Tag Archives: NIH

Break Free: US Healthcare – Another Example of Our Bankrupt Culture

We are prisoners of our culture, break free or die.” (Click on quote for meaning.) This post deals with the healthcare bill.  Our broken culture has given us the worst healthcare system of the leading developed countries, and prevents us from even considering an approach that would give us a competitive healthcare system (w.r.t. both outcomes and cost).

1st my view on the current bill.  The house version is marginally better than the senate one, but we will end up with a version closer to the senate one.  The bill sucks, but it does have a few worthwhile attributes (e.g. providing 30M uninsured Americans with health care insurance starting in 2014), and, as such, I hold my nose, and support its passage (also see Krugman’s Op-Ed, Pass the Bill, and his blog entry, Numerical notes on health care reform).  Like Medicare Part D (the drug provision passed a few years ago), it improves the status quo, w.r.t. the suffering, but with a high cost to others, and a major boon to the insurance and drug companies .  Now, on to the culture aspects.

Our Healthcare System is Broken

First, all other developed countries provide healthcare for all their citizens.  Only in America do people die because of a lack of insurance.  As reported in a recent study, about 45,000 Americans die each year because of a lack of insurance.  The cost of covering the ~45 million uninsured Americans is about $100 Billion per year (about 3% of the Federal Budget).  In addition to the uninsured, about 25 million Americans are underinsured (a 60% increase from 2003).  62% of all personal bankruptcies are related to illness or medical bills.  About 80% of these are by families that have medical insurance.

(Note:  all the following comparative country data is from the 2009 OECD health report.  OECD consists of the developed democratic countries – 30 in all.  Here is the spreadsheet (XLS). The data is from 2006 since later data is not yet available for some countries.)

Second, by key metrics, we have worse outcomes than other developed countries.  In life expectancy at birth, the US ranks 24th (beating only Hungary, Turkey, Slovakia, Mexico, Poland, and Czech Republic).  In infant mortality, the US ranks 28th (only Mexico and Turkey have a higher rate). To get into the top 10, we would have to cut our infant-mortality rate in half.  But Americans surely have better access to health care, right?  Of the 20 countries reporting on number of doctor consultations per capita per year, the US is 19th (3.8) vs. Sweden (2.8).  Some others:  Canada (5.8), France (6.4), UK (5.1), Netherlands (5.6), Germany (7.4).  Of the 26 countries reporting (and also excluding Luxembourg, because of its size) on number of hospital beds per capita, the US is 25th at 3.2 vs. 2.7 for Turkey.  Some others: Canada (3.4), France (7.2), UK (3.6), Netherlands (4.5), Germany (8.3).

Third, we pay much more than any other developed country.  Total healthcare expense as percent of GDP (2006) was 16% for the US.  The average of all the other OECD countries was 8.6%.  The highest was France at 11%.  The ones between 10 and 11% are: Switzerland, Germany, Belguim, Austria, and Canada.  Another way of looking at the data is the per capita healthcare expense in US$ purchasing power parity.  In 2006, the US was $6,933.  The next highest countries are Norway ($4,507), Switzerland ($4,165), Luxembourg ($4,162), Canada ($3,696), Austria ($3,608), Netherlands ($3,611), Germany ($3,464), and France ($3,423).  The rest are less, e.g. UK, Spain, Italy, and Japan are all less than $3,000.  But one factor to take into consideration is the percent of the population over 65, since they account for so much of the healthcare expense.  I just downloaded a report from the US census bureau, An Ageing World 2008.  From table B-1, the percent of the US population 65 and older in 2010 is estimated at 13%.  For the large western European Countries, it is ~18% (e.g. 20% for Germany and Italy, 16.5% for France and UK).  Japan is at 22.6%.  So, given these demographics, we should expect the US to have near the lowest healthcare expense.  Yet the exact opposite is true!

Obvious conclusion: Our healthcare system sucks.  Besides being cruel to 15-25% of our citizens, the cost/benefit is the worst in the world, and it puts our US based manufacturing at a competitive disadvantage, since employers bare most of the insurance cost.

