Wednesday, April 13, 2005
the decline of american health care
kash had much interesting to say, but nothing so striking as his chart from the oecd:
kash doesn't point fingers, welch engages in some minor class struggling, but i think that the difference lies in the structure of the system. welch starts but doesn't follow on:
What I still can't understand, is how anyone -- seriously, anyone -- can think a system where it is extremely difficult for a perfectly healthy young person untethered to an insurance-providing job to obtain health insurance without lying, or without giving up the possibility of having childbirth covered, is a good system. Sure, it can be one helluva system for the folks who can afford it, or who have jobs where these kinds of problems don't come up, or who think that lying is a normal part of everyday life ... but there are reasons other than laziness and lack of imagination that at any given time 10 percent or more of the U.S. population is uninsured.this is a clear observation. the nations we are compared to in the oecd graphic, besides being more efficient in cost per capita, insure 100% of their populations. i'm sure welch would not say that all market incentivizing (or perhaps any) should be removed from the current american system. but one still has to look at the list to which we are compared and see what is obvious: those nations with remarkably better healthcare have effectively socialized their healthcare systems.
the problems associated with retaining a market-based health care system seem very clear to me, and are consistent with some of what we see in the united states.
paul krugman points out that more services are possible under medicine every day, accounting for the rise in cost. but when this occurs for, say, a VCR, the price ultimately goes down. why? because efficiencies of production increase supply, lowering cost.
is this not true of health care? in some ways, it is. devices (like pacemakers) and off-patent pharmaceuticals cost a fraction of what they once did.
however, the labor cost associated with surgery has increased as the supply of surgeons, et al, has not increased in proportion to demand. even as devices and procedures multiply, the number of surgeons cannot.
what is the solution to this shortfall? in a market system, the services are simply allocated to those who can pay for them -- which is what we see in america, with vastly higher salaries for doctors (and the foreign physicians they draw). this means, however, putting vast numbers on the outside, looking in. in socialized systems, services are allocated with regard not to price but need and potential benefit. everyone in need can be served, but may have to delay treatment awaiting availability or (in some cases) be denied treatment deemed unnecessary.
and beyond that, there is the truth that competition can be wasteful. real markets (if not theoretical ones) can encourage redundancy and complexity -- decidedly features of the american health care market -- and, in boom times, overinvestment and malinvestment. there's also the risk of legal action, which is far higher under the united states than any other nation on earth, and the cost of insuring against it.
which system is better? the proof seems to be in the oecd's numbers. as krugman notes:
In the long run, medical progress may force us to make a harsh choice: if we don't want to become a society in which the rich get life-saving medical treatment and the rest of us don't, we'll have to pay much higher taxes. The vast waste in our current system means, however, that effective reform could both improve quality and cut costs, postponing the day of reckoning.this is not to say that problems cannot or would not arise under a socialized system of health care. they would. but one cannot ignore the data on the basis of ideology alone if one hopes to improve the system. the data show that there clearly is an advantage to a socialized plan; it's up to theory to explain why, not deny the data.
To get effective reform, however, we'll need to shed some preconceptions - in particular, the ideologically driven belief that government is always the problem and market competition is always the solution.
The fact is that in health care, the private sector is often bloated and bureaucratic, while some government agencies - notably the Veterans Administration system - are lean and efficient. In health care, competition and personal choice can and do lead to higher costs and lower quality. The United States has the most privatized, competitive health system in the advanced world; it also has by far the highest costs, and close to the worst results.
UPDATE: from crooked timber, a wonderfully illustrative graph depicting the problematic nature of markets and health care: