Let's talk about the facts - Part 3 - Health Care

Back when I lived in Canada, health insurance was never a worry. Sure you might have to wait a bit before you got it, but you could always count on being seen by a doctor when ever something is wrong. If you wanted you could have purchased additional health insurance that pays for upgrades, but almost all Canadians (91% in a recent poll) prefer Universal Health Care to the American system. But what is the situation down here in my adopted land? (I've lived in the US for the past eleven years) The Democrats want to change things, they recognize that the system is broken. In contrast the GOP claims that the status quo is just fine, that the free market will solve all of our problems, but the numbers tell a different story. Let's look and see what the free market has done:

insurance_chart200.jpg

Source: NPR Health Care Back in the National Spotlight

Note that the break in the line in the above graph (@ '99) was caused by an adjustment in how the numbers were tallied.

HealthCareShareGraph-thumb-300x316.jpg

And look at how the cost of both health insurance and education are skyrocketing. We will soon become a country where only the rich can afford a trip to the doctor or a decent education.

InflationGraphic-thumb-300x396.jpg

The GOP and free market preachers always chant that the market is more efficient than socialized programs. But when short term profits are the goal, sometimes you need to spend a whole lot more on management in order to screw your clients. So what are the stats on overhead in the American and Canadian systems? This is from a NEJM article:

Background: A decade ago, the administrative costs of health care in the United States greatly exceeded those in Canada. We investigated whether the ascendancy of computerization, managed care, and the adoption of more businesslike approaches to health care have decreased administrative costs.

[...]

Results: In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada. Canada's national health insurance program had overhead of 1.3 percent; the overhead among Canada's private insurers was higher than that in the United States (13.2 percent vs. 11.7 percent). Providers' administrative costs were far lower in Canada.

Between 1969 and 1999, the share of the U.S. health care labor force accounted for by administrative workers grew from 18.2 percent to 27.3 percent. In Canada, it grew from 16.0 percent in 1971 to 19.1 percent in 1996. (Both nations' figures exclude insurance-industry personnel.)

Conclusions: The gap between U.S. and Canadian spending on health care administration has grown to $752 per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system.

Ref:
Steffie Woolhandler
Costs of Health Care Administration in the United States and Canada
NEJM (03) 349:768-775

So who's in touch with reality? Those who believe in invisible hands, or those looking at the situation on the ground?

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One of the biggest problems that both Obama's and McCain's health care proposals are facing is the lack of incentive when it comes to addressing the shortage of primary care internal medicine physicians.

That would go a long way in putting preventative care on the front line and would inevitably reduce health care costs.

Obama addresses the issue of coverage, which is fine. But coverage means nothing if you don't have ACCESS. This has been a problem with the Massachusetts health care reform of '06, something that has done a good job in extending coverage, but the state has to deal with the deficiency of primary care physicians.

Because people who finally get coverage still don't get care.

And Obama's health care plan is very similar to the Massachusetts one.

By Alexander C. Ross (not verified) on 16 Sep 2008 #permalink

Good point. We need both an increase in coverage and access, a deficiency in either is bad. As far as I'm concerned Obama's plan (and the Mass plan) don't go far enough, but every step in the right direction is good. To promote these incentives the government would have to either 1) force the insurers to take on patients for long terms (thus giving them a reason to care about their client's long term health care costs) 2) step in with more regulation or 3) scrap the whole system.

If there are any other alternatives, it would be great to hear them out.

IMO, there are two very simple arguments, one moral/ethics, one economics.

How does the Hippocratic Oath possibly jive with 'for profit'?

How can anyone be a 'rational consumer' of healthcare? How much money is your (or your loved one's) life worth?

The notion of basing a healthcare system on the free-market is simply insane. Market forces can be leveraged/used to some extent, but it simply makes no sense as a basic framework.

In the article you said,

"In contrast the GOP claims that the status quo is just fine, that the free market will solve all of our problems

The status quo -- what we currently have -- is not a free market.

The status quo -- what we currently have -- is already socialized! (Although not as socialized as you are proposing.)

Although the GOP does certainly make the claim that they are for free markets, their "actions" say otherwise.

In a free market, there is no regulation. No drug patents. (Or any other kind of patent.) And no suing.

In a free market, you do not need (government) permission to practice medicine. And you do not need (government) permission to set up schools to teach medicine.

If you are arguing against the free market, by arguing against what we currently have, then you are using a straw man.

What we have now could be characterized as Big-Business Socialism. And, my impression is that you are arguing for another kind of Socialism.

(And yes, I know, many people don't like to use the word "Socialism", so they use words like "Socialized" or "Universal".)

So, my impression is that this is just an argument to change from one kind of socialized medicine to another kind of socialized medicine. (Or am I mistaken?)