Our Culture Inhibits Good Solutions – NIH and a Broken Political System

In the context of healthcare, NIH is the acronym for our National Institutes of Health, one of our better government funded agencies.  But in this post, I mean: Not Invented Here.  Rather than learn from the experience of others, we are more inclined to view other approaches negatively.  And, our political ideologies outweigh pragmatic, known-to-work solutions.

Ideology vs. Pragmatism.  We live in a global economy. The far-left view of “Globalization is bad for the American worker” is true to some extent, but is irrelevant – Globalization is simply the new waves in the ocean of life – you either get up on your surfboard and ride the waves, or drown.  The far-right view of no significant change to our broken healthcare system has already proven (over more than just the last decade), through increasing costs and continued suffering, to lead us into a competitive death spiral w.r.t. cost per employee.

Neither the far-left nor the far-right wants to compromise their ideals and realize: “OK, our healthcare system is totally broken.  All developed countries have a better system than we do.  What can we learn from their success to reduce our costs, improve our healthcare, and reduce the suffering of so many of our fellow citizens?”

The far-right is the biggest obstacle to change, and with the greatest NIH attitude.  All the reform proposals are labeled as an increasing step to “socialism”.  They are correct.  For 20+ years, I was registered as a Libertarian.  A Libertarian believes that the only role of government is a “monopoly of force” – e.g. police and military.  EVERYTHING else should be provided by the private sector – including roads, schools, firefighters, etc.  A Libertarian is a free-market capitalist.  There is no role for most of the taxes that we pay, especially the income tax.  There is no social security, no medicare, no medicaid, no unemployment insurance, no Federal Reserve, no FDIC, no national parks, no environmental regulations, etc.  When most of these was proposed in the last 100 years, it was rightly labeled “socialism”.

But since retiring in 2001, I’ve switched from being a Libertarian to being a Pragmatist.  In the context of healthcare, in particular, we all need to be pragmatists.  Forget the ideologies and labels.  Almost 50% of US healthcare expenses are already paid by the government.  So are we already healthcare socialists?  So let’s get real. Since the founding of our country, we have increasingly become more socialist – we are now only debating the extent.  One example to think about: Utilities (electric, gas, water) are mostly private, but are heavily regulated.  Are you OK with your electric utility being regulated, but not your healthcare (especially given the above economics)?

The far-left makes the mistake of advocating single-payer healthcare.  And the far-right uses this to scare people, e.g. the death-panel rhetoric.

However, very few people realize that many of the healthcare systems in other developed countries are NOT single payer.  Although Canada and the UK are single payer, France, Germany, and the Netherlands are not.  In these 3 (and many others), there is a multiplicity of competing private insurance companies.  In these 3, there is significant government regulation.  But in all 3, individuals have a choice of their insurance – it is not tied to their employer.  And, all people are covered.  I am not going to describe the healthcare system of each of these countries, but here are a few links for more information:  Netherlands, France, and, Germany.

My major “culture” concern is our NIH attitude that I’ve just described.  But of equal importance is the political influence of the health-insurance and drug-companies on our political system.  The latter is obvious to even the casual observer.  But for completeness, one example is appropriate.  The Medicare Part D regulation prevented the government from negotiating drug prices.  But the Veterans Administration (VA) does negotiate drug prices in connection with VA drug benefits.  So the price paid by the VA for a drug is less than that paid for under Medicare Part D.  The current healthcare bill continues this practice.  The Senate bill also prohibits the importation of drugs from other countries.  My proposal is simple: for a drug to be approved for sale in the US by the FDA, the drug company must agree to not sell it for more than the 1.05X the lowest price it charges for the same drug in the OECD countries.  Simple, but political death to any congressman/senator who would propose it.

Summary

Our culture has resulted in a broken healthcare system.  And, our culture prevents us from fixing it.  The best we can hope for is a bill that will help many of the abused victims, but, at best only slow the system’s cost/benefit deterioration.  Depressing, isn’t it?