-all won't magically create cost savings because the US federal government already spends more per capita than Canada but only covers 27% of the population compared to Canada's 100%.

[tgirsch]

Sebastian:

Please explain to me how what the government would do in a Medicare +5% scenario would be any different in principle from what Wal-Mart does with its suppliers all the time.

The only real difference, which I contend isn't a significant one, is that the latter is a private entity. But the bottom line is that you still are talking about two entities that have tremendous bargaining power because of their overwhelming market share.

[Jay Jerome]

"healthcare systems should not be run on a for-profit basis."

Why? Profit works for the Germans, whose universal system has both private for-profit, and public non-profit elements, and is rated as one of the best in the world.

Same for the Netherlands, they have mostly for-profit doctors and hospitals, like the US. Same for most other universally-covered Industrial nations, a combo of public and private care.

[Marty]

"Please explain to me how what the government would do in a Medicare +5% scenario would be any different in principle from what Wal-Mart does with its suppliers all the time."

Yes we can all race to the bottom in healthcare just like we have with Walmart. Then we can complain on other threads about the wage slave society we have, as we turn doctors into the next set of them.

[Sebastian]

"He's arguing that since the US government already spends more on health care than the Canadian government, there can be no reason to adopt a single-payer system (or even expand existing government programs)."

Nombrilisme Vide, your mind-reading skills aren't good in this instance.

I have previously written for example: cite

"I would much rather have the government just expand Medicaid to everyone without insurance. It would provide the baseline level of care and insurance could insure everyone who wanted more (which would be lots of people, because Medicaid isn't anyone's favorite program). Then we could try to improve Medicaid without trying to screw up everyone else's care."

So I'm rather not against the idea of expanding it at all.

I'm against the pretense that doing so is some great solution to figuring out why the US system (both private or public, EITHER or which spends more money than Canada or the UK, and NEITHER of which covers nearly as many people).

[Nombrilisme Vide]

</tagclose>

@Seb:
Together they represent more than 90% of the government expenditures on health care in the US.

Cite please. Not saying it's not so, but you're not doing a lot to make me trust the precision of your statements. Sloppy statements tend to do that.

Together they cover about 27% of the population.

You've given no cite for this. The cite I've seen (the June post) puts the figure at 12.4% for Medicaid, 13.7% for Medicare, and 26.6% for total coverage (which additionally includes 3.5% for military coverage). The best you can claim is to have given a cite showing about 26% coverage (26.1% is NOT "about 27%", sorry - it may be "about 25%" or even "about 30%", but 27% is the same degree of precision as 26%).

Yeah, call me a nitpicker all you like. Don't go in for that degree of precision unless you're going to be accurate.

Together they spend more per capita than Canadian care.

Putting all questions of the accuracy of what you're saying, how is this some scathing argument against expanded government coverage? Medicare and Medicaid are covering some of the least-healthy members of society, so expanding coverage beyond them is not going to entail the same level of per capita expenditure for additional patients. Shall we start talking administrative costs for public vs. private?

[Jay Jerome]

"But Medicare is still cheaper than the for-profit system, right? So why wouldn't replacing the for-profit system with Medicare save money?"

Because of the shift

[Nombrilisme Vide]

Seb: fair enough. I will say that the manner and tone with which you put forth this point every time the subject is broached makes your opposing Medicare/Medicaid expansion a fair inference.

[Sebastian]

Essentially I believe that we have some seriously odd things going on in the US health care providing world. And those things are INDEPENDENT of who pays.

As such, the solution to THAT problem isn't having the government pay.

I'm all for having the government solve the problem of the uninsured by setting up a structure where poor people can get vouchers on a sliding scale for insurance. That is a problem that can be resolved at the payor level.

The problem of out of control costs is different from that problem, which is my point about government spending only covering 27% of the population. Private spending in the US is more than government spending. And it only covers about 55% of the population. So either system alone spends more than Canada. Clearly something deeper is going on here than just government or non-government payment.

I made a number of tentative suggestions about what that might be in the post I originally linked which Jes is so dismissive of (and which had a vast number of comments centering on whether I should have used the word 'factoid').

My point remains, extending Medicare to the uninsured can solve the problem of the uninsured, but it should not be assumed that it can fix the problem of high US costs (which is exactly the assumption that Lindsay makes).

[Sebastian]

Nombrilisme Vide,

Together they cover about 27% of the population.

You've given no cite for this. The cite I've seen (the June post) puts the figure at 12.4% for Medicaid, 13.7% for Medicare, and 26.6% for total coverage (which additionally includes 3.5% for military coverage). The best you can claim is to have given a cite showing about 26% coverage (26.1% is NOT "about 27%", sorry - it may be "about 25%" or even "about 30%", but 27% is the same degree of precision as 26%)."

Ok, I'm done with you.

Everyone else may judge for themselves whether the quoted comment is productive, but for myself this intense interest in the difference between 26.1% and 26.6% and 27% combined with the rather noticeable (and blatantly wrong) mindreading when it suits you strikes me as "concern trolling".

And for the record you might want to read "Totals do not match the sum of subcategories because individuals can draw on more than
one system." under the 26.6% that you don't want me to round up to 27%.

[Nombrilisme Vide]

Seb:

See, I read that multi-coverage statement. And I appear to have drawn the opposite conclusion from it that you did. If you're excluding military coverage (which you seem to be), that citation has government-provided health care falling into an indeterminate range: more than 23.1% and less than 26.1%. Neither end of which gives us "about 27%" for combined Medicare and Medicaid.

But sure, whatever. I am nitpicking. Concern trolling? I was more aiming to underline how sloppily you're throwing figures around, but call it concern trolling if you like. Given that you're chiding us not to rush to embrace Medicare/Medicaid expansion, while implying that we should be looking for market based solutions AND claiming to support Medicare/Medicaid expansion... I suppose you might know a thing or two about concern trolling.

[Sebastian]

You might think about the impact on the argument. Rounding 26.6% up to 27% is giving my opponents the benefit of the doubt. I'm giving them pretty much the largest possible easy interpretation of the numbers. So if anything, I'm misleading against the interest of my own argument.

And if you're intensely interested in the numbers, I provided a cite.

Since the difference between 26.6% and 27%makes no change to the argument whatsoever, and since rounding up is at worst an error in favor of the opposing side, it feels like a non-substantive thing for you to focus multiple comments on.

The reasons I'm disinclined to respond to 'cite-please' trolling:

A) I have typically already provided the cite.

B) It isn't clear that the person even disagrees with the substantive statement, they just want to express doubt without commiting themselves.

C) When provided, they nitpick over things that don't change the argument at all.

D) They aren't actually confused, they are merely being combative about the argument.

As a counterexample: take elm on the other thread. He seemed genuinely confused about the statistic I was usuing, and genuinely interested in the facts. So we discussed them. I'm not sure if I convinced him of anything, but I do think I clarified in a way that was productive to his understanding. He wasn't cite trolling. He furthered the discussion in a productive way and even found a better trove of statistics than I initially used.

[Jesurgislac]

Yes we can all race to the bottom in healthcare just like we have with Walmart.

The US is already at the bottom for a developed nation: indeed, some Third World nations manage better healthcare than the US.

[Marty]

"The US is already at the bottom for a developed nation: indeed, some Third World nations manage better healthcare than the US. "

Thanks Jes for that reminder that we need to do something, all this time I thought we were discussing "what" to do because we all agreed that something should be done. But now I am really convinced there is a problem.

[Nombrilisme Vide]

Since the difference between 26.6% and 27%makes no change to the argument whatsoever, and since rounding up is at worst an error in favor of the opposing side, it feels like a non-substantive thing for you to focus multiple comments on.

Setting aside whether conflating 23-26% and 27% makes any change in an argument without clear citations of all figures... it's funny you should mention non-substantive arguments.

The fact that the US government spends more per capita on health care than the Canadian government has absolutely no bearing on the OP. None. Not a speck. That's totally beside the point, without the least bearing on the discussion at hand. The issue of whether the US should be using "market forces" or government-managed health care does not involve Canadian health care. Your inclusion of this point in the discussion is a non-substantive distraction which, alas, succeeded in doing some thread derailing. Whether or not Medicare is "horribly inefficient" as you claim cannot be proven by pointing north of the border; you need to compare its efficiency with private US insurance, something you pointedly fail to do amidst your calls for market-based solutions and government-paid private insurance vouchers for the poor. That Medicare/Medicaid covers demographics without parallels in the private market does make this difficult for you, but as your overarching thesis is that the structure of the health care market in the US is radically different from those abroad, you've left no choice but to try.

That, or stopping speaking up in favor of Medicare/Medicaid expansion by mournfully clucking at how horribly inefficient it currently is.

[Jay Jerome]

Jesurgislac: "The US is already at the bottom for a developed nation: indeed, some Third World nations manage better healthcare than the US."

Yeah, like Cuba... with the highest doctor-to-patient ratio in the world... Thinking of relocating there for better healthcare?

[Jay Jerome]

Nombrilisme Vide: "Shall we start talking administrative costs for public vs. private?."

You can talk all you want, you'll just be spinning your wheels: we're not going to have a 'single-payer' system here in the US: at best, an insignificant public-option, which kicks-in if the insurance companies don't work harder to keep costs in check (they'll try, but they'll fail -- like the rest of the world is failing, rising health care costs threatening the stability of universal-care systems everywhere.

[Marty]

"The fact that the US government spends more per capita on health care than the Canadian government has absolutely no bearing on the OP."

Except that every argument for the Public Option cites Canada as an example of why it would work. If everyone stops using NHS and Canada as a justification for why it would be successful here, then Seb won't have to point out constantly that:

We are not in Canada or the UK so we may need to do something different than just change the payer to fix the problem.

[Jesurgislac]

Marty: But now I am really convinced there is a problem.

Good. I thought you were supporting the status quo: your comments certainly haven't given the impression that you see anything much wrong with a healthcare system focussed on delivering profitability to health insurance companies at the expense of healthcare for a large proportion of the US.

JJ: Thinking of relocating [to Cuba] for better healthcare?

Of course not: I live in the UK, where we do have better healthcare than in Cuba: we have the NHS. Why are conservatives so convinced that the US can't achieve a healthcare system better than 37th in the world?

[Marty]

"that you see anything much wrong with a healthcare system focussed on delivering profitability to health insurance companies at the expense of healthcare for a large proportion of the US."

See Jes, you don't listen, at all, ever. You just talk. The problem isn't the profitability of insurance companies, the problem is delivery costs too much. Freezing prices through government control is a way to fix that, but not the only one. I assume the average person in the UK pays higher taxes than in the US, I don't know that I've just heard it.

So someone is paying for all that healthcare somehow. If it cost as much in the UK then your taxes would be higher and you might not be so thrilled with the value proposition, or you might not care.

Healthcare costs (and prices) are too high, neither of those have anything but a negative impact of the profitability of insurance companies.

[Jesurgislac]

Marty: See Jes, you don't listen, at all, ever. You just talk.

Now, now. Ad hom may get the wrath of Slarti directed at you.

The problem isn't the profitability of insurance companies, the problem is delivery costs too much.

And the main reason delivery of health care costs the US more than it costs any other country in the world: the health insurance companies that require their profit to come before anything else.

I assume the average person in the UK pays higher taxes than in the US, I don't know that I've just heard it.

Hard to compare. I'm in the third income quintile. My take-home pay after income tax and NI is deducted is about 71% of the gross. I pay council tax (local tax charged on the value of my home) and that bites another 6-7% out of my take-home pay). I pay 15% VAT on some goods and services, but I couldn't tell you what that comes to. My prescription charges are a separate tax, but that's only £104 a year. Discounting VAT and prescription charges, then, my taxes are about 35% of my income.

So someone is paying for all that healthcare somehow. If it cost as much in the UK then your taxes would be higher and you might not be so thrilled with the value proposition, or you might not care.

But our healthcare system is better and costs less, because we adopted the universal healthcare free at point of access system: less bureaucracy, massive savings, no one left to die without healthcare. Also, cuts litigation, if that's still important to you.

UK: Total expenditure on health per capita (Intl $, 2006): 2,784. Total expenditure on health as % of GDP (2006): 8.4

US: Total expenditure on health per capita (Intl $, 2006): 6,714. Total expenditure on health as % of GDP (2006): 15.3

Figures from WHO

[Jesurgislac]

Marty: If everyone stops using NHS and Canada as a justification for why it would be successful here

People also use the success of VA and Medicare to point out that the idea that the US can't have the same kind of successful, efficient, effective healthcare system as other countries do is demonstrably false. I use the NHS as an example because it's the example I know best: I presume Canadians and Americans living in Canada do the same. Would you prefer one of the other 36 countries that have better healthcare than the US to be used as an example of why the US could spend less and get more if they ditched their unique profiteering healthcare system?

[Jay Jerome]

Jesurgislac: "I live in the UK, where we do have better healthcare than in Cuba"

I know you live in the UK. The point I was trying to make is that the '37th' number is not really representative of the quality of the US health care system. That rating comes from a decade old WHO study, no longer thought relevant (WHO discontinued those ratings because they found the criteria analysis unreliable).

For instance, the rating totals were arrived at by calculating in things like infant mortality and life expectancy (Cuba did better on both than the UK and the US in the WHO ratings). But the US scores were skewed in both those categories: for infant mortality they're higher because the US has an intensive emergency intervention system to try to keep premature infants alive (one of the best in the world): but the mortality rate of premature infants is high, and if they're kept alive even one day, they're then entered into the infant mortality statistics (babies who die at birth are not) skewing them unfavorably.

US Life expectancy statistics are also skewed because of the high homicide rate in the US, and high drug-overdose related deaths, and high rates of transportation accidents: the US homicide rate is about 6 per 100,000, almost five times higher than England, at 1.37 per 100,000. And traffic and drug death percentages are higher too.

So, the 37th rating number isn't really accurate, and in the future you may want to substitute some other statistic to use with a little more verisimilitude.

JJ

[Marty]

"And the main reason delivery of health care costs the US more than it costs any other country in the world: the health insurance companies that require their profit to come before anything else."

Jes, one more time, insurance companiess have almost no impact on the cost of healthcare. The admin costs of dealing with multiple insurance companies don't come close to being a significant savings on actual healthcare costs or prices.

Their profits impact the price of insurance, not of healthcare. If they didn't make any money (which 44% of them don't as they are mutual companies) the cost of healthcare wouldn't go down a dime.

[Nombrilisme Vide]

Except that every argument for the Public Option cites Canada as an example of why it would work. If everyone stops using NHS and Canada as a justification for why it would be successful here, then Seb won't have to point out constantly that:

Funny, I heard Medicare-based arguments before I ever heard Canadian ones. And even if those are all you hear, they're not exactly relevant, particularly if the thesis being argued is that America's health care dynamic is "exceptional" on the international scene. And even putting that aside, it remains meaningless to compare US gov't expenditures in the American market with Canadian gov't expenditures in the Canadian market, and try to make apples-to-oranges comparisons between them.

Medicare isn't "horribly inefficient" at providing health care in the US if it performs unfavorably compared to Canada's gov't health care; it's only "horribly inefficient" if it performs unfavorably compared to the alternatives in the US.

[Jesurgislac]

insurance companies have almost no impact on the cost of healthcare

So, the inevitable practice of insurance denial and recission, meaning that more and more Americans get healthcare only via the ER, which means they don't get routine, preventative healthcare but only expensive emergency lifesaving treatment, has "almost no impact on the cost of healthcare"?

Really?

That's just the most obvious example of how private health insurance companies drive up the cost of American healthcare - both financial and human.

Their profits impact the price of insurance, not of healthcare.

And when health insurance becomes too expensive for many people to buy... again, how does this not drive up the cost of healthcare?

[Sebastian]

"And even putting that aside, it remains meaningless to compare US gov't expenditures in the American market with Canadian gov't expenditures in the Canadian market, and try to make apples-to-oranges comparisons between them."

Wow, someone who will quibble for post after post over 0.4% rounding when I say "about 27%" then goes on to suggest that the fact that the US is about 100% more expensive in health care costs is a meaningless comparison.

That's just amazing.

[elm]

@Sebastian - Thanks for the kind words. You understood me correctly (though in retrospect, I really should have understood your point by myself). It appears that we have very different political outlooks, but I appreciate your input. I'd certainly buy you a beer if we met and thoughtful conservative politics are worlds better than the rabies that's afflicted the Republican party recently.

You did convince me that reducing total spending on healthcare is both important and, from the available data, entirely possible. I don't believe that it's politically feasible to combine that issue with the issue of providing coverage -- on the other hand, it seems that this nation faces that issue sooner rather than later.

At the moment, I can't conclude whether government spending on healthcare is more or less efficient (measured in positive outcome per dollar) than non-government spending. Differences in the populations covered make it difficult to draw any firm conclusions. Any such efficiency -- should it exist -- seems more likely to be accidental than intentional. I'm sure that both are packed with waste.

Research on and recommendations about the effectiveness of treatments appear to be good tools to combat waste. Unfortunately, they'll bring Sarah Palin back, screaming about "Death Panels!". I also expect many doctors to complain about its effect on their paychecks and clinical decision-making. Finally, there's a serious problem of establishing confidence that such research is well-founded -- there's enough distrust of government, academic, and corporate groups to undermine such an effort.

If I understand correctly, the HMO was originally intended to solve that problem (unnecessary treatment) but some combination of earned and unearned mistrust have tarnished them.

[Jesurgislac]

Elm, the National Institution for Clinical Excellence is the independent organisation responsible for providing national guidance in the UK on promoting good health and preventing and treating ill health - one of NICE's roles is evaluating new clinical treatments.

[elm]

Jesurgislac, NICE was one of the targets of Palin, et. al's wharrgarbl earlier this summer.

In their (twisted) view, NICE determines when to stop paying for somebody's care -- i.e. the NHS will pay less to keep a blind or mentally-handicapped person alive and healthy. Those of us in the reality-based community know that it determines what the NHS will pay for treatments (with treatments that offer better quality of life qualifying for higher payment).

Regardless, the fact that anybody believes that crap is a major part of the problem with contemporary U.S. politics -- that's the "rabies that's afflicted the Republican party recently" I mentioned.

[yoyo]

Does sebastian have a point other than that USian doctors, like many others in the US, earn way to much money by making most everyone else suffer?

Because it almost looks like he's trying to pretend that Public Option isn't a good idea, despite not have any evidence to support it, other than that socialised medicine is better than private. Sort of like

Here is a similar idea:
I suggest we cut funding from the War Department, since we spend way more than other countries.
Schmastian points out that Canada spends far less, but manages to have fewer casualities. Thus, there must some terrible inefficiency in our War Department, so we had better not cut funding, or we will all be unsafe.

[Nombrilisme Vide]

Wow, someone who will quibble for post after post over 0.4% rounding when I say "about 27%" then goes on to suggest that the fact that the US is about 100% more expensive in health care costs is a meaningless comparison.

That's just amazing.

Not to my eye as amazing as your insistence on A) claiming that a "quibble" over rounding a range of 23.1% - 26.1% up to ~27% is actually over rounding it from 26.6% to ~27% (for clarity, the former isn't ~27%, but the latter is; as soon as you're willing to clarify that you mean ~27% of the US is on the rolls of "some government-provided health coverage" instead of just "Medicare or Medicaid", you're free to use ~27% - until then, I suggest you stick to ~25%), and B) are willing to pretend that your bemoaning Medicare's "horrible inefficiency" (compared to foreign parallels) is consistent with supporting expansion of its coverage - especially when you use that "horrible inefficiency" to justify asides calling for shoring up the private insurance system (something oddly exempt from efficiency comparisons of any sort).

The former is a derailing quibble over the necessity of precision in terminology usage and rounding, and has very little to justify wasting the pixels taken to display it. The latter is pure and simple concern trolling, and bears equally little value.

But to more precisely address what you find just so amazing, that US care is 100% more expensive than Canadian care is a meaningless observation in the limited context of comparing the efficiency of existing public and private insurance in the US. It's very interesting and certainly worth looking into on its own merit, but you fail to make any explanation of how a refusal to implement a very broad public option should follow from it. The question is not "can Medicare deliver coverage as or more efficiently than Canadian gov't coverage", it's "can Medicare deliver coverage as or more efficiently than private American insurance". The question of what structural problems cause the aforementioned underlying international disparity in costs is interesting and needs examined, but by itself it really has no bearing on the question of whether US coverage should be publicly or privately provided. In this context, it's nothing but a red herring.

[Jesurgislac]

People ask me, they say, Jes, why do you get so mad about the crappy healthcare system in the US, when it doesn't affect you?

Well, I have friends whose lives (and once, whose death) are savagely affected by the crappy healthcare system in the US. Hell, I have decent enemies whose lives are savagely affected: I may dislike them/their political beliefs, but I want them to stay healthy and get the healthcare they need without going into debt. That's personal.

But yeah, there are instances of impersonal rage, and this is one of them: why it's difficult for women whose genitals have been mutilated in childhood to get reconstructive surgery in the US. Because insurance companies regard restoring a woman's ability to enjoy sex as cosmetic surgery. Warning: the full article has details that are nightmarish.

Bowers learned the procedure in Europe by observing Dr. Pierre Foldes, a French urologist and surgeon who pioneered the technique after years of humanitarian work in Africa. He has received death threats from radical Islamists for his work as a surgeon and for his other efforts to reduce violence against women, he says. But he continues to train doctors and to perform the surgery. Foldes—reached by telephone outside Paris—tells NEWSWEEK that more than 3,000 women have come to him, largely because in France, genital reconstruction surgery is covered by national health insurance. (In the United States insurance companies are still mostly unfamiliar with the surgery—only one of Bowers's patients has so far gotten full medical coverage for the procedure; others are still fighting with their insurance companies or have paid out of their own pockets. Bowers performs the surgery free of charge, and the hospital caps its fees at $1,700. "As Dr. Foldes has said, you cannot charge money to reverse a crime against humanity," she says. "Sexuality is a right."

