5 Myths About Health Care Around the World
washingtonpost.com
washingtonpost.com
"The United States is home to groundbreaking medical research, but so are other countries with much lower cost structures. Any American who's had a hip or knee replacement is standing on French innovation. Deep-brain stimulation to treat depression is a Canadian breakthrough"
Now if you really wanted to present the facts you'd hunt down actual figures (e.g. how many breakthroughs were made in the U.S. vs other countries). Instead he presents a handful of breakthroughs and then treats them as proof that the rest of the world is on par with the United States in medical breakthroughs.
Beyond that he quotes figures that are designed to be misleading. For example, he claims MRIs are much cheaper in Japan (which they are). But what he leaves out is the Japanese government did this by (a) arbitrarily cutting how much the Government will pay for an MRI and (b) purchasing MRI machines that have an inferior image density. So the result is you have technicians with inferior equipment rushing through MRIs because their sole customer (the Government) has arbitrarily set a really low price.
In the US, we typically use 1.5-3 tesla machines at a cost of $1-4 million. Price goes up faster past 4 tesla, and 8 tesla reaches safety limitations.
In-plane resolution is roughly proportional to the field gradient. On 3 tesla machines, you can get voxels on the order of 1mm x 1mm x 2.5mm [1]. On a 1.5 tesla machine, you get 2mm x 2mm x 3mm. I'm told Japan typically works in the 0.5-0.75 tesla range, so expect resolution at least as bad as 4mm x 4mm x ??. (I don't know how thick their imaging plane is.)
Artifacts are also considerably worse on low resolution machines.
SNR and CNR (contrast/noise ratio) is also better with higher tesla machines.
[1] Some people claim better resolution, but that's mostly M.D.'s who don't understand signal processing. You can make images with pixel sizes representing 0.1mm x 0.1mm, but they usually don't convey extra information.
http://www.wecaremedicalmall.org/ http://www.mriscangroup.com/
You can do research in the UK with the hopes of selling in the US. This does not mean that your business plan wouldn't change if the US market dramatically shrank.
> It may seem to Americans that U.S.-style free enterprise -- private-sector, for-profit health insurance -- is naturally the most cost-effective way to pay for health care. But in fact, all the other payment systems are more efficient than ours.
That misses three obvious points about the American system: First, healthcare is tax advantaged, which causes even the most standard health issues to go through middlemen. Second, the supply of doctors is kept artificially low with very heavy licensing requirements. Third, the FDA approval process is very lengthy and expensive. Implying that the effect of a bloated, inefficient system is due a cause of free enterprise, private-sector, and for-profit insurance leaves out these well known points. More details:
1. Health insurance is massively tax-advantaged in the United States. Employers and employees pay no taxes on health insurance coverage.
This leads to lots of things. Here's a few: Frequently, all routine medical expenses are routed through health insurance. Antibiotics or a simple doctor's visit - $10 or $50 respectively - aren't paid for out of pocket, but claims are sent in and much paperwork is done. Routine expenses like checkups, physicals, and simple one-off prescriptions aren't what insurance is needed for. Think about if your auto insurance was expanded to cover all your gasoline and oil changes, but only from certain gas stations or mechanics. Then you paid much higher auto insurance, but all your gas and oil was free as long as you met a complicated set of contradictory rules. And then auto insurance was made tax free.
2. The supply of doctors in the United States is artificially limited by ridiculous overboard licensing requirements. This artificially drives up price. A doctor needs to complete undergraduate studies, medical studies, and complete an indentured-servant undermarket brutal residency to get their medical license. Doctors look at 8-10 years (longer for specialists) of training and hundreds of thousands of dollars of bills. Some of the most expensive and in-demand types of medicine are artificially restricted even further: There's only a few schools with programs for them, and they admit limited numbers of people.
Certainly, a doctor needs a high standard of training, but the current system is way overboard. This artificially keeps supply down and makes medicine more expensive.
3. The average cost per approved drug of the FDA approval process is $800 million. This increases the cost of new drugs and therapies tremendously. Drugs aren't tested just for safety - they also have to meet efficacy standards. That means they need to be proven to work - but that means drugs come out sometimes years later at much higher prices than they would otherwise.
