Asymmetrical Information

Two salient things:

1) Britain's NHS covers everyone, not just seniors. And the care given is, how do I say this...less than adequate?

2) Medicare is so grossly overfunded because it is a sop to the senior citizens vote.

Gosh, I've also heard that cars older than 10 years old cost more than the average car to maintain! Imagine!

Jane, where did you get these figures from? Medicaid enrollees in 2001 were 36 million (http://www.cms.hhs.gov/medicaid/managedcare/trends01.pdf), not 58 million. The CBO reports that 2003 Medicaid spending was $152 million. I'm thinking you have mixed up Medicare stats with Medicaid stats.

Also, not sure about those NHS figures. I have £63.7bn for 2003-4 estimated outturn, which would be more like $117bn. And you're also short about a million Brits on the population number.

Also Tom's point is entirely relevant; you're attempting to compare the cost of health for a cross-section of the population against a health service for kids and grannies. This is where all the cost of a health service is incurred.

If the US public health service already covers the lion's share of health care costs (i.e. those costs incurred for kids and grannies), doesn't that suggest that further steps to nationalize health care really aren't necessary? If anything that we should think about rolling back some of our coverage?

This isn't a snark, it's a genuine question from someone who knows little about the public health system. I have to admit I didn't realize just how much of the bill we were already footing.

This publication shows that Australia spent US $46 (A$66) Billion on health goods and services in 2001-2 (financial year) on a population of approximately 20 million. Government funding (State and Federal) of the total health care expenditure was 68.4% of this figure. This was an increase of 1% over the previous decade.

Australia's national healthcare system broadly follows Britain's NHS system but with much greater penetration of private healthcare (there are some government incentives to encourage this). Something like 30% of the Australian population have private healthcare, but equally still have access to public healthcare should they so choose. It's more or less a blended provision of services rather than a black-and-white cut off between the two areas.

My own anecdotal evidence from nursing friends who have worked in the British, Australian and Swedish health systems is that the quality of Australian public healthcare is generally superior to the British system and similar to the European experience. (Qualified by particular examples of unique excellence in all three).

The Australian model might be closer to what you might be debating for a US system.

Sorry, my link did not work. Here it is:

href"http://www.aihw.gov.au/publications/index.cfm/title/9307

The total amount spent per person is not the whole issue. You should also factor in that the UK's NHS now has more administrators than beds, and that contributions are compulsory, even though some aspects (dental and optical care, prescription medication) require further payment. Plus over 5,000 patients per year (NHS's own figures) die of MRSA.

Er... you might as well be comparing two High School athletic programs: One is soccer and the other ice hockey. Are costs (equipment, playing area, spectator stands) and output at all similar?

Ian, the figure of 5,000 refers to total MRSA cases, not deaths. The figure for deaths is about a tenth of that.

It is possible to argue a particular publicly funded health system is badly managed without arguing that publicly funded health care is always badly managed in every place and circumstance. Canadians often fall for the converse unreason of assuming that simply because some private American health is expensive that all private health care provision should be opposed per se.

Jane - why are you comparing United Kingdom citizens and only the United States citizens in a specific program?

Plenty of people in GB have private health care, or use private docs part of the time.

The best way to keep costs down is to have people make the economic decision themselves - meaning, their own money.

It's always easy to spend someone else's money, and that is why there is so much spent on overhead - in both the public and private systems.

"It's always easy to spend someone else's money, and that is why there is so much spent on overhead - in both the public and private systems."

Most people aren't in a position to evaluate whether or not the medical services being purchased are needed or not. If the doctor says, "You need Very Expensive Procedure which my lab provides," you're probably going to buy it if you can. So I'm not sure what you're recommending.

"The best way to keep costs down is to have people make the economic decision themselves - meaning, their own money."

Maybe in buying apples or cars, but not in healthcare. Firstly, you've got a public interest in making sure medical professionals are qualified & suitably trained - but that creates restriction on supply of said professionals, driving up costs*.

Secondly, you've got assymetric information (as Ti pointed out) between the patient and the healthcare provider.

Thirdly, you've got an inelastic demand on the part of the patient. If my kid needs a medicine or an operation, I'm going to spend anything and maybe do anything to get them what they need.

Fourly, you've got considerably economies of scale and scope between healthcare providers. Kaiser Permanente in California is probably the most cost-effective medical care given in the US, and maybe the world. So again, we're deviating from atomistic competition.

Also, I believe the overhead in the Mediaid system has dropped from ~10% in 1980 to ~2% today. So your assertion that overhead monotonically increases is not even directionally correct.

*It wasn't until the late 19th century that the medical profession became a licensed profession - before that the assumption was that anyone could act as a medic - that it was a craft, rather than a profession. This was probably a good thing, as before Pasteur's germ theory of disease you'd have been better off going to a medicine man than a physician.

Jane, if your figures are correct, it means we spend an average of over $5,000 per year per patient! Where the heck is all that money going?

The problem with healthcare that messes up the debate is that there is no definition of "enough" healthcare. What should be covered? Everyone has a different opinion on this and there's no way to find a middle ground that will satisfy a large percentage of the population.

Here's what I think would work to encourage competition and accomodate everyone's needs: As with so many other fields, a good place for government to intervene is in setting standards. The government should define a dozen or two standardized insurance policies, ranging from basic hospitalization to total coverage of everything. For each policy they should specify exactly what is covered and what is not, in as much detail as is needed. Then insurance company A could offer say, Plan 9, for X dollars per month. Insurance company B could offer it for Y dollars per month. The government wouldn't set any prices, but it would only certify that a plan met the definition or not.

This way, people would know what they were buying and could comparison shop. Employers could offer, say, $200 per month towards whichever plan an employee wanted. If they wanted an expensive plan, they could kick in the extra or they could choose a cheaper plan and pocket the difference.

Medicaid and Medicare recipients would be offered a choice between several plans that the government was willing to fund and they could pick the one that suited them (say, picking one that covered dental work but not eyeglasses).

Health care providers would no longer have to hassle with insurers over coverage, because the definition would be set by the government and it would be pretty plain who was in error (and discrepancies could be fixed by ammending the plan definitions). Insurers would have to toe the line, or lose their government certification (which would make their plans ineligible for publicly funded use, such as by medicare recipients).

It will never happen, because insurance companies certainly don't want to compete directly in what would probably quickly become a commodity market, but I'll bet it would work better than what we have now.

Also, we have to find a way to get lawyers out of health care. If it means we have to set up some sort of medical arbitration board or something or change laws or whatever, we are getting killed by legal costs. When I go to get a plain, old physical these days, my insurance company has to kick in over $600! Why? Because my doctor is afraid of lawsuits. He can no longer just take my vitals and talk to me. He has to run a large battery of tests (EKG, bloodwork, chest X-ray, etc), every single checkup, or he might miss something and get sued later. We are wasting a tremendous amount of money and time on stuff that is more about avoiding lawsuits than health. This is particularly bad because, as above, there is no definition of "enough". As soon as some doctor, somewhere, gets sued because he didn't screen for rare condition during a routine physical, then they all have to start screening for that rare condition. It never ends; enough is never, by definition, enough.

rob,

excellent idea about the standardization of insurance policies. I don't think they would even need to be mandated, how about something like fannie mae for health insurance.

Health insurance backed securities will be right around the corner - fixed payments in, pooled risk, likely losses in excess covered by the govt. Think about it...

What do you expect from a country that is still paying us for WWII Lend/Lease debt.
http://www.hm-treasury.gov.uk/media/52848/DebtManageRpt03to04PartOne(756kb).pdf

And it should be mentioned that we forgave $26 billion, so they only had to repay a bit over $5 billion. And with a generous 2% interest.
(wish I could get a 60 year mortgage at 2%)

Bill, if you live in a state whose charter dates back to before 1880 or so, you might not want to open up that particular hornets' nest ...

Medicare is Federal medical coverage for the 65+ croud (and a few others). Medicade is the gov't program for the very poor. Next Sunday, when you're watching 60 Minutes, remind yourself that all those old guys have insurance that you are paying for, because you 'care.'

Standardized insurance policies? Been there, done that. Check out Medicare supplimental policies A through J. Policies H, I, and J cover prescription drugs; however, due to adverse selection, not all policies are available in all areas.

A large portion of Medicaid dollars go to nursing homes to cover room and board for the eldery.

If the average Britain costs half as much as the average Medicare patient, the US is very efficient. Here, the under-65 population costs about a third of the cost of the elderly.

If Jane was actually comparing NHS costs with Medicaid like she said, than this is apples-and-oranges; NHS doesn't cover food & housing, Medicaid is a state-run program supplemented with Federal funding (up to 50%), and NHS isn't heavily subsidised by private sector healthcare providers.

$5,000 per year per person on Medicare is pretty accurate, albeit with wide variation by county: from about $2200/year in South-Central Minnesota to over $8,000/year in Dade County (Maimi) and NY City. People get the same care, but the reimbursement factor varies by county.

It's a messy, complex system, and that's a good thing; otherwise the would be no call for Medicade cost analysts.

If your figures are correct, we pretty much already have socialized medicine in the US. (I have suspected this for a while, just on the basis of how inefficient medical care is- must be socialized...)

My experience with the Canadian health care system (when i was a chronically ill child) make me mistrust socialized medicine, and I pretty much distrust socialized anything... but maybe we should either do away with the current system, or fully socialize it... I admit to being an ignoramus on this subject, so if that's laughable, tell me why.

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