[Francis D]

Sebastian, your 27% statistic probably is technically true - I'm not going to argue it. It is also spurious. This is because the distribution of healthcare costs is not even close to uniform. If you take the IPPR (fluffy think tank) and Price Waterhouse Coopers seriously over 60% of NHS expenditure is on those 65 and over*. In short, Medicare covers one of the most expensive groups of the population. And Medicaid is not as extreme as Medicare. IIRC the third part of healthcare the government pays for (as mentioned by Lindsay a while back) is renal failure - and that is also extremely expensive. So although public spending may only cover just over a quarter of the population in the US it covers at least two thirds of the medical costs and probably three quarters for equivalent countries.

Meanwhile the insurance companies cherry pick the people they can charge but don't need to bother paying out on.

*I'm aware of the problems with that graph - like not adding to 100%, but a quick google didn't find a better source.

[Shane]

yoyo:
"Schmastian points out"

C'mon.. no need for that.

[Nate]

One thing that makes comparisons between the US and the UK, and possibly Canda less worthwhile is on the supply side of doctors. As I understand, in the UK, it used to be that college was largely paid for if students did well enough. In Canada, I think college is much more subsidized as well. In the US, most college subsidies come in the form of loans, and doctors in particular can end up with hundreds of thousands of dollars in debt. I don't know about grad school in the UK/Canada. Without $200,000 in loans, a doctor can afford to make less and maintain a good standard of living.

I know some of that has changed in the UK, and as I said, I don't know many specifics about Canada's educational structure, but having 50 years worth of doctors who don't need to make huge salaries to pay off student debt I would expect has helped. Not to mention 40-50 years of having a single payer system to work at holding down costs, rather than the mess we've had in the US.

In other words, current costs are very path-dependent, so what makes Canada's health care so much cheaper may not be stuff we can do immediately. We can, however, do MUCH better than we are doing now.

[Phil]

Well, I should really get to see some of this firsthand now. My cousin's 19-year-old son was just diagnosed with a brain tumor. He has to have surgery on Nov. 20th to remove it and find out whether it's malignant.

He's a college student, so is probably still covered on my cousin's insurance. She's had a good steady job for many years and probably has a decent policy. Unfortunately, he also had some brain surgeries when he was 3 years old, so I bet they're going to fight her tooth and nail on covering this, claiming pre-existing condition or somesuch.

[Sebastian]

"It's very interesting and certainly worth looking into on its own merit, but you fail to make any explanation of how a refusal to implement a very broad public option should follow from it."

Which if you would bother listening to me instead of mere assuming that you can read my mind, you wouldn't think. I think the best solution to the problem of the uninsured is extending offering Medicare to them.

What I don't think, is that doing so will fix the problem of how much more expensive US health care is than other countries. Which is what a bunch of people, including apparently Lindsay, seem to believe. I have consistently said both of those things.

That is what I actually think. That is what I have actually written. You seem to be arguing with someone else.

You'll notice that someone who isn't as interested in slamming me for fun, gets to that without much problem. See elm:

"You did convince me that reducing total spending on healthcare is both important and, from the available data, entirely possible. I don't believe that it's politically feasible to combine that issue with the issue of providing coverage -- on the other hand, it seems that this nation faces that issue sooner rather than later."

That is pretty much a restatement of what I'm saying, so I'm pretty sure that it was understandable.

Francis, I'm not sure what you are trying to say. The explanation can't be because Medicare covers old people--Canada covers old people too. The UK covers old people too. Japan covers a lot of old people. Those countries cover all their old people PLUS everyone else in the country for less than the US government pays to just cover old people.

If I were claiming that the US government is some easily defined amount less efficient than US private insurance because it covered only 27% of the population while private insurance covers much more, I could understand your point because they cover different types of subpopulations. But a universal system by definition doesn't. Canada covers both old and young. And it does it for less than the US government does to just cover 27% of the population. It does it for less than the private insurance companies do to cover about 55% of the population. By international standards either the public or the private system is spending more than enough to cover everyone. But in reality, the public PLUS the private system isn't even covering everyone.

And that suggests to me, that problem of high costs is not a public/private payer issue. Neither is doing well in keeping costs down. And that seems worth investigating. At least to me.

There are two issues: covering the uninsured and figuring out what to do about costs in the system in general.

They aren't the same issues.

There is no reason to believe they have the same solutions.

Yet all over the place, people treat them like they are one issue. And worse, they make assumptions that fixing the first automatically leads to the second.

[Nombrilisme Vide]

Which if you would bother listening to me instead of mere assuming that you can read my mind, you wouldn't think. I think the best solution to the problem of the uninsured is extending offering Medicare to them.

I'm all for having the government solve the problem of the uninsured by setting up a structure where poor people can get vouchers on a sliding scale for insurance. That is a problem that can be resolved at the payor level.

Again, if you think I've earned Carnac penalties, I'll not argue too loudly. I just kinda have trouble taking too seriously your claim to be arguing in support of broad Medicare coverage when you lace your comments with lines like the above, or decrying Medicare for failing to use "market forces".

They aren't the same issues.

There is no reason to believe they have the same solutions.

Yet all over the place, people treat them like they are one issue. And worse, they make assumptions that fixing the first automatically leads to the second.

I entirely agree. I might question whether repeatedly bringing this distinction up in discussions of the former problem isn't somewhat derailing.

[chmood]

I can only deduce that the impact of private medical insurance on the cost of medical care in the US is denied due to ignorance of that impact. However, anyone even remotely connected to or involved with health-care in the US is well aware of the weight of administrative costs, the burden of delayed payments, denied coverage, and need to see as many patients as possible in a day - ALL for the purpose of wrestling with an "industry" that very effectively limits the income of health-care personnel. Not just doctors, but technicians and office staff at every level. ALL of this burdens THE PATIENT with extra costs, higher prices, and delays of service.

Bailing out Wall Street leaves investors and mortgagees in the lurch; bailing out the auto industry leaves workers in the lurch; and now we're talking about "reform" that will leave both doctors and patients in the lurch.

I'm still waiting for a clear, compelling case to be made for why *protecting the power and privileged profits* of the medical insurance industry is the course that makes the most sense.

I would also like to say (at the urging of the insurance professionals I know) that medical insurance - health-care insurance - IS NOT "INSURANCE" AS WE KNOW IT: there IS no "pool" being managed for the good of the insured. Every DIME that is not soaked up by overhead and patient services goes toward profits; if those profits are high enough, there are very generous bonuses. EVERY DIME paid toward the care of the sick and injured is a dime out of the pockets of the executives first, then the stockholders.

So: what, exactly, IS the service provided by these companies that is so urgent, so crucial,so essential that we as a society must do whatever we can to preserve the jaw-strength and the suction of these parasites?

Ordinary medical & dental costs have risen on the order of 1000% over the last 25 years. Medical insurance has led the way. Refuting this will take more than unsupported assertions.

