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French health care
Many people (Jon Chait also) argue that France has the best health care system in the world.
As of 2003, the average income of a French physician was estimated at $55,000; in the U.S. the comparable number was $194,000.
A visit to a GP's office (half of the doctors in France are GPs) had a reimbursement capped at 20 Euros, again circa 2003. It is not hard to pay ten times that amount in the U.S.
Did I mention that health care is a labor-intensive industry?
This is the major reason why French health care is cheaper than U.S. health care. France also spends less per unit on other inputs, such as prescription drugs.
Note that France still spends more than all or most other European systems, namely about 11 percent of gdp.
When comparing health care outcomes, France only does slightly better than many Mediterranean countries with obviously non-enviable health care systems. It is not obvious that France does better on health care outcomes than Japan, again a country with non-enviable health care institutions. In other words, France spends lots of money making people feel good about their health care processes, with only very marginal measured health care results. The United States also spends money on customer comfort, albeit in a more expensive and less egalitarian way.
It is easy to argue that the French system is better than that of the United States. But a defender of the French system must, in reality, fight "a war on two fronts," to paraphrase Derek Parfit. The French system does not, by the standards which have been erected in the debate, appear noticeably better than many other cheaper systems around the world. It does spend more money producing "customer satisfaction" and papering over some of the obvious inhumanities of the cheaper systems. That's why it is easy to hold up as a model.
The disconnect arises because single-payer defenders wish to use international data to compare health care systems -- France > U.S. -- while pushing under the table the more radical (apparent) implications of that data, namely that France is spending far too much as well.
If we are going to be umm...transitive here, let's have the debate where it belongs: expensive health care with marginal impact on measured health outcomes vs. saving lots of money and giving people much less in the way of health care services. I do think there is a good case for the latter, though looking toward the future I would myself prefer the former.
I might add I do favor taking action to lower doctors' wages in the United States. Letting in a greater number of qualified foreign doctors is step number one. But if we're going to criticize the U.S. system for its costliness, let's put the blame where it belongs.
Posted by Tyler Cowen on March 24, 2007 at 01:29 PM in Medicine | Permalink
Comments
To paraphrase: The French system is better, but we shouldn't use it anyway.
Or maybe:The French system looks a lot better, but if you take a closer look it is only a little bit better.
Posted by: talboito at Mar 24, 2007 1:58:56 PM
"If we are going to be umm...transitive here, let's have the debate where it belongs: expensive health care with marginal impact on measured health outcomes vs. saving lots of money and giving people much less in the way of health care services."
This has been bandied about several times. What are "measured health outcomes?" Such a statement could either mean nothing or everything. If "measured health outcomes" means eventual mortality, then yeah, I expect the French system isn't much better, since everyone dies in the end.
There were a number of health issues that I couldn't get care for when I was uninsured, none of which killed me. By the metric you're citing, does that mean the health outcomes were just as good as if I could have got treatment? Sure didn't feel that way.
This discussion is meaningless unless we first agree to terms.
Posted by: Shane at Mar 24, 2007 2:06:11 PM
To paraphrase: The French system is better, but it's not market-based, so it can't be better.
Posted by: Rob at Mar 24, 2007 2:24:48 PM
I agree with Shane that it depends what measures we're looking at. There are many measures short of mortality -- quality of life measures -- where the U.S. does much better.
Also, it's unclear whether loosening up the supply of doctors would driven down overall costs within the current system. It might help insurers extract better terms from physicians, but as long as they practice in a fee-for-service, third-party pay system doctors are capable of extracting the same revenue by pushing up the volume and intensity of their services. They've done it before.
Perhaps under a largely self-pay system as suggested by Arnold Kling we'd get a lot less health-care spending as individual patients are much more judicious with their out-of-pocket costs, more real competition and an insignificant change in outcomes.
Posted by: Kevin B. O'Reilly at Mar 24, 2007 2:36:45 PM
We've gotta find a means to lowering doctors salaries.
200,000 a year!!!!!!!!!!!
and I think many doctors would take a paycut if it meant more reasonable hours and less insane education requirements/debt.
Posted by: thehova at Mar 24, 2007 3:13:46 PM
I agree by and large with everything you've said in this post, only with one detail: infant mortality and life expectancy are terrible measures of the quality of a healthcare system.