The author pointed out that the "free enterprise -- private-sector, for-profit health insurance" system in the United States is expensive and inefficient. Author implies it's because it's a free enterprise, private sector, for-profit system. Maybe there's some truth in that, but it misses how the tax code, medical licensing, and drug approval processes all increase costs. Working to improve just those three areas would dramatically bring down the expense of care.
There's a lot of problems in the system, though I'm inclined to fix obvious ones with simple solutions before embarking on difficult and complicated solutions. Here's a few suggestions that would be easy to implement, reduce costs of American health care, and increase quality:
1. Making all medical and health purchases tax deductible regardless of insurance status would lower the cost of premiums, administration, and would help people who don't have large coverage.
2. Reducing the really lengthy, unflexible, expensive licensing process for doctors would increase the number of doctors in the USA and lower the costs of visiting a GP or specialist. Doctors could probably get sufficiently good at medicine with 4-6 years of education and 1-2 years of on-job training at closer to market rates. Make it easier to open a medical program that can complete the licensing requirements, especially so that more specialists can be trained in the expensive and highly in-demand fields. Artificially keeping the number of cardiologists down, for example, drives up costs for people with heart problems. If any mix of trained educator and cardiologist could open a licensing program easily, you'd see lots more cardiologists and better quality, less expensive heart treatment available.
3. Streamlining and reducing the costs of the approval process would get drugs to people faster, have the drugs become generic faster, and make them cheaper. You could immediately strike the "efficacy" requirement from the FDA, and have them test just for safety. Individual doctors can explain how likely they think a drug is to have positive effects on a patient once it has been proven safe. Requiring the treatment to be shown to be effective (beyond just not harming the patient) makes medicine more expensive and slower to reach people. Medicines that aren't very effective but aren't harmful don't set the world back so much. But people die while waiting for treatments that are already proven safe are going through multiple, rigorous, expensive trials to be proven effective. Once they are proven effective, some people have already passed away whose lives the treatment would've saved with a forward-thinking physician. And it makes the costs of all medicine higher: Reducing FDA requirements would be beneficial on a number of levels. Keep the safety requirements, but reduce "proven to work" to "seems promising that it could work" - especially in cases of a drug treating a fatal condition.
It may seem to Americans that U.S.-style free enterprise -- private-sector, for-profit health insurance -- is naturally the most cost-effective way to pay for health care. But in fact, all the other payment systems are more efficient than ours.
To which you respond:
That misses three obvious points about the American system: First, healthcare is tax advantaged, which causes even the most standard health issues to go through middlemen. Second, the supply of doctors is kept artificially low with very heavy licensing requirements. Third, the FDA approval process is very lengthy and expensive. Implying that the effect of a bloated, inefficient system is due a cause of free enterprise, private-sector, and for-profit insurance leaves out these well known points.
But many of the other systems are also in the same situations, and thus are comparable. In Holland (a country mentioned in the article, and where I'm currently living), all of those three things are also true. Same goes for many other nations listed in the article.
So while you're claiming that the author can't use America as a free-market example to bash on, that's not the real point.
The general debate out there is that a lot of people are saying "we don't want socialism" and "the free-market is more effective" while refering to the American system. We can sit around a debate whether or not it's really a free-market, whether that's possible, or whether or not it's even desirable. The authors point is, free-market or not, the system doesn't produce the same results when compared with many other systems, which are accused of being less free-market. That's a compelling argument for change, specificly change in the direction of the type of healthcare that the other countries are currently practicing.
If people accuse other systems of being less free-market, and those systems are actually more free market, it simply shows that the accusers are either idiots or lying or both. It does not prove that a free-market is a bad idea.
Nor is there some linear continuum between socialism and free markets. Imagine you have two financial systems, one a complete free market, the other covered in a web of regulations. The free market one might be considerably better. But let's then say that one single regulation gets introduced: "Banks that fail get bailed out". With that single regulation, the system is now infinitely bad, much worse than the highly regulated system.
What matters most is the particular details of a system, along with its implementation and its management.
The real reason that the U.S. system so bad is that our political system is so completely dysfunctional.
I could describe a half-dozen plans that on paper would be perfectly acceptable to you and lionhearted, to conservatives and liberals. But none of these plans will happen. Neither will the liberals' dream, European-like plan happen. The actually plan winding its way through Congress is a continuation of the same problems. By funneling more money away from the American people into the pockets of the various factional interests in the healthcare industry, it will most likely make things much worse.