[Sebastian]

"Ordinary medical & dental costs have risen on the order of 1000% over the last 25 years. Medical insurance has led the way. Refuting this will take more than unsupported assertions."

This doesn't even make sense as a rant. You complain for paragraphs about how insurance companies pinch pennies and never want to pay, yet somehow they are to blame for medical costs rising 1000%. Do you think they want to pay higher claims?

(In theory, you might be on to something as a second order effect--that insurance means people overconsume health care sometimes when they don't need to because they are shielded from seeing how much it really costs) But without that, you seem to be fighting with your own argument.

[Nate]

Huh, it ate my other post. Okay, here's a new one.

Sebastian: "There are two issues: covering the uninsured and figuring out what to do about costs in the system in general.

They aren't the same issues.

There is no reason to believe they have the same solutions."

This is true in some senses, but false in others. One of the major reasons people don't have insurance is because they can't afford it. People can't afford insurance because health insurance and care costs are so high. Ergo, many of the solutions to one are going to at least help address the other.

Comparing the US system to the Canadian system isn't entirely accurate, either. Canada started their universal system years ago, as did the British, they've had more time to keep costs down. And, as I mentioned upthread, college costs are more subsidized, so doctors don't leave universities with hundreds of thousands of dollars in student debt. We're starting from a much worse position in the US, sort of like how delaying on dealing with climate change just makes it worse, and makes the fixes harder.

Medicare and Medicaid work within our much more expensive environment, and cover two of the most expensive groups, the elderly and the poor. Without controlling for that more expensive environment, a direct comparison with any other country is difficult. How about comparisons within the US? Well, the US govt accounts for close to half of all health care spending (a WAY too vague term) and covers the most expensive groups (including the emergency rooms much beloved by Republican congresscritters). The insurance companies account for the other 50% of costs, and mostly just cover the healthiest people. I suppose we could compare the costs of health plans offered to the elderly, but those would include the existence of Medicare, so I'm not sure that'd be a very good comparison either. (Here's a chart of Medica costs per enrolle)

But to baldly state that a system that has been proven to work in numerous other wealthy industrial countries won't work in the US is somewhat silly.

[Marty]

"He's a college student, so is probably still covered on my cousin's insurance. She's had a good steady job for many years and probably has a decent policy. Unfortunately, he also had some brain surgeries when he was 3 years old, so I bet they're going to fight her tooth and nail on covering this, claiming pre-existing condition or somesuch."

If she has insurance through her employer that isn't a possibility. Recission doesn't happen in employer based plans. Sorry to hear about your cousins son.

[Francis D]

Francis, I'm not sure what you are trying to say. The explanation can't be because Medicare covers old people--Canada covers old people too. The UK covers old people too.

What I am pointing out is that in any country the 27% of the people that the US government covers would make up way more than 27% of the cost of healthcare. More like somewhere between 2/3 and 9/10 of the cost of healthcare in those countries you are comparing the US to. So a better estimate would be that the US government spends more than the Canadian government to do only 2/3 of the work.

It seriously does not on average cost a lot to provide medical cover for a 25 year old with no chronic conditions. Which is the segment of the population the insurance companies love. The US government meanwhile provides coverage for the 25% of the population that is expected to cost serious money and that consequently the insurance companies won't touch with a bargepole.

Or in short, covering the entire population would likely cost only 25% more than covering the 27% of the population the US government covers. Because the US government already does almost all the hard stuff.

[Sebastian]

"What I am pointing out is that in any country the 27% of the people that the US government covers would make up way more than 27% of the cost of healthcare. More like somewhere between 2/3 and 9/10 of the cost of healthcare in those countries you are comparing the US to. So a better estimate would be that the US government spends more than the Canadian government to do only 2/3 of the work."

Actually, it would seem to be about 45ish% (very vague, probably plus or minus as much as 5 percent). You can estimate it in lots of various ways, but these easiest thumbnail guess could come from directly comparing the private and public systems in the US. If you posit that Medicare and Medicaid are covering the hardest cases, those represent about 45% of the costs. Which would put it in line with costs compared across countries in general (yes I know that is a semi-circular argument).

9/10 I'm extremely confident is much too high. I'm pretty darn confident that 2/3 is much too high as well.

So a better estimate would be that the US government spends more than the Canadian government to do only half the work. If that is how you want to look at it. I don't see how that is particularly comforting--one would think that at the very minimum the US government should have been able to cover all of the currently uninsured with that kind of money--especially with the private system still covering more than half of the population.

Also, as I mentioned in my original piece, the anecdotal evidence for years has been that the US pays a huge portion of the costs in (mostly futile) end-of-life care that doesn't happen in other countries. If true, (and I renew my bleg for any useful data on it, as I've been completely unable to find much), that would mean that we may need a shift in thinking about such procedures if we want to bring costs in line.

Anecdata point 1: My grandmother suffered from Alzheimer's. By the last year she didn't recognize anything. She eventually caugt pneumonia and died after spending a week in the ICU. That week in the ICU cost almost certainly in the hundreds of thousands of dollars. That was almost certainly wasted money. (Wasted Medicare/MediCal money).

[Sebastian]

"Which would put it in line with costs compared across countries in general (yes I know that is a semi-circular argument)."

Hmm this line isn't very clear. What I meant was Medicare getting about 45% on the dollar compared to other countries would put it in line with how much more health care costs in the US in general. I realize that is sort of a circular argument considering how I derived the number, but it would seem to make sense. For it to be other than that, you have to make weird assumptions like "the private system covers the mostly healthy population at about 5 times the costs of other countries" which seems to be A) untrue, and B) wildly implausibe, and C) nobody seems to claim anyway. Medicare is often claimed to be 1 or 2 or 5% more efficient (I suspect many of the costs are just hidden in Treasury or the DOJ) but I don't think anyone is claiming that Medicare is on the order of twice as efficient as the private system.

[Nate]

Sebastian: "So a better estimate would be that the US government spends more than the Canadian government to do only half the work."

Well, by that logic, the US private health insurance sector spends even MORE than the US government, and doesn't even cover the rest of the costs and people. That's if we're assuming the proportions of costs between US public/private are right, even if the magnitudes aren't.

So even in this case, the private sector is markedly less efficient than even a worst-case assumption of government run care.

That's not really helping your case, Sebastian.

[Jay Jerome]

Jesurgislac: "...the National Institution for Clinical Excellence is the independent organisation responsible for providing national guidance in the UK on promoting good health and preventing and treating ill health - one of NICE's roles is evaluating new clinical treatments."

You mean like this: Patients denied life extending cancer drugs.

You need to stop unconditionally touting the UK health system. Yes, it covers most people, but a lot of UK citizens think it sucks in other ways. A quick Google brought up the following problems and complaints:

Dissatisfacton with hospital food.

Poor access to to GP appointments, and poor response for flu shots. Unhygienic hospitals.

And that doesn't include my own anecdotal report from a woman friend of my wife's who moved to England 8 years ago, now married to an Englishman, who told us the NHS is 'adequate' for general coverage, but that even the free clinics we have here in the US provided faster service, friendlier doctors and nurses, and quicker turnarounds for follow up appointments then she gets now.

And of course, the NHS is is big trouble, "the biggest financial crisis
in its history” - with larger taxes looming, and a possible six year funding freeze -- so maybe you should schedule routine check-ups while you can.