We all know the problem with infant mortality (everyone has a different definition), but life expectancy also has its flaws. First of all, it has as much to do with lifestyle as healthcare (Okinawa, anyone?) But most importantly, an extra week or month may not sound like much, but it adds up to so many cancers and other diseases that were detected early.
A few months overall for a few points of GDP sounds like a good deal if it means old people will die at 73.4 instead of 73.2 years, but in reality it means that whole segments of the population are going to die earlier of preventable death. God knows many things are dysfunctional about France, but the choice to splurge on a healthcare system that, ceteris paribus, isn't that screwed up, isn't.
(BTW, in my opinion, Switzerland has the best healthcare system.)
Posted by: PEG at Mar 24, 2007 3:22:34 PM
I might add I do favor taking action to lower doctors' wages in the United States. Letting in a greater number of qualified foreign doctors is step number one.
We already are importing large numbers of foreign physicians. I don't believe we are limiting them in any way. The market is giving us what it will bear.
Posted by: squik at Mar 24, 2007 3:27:29 PM
Note that France still spends more than all or most other European systems, namely about 11 percent of gdp.
What percentage of its GDP does the United States spend?
Posted by: golddog at Mar 24, 2007 3:36:35 PM
I just worked up some numbers. Take your estimate that the average doctors income is $194,000 and gross it up to $250,000 to account for insurance and other fringe benefits. According to the AMA there are roughly 800,000 practicing doctors in the US. that means doctors income amounts to roughly $200 B.
Current dollar US GDP is about $13,500 b.. 16% of that is $2,152 and 11% of that is $ 1,479.5 b , or a difference of $672.5. This implies that doctors income ($200, b) amounts to under 10% of medical spending ($2,152 b). If you completely eliminated doctors income this would account for about 30% of difference between the 16% of gdp the US spends on medical care versus the 11% France spends.
Now I realize my numbers are just back of the envelop calculations. What data do you base your conclusion that the difference in doctors income is the major reason the US spends more on health care then the French?
What is wrong with my back of the envelop calculations?
Posted by: spencer at Mar 24, 2007 3:40:44 PM
This is a reposting of several points I posted on Ezra Klein's website months ago:
1.) Lowering doctor pay is a great idea if you want less talented people in the field. As it is, thanks to Baumol's disease, the number and quality of Harvard students (to pick one proxy for whatever its worth) going into medicine has almost certainly declined anecdotally given the better pay and work conditions of even such demanding fields as law and i-banking (medicine's current competition for high quality applicants)...Logically, one could hardly doubt that decreasing compensation would lead to lower quality applicants. Given the increasing opportunity and absolute costs of a medical education in the US (10 yrs. post college and usually at least 200 thousand in assorted expenses post-college), I doubt this idea could be implemented without significant adverse effects. As it is, even dentists salaries have increased at a higher rate...
2.) Postgraduate medical training (residency) is the real roadblock to more physicians. The govt. funds these spots and doesn't want to pay for more (along with the enormous cost of underwriting medical schools) while hospitals certainly won't do that. Most doctors in addition wouldn't be caught dead in teaching hospitals instructing medical students and residents. The US medical system as a result is already highly dependent on importing foreign medical labor and will continue to be so given these facts. Given the working conditions of long hours, extensive further educational requirements, etc., only third world physicians at present (despite the salary differentials) are willing to emigrate in addition in large numbers, a little remarked upon problem given their training limitations.
3.) Before anyone brings in AMA bashing and cartels limiting the size of med school classes (I can sense this coming on), they have no power over postgraduate medical education (a body called ACGME runs this) or over medical schools (the AAMC sets standards for them). Perhaps people incorrectly think they are analagous to the ABA? There are other ways of effectively increasing the size of classes (limiting woman students since they on average work less post-graduation) but they are politically impossible...
4.) More doctors = less health care cost is a fiction. It might decrease avg. compensation but certainly not total health care costs as every study has shown due to increasing referrals, specialization and procedures. Matt Yglesias had a good posting on his blog about this a while back.
