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How to debate health care policy
Health care policy should be debated through micro-facts. Let's consider a few:
1. American health care outcomes look much better once we adjust for race and other demographic factors, including violence and car crashes. Some groups -- such as Asian-American women -- have remarkably good health care outcomes.
2. Some of the health care savings of other systems occur through price effects (e.g., doctors are paid an average of $60,000 in France) and do not involve real resource savings.
3. American's high expenditures, however wasteful they may be, nonetheless drive much of the world's medical innovation. Medical innovation is also a public good to some extent and no the pharmaceutical companies are not simply parasites on the NIH and universities.
4. America has a different structure of interest groups. and therefore a single payer system in the United States would not operate as does a single payer system in other countries. It would more likely favor the interests of doctors and insurance companies, for a start.
5. If we take the international health results/expenditures data at face value (and we shouldn't), they imply that greater access to medical care does not itself improve health outcomes. So we should be careful in how we use and cite such results.
6. Health care outcomes improve with income even under single-payer systems. Our best estimates suggest that this gradient is no steeper in the United States than it is in Canada.
7. Having health insurance does improve your health care outcomes, but not to an amazing degree. The largest benefits are arguably the alleviation of financial risk, and no I am not meaning to slight that factor.
8. Pharmaceuticals, unlike many forms of health care, have large and noticeably positive effects on individual health.
9. The major Democratic health care plans on the table all, one way or another, admit they will spend more money on health care. The fact that other countries spend less therefore does not help predict the change in spending that would result from these plans.
(Sorry for the lack of links, I am on the road, google back to previous MR posts for documentations.)
Now here is how to debate health care policy. Ask a defender of single payer systems (or other possible reforms) how many of these points he or she accepts. Settle on that list, noting that residual disagreements may well remain. Then debate what the list means for what America should do about health care policy today.
Here's how not to debate health care policy. When you hear one point on that list, bring up in response that other countries spend less and produce better health care outcomes and that therefore we should copy the systems of those countries.
But libertarians, I am not letting you off the hook either: Isn't there some form of further government intervention into health care that could help somebody? And if your basic model is that governments steal as much money as they can, and then waste it all, shouldn't we then jump at the chance to institute health care subsidies of this at least partially helpful nature? The alternative is simply that the money gets wasted some other and worse way.
Posted by Tyler Cowen on October 16, 2007 at 05:12 AM in Medicine | Permalink
Comments
I'd say that rather than focusing on how health care is provided or payed for, the focus should be on how doctors are licensed. That whole system needs to be opened up, one way or another, so that the number of doctors that come to the market is more directly pegged to the demand for them.
One way this could be done without doing away with licensing entirely would be to allow people to get their licenses if they spend a certain amount of time training under doctors who already do--so that in those hospitals where the ratio of patients to doctors was especially high, pressure would be put to train new ones.
Allowing the supply of doctors to more closely mirror the demand for them would make medicine on the whole more affordable. Another way to go about lowering the cost would be to pass laws limiting the circumstances under which a patient may sue a doctor; and putting a cap on the amount of money that can be paid should the patient win.
Posted by: Adam at Oct 16, 2007 6:06:01 AM
Adam,
Though your suggestion may seem to make economic sense, I do not believe American voters will ever accept unlicensed physicians.
An alternative they have accepted is to increase the amount of medical care provided by licensed nurses. That's the solution that Walmart is pursuing.
Posted by: John Dewey at Oct 16, 2007 6:32:36 AM
Some of the health care savings of other systems occur through price effects (e.g., doctors are paid an average of $60,000 in France) and do not involve real resource savings.
One reason for this is that licensing of doctors in France is far less onerous than in the U.S. The increased supply of doctors may not be a "resource saving" strictly speaking, but surely it is economically meaningful.
Posted by: anon at Oct 16, 2007 6:36:19 AM
Another way to go about lowering the cost would be to pass laws limiting the circumstances under which a patient may sue a doctor; and putting a cap on the amount of money that can be paid should the patient win.
