Comments on: Government and Health

By: Sean O'Callaghan

Sean O'Callaghan — Tue, 25 Nov 2003 06:16:33 +0000

Like most of the ‘stats’ produced by the OECD, the picture is distorted to show that the US is doing everything wrong. Instead of using life expectancy as a measure of ‘goodness’(mostly due to good food and effective sewers), it would be more relevent to use the cancer survival rate (mostly due to good health care). Check it out – and you’ll want to move to the US! Besides, the French system really did itself proud during this summer’s heatwave – no? It was safer to be a GI in Baghdad than a pensioner in Paris! Mind you, that’s probably true no matter what the weather in Paris…

By: David Yaseen

David Yaseen — Thu, 20 Nov 2003 16:52:22 +0000

Taking the percentages of public/private financing and turning them into dollar figures (absolute expenditures) yields some more interesting relationships. Absolute private expenditures correlate significantly more with health care costs as % of GDP (.80 vs .64) Public dollar expenditures correlate much more with increased life expectancy (.67 vs .31 female, .75 vs .36 male) and with decreased infant mortality (-.58 vs -.21).

By: Nasi Lemak

Nasi Lemak — Thu, 20 Nov 2003 16:09:22 +0000

I think it will be news to the NHS that there is a “tax line item” representing part of its revenues, unless I’ve misunderstood what a “tax line item” is supposed to be.

By: Nicholas Weininger

Nicholas Weininger — Thu, 20 Nov 2003 15:50:56 +0000

I have several objections to this—(2) and (4) below expand on what Harry said: 1. infant mortality and life expectancy are, at best, very rough proxies for the quality of health care provision. They certainly don’t correspond very well to the things that most individual consumers want from health care at time of provision (friendly and prompt service, choice of providers, etc). Maybe they correspond well to what you think people should want out of a health care system, but that’s another argument entirely. 2. There are lots of non-health-care factors that influence infant mortality and/or life expectancy—some examples would include crime rates, rates of unwanted pregnancies, diet and exercise habits. Some of these may be strongly correlated to government health-care funding for cultural reasons having nothing to do with the effectiveness of said funding. I am reminded of Milton Friedman’s famous exchange with a Scandinavian economist, which went something like: Other guy: “In Scandinavian countries we have no poverty.” Friedman: “Well, among Scandinavians in America we have no poverty either.” 3. There are also cultural factors influencing the spend rate on health care that have nothing to do with the efficiency of provision. US health care consumers, as a previous commentator noted, demand lots of really expensive end-of-life care that Europeans do not; they also are notoriously quick to sue health care providers, driving malpractice insurance costs through the roof. These things are largely due to an American cultural tendency to believe that: (a) death is essentially optional; (b) any death that happens while under a doctor’s care should be assumed to be the fault of the doctor until proven otherwise. Changing to a more socialist system of health care provision would do absolutely nothing to change these cultural attitudes, and it is therefore doubtful it would reduce expenditures. 4. Averages are misleading. The US may well be better than other nations at providing health care to most people, and still have low average outcome scores because a small percentage of people have really horrendous outcomes. Whether you think this vindicates the effectiveness of the US system or not depends on how egalitarian you are, I suppose; but it’s still worth noting that the average doesn’t tell the whole story. 5. Less direct government funding does not equal less government involvement. The data given do not provide any basis for a comparison between free-market and government-funded health care, because no developed country today has anything remotely resembling a free market in health care. Certainly the US does not, and has not for decades; indeed in many ways the US government probably micromanages the provision of healthcare more than some single-payer countries do.

By: harry

harry — Thu, 20 Nov 2003 14:11:57 +0000

Could one problem be that the US government is almost uniquely inefficient among OECD governments in providing and spending anything, because the political system is designed to encourage log-rolling and rent-seeking directly through the process of legislation? If this were true there might be a case for keeping things as they are. Infant mortality rates may be quite misleading. They are staggeringly high for the poorest 20% of Americans; the rest get infant mortality rates pretty close to the OECD average. The poorest 20% get paltry primary care spending—they get urgent care treatment instead, which is just as expensive but far less efficient. There is very weak ante and post-natal care for the poor. One thing that doesn’t show up in the estimates above are the costs absorbed by healthcare consumers—the opportunity costs faced by patients and their relatives trying to a) figure out which insurance company to choose; b) how to get the insurance company to pay for treatment and also the cost of feeling insecure about prospective healthcare provision. Antoher thing that doesn’t shwo up is the amount of healthcare spending on children that is done in schools—this all comes under education budgets, and I’m sure it far exceeds the normal amount that comes under these budgets in other OECD countries. SO the figures above almost certainly UNDERSTATE the real costs of the US system relative to other systems. Does the US subsisidise R&D? Whenever I see that argument made it is supported by strident stipulation, not economic analysis. Even if it does, though, drugs have very limited impact on health outcomes (as does health care generally, as Chris sort of points out). Over the course of their similarly long lives Americans work about 20% more hours than Europeans; they live further from their families; they spend much more time doing sedentary things like driving; they consume more fast food and they spend less time with their friends (because they live further away from them both because of the high rates of geographical mobility and because of the population sparsity even within urban areas once you get away from the Eastern seaboard). Living healthily reduces health care costs and increases life-expectancy. Sorry to rant—you’ve touched a nerve.

By: Andrew Boucher

Andrew Boucher — Thu, 20 Nov 2003 13:14:20 +0000

By the way the conclusion that I draw from this situation, is that the U.S. should limit drug costs too. Remark (for all of those nodding your approval) that this is the unilateralist solution. The multilateralist solution would be for the U.S. to get together with all the other heavily drug-consuming countries and negotiate before it does anything.