Your position is that it is impossible to change this industry no matter what because of a deeply flawed political process unique to the US.
The core problem is that any policy that actually improves healthcare will by definition result in far lower healthcare spending. That means lots of doctors, nurses, insurance companies, etc will lose money and jobs. In a Congressional system, determined, concentrated factions will always beat the public as a whole. Very few people will vote out their own Congressman if healthcare reform fails. But if it succeeds, and results in cutting healthcare spending, then many nurses and doctors will switch their vote and stop donating money. Read "Government's End" by Jon Rauch. I interned on Capitol Hill, and his take on the problem is one of the most accurate - http://www.amazon.com/Governments-End-Jon-Rauch/dp/189162049...
I'm claiming there's problems with the American system that everyone, regardless of party or political affiliation, can agree with. I'm further claiming that they have fairly simple fixes that would reduce cost and increase quality. That means healthier people with more options. Here's one such way:
Tax-advantaged health insurance is one reason the system is so expensive - frequently, all health care purchases are routed through insurance if a person can afford health insurance. That means there's these huge administrative costs and conflicts over treatments.
There'd be lots of ways of addressing it: You could gradually remove the tax break on it, you could give everyone the option to receive any of their benefits in cash tax-free instead of the tax-free benefit, you could allow people to deduct all health and medical spending regardless of insurance. I don't know where those three ways of changing things would fall in the political continuum, but one increases taxes, one lowers taxes, and one keeps the tax yields about the same while reducing the reliance on the inefficient insurance system with its associated bureaucracy.
> The general debate out there is that a lot of people are saying "we don't want socialism" and "the free-market is more effective" while refering to the American system.
Yes, I'm intentionally sidestepping that debate, pointing out three issues that are not backed by either party, that everyone can agree on. We can fix those and be more prosperous, and then continue to the general debate in which people have been having a very hard time of agreeing.
The American system is more expensive than it should be for the quality. There's a few elegant, low cost, simple improvements that can be made. I think we ought to make them.
Your first point does not persuade me, because I live in Canada where we also have restrictions on doctors. We have thousands of foreign trained doctors driving taxis because the powerful medical lobby won't let them practice. My wedding photos were taken by a Filipino cardiologist!
We buy and sell the same drugs you do, from the same companies. So our costs ought to be the same as yours. Yet somehow Canadian pharmacies are selling brand-name drugs to Americans for less than what your pharmacies pay!
It may be valuable to split hairs and say "it's not the free market at fault." To which I reply, American markets aren't free and never have been. Your "free market capitalism" is actually a series of interconnected oligopolies where a few powerful players control the market and use lobbying to errect barriers to free enterprise.
Like your patent system. Or your Disney/Bono laws controlling copyrights and copying of creative works.
I'm prepared to believe that free market capitalism might work, but I am skeptical that such a thing has existed or will exist in the USA during my lifetime.
The facts:
* There are severe restrictions on prescription pharmaceutical advertising in Canada. For example, access to product information on pharmaceutical 'brochureware' sites is restricted by 'password' (I developed many of these sites for Pfizer years ago). Television advertising is limited to brand recognition type ads, the ad can't actually tell you what the drug does.
* The result of these restrictions has lead to far less marketing costs for pharmaceuticals.
* Medicare pharmaceutical guidelines (PMPRB) do impose price increase restrictions after they have been introduced to the market, and stated in it basic manner, will not endorse drugs that achieve the same effect as current drugs, yet cost more.
* Canadian gov't provides plenty of tax subsides for pharmaceutical research
So yes, while there are pricing guidelines, it's not a one way street, there a bit of give and take here. In exchange for following pricing guidelines, companies receive generous tax credits for research.
The (intended) effect of pricing on advertising guidelines is designed to guide doctors to prescribe the best (from a cost/effectiveness standpoint) drug, rather than the 'new thing' or the one their patient is demanding due to seeing it advertised repeatedly on television.
This idea that the US is subsidizing the cost of drugs for other countries is silly. Drugs of US origin would not be sold abroad if it weren't profitable to do so. And given the 'free market' in pharmaceuticals in the US, wouldn't drugs be sold at the most profitable price anyways, regardless of market conditions elsewhere?