This is a very bad idea. Allowing malpractice lawsuits incents better quality control by private actors, thus obviating the need for strict professional licensure.
Posted by: anon at Oct 16, 2007 6:48:03 AM
'American health care outcomes look much better once we adjust for race and other demographic factors'
Ah, the last defense used when defending America's health care system, one which is sadly no more tenable than any of the other excuses for a system which sets world standards in how much is spent on it while returning results that would not make Italy or Portugal envious.
'The researchers who were funded by several US and UK government agencies, set out to look at the social and economic factors affecting health but shifted emphasis when large differences emerged between the two countries. The study looked both at the way people reported their own health and – to guard against any bias from self-reporting – at objective biological markers of disease from blood tests. Altogether there were about 15,000 participants.
Samples in both countries were limited to whites and excluded recent immigrants, so as to control for racial and ethnic factors.
“This study challenges the theory that the greater heterogeneity of the US population is the major reason the US is behind other industrialised nations in some important health measures,” said Richard Suzman, programme director at the US National Institute on Ageing, which co-funded the research.
http://www.ft.com/cms/s/0/6c9dee06-d9ff-11da-b7de-0000779e2340.html?nclick_check=1
To keep quoting from that bastion of British socialism, the Financial Times -
'The researchers are struggling to explain their findings. Their analysis shows that lifestyle factors – particularly the fact that Americans are more obese and take less exercise – cannot account for the whole discrepancy. though they may provide a partial explanation.
Different health systems may also be part of the story. The researchers note that the US spends $5,274 per head on medical care while the UK spends $2,164, adjusted for purchasing power. But Britain’s National Health Service provides publicly funded medicine for everyone, while Americans under the age of 65 have to rely on private insurance.
Prof Marmot suggested that, while the healthcare provided by the British state health service was not superior to the private US system, it provided important psychological reassurance.
As the researchers say in the journal paper: “To a much greater extent England has set up programmes whose goal is to isolate individuals from the economic consequences of poor health in terms of their medical expenditure and especially earnings and wealth reduction.”'
Why let facts intrude on popularly held American beliefs, since as we all know, America has the best health care system in the world, as long as you ignore actually being healthy - shockingly, the British system, the sick man of Europe, so to speak, is returning empirically better results for lower cost.
But just keep tweaking those figures to get the right demographic - I bet the health outcomes for those earning more than 100 million dollars a year and their families are fantastic in the U.S.
Posted by: at Oct 16, 2007 6:59:58 AM
The trouble with #1 is #6. To adjust for race is to bias your comparison by ignoring a relatively less well-off segment of the US population.
Posted by: Bernard Yomtov at Oct 16, 2007 7:19:57 AM
Socialize the whole goddamn thing country right away and be done with it. Why drag out the inevitable? Freedom and liberty is dead as principles of government.
Posted by: Erik at Oct 16, 2007 7:21:44 AM
Dewey: "Though your suggestion may seem to make economic sense, I do not believe American voters will ever accept unlicensed physicians."
I worked at a doctors office which had a physician assistant. the physician assistant could nearly do everything the doctor could do (needed approval on some stuff).
and patients were more than willing to see the physician assistant (who was more likable).
We need more physician assistants. but of course, the AMA is fighting the whole concept of a physician assistant to increase demand for doctors.
Posted by: thehova at Oct 16, 2007 7:27:28 AM
Interesting point about not including car deaths or violence - sort of like how American unemployment statistics simply skip over the fact that the world's largest prison population (America Number 1, all the way) doesn't count as being employed or unemployed - out of sight, out of mind, it seems.
Though it remains open by what is meant by 'adjust' - for example, since much of the inner city gun violence is paid for from public funds (amazingly, a shot drug dealer is likely to receive more public money in care in a few hours than the total amount spent on his public education), do you mean that eliminating this subsidy from the picture would make America's private health care system look better?
Or do you mean that if we excluded the amount of money spent on health care due to gun injuries (freedom has its price, but why include it when talking about health care), America would look better? Sort of like if the Russians could exclude alcohol, their health care system would also look better in various rankings?
Or do you mean that because Americans drive a lot, and thus not only suffer a higher rate of accidents, but also suffer from obesity in part due to their lack of physical activity, the adjustment for car driving should be a minor one - sort of like the number of Asian-American women in the total population - roughly 2.5%. (I think Catholic nuns have a fairly decent health outcome too, by the way - why not mention them when 'adjusting' the numbers?)
Posted by: happiness at Oct 16, 2007 7:31:55 AM
I can't understand 2. Are you saying that bringing prices down to marginal costs isnt't welfare enhancing?
Posted by: Nicola at Oct 16, 2007 7:33:14 AM
I think Tyler's restrictions on the debate make sense from the standpoint of trying to determine if/how to alter our system.
However, I still am very curious about the debate he specifically abrogates:
How and why can Canada, for example, deliver equal or better health care outcomes for half the price?
Whether or not we can realistically create such a system here, I think it would be fascinating and important(kinda in the
mechanism v application way) to understand.
I am also tired of working and interested in embarking on a life of crime. I don't want to directly physically hurt someone or
end up in prison, and am only looking to pull in approximately 50K per year. Anyone with a suggestion that is used will be
rewarded with 50% of the first 15K I pull in with your method. Please ust click the comment sig and email so as not to interfere with the
discussion here. Thanks.
with
Posted by: Different Jeff at Oct 16, 2007 7:38:12 AM
Anon,
It does no good to increase the supply of doctors in France. They still fall under the French labor laws, and thus they all go on vacation in August, just like the rest of France and only work, what is it now, 35 hours a week.
http://query.nytimes.com/gst/fullpage.html?res=9C02E6D71030F93AA2575BC0A9659C8B63
France will also shut down hospital, force mandatory holidays on doctors, and take other cost saving measures to save money. Oh yeah, most French hospitals don't have air conditioning, which means that they don't have modern environmental controls.
Posted by: Xmas at Oct 16, 2007 7:55:54 AM
Could anyone shed some light upon the 45+ million uninsured Americans? How many of them are young and healthy people who prefer paying 40 USD a year for treatments and drugs they need to shelling out hundreds of dollars for insurance?
Posted by: J at Oct 16, 2007 8:18:29 AM
So you suggest we subsidize the research for the rest of the world, that unlicensed practitioners would not harm medical care, that it does not matter that people are uninsured, and that it is okay that we spend twice as much as the UK? That is an interesting world you live in. And sadly not the real one.
Posted by: akatsuki at Oct 16, 2007 8:31:48 AM
This post, like so much else in the debate about "health care policy" is more usefully thought of as two debates: a debate about health care economics, and a debate about health care policy. I appreciate that Tyler has a lot to say about both, but it still muddies the waters to not consider these items separately.
I don't think one can have a sensible discussion about health care economics if both parties don't understand or acknowledge the inherent trade-off between access, innovation, and cost. Anyone who thinks we can have full access (which doesn't exist even in countries with "universal coverage"), the American pace of innovation, and Canadian costs is simply delusional. Assuming that Americans can improve on all three via non-market mechanisms is very likely assuming away scarcity of some resource or other.
The policy argument is different. It must answer questions like, "For a given economic result, under what conditions is it acceptable for the government to intervene on personal decisions about treatments," or "Even if the economic results might be better under a government-controlled system, to what extent do we want the allocation of scarce societal resources to be distributed via political rather than market mechanisms?"
The tendency today is to assume that if one can show that Canadian or French style systems produce better economic results that one should automatically accept their policies. As a practical matter, people's policy positions tend to color their view of the data. People biased in favor of "universal health care" ignore that access in Canada or France is far from universal. People biased in favor of less governmental involvement are unwilling to admit that they don't care if children die because their parents were too poor to afford decent care, and the private charities weren't enough to make up for that.
