As part of my attempts to reduce anxiety-loops related to media consumption, when the argument broke out about Obamacare eight years ago I purchased a number of books about healthcare around the world to better understand the global context and options.
I find Americans tend to argue that there’s ‘market’ driven healthcare and ‘socialist’ healthcare. Europe has ‘socialist’ healthcare and that’s expensive, they use a high amount of taxes to support it. America has less taxes, and spends more on defense, so it uses ‘market’ healthcare that its citizens pay for.
Often, the argument between left and right Americans is between arguing for higher taxes and better healthcare, or using the ‘market.’ Many Americans who have healthcare via their jobs are also somewhat uninformed about what American healthcare looks like and how it works. The number of people I’ve talked to who have day jobs and healthcare through employers and who are upset about Obamacare market exchanges being forced on them when they’re not using it, is somewhat astounding to me.
Talking to Europeans and other folk around the world, I also noticed that people took it for granted and saw it as invisible, or talked about the downsides. It wasn’t until I would outline how it worked in the US that they got horrified faces (I knew it was bad, but fuck me, was one friend’s response via email).
As far as I can tell, the America system is an amalgamation of a number of different healthcare approaches all followed somewhat haphazardly. It actually uses elements of ‘socialized’ healthcare and ‘market’ healthcare. But those two dualities are not altogether right, as far as I can tell.
The book that laid it all out the best is The Healing of America, which I really recommend anyone who opens their mouth about healthcare options read.
There are basically 4 approaches to offering healthcare in the world that humanity tries. Wikipedia summarizes them here:
The Bismarck Model
This is the model followed in Germany and in its rudimentary form was laid out by Otto von Bismarck. The system uses private initiatives to provide the medical services. The insurance coverage is also mainly provided through private companies. However, the insurance companies operate as non-profits and are required to sign up all citizens without any conditions. At the same time all citizens (barring a rich minority in the case of Germany) are required to sign up for one or the other health insurance. The government plays a central role in determining payments for various health services, thus keeping a decent control on cost.
The Beveridge Model
This model adopted by Britain is closest to socialized medicine, according to the author. Here almost all health care providers work as government employees and the government acts as the single-payer for all health services. The patients incur no out-of-pocket costs, but the system is under pressure due to rising costs.
The National Health Insurance Model
The Canadian model has a single-payer system like Britain; however, the health care providers work mostly as private entities. The system has done a good job of keeping costs low and providing health care to all. The major drawback of this system comes from the ridiculously long waiting times for several procedures. The author, T.R. Reid, would have had to wait 18 months for his shoulder treatment in Canada.
The Out of Pocket Model
This is the kind of model followed in most poor countries. There is no wide public or private system of health insurance. People mostly pay for the services they receive ‘out of pocket’. However, this leaves many underprivileged people without essential health care. Almost all countries with such a system have a much lower life expectancy and high infant mortality rates. The author gives his experience with the system in India, and a brief description of the ancient medical system of Ayurveda.
So by the writer’s estimation, the USA mixes in from all four of those models above in bits and pieces.
So, 36% of the US uses some form of a system from the NIH model, 50-60% of it uses some form of Bismarck mode, but using for-profit systems that are lightly regulated, whereas every other place that uses the Bismarck model (some of Germany, France, Belgium, Netherlands, Japan, and Switzerland) don’t actually do socialized medicine, they just highly regulate the companies that provide and demand they cover all citizens and offer minimum benefits.
Canada and the UK, which offer what some might imagine as socialized medicine, do it through two radically different mechanisms (Canada creates a national health insurance company via the government, Medicare, while UK government directly hires doctors and makes hospitals).
Few of the above, even in Europe, are actually truly socialized medicine, by the way. The UK comes the closest. Socialism is ‘seizing the means of production from private capital.’
Okay, a number of debates are about ‘single payer’ and socialized healthcare vs ‘market’ healthcare.
Single payer means the government acts as an insurer and collects all the payments, whether via a tax, or via a set payment, and then pays private hospitals or doctors for your treatment. Having a single source means the government can negotiate down costs.
Medicare and Medicaid are single payer. The UK and Canada are single payer models. Canada is Medicare for all. A third of the US system is single payer. It is just that most Americans do not realize this, it’s a wonky term. Many people hear ‘single payer’ and they don’t think ‘Medicare’ they think ‘Canada’ or ‘Europe’ even though Europe has a mix of systems.
