Preaching to the choir
Jan. 8th, 2009 04:29 pmI keep hearing Americans talk about universal healthcare as if it were a bad thing. Being English therefore loving the NHS as one of the great institutions of my homeland (along with the BBC and and tea drinking) I admit I may be a bit biased when I think that universal healthcare would be good for the US, however, I think I have good reason to think so beyond just nationalistic bias.
Let's ignore for the moment the 'it's wrong to let people die of curable diseases just because they're poor argument'. That argument doesn't wash with a lot of Americans for several reasons. Firstly, I've noticed Americans tend to attribute bad health to lifestyle choices more than English people tend to. This fits into a deep cultural difference in the way Brits and Americans view the world. Rigid class systems and the paternalism that grew out of it led to a culture that one's place in the world was not necessarily one's own fault and the rich had an obligation to care for the poor. The second world war led to British people accepting the idea that the government could and should interfere hugely with people's economic lives for the greater good. The US is a nation of immigrants who went there with the dream that they could be in charge of their own destiny. Americans also tend to look to non-governmental solutions to problems more than Brits do, so might see the best way to deal with health inequality as through NGOs. Also, to be honest medicaid provides more of a safety net for the poor than a lot of Brits imagine. Either way, the case for universal healthcare doesn't have to depend upon distribution because, I would argue, the US system just isn't cost efficient.
The US spends more per capita on healthcare than any other country. That's not so surprising but the magnitude of some of the differences are. In 2002 the US spent over twice as much per capita on health care as: Austria, Canada, Australia, Finland, Italy and the UK. Was US healthcare in 2002 really 255% better than in the UK? The really shocking thing is when you look at the level of per capita government spending on healthcare. In 2000 the US government was the third highest spender per capita on healthcare. The US public sector spending on healthcare was 144% UK per capita spending on the NHS. Since than UK spending on healthcare has gone up a lot and is now higher than US public sector spending per capita but is still way below US total per capita spending. Most developed countries in the world have some system of compulsory health insurance or tax funded health service. There spend less on health than the US and the US doesn't have better health outcomes for their money. Their child mortality rate is high, their peri mortality isn't great. They don't have higher life expectancy, particularly certain sections of the US population.
Lots of Americans admit that European countries have cheaper and just as good healthcare systems but still don't think that it would work in the US. I can see their point if it were to be introduced on a state by state level because the high mobility in the US between states would lead to a lot of health tourism to any state with lead the way. I don't necessarily see why it couldn't work introduced across all states. I can, however, think of sound economic reasons to explain why the US system is so inefficient. Most of these reasons come down to information problems in health care.
Health insurance markets are plagued by information asymmetries. Someone taking out insurance is likely to have a better idea what medical conditions they are likely to have during the course of the cover, either because of their lifestyle choices or knowledge of symptoms and undiagnosed issues in their family which aren't enough for them to have to declare them on the form. This means that it's really difficult for certain conditions to be covered by health insurance in a competitive market. Take birth control. Most universal healthcare systems subsidise contraception because contraception is cheaper than abortions which are cheaper than antenatal care and birth. Unplanned pregnancies are really cost ineffective compared to contraception. However, women tend to be in a better position than insurance companies to know how likely they are to want to use contraception. Imagine there are two plans, one which covers contraception and the other doesn't. The no contraception one is 50p cheaper because not covering contraception saves them a little bit on average. At first only the lesbians and Catholics go on the no contraception plan because for 50p it's worth having it covered if there's any risk you'll need it. But that makes the proportion of people on the contraception plan who use contraception higher than before so the average cost goes up and the premium goes up. So now the kids who really intend to wait until marriage honest switch across and the women who figure they must be close enough to the menopause not to worry switch across and that increases the contraception covering plan's premiums even more. Eventually the only people on the plan which covers contraception are people who definitely want to use contraception and this means that the premiums for the contraception covering plan are higher than the no contraception plan by the cost of contraception so you may as well just be on the no-contraception plan and pay for the pills yourself. Everyone apart from the Catholics and the lesbians would be better off if the only plan available was one which covered contraception and was 50p more. This is why a friend of mine has insurance which won't cover contraception but will cover up to two abortions a year even though a year of contraceptive pills costs less than two abortions. It's also why employee health insurance tends to cover more stuff than private policies.
Another informational problem is that doctors know better than patients what patients need. If doctors get paid in turns of procedures performed they have an incentive to recommend very expensive procedures even if the cost to benefit ratio is very high. Patients aren't in a position to tell whether a treatment is really necessary and insurance companies each trying to come up with a scheme of cost and benefit which will decide which treatments are covered tends to be very expensive and leads to weird rules about what is and isn't covered because coming up with a complete schedule that can cover all eventualities is impossible, especially due to regular medical advances.
Another problem with private healthcare is that it doesn't take into account externalities. Government healthcare pays a lot of attention to contagious diseases, particularly those that can cause problems later in life. The NHS has a crusade against chlamydia at the moment because finding and treating the people who are infected now is cheaper than treating the infertility it will cause to all the people who get infected if it goes untreated for 10 years. I was offered a chlamydia test in a toilet at my university's society fair. Similarly, the NHS is cracking down on the prescription of antibiotics for minor ailments because it leads to resistant strains. It also tries to avoid unnecessary C-sections because of the problems they cause for future pregnancies.
I'll be honest, there are some losers from universal healthcare systems like the NHS. You're better off in the US if you have good insurance and you might benefit from a really expensive treatment that has a slim chance of working. Infant mortality in the US is quite high compared to other countries but extremely premature babies are much more likely to survive if they are born in the US.
Let's ignore for the moment the 'it's wrong to let people die of curable diseases just because they're poor argument'. That argument doesn't wash with a lot of Americans for several reasons. Firstly, I've noticed Americans tend to attribute bad health to lifestyle choices more than English people tend to. This fits into a deep cultural difference in the way Brits and Americans view the world. Rigid class systems and the paternalism that grew out of it led to a culture that one's place in the world was not necessarily one's own fault and the rich had an obligation to care for the poor. The second world war led to British people accepting the idea that the government could and should interfere hugely with people's economic lives for the greater good. The US is a nation of immigrants who went there with the dream that they could be in charge of their own destiny. Americans also tend to look to non-governmental solutions to problems more than Brits do, so might see the best way to deal with health inequality as through NGOs. Also, to be honest medicaid provides more of a safety net for the poor than a lot of Brits imagine. Either way, the case for universal healthcare doesn't have to depend upon distribution because, I would argue, the US system just isn't cost efficient.
The US spends more per capita on healthcare than any other country. That's not so surprising but the magnitude of some of the differences are. In 2002 the US spent over twice as much per capita on health care as: Austria, Canada, Australia, Finland, Italy and the UK. Was US healthcare in 2002 really 255% better than in the UK? The really shocking thing is when you look at the level of per capita government spending on healthcare. In 2000 the US government was the third highest spender per capita on healthcare. The US public sector spending on healthcare was 144% UK per capita spending on the NHS. Since than UK spending on healthcare has gone up a lot and is now higher than US public sector spending per capita but is still way below US total per capita spending. Most developed countries in the world have some system of compulsory health insurance or tax funded health service. There spend less on health than the US and the US doesn't have better health outcomes for their money. Their child mortality rate is high, their peri mortality isn't great. They don't have higher life expectancy, particularly certain sections of the US population.
Lots of Americans admit that European countries have cheaper and just as good healthcare systems but still don't think that it would work in the US. I can see their point if it were to be introduced on a state by state level because the high mobility in the US between states would lead to a lot of health tourism to any state with lead the way. I don't necessarily see why it couldn't work introduced across all states. I can, however, think of sound economic reasons to explain why the US system is so inefficient. Most of these reasons come down to information problems in health care.
Health insurance markets are plagued by information asymmetries. Someone taking out insurance is likely to have a better idea what medical conditions they are likely to have during the course of the cover, either because of their lifestyle choices or knowledge of symptoms and undiagnosed issues in their family which aren't enough for them to have to declare them on the form. This means that it's really difficult for certain conditions to be covered by health insurance in a competitive market. Take birth control. Most universal healthcare systems subsidise contraception because contraception is cheaper than abortions which are cheaper than antenatal care and birth. Unplanned pregnancies are really cost ineffective compared to contraception. However, women tend to be in a better position than insurance companies to know how likely they are to want to use contraception. Imagine there are two plans, one which covers contraception and the other doesn't. The no contraception one is 50p cheaper because not covering contraception saves them a little bit on average. At first only the lesbians and Catholics go on the no contraception plan because for 50p it's worth having it covered if there's any risk you'll need it. But that makes the proportion of people on the contraception plan who use contraception higher than before so the average cost goes up and the premium goes up. So now the kids who really intend to wait until marriage honest switch across and the women who figure they must be close enough to the menopause not to worry switch across and that increases the contraception covering plan's premiums even more. Eventually the only people on the plan which covers contraception are people who definitely want to use contraception and this means that the premiums for the contraception covering plan are higher than the no contraception plan by the cost of contraception so you may as well just be on the no-contraception plan and pay for the pills yourself. Everyone apart from the Catholics and the lesbians would be better off if the only plan available was one which covered contraception and was 50p more. This is why a friend of mine has insurance which won't cover contraception but will cover up to two abortions a year even though a year of contraceptive pills costs less than two abortions. It's also why employee health insurance tends to cover more stuff than private policies.
Another informational problem is that doctors know better than patients what patients need. If doctors get paid in turns of procedures performed they have an incentive to recommend very expensive procedures even if the cost to benefit ratio is very high. Patients aren't in a position to tell whether a treatment is really necessary and insurance companies each trying to come up with a scheme of cost and benefit which will decide which treatments are covered tends to be very expensive and leads to weird rules about what is and isn't covered because coming up with a complete schedule that can cover all eventualities is impossible, especially due to regular medical advances.
Another problem with private healthcare is that it doesn't take into account externalities. Government healthcare pays a lot of attention to contagious diseases, particularly those that can cause problems later in life. The NHS has a crusade against chlamydia at the moment because finding and treating the people who are infected now is cheaper than treating the infertility it will cause to all the people who get infected if it goes untreated for 10 years. I was offered a chlamydia test in a toilet at my university's society fair. Similarly, the NHS is cracking down on the prescription of antibiotics for minor ailments because it leads to resistant strains. It also tries to avoid unnecessary C-sections because of the problems they cause for future pregnancies.
I'll be honest, there are some losers from universal healthcare systems like the NHS. You're better off in the US if you have good insurance and you might benefit from a really expensive treatment that has a slim chance of working. Infant mortality in the US is quite high compared to other countries but extremely premature babies are much more likely to survive if they are born in the US.