5.) As a cost driver, I think addressing the amount of the current medical system and bureaucracy designed to address litigation risks is a much more fruitful approach. This applies not only to marginally useful tests (e.g. CTs for headaches which I personally have ordered for patients unnecessarily on the sole basis that that was the current "standard of care") but also the entire placement system that hospitals are forced to employ. Our hospital Brackenridge employs a ridiculous number of people just to shift "patients" into other instituitions because we can't be seen to be blamed for a homeless individual's later runins with the law, etc.
Posted by: vik at Mar 24, 2007 3:50:24 PM
I don't think the issues is some average "quality" score, or the cost per se. The issue is fairness and justice.
It is way too easy for responsible, careful, middle-class people in the US to suffer an expensive condition only to find themselves both uninsured and uninsurable on the basis of bad luck and obscure technicalities. It often happens about when people are sick and vulnerable, and can't keep up with the bureaucratic details of their own care.
This happens all the time; it has happened to people I know personally. Just today there was an article in the paper about Blue Cross canceling individual patients on the basis of their claims. That this can occur at all mocks the very idea of insurance.
I don't give a damn what insurance costs, and frankly the standard of care in France is good enough for me. I want to have it, pay for it, know that it covers whatever is going to happen, and be confident that I will never lose it. That is almost impossible to achieve in the US, and the fact that it's especially hard to achieve for small independent businessmen is a factor that stifles innovation, limits job mobility, and ultimately serves as a drag on the economy.
Posted by: Tony at Mar 24, 2007 4:01:20 PM
Unless things have recently changed - it is now, and has been for a long time, VERY difficult for UK qualified doctors to work in the USA. I went into this matter in some detail a few years ago in evaluating the possibility of my family emigrating to the USA.
(From memory) the system was that UK doctors (including specialists with advanced degrees and specialist training exams) essentially had go back to resit their university medical school examinations (including basic science) in a once a year exam held in one location in the USA (maybe Philidelphia?).
It was about as restrictive a practice as was imaginable without actually banning emigration.
I should add that UK medical training standards are _at least_ equal to those in the US. And that US doctors can work in the UK on the basis of their US qualifications and without taking further exams (except English language exams), as can doctors from the European Union and indeed from almost anywhere.
Who benefits from the US restrictive practices? Answer: US doctors.
Who loses? Everyone else.
Posted by: Bruce G Charlton at Mar 24, 2007 4:58:23 PM
You want more immigrant doctors. But I hope that you aren't advocating draining ever more physicians from LDCs to developed countries. Consider this argument from Laurie Garrett (at
http://www.foreignaffairs.org/20070101faessay86103/laurie-garrett/the-challenge-of-global-health.html
"As the populations of the developed countries are aging and coming to require ever more medical attention, they are sucking away local health talent from developing countries. Already, one out of five practicing physicians in the United States is foreign-trained, and a study recently published in JAMA: The Journal of the American Medical Association estimated that if current trends continue, by 2020 the United States could face a shortage of up to 800,000 nurses and 200,000 doctors. Unless it and other wealthy nations radically increase salaries and domestic training programs for physicians and nurses, it is likely that within 15 years the majority of workers staffing their hospitals will have been born and trained in poor and middle-income countries. As such workers flood to the West, the developing world will grow even more desperate."
I realize there is a good literature on the help that remittances do for the home countries, but money can do little for health when there is no one on the ground to purchase services from.
Posted by: Frank at Mar 24, 2007 4:59:03 PM
The notion that health spending ought to be measured by life expectancy is like saying that the yardstick we should use when measuring four star restaurants is the cost/calorie ratio, as opposed to the quality of the flavor of what we are eating.
Pretty much everything I've read says that more health care spending doesn't add to life expectancy in any meaningful way. If life expectancy is your only goal, then by all means let's massively slash health care spending. But if the goal also includes quality of life measures such as not having to wait 6 months to get surgery on your painful knee, then it is absurd to make costs the most important factor under comparison.
Single payer systems created by a populist politician under the theory of reducing costs scares the crap out of me. These systems will almost certainly reduce our quality of life, and I strongly suspect if the average American thought about it this way they too would be horrified about the prospect of a single payer system.
If you want to create a system that covers the poor even better than they are now, i.e. add in quality of life improvements to their already fully covered life emergency care, then do that, or at least try, but don't throw the baby out with the bath water.
Posted by: happyjuggler0 at Mar 24, 2007 5:24:20 PM
Where does the $55,000 figure come from? I find it hard to believe. Maybe it includes nurses and orderlies.
Certainly it's not like that in the UK, the figure even for GPs is pretty close to the US one and possibly higher. It wouldn't be hard for French doctors to work here.
Posted by: Jack at Mar 24, 2007 5:24:50 PM
I want to have it, pay for it, know that it covers whatever is going to happen, and be confident that I will never lose it.
You mean, you want your health insurance situation to resemble that of a tenured economics professor at a large, well-funded public university in an affluent state?
Posted by: Albatross at Mar 24, 2007 7:03:54 PM
Single payer systems created by a populist politician under the theory of reducing costs scares the crap out of me. These systems will almost certainly reduce our quality of life, and I strongly suspect if the average American thought about it this way they too would be horrified about the prospect of a single payer system.
I think it's time for some new terminology here.
How about we start using SINGLE PROVIDER to refer to British-style systems, SINGLE PAYER to refer to Canadian-style systems, and NON-SINGLE PAYER UNIVERSAL to refer to systems like that of France, Switzerland, Germany, Japan, Australia, etc. -- where the government plays an important role in guaranteeing the universality of health insurance (and sometimes in the financing of the same), but where there are plenty of non-governmental actors -- including for profit insurance firms -- that play a role in providing and paying for healthcare.
I truly doubt many Americans would be "horrified" at the prospect of moving to a version of #3, where the law guarantees they'll always be insured, but where's they'll be able to continue to enjoy the benefits of private sector health coverage.
Indeed, it seems that pretty much all of the world's highest rated systems of guranteed, universal access healthcare follow this public/private mixed model, including what Tyler refers to as France's highly regarded, much beloved but "expensive" (as I stifle the urge to break out in a full belly laugh) system.
By the way, I apologize for the botched pseudonym use above; I was reluctant to call out the famous professor on his own blog. Serves me right.
Posted by: Jasper at Mar 24, 2007 7:23:50 PM
But I hope that you aren't advocating draining ever more physicians from LDCs to developed countries.
How would one advocate "draining" more physicians from anywhere? Are physicians, or any group of people, some kind of fluid to be diverted, channeled, or dammed (or, perhaps more accurately, damned) to prevent their flooding into the wrong places? The physicians at issue are, after all, individuals who would merely make an individual choice to come here, were they free to do so. It seems to me Tyler was simply, and quite rightly, advocating more such freedom.
But I hope that you aren't advocating limiting another person's freedom to pursue a life you take for granted because you judge him to be more "needed" in some poor country. I fail to see how such an individual has any greater moral obligation to serve as a physician in a poor country than you or I do, and we are all more "needed" in any number of poor countries than we are here. No, such an obligation is either borne by all humans or it is borne by none; I want no part of any moral philosophy that requires of a woman in East Timor what it does not of a man in East Hampton.
If there is such a moral imperative and government coercion is a legitimate tool to apply, then why not forcibly ship off some American doctors (and some of the rest of us after our compulsory medical training) to these poor countries to fulfill our ethical duty? I hope such a plan would strike us all as a patently egregious affront to fundamental human rights. Perhaps we should wonder if there is truly such a principled difference between that scenario and the one where we use the same coercive force to, in effect, "ship off" a person to some place he prefers not to be, based solely on the random accident of his birth occurring on the wrong side of some imaginary line.
Posted by: Brian Courts at Mar 24, 2007 9:18:00 PM
I believe France is one of the countries that grants a MD after a 6 year program straight from high school. This puts those MDs at a training level equal to a second year medical student here is the US, or approximately a Master's degree level in other fields. France's system also graduates many more MDs than there are openings for clinical training (the six years is almost all book work), so there are many MDs who are not employed as a clinical physician.
$55,000 is a reasonable wage for a Master's level person. Almost all US physicians, though, have an additional three years training (two in medical school, one post graduate or internship) to reach the GP level and at least three more after that to become a family practitioner, internist or pediatrician. Subspecialists and surgeons have between one and five more years of training, which explains a lot of that higher salary.
Posted by: SteveSC at Mar 24, 2007 10:47:04 PM
Did I read a request for a reduction in physician salaries and education requirements?