Funnily enough, UK patients tend to self-report as liking their healthcare the best:
But that doesn’t mean the more socialized the healthcare the happier people are. Switzerland has a fairly lean Bismarck model that the US would recognize and is second on that chart up there. The difference is that they regulate the ever-loving hell out of it and require (mandate) that everyone buy some, something the US keeps shying away from.
People in Japan live the longest. Switzerland is next, followed by Singapore, then Australia, Spain, Iceland, Italy, Israel, Sweden, France and then Republic of Korea for your top 10.
Now whenever I post that someone links me to a look at how much more they have public transportation, or a better diet. Sure, it’s not healthcare alone. But it’s the single largest impact on life expectancy of a civilization. The fact the USA is #31 on the life expectancy list and dropping (one of the few or only developed nations to be reversing a trend in life expectancy growing in areas of the US) demonstrates the power of healthcare and quality and longevity of life.
Often I hear an argument that goes “well, the US spends so much on defense we’d have to give up other things to have the government create socialized medicine, socialized medicine is too expensive.”
Well, arguments against the complicated amalgam of systems the US currently has isn’t an argument for socialized healthcare and also no other system is more expensive than the US system.
Here’s what countries spend, both in taxes via the public government, and via private systems, visualized on a graph:
You can see that just in government spending, the US spends as much as Switzerland, Netherlands, Sweden, Ireland, Austria, Denmark, Belgium and more than the UK. So we don’t have to spend any more than we’re already spending, we just need to change what we’re doing.
Also, all of those systems get dramatically better results for longevity and patient-reported happiness.
There are a lot of reasons. A big one is that America is one of the few countries that assumes health insurance companies should be big, profitable businesses. Most countries look at it as a service. Fire, police and teachers aren’t big, for-profit business, but are services for the community. They make assumptions moving back from there. America’s education system also puts a huge burden on medical professionals who take on a lot of debt, who then charge more. The US also has a legal system that allows big lawsuits, that means doctors take out expensive operating insurance.
There are many other pain points as well, but another huge one is this:
The entire US system is actually socialized, and it was socialized by President Ronald Reagan in the 1980s with something called EMTALA. I have a long post about that here.
Short version: the US used to require payment or proof of insurance before you went into the ER. Reagan changed that to legally force ERs to take care of anyone who came in. Thus, the moral contract America legalized was that all people should be taken care of.
What Reagan never did was to decide how we paid for it. We’ve been arguing ever since. But hospitals are still admitting people. And since many Americans don’t have insurance for preventative care, they use the ER as their doctor. ERs pass this cost onto any American who has insurance by randomly fiddling with billing to make sure the hospital as a whole makes a profit.
I sometimes thus make the argument that American health insurance is a ‘socialist’ (using some right wing arguments about healthcare) unfunded mandate.
Funny you should ask.
This is of interest to me:
— RoseAnn DeMoro (@RoseAnnDeMoro) April 3, 2017
One of my friends who is a nurse retweeted this and it caught my attention because of the history of how Canada came to adopt the NIH model. In 1947 in Saskatchewan, a Canadian province rolled out an act that guaranteed free care, thanks to one Tommy Douglas. They couldn’t quite do universal health care, the original vision, due to funds at the time. Alberta came next with medical coverage for 90% of the population. In 1957 Canada’s Federal government created a 50% cost payment plan, and by 1961 all the provinces were using that plan to create universal programs. In 1966 it was expanded further.
That hints to me that all we need is one big state to do something similar in the US. Vermont had looked into it after Obamacare was passed, as that law has a provision allowing a state to take federal funds for health and pool them all into one giant pot if it’s creating a universal healthcare situation. That’s basically the Canada path.
I also think using Medicare as the vehicle is smart.
Medicare has a great brand. In the US, 75% of its users report satisfaction, making it one of the more well-liked American institutions.
Further, using existing Medicare program for growing would bring down older users costs in the program by healthifying the Medicare user base.
Lastly, Medicare, even though it’s for older folks and higher risk by default, is pretty damn cheap in comparison to workforce insurance and self employment health insurance. Part A is free (basic emergency stuff and hospitalizations) and Part B (doctors and preventative stuff) is $150/month and part D for drugs is $50. I’d jump on that.
And none of this means employers have to stop offering great healthcare plans to sugar employment deals. In the UK, and all throughout Europe, people who make extra money bolt on private health insurance plans on top of the public options so that they can the care they want in the style they want. Medicare has a part C, which is where you can get a more Cadillac private insurance set up added on.
But having the option so you can get out of a shitty employer healthcare plan, or move around, be portable? That sounds great.
One Canadian province setting it up got other provinces to look over there and say ‘hmmm’ and spread the idea. If California got rolling, it wouldn’t be too long before Washington and Oregon joined up, and the entire west coast was set up. They’d draw a lot of small business over there.
I’ll be rooting for California.
Right now, the House Republicans are fighting to get enough votes to pass their bill to repeal and replace the Affordable Care Act, aka “Obamacare.” The Democrats are staunchly opposed. Both sides are arguing over the affordability of healthcare and access to healthcare insurance.
As far as I can see, they’re both circling around wrong tree, chasing each other’s tails. Insurance is only a symptom of the greater problem, and trying to deal with symptoms is not only expensive, but will also postpone dealing with the real problem, which continues to worsen. That problem? Healthcare costs. People need insurance because healthcare costs in the U.S. are effectively the highest in the world, and the vast majority of Americans don’t get as good healthcare as nations spending far less on healthcare.
In 2015, U.S. health care costs were $3.2 trillion, making healthcare one of the largest U.S. industries, nearly eighteen percent of Gross Domestic Product, but fifty-five years ago, healthcare only comprised five percent of GDP.
Part of the reason for the cost increase is emergency room treatment, the most expensive single aspect of current healthcare, making up one-third of all health care costs in America. And a significant proportion of emergency room care occurs because people can’t get or afford other treatment for various reasons.
Another component of rising costs is the continuing increase in the costs of drugs and medical devices. According to Forbes, the healthcare technology industry was the most profitable U.S. industry sector of all in 2015, notching an average profit margin of 21%, with the most profitable company of all being Gilead Sciences with a 53% profit margin. And no wonder, given that the list price for the top-20-selling drugs in the U.S. averages more than twice as much as those drugs as in the E.U. or Canada.
While the pharmaceutical industry pleads high research and development costs, a GlobalData study showed that the ten largest pharmaceutical companies in the world in 2013 spent a total of $86.9 billion on sales and marketing, as opposed to $35.5 billion on research and development, almost two and a half times as much on marketing as R&D. Those ten companies had an average profit margin of 19.4%, ranging individually from 10% to 43%, with half making 20% or more. And since Medicare is prohibited by law from negotiating drug prices for its 55 million beneficiaries, the program must pay whatever price drug makers set.
The U.S. medical technology market exceeds $150 billion a year in sales, and in 2015 the gross profit margin for the medical equipment and supplies industry averaged 12.1%, according to data from CSImarket.com.
Studies of doctors’ compensation show that over the past twenty years, that, in general, physician compensation has increased far less than all other components of healthcare. In fact, annual earnings actually declined for the typical physician between 2000 and 2010. Annual earnings for physician assistants and pharmacists have increased at a greater rate. More to the point, as a percentage of total national healthcare costs, U.S. physician wages are small – approximately 9% – a number among the lowest in the developed world.
Hospitals’ costs have increased significantly, but not because they’re making money. A Health Affairs study analyzed hospital income and costs of more than 3,000 hospitals nation-wide and found that fifty-five percent of hospitals lost money on each patient they served in 2013. This does raise the question of whether non-profit hospitals are paying more and more, possibly too much, for high-priced administrators apparently required by the bureaucratic and legal maze generated by the interweaving of private and public medical systems, government regulations, and insurance company requirements. Studies indicate that administrative costs make up twenty to thirty percent of the United States health care bill, far higher than in any other country. American insurers, meanwhile, spent $606 per person on administrative costs, more than twice as much as in any other developed country and more than three times as much as many, according to a study by the Commonwealth Fund.
Then add to that the skyrocketing costs of malpractice insurance and often excessive court judgments in medical tort claims cases.While the amount is subject to dispute, it’s not inconsiderable and also adds to costs.
Unfortunately, neither the Affordable Care Act nor any proposed Republican replacement will do anything to deal with what I’ve mentioned, and what I’ve mentioned are only the most obvious causes of ever-increasing health care costs.