By: Andrew Boucher

Andrew Boucher — Thu, 20 Nov 2003 13:04:55 +0000

“The usual conservative response to nasty data like this is to insist the US “free market health care system” is subsidizing the rest of the world’s socialist systems. No actual evidence is provided, but there you go.” OK maybe this is tangential, but there is one clear case where the US does subsidize the rest of the world’s socialist health systems – drug costs. Socialized systems limit the prices of drugs, the U.S. does not. Ergo it’s the U.S. consumer which is paying for all that research, while the Socialist systems (by pricing the drug just above its manufacturing cost) are freeloading. The U.S. consumer does get one benefit – drug companies are more likely to do research on diseases which impact Americans strongly, such as (if this really is a disease) obesity. But other countries still do derive the benefit without paying their fair share of the development cost.

By: Chris Bertram

Chris Bertram — Thu, 20 Nov 2003 12:07:11 +0000

Here’s wild thought that just came to me… There’s some evidence that more inequality is correlated with worse outcomes independently of the absolute level of income of the worst off in the relevant society. Very unequal societies are likely to have more private medicine. In other words (at least part of) the explanation of the correlation is that the bad health care outcomes and the health system type share a common cause.

By: john b

john b — Thu, 20 Nov 2003 11:58:10 +0000

This discussion reminds me of my favoured NHS money-saving solution. If anyone has a less than 10% chance of surviving an expensive treatment regime, then the only care they should be offered on the NHS is a copious amount of morphine to make their final days more agreeable. Instantly you have the cash to pay for the hip replacement type operations that will affect people’s quality of life for decades, and the doctors to carry them out. Meanwhile, if anyone really wants to sell their house to pay for a treatment regime with a marginal chance of success, then they still can.

By: Brian Weatherson

Brian Weatherson — Thu, 20 Nov 2003 10:18:49 +0000

Chris, I agree that the systems aren’t designed exactly to maximise life expectancy. But I think infant mortality is a pretty good test, since that really is a data point that is an explicit target. That the US has the worst numbers in the developed world (and by quite a distance) is rather striking, and a serious mark against its health care system. I agree though that a health care system could go from efficient to inefficient (by these measures) by spending a lot of money on palliative care for those nearing death, and this might be an entirely appropriate use of health care resources. If there’s evidence that that’s exactly the difference between gov’t based and private based systems then the data isn’t as compelling as I try to make it look. I don’t think that it is what’s happening in the US though (it could be in Switzerland – they do have a small life expectancy gain for all their spending) but it’s certainly a possible explanation of the data.

By: Chris Bertram

Chris Bertram — Thu, 20 Nov 2003 09:52:46 +0000

Since I don’t have any data whatsoever to hand, I’d better be careful with my assertions. But I think I’m right in saying that health care expenditure has hardly any impact on aggregate health outcomes (so much of it goes on people who are about the die anyway). Even expenditure on public health doesn’t affect things much. So there’s a bit of a problem in making assertions about the relative efficiency of health care systems where there’s little reason to suppose that those systems are crucial in achieving the outcomes their efficiency is being assessed by.

By: Jason McCullough

Jason McCullough — Thu, 20 Nov 2003 06:00:12 +0000

The usual conservative response to nasty data like this is to insist the US “free market health care system” is subsidizing the rest of the world’s socialist systems. No actual evidence is provided, but there you go. Oh yeah, and hand waving about immigration. See: janegalt.net, chiefly.

By: Vinteuil

Vinteuil — Thu, 20 Nov 2003 05:12:30 +0000

Brian, Jonathan: What is to prevent the U.S. public sector from rearranging the financial resources it has already got? Given that those resources are already fully comparable to those of the best socialized systems in the world, the ratio of public to private expenditure seems like a red herring. Incidentally, the particular outcomes listed in the chart are hardly the be-all and end-all. Keep in mind that a huge percentage of U.S. spending is devoted to end of life care that has little effect on life expectancy. The government could probably improve U.S. numbers by rationing its share of such care in favor of preventive measures, but what are the chances that the senior citizens lobby would sit still for that?

By: Brian Weatherson

Brian Weatherson — Thu, 20 Nov 2003 05:02:01 +0000

Even if the OECD has been duped into understating the amount the British gov’t spends on health care (which I somewhat doubt), the data still shows that the US gov’t expenditures on health are within 10% of the total expenditures on health in the UK (on a per capita basis). But if you rely on just what the government provides in the US for your health, you’ll be much worse off than you would be given the available options. I think it’s only at Hogwarts that the private sector could do as well as the gov’t at efficiently providing a health care system.

By: ASG

ASG — Thu, 20 Nov 2003 04:46:31 +0000

You always have to be careful with these sorts of figures. In the UK, there’s a tax line item for the NHS. It is therefore often assumed that the NHS budget is made up only of that “contribution”. But of course the NHS also draws substantial funds from general revenues. Often, though, government statistics will list the NHS budget as merely comprising the revenues from that single line item. The U.S. government plays similar games with many agencies, including the Postal Service. In years where the Postal Service makes a profit, it is moved “on budget”. In years where it makes a loss, it is moved “off budget”. While I have no illusions about the cost of the labyrinthine U.S. health care system, whose insane insistence on tying coverage to employers still perplexes me, I find it hard to maintain a straight face when people blithely assert that everyone would be better off for less money were health care to be nationalized. Maybe at Hogwarts.