Posted by: M. Hodak at Oct 16, 2007 8:39:25 AM
The problem with the debate about health care is that it too often tries to treat a couple symptoms (health insurance coverage and high costs) while not even attempting to diagnose the reasons for those symptoms. As Tyler notes, America's quality of care is tops in the world. As a side note, if you are going to cite the WHO rankings, it would be wise to be aware that an important element in those rankings is essentially the degree of socialization. In other words, the rankings pre-suppose socialized medicine is superior.
The cost of healthcare in the US is far higher than anywhere else in the world, and this is worth addressing. But instead of just trying to reduce these costs by government dictate, we should be asking why they are so high in the first place. A lot (though not all) of what McCain proposed the other day strikes me as looking for th root of the problems.
The most important source of our problem, of course is the placing of incentives for health insurance on the employer rather than the employee; this makes no sense, and results in people receiving coverage that provides far too much coverage in some areas and far too little in other areas. Removing responsibility for health insurance from the employer to the individual will have a positive long-term effect on wages, and more to the point will also decrease overall health care costs as people actually get to choose the health insurance appropriate to them. For example, most people currently would be best off with high deductible insurance would be appropriate, but the employer based system discourages purchase of high deductible insurance (since high deductible insurance shifts costs to the employee).
Other problems include the fact that we are effectively subsidizing pharmaceutical price controls in the rest of the developed world- this would, I think, be alleviated if we allowed re-importation of drugs into the US; it would cause the drug companies some short term pain, but in the long run they would wind up better for it since it would place tremendous pressure on single payer systems to pay a fair market value for their drugs.
Another huge problem is the wide discrepancy in health insurance requirements from state to state - there is no rational reason for this. Individuals in one state shouldn't be prevented from purchasing insurance that is tailored for their needs just because their state prohibits that type of insurance or considers that type of insurance to be insufficient.
Posted by: Mark at Oct 16, 2007 8:51:17 AM
Why are we talking about ''Canadian'' health care when we should be talking about ''Ontario'' or ''Quebec'' or ''B.C.'' health care?
Our federal government has no power to run a health care system. Only our states do. So we should be talking about the MN or CA or NY health care systems.
Posted by: Russ Nelson at Oct 16, 2007 8:55:36 AM
But libertarians, I am not letting you off the hook either Isn't there some form of further government intervention into health care that could help somebody?
Sure. I don't know any libertarian who would dispute that. The problem is not that government is unable to help anyone, it's that it has no right.
And if your basic model is that governments steal as much money as they can, and then waste it all, shouldn't we then jump at the chance to institute health care subsidies of this at least partially helpful nature?
I don't know any libertarian who thinks that the basic model of government is that it steals as much as it can and wastes it all, either. I certainly do think it takes what is politically feasible, but the political feasibility constrains its spending as well as its taxation.
Who is this libertarian that you're arguing with?
Posted by: Joshua Holmes at Oct 16, 2007 9:09:35 AM
As apparently one of the apparently few libertarians to respond, let me say that if government MUST intervene (more than it already has), then the only intervention should be across the board cash distribution of some amount which should not explicitly earmarked for health care/insurance, but its use for health care should be strongly encouraged. Encouragement should be read as PSAs. I would agree to an opt-out program if it weren't for slippery slopes (for a relevant example see the SS reform of 1983)
As far as those doubting the facts, given similar inputs, the US health care system really does produce superior results. See survival post-cancer diagnosis, or how Canada handles its a significant fraction of its premature births.
Posted by: Jody at Oct 16, 2007 9:14:27 AM
Just to clarify- as a libertarian, it's worth my pointing out that most of what I argued for above is really the pushing of government out of the health care industry. Re-importation of drugs means an elimination of current prohibitions against such; removal of tax incentives from employers in favor of individuals reduces government intervention, and so forth. So what I'm saying is that the libertarian position is more that the problem, properly diagnosed, is primarily too much government intervention rather than too little.