*shudder*
Salaries in professional sports are high due to scarcity. When my knee finally gives out from running, I want the professional holding the scalpel to have beaten out others in his/her field. As others have alluded, the addition of litigation-related costs is a recent phenomenon. Surgical specialists' salaries have fallen precipitously over the past decade, real and nominal.
Walk a mile in a surgeon's Mephistos before dropping your jaw at $200K.
Posted by: Dan at Mar 24, 2007 10:49:18 PM
How does a believer in markets type (with a straight face, I assume) the following: "I might add I do favor taking action to lower doctors' wages in the United States."?
How do you justify the regulation of a physician's salary? Shall I regulate yours?
Posted by: topher at Mar 24, 2007 11:09:23 PM
quote:
[How does a believer in markets type (with a straight face, I assume) the following: "I might add I do favor taking action to lower doctors' wages in the United States."?]
Tyler can answer for himself, but with the amount of regulation already inherent in the health care system, I would think it safe to assume that the level of their salaries is partly due to that existing regulation.
Stripping away unnecessary regulation from a highly skilled industry typically results in lower salaries for the "stars." Airline pilots have taken it in the shorts, for example.
If their are unnecessary bars to foreign doctors, if the AMA at times operates more as a union than anything else, if, through this quasi-union certain strictures were to be found that weren't actually necessary, etc.
Stripping the medical industry of said red-tape would lower the salaries in a number of ways, namely of which by bringing in more doctors.
And for those wishing to have the most elite orthopedic surgeons to care for their knees and such, such doctors would still be available.
Posted by: Ray G at Mar 24, 2007 11:19:35 PM
doctors are overeducated (as are lawyers).
I think you can put a lot of the blame on the AMA.
Posted by: thehova at Mar 24, 2007 11:52:44 PM
This is nice, really. I love this stuff.
Let me say at the outset, for what it's worth, I'm an American living in Italy and if I were to get sick, I truly believe I'd get better care, over all in the US. I'd much rather get sick there. That being said, the quality of healthcare here is adequate, if not more so. It's quite good enough.
That being said, I spend alot of time thinking about healthcare in the US, what it is, what it should be and what it will likely become. Comparing the US system to others is certainly not a bad thing, but let's recognize that the current system ISN't 'broken' (yet) so, it's unlikely to be 'fixed.'
It seems these comparisons implicity assume the US can just order up any old healthcare system, the best in the world. But the reality is we can not just scrap what we have and do-over. That's just not going to happen.
Yes, the US spends too much on healthcare (versus the rest of the world), and yes, outcomes should be better, and yes, America should do a better job of providing quality healthcare to all its citizens. Great. Wonderful. Not alot of argument here.
And so...? When does the spending get so onerous that the US just can't provide essential services. Does the 16% or so of GDP go to 20% and then 25% before serious changes have to be made? Will changes be revolutionary - becasue that's what these comparisons assume - or evolutionary?
I'd bet the latter. And unfortuantely alot of smaller ad-hoc evolutionary changes over time, without some great big blueprint or plan, could lead to a worse system overall.
Doctors will have to make less money, no doubt. But it's unlikely to happen in any serious way. More likely, they'll just get fewer increases in the years relative to inflation....very, very, evolutionary.
Again, I really enjoy the talk, the debate, the highfalutin ideas and ideals, but when it gets to the fine details or making necessary changes, it becomes so problematic as to be nearly paralytic.
Posted by: glenn at Mar 25, 2007 1:52:14 AM
and I recognize this seems heretical - to me, too - but I think one must question whether healthcare, like much of defense spending, works well under a capitalistic model. Parts of it, sure. Some other aspects, probably not.
One last thing - and I don't know how cultural this is, or if it's just human nature - a HUGE percentage of spending happens in the last few months of a person't life. Not to save their lives, m ind you, but just to extend it. And frankly, not to be judgmental, but the quality of those last few months are questionable.
People die, folks. Death is inevitable. Somehow, someway, there has to be a limit on this. It's hard, it's cruel, but when it comes to government spending, at some point we have to come to the conclusion that the costs of some services just aren't worth the benefits.
Posted by: glenn at Mar 25, 2007 2:00:16 AM