JJ

[elm]

@Nate - From the data available, I can't conclude that either system is more efficient than the other. It almost certainly does support the hypothesis that both are very inefficient.

Comparing efficiency, we see:
1. Both contributions are roughly equal (each is about half of all healthcare spending).
2. Government programs cover a smaller part of the population (approx. 27%).
2a. This includes many expensive-to-treat people (elderly and the too-sick-to-work).
3. Private spending covers (very roughly) 55-60% of the population.
3a. This includes many cheap-to-treat people (young to middle-aged people without chronic health problems).

Additionally, there's no very good reason to believe that spending and outcomes are well-correlated.

There's a big factor pushing each direction (on comparative efficiency) and a large measure of uncertainty.

As such, I don't see a compelling reason to believe that either is substantially better than the other.

[elm]

So much for efficiency comparisons between private and public funding for health care in the U.S.

Can we conclude anything about their efficiency compared to the rest of the world? I think we can.

First, it's well known that the U.S. health care system produces worse-than-average outcomes. The U.S. ranks poorly on comparisons of life expectancy and on # of healthy years lived. This excludes the possibility that those greater expenditures (in aggregate) produce better outcomes.

If we used the Canadian system, the U.S. Government spending on health care could cover everybody.

Additionally, if we used the Canadian system, U.S. private spending on health care could cover everybody.

As neither system covers everybody, it's straightforward to conclude that neither system is very efficient when compared to the Canadian system.

[Nate]

elm: My main point was that, even granting Sebastian's data the most favorable interpretation, it reflects worse on the private health insurance industry in the US than it does on Medicare and other government run programs. They spend about half of total expenditures, and that's AFTER they do their best to leave out as many expensive cases as they can (that the government doesn't already cover).

Which, to me, points to them being significantly less efficient.

[Jay Jerome]

Nate: "But to baldly state that a system that has been proven to work in numerous other wealthy industrial countries won't work in the US is somewhat silly."

It depends on what 'proved to work' means.

If it means insure a larger percent of the population, yes, they do. If it means provide high-quality sustainable care over the next decades, that's problematic.

All the wealthy industrial nations are facing severe cost escalations, threatening their own abilities to continue providing services. Are those models we want to emulate?

What's good for the goose in Japan or Germany may not be good for the gander in the USA.

[Nate]

JayJerome: If you haven't noticed, the model we have in the US is also "facing severe cost escalations, threatening [our] ability to continue providing services."

Look, our options are our current system, which is manifestly more expensive and less effective than systems in other countries, something based on systems that have proved to work in other countries for years, or something completely new and untried.

I'm not quite sure why the allegedly conservative response to these options is "stick with our broken system" or "try something completely untested", given how the dictionary defines conservative. The proven option would seem to be more conservative to me.

On the other hand, Jay Jerome could be right, and everywhere across the world, health care will become completely unaffordable, as we're near or at some kind of unstoppable tipping point. In which case, whatever we do, nothing will help. Somehow, I doubt this.

The real argument here comes down to two main themes, it seems. 1) Do we owe all our fellow citizens decent health care, and 2) what's the cause of health care costs going up?

2 is the more salient one here, as liberals have ascribed the cost increases to a variety of things including profit motive (doctors and insurers), doctor student debt, end of life care, etc. The conservative side seems to blame malpractice suits, government interference (largely unspecificed), malpractice suits, end of life care, malpractice suits, and just sort of happening.

Why you think costs are going up is going to have a major effect on what you think can prevent that, unless you, like Jay Jerome seems to, think it's some kind of unstoppable wave of costs that just happens.

[Jay Jerome]

elm: The U.S. ranks poorly on comparisons of life expectancy and on # of healthy years lived.

Those figures may be negatively skeewed due to the mitigating circumstances I posted above @10:42 -- because of higher US murder and highway fatality rates, etc. A couple of percentage points one way or another drastically shift those rating comparisons.

[elm]

Nate, we may have to agree to disagree on that point. I haven't done the analysis to have any confidence in either conclusion.

Regardless, both systems should be much better. Neither system appears very effective at turning dollars into positive outcomes.

Medicare's reimbursement rate for an unneeded MRI scan may be lower than private insurance, but any money spent on an unneeded MRI is pure waste.

This article in The New Yorker documents one pattern of waste. This recent episode of This American Life also covered waste in health care.

A common thread that runs through investigation of healthcare waste is that people receive expensive treatments when inexpensive ones are no worse (sometimes the cheap ones are better). The central challenge is devising a mechanism that encourages the use of appropriate treatments.

[Gary Farber]

"Dissatisfacton with hospital food."

Whereas people in the U.S. go to hospitals simply because of how delicious the food is.

Of the NHS: "Yes, it covers most people...."

In the sense that "most people" means "everyone."

[Jesurgislac]

Jay Jerome: Dissatisfacton with hospital food.

Yes, the NHS hospital food is terrible. I will freely and fully admit that I know of no one who thinks of a hospital as a great place to go to have a good meal. Meals in BUPA hospitals are much better, and it's one of the ways in which private health insurance tempts people away from the NHS - the promise that you will have decent meals as you lie in bed Getting Better.

But: my dad, in his eighties, has the full use of both his hands: good vision in both his eyes: a heart that beats a regular pacemaker-rate: and when he fell down a flight of stone steps and broke his nose, the only reason he wasn't rushed to the hospital immediately was because he is the most politely stubborn guy you ever met and didn't want to go "just" for bruises and a nosebleed, until it became clear some hours later that the bleeding just wasn't going to stop.

And my parents, and their children, didn't have to worry that any of this care would be denied him because it wasn't profitable or it was too expensive.

Yes, his meals were terrible. But the healthcare he received was excellent. I don't care how good the food is in US hospitals.

That the NHS is more open than the private for-profite hospitals about which hospitals don't meet the hygiene standards required is a feature, not a bug. People still die in the US of MRSA and other HAI - proportionally, more people die in the US of such Hospital Acquired Infections - but the NHS is both more open about the problem and better at tackling it, as even the CDC acknowledges.

[chmood]

Sebastian, I'm glad it doesn't make sense as a rant, as it's no such thing. Perhaps you're young enough to have still had your parents paying your medical expenses back in the late 70s & early 80s.

Initially (that is, when medical insurance as an employee benefit was still comparatively rare), doctors were glad to accept insurance as it insulated them against rate pressures; that insulation allowed rates to climb.

As rates climbed, insurance became more and more sought-after as a benefit of employment. In time, individuals came to rely on insurance to buffer *them* against rising health-care costs. The rising demand for insurance coverage shifted the role of insurance providers from ancillary to primary. With this shift came increasing dependence on insurance by both patients and providers. Over time, this brought rising insurance rates and declining coverage AND reduced reimbursement.

This may seem extreme to you, but it's really no different functionally from the changing nature of our dependence on foreign oil: once, we were oil-rich, a major producer & exporter, during which time we came to rely on dirt-cheap oil - even exceeding our own production; still, foreign oil was something of a luxury. As domestic production began to decline, we started importing more as a stop-gap while we improved our production. Now however, we are dependent on foreign oil: for transportation, for products & packaging, for everything we still make from petrochemical. In 1970, I could fill my tank for $5; today, my slighty-smaller tank costs $40 to fill. Everything made of plastic has gone up in proportion; all due to the cost of oil from other nations.

And before you dismiss me as some congenital liberal flake, let me remind you that I worked for Barry Goldwater in '64; I was a member of the Birch Society; I worried about the black helicopters and UN gun-snatchers of the Clinton era; and I was hanging out @ Free Republic 12 years ago.

[Francis D]

You mean like this: Patients denied life extending cancer drugs.

You mean you think that the NHS should have an unlimited budget to spend? There's only so much you can do with the money. And by international standards the NHS spends very little.

"Here's a drug. It will extend life expectancy but it will cost $100,000 per day. We'll make the government pay for it." Not the way any healthcare system can control costs.

You need to stop unconditionally touting the UK health system.

It's not perfect. There are things the French, German, and Scandinavian systems all do better. And even a few things the Americans do better. It's just overall a hell of a lot better than the atrocity that is the US healthcare system.

Yes, it covers most people,

And by most, you mean 100% of the population of Great Britain? Including tourists, illegal immigrants, and everyone else. We treat the patients and then work out the bill - so we treat everyone. (The one exception is that it is possible for hospitals to ban individuals with a persistent record of abuse from going to that hospital - so they can simply go to another one).

but a lot of UK citizens think it sucks in other ways.

No. A few UK citizens think it sucks. A lot think it's tolerable but there are things that could be done to improve it.

Dissatisfacton with hospital food.

On a list of reasons for dissatisfaction with hospitals that must come several places below the colour of the paint on the walls. Yes, it's produced on an industrial scale and it's bland. Is that really the best you can do?

Poor access to to GP appointments, and poor response for flu shots.

#define. And again what's your baseline.

Unhygienic hospitals.

Something that's got a lot better in recent years - and it's a contextless link as it doesn't say what those standards are.

And that doesn't include my own anecdotal report

Good. Because I don't care about one anecdotal report when I can produce stats.

And of course, the NHS is is big trouble, "the biggest financial crisis
in its history”

Not really. That was under Thatcher. Or possibly three years ago when it was running a deficit - and mysteriously the press stopped reporting it when it turned that to a surplus.

- with larger taxes looming,

Maybe we will spend as much in taxes on it as you guys currently spend on yours. The NHS is run on the cheap and has been since Margaret Thatcher. When New Labour came into office they absolutely poured money into the NHS - with the intent to match the european average spending.

In short all you have to throw there is a mixture of ignorance and grumbles.

[Francis D]

Actually, it would seem to be about 45ish% (very vague, probably plus or minus as much as 5 percent). You can estimate it in lots of various ways, but these easiest thumbnail guess could come from directly comparing the private and public systems in the US.

Um... no. Because we aren't comparing the US with the US. We are comparing government efficiency in spending in the US with other governments. So we normalise to their spending rather than taking as an assumption that the government and the private sector are equally efficient. I gave my source for 60% of spending being on the elderly (i.e. medicare patients) upthread.

For it to be other than that, you have to make weird assumptions like "the private system covers the mostly healthy population at about 5 times the costs of other countries"

False. For it to be other than that you have to make no assumption about what the private sector covers at all - you simply match up the population the private sector covers to those of other countries and see what their spending is. The 5 times isn't an assumption - it's a conclusion based on the worst case estimates.

I've shown my back of the envelope workings. Show yours - and don't confuse assumptions with conclusions.

[Shane]

Nate - I think it does help Seb's point,because he's not actually arguing against the current HCR effort, in fact he's in favour of it. It's just he *also* thinks it's misdirected.

Seb - when you bring this up, it really does read to me like you're raising an argument against current HCR (and implicitly, in favour of the current system). Which might be part of why you get such a negative reaction.

Jay Jerome - Somehow I have the feeling that "but, the food is better!" is gonna come back to haunt you.

[Sebastian]

"The 5 times isn't an assumption - it's a conclusion based on the worst case estimates."

The problem is that the assumption is one of those things that self evidently isn't likely. I haven't seen anyone assert that Medicare is twice as efficient as the private care system. Even wide-eyed optimists suggest something like 5-10% direct savings and very speculatively 5-10% indirect savings. No one is suggesting anything like the idea that a Medicare system could automatically cut costs in half. So it is one of those back-of-the-envelope calculations which is either clearly wrong, or needs tons more support because the conclusion is so amazingly out of step with all other analysis.

[elm]

@Jay Jerome: The highway fatality rate is about 15 per 100,000. Homicide rate is about 6 per 100,000.

These events occur too rarely to make a significant difference. To approximate crudely: eliminate those causes of death completely and assume that those 21/100,000 would have lived an additional 100 years and you get an extra 2100 years lived per 100,000 people. Divide that for a delta average life expectancy of +0.021 years (about 1 week). That would not alter the rankings at all.

[Francis D]

The problem is that the assumption is one of those things that self evidently isn't likely. I haven't seen anyone assert that Medicare is twice as efficient as the private care system. Even wide-eyed optimists suggest something like 5-10% direct savings and very speculatively 5-10% indirect savings. No one is suggesting anything like the idea that a Medicare system could automatically cut costs in half.

It depends what you mean by "efficient". Because the American Private Insurance sector is absolutely notorious for providing procedures (and especially diagnostics) that the patient really doesn't need. Which is a lot less common for the elderly because they actually do need so many tests. They are very efficient at providing those diagnostics - but at a strategic level you can be efficient as you like at producing unnecessary tests and they are still waste.

And the efficiency savings that could be made in the not too distant future are a different matter entirely to the efficiency difference between the public and private sector in the US. The public sector would inherit the utterly perverse incentive riddled healthcare model the insurance companies (and other factors - one important one being the university tuition fees for doctors and the need to pay them off ASAP right at the point the doctors are learning their professional habits) have produced. And it certainly couldn't fix that in one go - changing custom and practice takes time even after you've removed the perverse incentives.

[Jay Jerome]

Re: Francis D @oct 22 04:28pm

jj said: Yes, it covers most people,

Francis D counters: And by most, you mean 100% of the population of Great Britain?

Except for the 10% of the population that opts to be 'uncovered' with private insurance, which provides them better care, less hassle, less wait time, and better overall care.

"Including tourists, illegal immigrants, and everyone else. We treat the patients and then work out the bill..

The Citizens Advice Bureau offers a contradictory opinion:

"If there is not an emergency, but treatment has to start immediately, you may be asked to give an undertaking to pay. In these circumstances, it is very important that you find out the likely cost.

If it is not urgent, you will be given the opportunity to refuse the treatment if you cannot afford it. Treatment can be delayed until you can raise the money. If you cannot do so, treatment will be refused."

Ireland is even stricter:

"Once the hospital has established that you must pay for treatment, you will usually be asked to pay the full cost in advance, unless emergency treatment is required immediately.

If you cannot pay in advance, the hospital will ask for a written undertaking to pay.

If you cannot provide proof that you can afford to pay, treatment will be refused and you may be offered the chance to be treated privately."

And the UK doesn't provide anywhere near the 'free' health care to 'illegals' as the US does -- especially when it comes to free hospital birthing services. And free everything else, for those who easily scam the system. And free medical care is provided to children of illegals born here until they're 18 years of age, under CHIP, the Children's Health Insurance Program -- though I do think we'd be better off if we emulated you on that issue, so that it took a more circuitious route to gain American citizenship.

RE: Dissatisfacton with hospital food.

On a list of reasons for dissatisfaction with hospitals that must come several places below the colour of the paint on the walls.

It's not my dissatisfaction, it's your own countrymen and women who were bitching about it. And for that to have happened, in light of the reputation England has for awful food preparation, it must have been really bad to garner the kind of public outrage it did... But aside from the taste, poorly prepared inedible hospital food is an impediment to recovery, and good meals an "integral part of treatment.

RE me: "And of course, the NHS is is big trouble, "the biggest financial crisis
in its history”

Not really. That was under Thatcher. Or possibly three years ago when it was running a deficit -

Are you stuck in a time warp? Or do you think Thatcher was still in power as of July 20, 2009?
Financial Crisis

"The National Health Service is facing “the biggest financial crisis in its history” requiring tax rises or large cuts to other government departments just to maintain its budget, a report predicts.

Spending on the NHS has doubled in a decade to more than £106 billion for next year, but the NHS needs to brace itself for a funding freeze that could last for six years, two leading think-tanks say."

There's at least a dozen other articles online, from various UK newspapers and journals, warning about the same crisis - I guess they must have escaped your attention (ADD?)

"In short all you have to throw there is a mixture of ignorance and grumbles."

You got the grumbling part right, so you're 50/50 on that paragraph, which is just about your veracity average.

[Jay Jerome]

Francis D: "Because the American Private Insurance sector is absolutely notorious for providing procedures (and especially diagnostics) that the patient really doesn't need."

You got it backwards.

Or haven't you been following the discussions?

One of the primary complaints against the insurance companies is that they REFUSE to OK treatments doctors recommend, everything from surgeries to drugs (sorta sounds like your own system, doesn't it...)

[Jay Jerome]

elm: " Divide that for a delta average life expectancy of +0.021 years (about 1 week). That would not alter the rankings at all."

Thanks for the insight...

[(TO) Francis]

Guys, you're really making this much harder than it needs to be. There are three principal components of the high cost of American health care:

1. High labor costs, from MDs to nurses to ... all the way down the line, and high drug and medical supply costs. There is some room to squeeze here, but there will be a lot of screaming. Imposing salary cuts and reducing compensation for everything from antibiotics to wheelchairs will take money out of peoples' pockets.

2. Over-prescription of unneeded procedures and medications. There's a ton of room to squeeze here, but the trick will be finding out the best way to do it. Increase payments to internists and decrease to specialists? Switch to a blend of fee-for-service and capitation? Empower a medical review board to examine the value of certain procedures/medications? Empower a review board to impose monitors on practice groups that are out of line with community standards? Require physician groups to adhere to Best Practices? One important offset is that more people should be moving into the mainstream system, so that even if the procedure per person number goes down, the total covered population goes up.

3. Inefficiency. This is low-hanging fruit and is being targeted by both the Senate and House bills. Insurance billing practices, recission, reliance on emergency rooms as a primary care giver, etc. are all inefficient, even if as a result a lot of people have jobs at insurance companies and doctors' offices. I have no problem in eliminating these jobs, but it's certainly not the whole of the problem (see above).

[nous]

Jay -- "You got it backwards.

"Or haven't you been following the discussions?

"One of the primary complaints against the insurance companies is that they REFUSE to OK treatments doctors recommend, everything from surgeries to drugs (sorta sounds like your own system, doesn't it...)"

Not necessarily. Any bureaucratic system will have treatments and tests that generate little resistance and others that generate massive resistance. In this case the disconnect you point to is between what is medically necessary, but expensive. What Francis D. is talking about are the areas where the tests and treatments are uncontroversial and relatively inexpensive, but either unnecessary or more expensive than another equally effective alternative. The latter can become quite expensive in aggregate and there are few ways to rein them in.

Both are products of insurance company approved fee for service models.

[Francis D]

Except for the 10% of the population that opts to be 'uncovered' with private insurance, which provides them better care, less hassle, less wait time, and better overall care.

Yet another display of ignorance. The people covered by private care in Britain are not covered by private healthcare in place of national healthcare. They are covered by private healthcare of some form (normally dental - NHS dental sucks) in addition to public healthcare. And the public sector does almost all the big stuff in Britain. What the private sector does is minor routine procedures as a general rule - where they can be more efficient because they can focus on that. (And when the private sector fucks up, the patients normally are sent as emergency admissions to the NHS which has the depth of knowledge to deal with complex cases).

The Citizens Advice Bureau offers a contradictory opinion:

And most hospitals don't even know where to begin billing individuals. The CAB gives the official line. That's not how it works at the two hospitals I have direct knowledge of the billing practices for.

It's not my dissatisfaction, it's your own countrymen and women who were bitching about it.

Brits are moaning about British institutions. Big deal. Bitching is a British pasttime. If you want to impress me, find an institution Brits don't bitch about significantly. As for our actual views on healthcare, they are that it could be improved - but that it generally works. And yours is simply risible by comparison. Hence the success of the #welovetheNHS campaign on Twitter (and it is far harder to get Brits to sign up to loving something than to grumbling).

There's a reason the NHS is considered the third rail of British politics. And it's not because there's a loby like the AARP protecting it.

And I don't know what Ireland has to do with anything - their system is almost as bad as the American one.

Financial Crisis

Ooh! The Murdoch Press using scare quotes and overstating situations. And basing an article that the sky is falling on one think tank report. It's not saying that the NHS is facing the worst financial crisis in its history, it's saying that it might be some time in the future. There was a reason I mentioned Thatcher - under her spending as a proportion of the economy actually fell (and total spending only increased 1.2% year on year in real terms). Which means that it certainly isn't the first time in the history of the NHS that it has had to go for several years with low growth - Thatcher was in office for twelve years and as such the article is factually false.

Also, this doesn't change the basic fact tha the NHS crisis you have identified is caused by the fact that we are extremely tight fisted by international standards in terms of healthcare spending. This is not news. And the "financial crisis" is caused not by the NHS being financially inefficient but by it being simply given much less money than comparable systems. And still (like just about every other system) outperforming the US system.

I'm not in a timewarp. I'm just used to the national papers claiming that the sky is falling with respect to the NHS. And if it isn't financially it's regarding MRSA because journalists send their swabs to an utterly incompetent biochemist who always produces positive results. Or fucking idiots claiming that there's a controversy about the safety of MMR jabs.

One of the primary complaints against the insurance companies is that they REFUSE to OK treatments doctors recommend, everything from surgeries to drugs (sorta sounds like your own system, doesn't it...

And one of the primary complaints about US doctors is that they are paid by the procedure. Which gives them a perverse incentive to order unnecessary tests - especially cheap diagnostics that the insurance companies don't argue with. And then the insurance companies crack down on procedures and refuse to pay out. The problem here is that the insurance companies aren't doctors and don't actually know which tests were medically necessary. Meaning you get the worst of both worlds - the insurance companies denying very relevant tests and procedures and the doctors performing irrelevant ones. This is not a contradiction, merely yet another symptom of how fucked up the US system is.

And it only sounds like our system in that both have limited resources to spend. Ours are allocated in a transparent and equitable way. Yours aren't due to the massively bureaucratic model (hint: turn it over to the government. The government has less bureaucracy than the insurance companies) and the perverse incentives riddling the system.

You got the grumbling part right, so you're 50/50 on that paragraph, which is just about your veracity average.

Even if my average had been only 50/50 it sure beats yours.