Posted by: Mark at Oct 16, 2007 9:30:44 AM
I think we should spend less for health and get more. The fact that other societies manage this buy such a large margine means that we are making some mistakes. The type of mistakes we are making is that we are buying things that aren't really health care and calling them health care. The left often characterizes the mistake we are making as making HMOs rich and the right even more absurdly claims that the mistake we are making is making trial lawyers rich. Really the mistake is in thinking that health care can do far more than it can. We want to believe that we have achieved more mastery over life and death than we have. In america we spend a great deal on things that work relatively poorly like cancer treatments, and far less on things that work relatively well like pre-natal care. If our nation's consumption of food was like our consumption of health care we would spend far more on escargots than on potatos.
Posted by: Michael Foody at Oct 16, 2007 10:02:25 AM
Different Jeff asked:
How and why can Canada, for example, deliver equal or better health care outcomes for half the price?
First, consider this: the median amount of time Canadians wait to see a specialist after being referred to one by a general (or family) practitioner has gone from 3.7 weeks in 1993 to 8.8 weeks in 2006 [these figures are from the Fraser Institute]. This more than double increase in the time delay to receive treatment has come despite there being almost no change in the proportion of GPs and specialists with respect to the total Canadian population.
In other words, the increase in median wait time to receive medical treatment over these years is not driven by a shortage of specialists.
By contrast, the total number of doctors in the U.S. has increased with respect to the population from 1993 to 2006, including the number of both GPs and specialists.
Now consider this: the Canadian health care system has systematically underfunded investments in new medical technology for years, including for well-established devices such as MRIs, which have become a primary means for specialists to diagnose and monitor various medical conditions. According to OECD data, in 1993 Canada had 1 MRI for every one million Canadians. By 2005, the Canadian health care system had increased that to 5.5 MRIs for every one million Canadians.
By contrast, the U.S. had 11.5 MRIs for every one million Americans in 1993, which increased to 26.6 MRIs for every one million Americans in 2005.
The lack of investment in implementing medical technologies into the Canadian health care system acts as a bottleneck for Canadians in receiving treatment. This underinvestment keeps costs down, as nothing saves more money than not spending it, but these savings come at the price to patients of serious delays in receiving advanced medical treatment. Once Canadians make it to the specialist, the outcomes are similar to those in the U.S. for many conditions, but not for those conditions (such as cancer) for which early treatment is an essential element in obtaining substantially better outcomes.
We should note that the OECD indicates that U.S. patients do not have a significant wait time between getting a referral from a GP to receiving treatment from a specialist.
Posted by: Ironman at Oct 16, 2007 10:13:27 AM
Yawn. Unless we address America's monstrously high spending on futile end-of-life care, any discussion of health care reform is just rearranging the deck chairs on the Titanic.
Posted by: Peter at Oct 16, 2007 10:20:32 AM
I don't get the argument over point 1. If you're debating a health care system, you can't include things that aren't affected by the system. If Americans drive more or have more gun violence which lowers the life expectancy, you can't turn around and use the lower life expectancy as evidence that America's healthcare system is broken. If different ethnic groups have different life expectancies based on diet and other factors, you can't assume the healthcare system is the problem.
Why not just have a two-tiered system? Free healthcare for anyone who wants it. Specify the level of GDP the government gets to spend based on how many people join the system, maxing out at 8% of GDP if everyone joins the system. With a maximum amount of GDP, the government will be forced to cut service if it cannot generate efficiencies. The only restriction on government is that it cannot set any prices. The non-government system should be almost completely unregulated. Then see what happens. If the market works, people will shift from government to market plans. If it doesn't work, people will quit the private system for the government.
Posted by: 8 at Oct 16, 2007 10:22:57 AM
Unfortunately, the AMA is opposed to measures that would increase the supply of physicans or others that can do their job. The AMA is perhaps the most effective union in this country.
Posted by: M at Oct 16, 2007 10:32:32 AM