The drug companies spend hundreds of millions if not billions telling you that there would be dire consequences if they couldn't patent their work six ways from Sunday and charge amazing amounts of money for a few pennies worth of chemicals.
They remind me greatly of your entertainment oligopolies, right down to the way they control your laws through their lobbying prowess.
Asking a drug company what would happen if you asked them to charge less is like asking the fox what would happen if you locked the door to the chicken coop.
Economic sectors can fall in three general categories:
1) free market ( low or no regulation, freedom of contract, no legal barriers to entry, people voluntarily choose to buy their product, freedom to make profits, freedom to take losses) - Examples include: most manufacturing, retail, entertainment, electronics, furniture, cars, clothes, lasic surgery, trucking, shipping, tourism, software
2) guild & cartel - businesses or associations recieve numerous special privileges and legal barriers to entry. One example is the banking sector and the special access to the lender of last resort and to bailouts. Another is the doctors associations and their monopoly right to dispense life saving pills.
3) socialized - a sector that is under operational management by the government. For instance, the public education system or the park system.
The basic test for a free market is this: If I wanted to start a business to compete with player X in this industry, would I be thwarted or hindered by the government in doing so?
America as whole has never been a perfect & absolute pure free market. But certain sectors tend to pretty come close the ideal. And its those sectors that tend to produce products of increasing quality and lower prices. The sectors that seem to have endemic problems that end up being the subject of national debates, are all in categories 2 and 3 (finance, healthcare, and education).
Of course there is no easy way to go from 3) to 1) or 2) to 1). A socialized system is a system of both price controls and restricted entry. If you remove just the price controls, you have given the industry a license to rake the consumers over the coals. Thus your path from 3) to 1) actually makes things worse. This is the fatal law of many of the Cato libertarians. At the end of the day, competency of the government is still important no matter what path is chosen.
U.S. health insurance companies have the highest administrative costs in the world; they spend roughly 20 cents of every dollar for nonmedical costs, such as paperwork, reviewing claims and marketing.
In Austria and Germany, if a doctor diagnoses a person as "stressed," medical insurance pays for weekends at a health spa.
US health insurance companies put some effort into reviewing claims (i.e. making certain treatment is really needed and avoiding fraud).
In contrast, Austria and Germany apparently pay for any nonsense a doctor recommends. The money they save on paperwork is spent sending people to the spa.
Relevant quantity to measure:
Administrative cost + Waste + Fraud
Not all of it, it seems. Germany spends 10.7% of the GDP on health care vs. 16% in the USA.
My point is that you simple can't look at administrative costs alone, since there is an important tradeoff between admin costs and waste/fraud costs. To determine who is closer to the optimum, we need data on (admin+waste+fraud), not simply admin.
Similarly, you can't say "GM spends 1% of costs on programmers, while 37signals spends 95% on programmers, therefore GM is more efficient." You have to know what those programmers produce.
* According to the CIA world factbook, we're ranked #35 in life expectancy, Germany #23: http://en.wikipedia.org/wiki/List_of_countries_by_life_expec...
* Again according to the CIA world factbook, the US is ranked #46 in lowest infant mortality rate, Germany #15: http://en.wikipedia.org/wiki/List_of_countries_by_infant_mor...
In terms of production, as well as in spending, Germany kicks our butt (as does the UK, France, etc.) If we can reduce costs and at the same time get free spa visits, I'm all for it!
25% health
25% health equality
12.5% responsiveness
12.5% responsiveness equality
25% financial equality
Near as I can tell, only 12.5% of the score (responsiveness) is directly related to health care effectiveness.
Remarkable fact: an improvement in health care can actually lower a score if it is unequally distributed (e.g., half the country gets better health care at higher cost, half the country stays the same).
* measuring the health system's contribution to socially desirable goals;
* measuring the health system and non-health system resources used to achieve these outcomes;
* estimating the efficiency with which the resources are used to attain these outcomes;
* evaluating the way the functions of the system influence observed levels of attainment and efficiency;
* designing and implementing policies to improve attainment and efficiency and monitoring the effect.
Check out http://www.who.int/health-systems-performance/about.htm
This is more or less directly concerned with measuring the performance of healthcare systems. It would, however, be completely fair to argue how effective this measure is, as it's very difficult to try to quantify something as complex as healthcare. That's why the WHO stopped making this index in 2000 apparently.
Since you seem to think I'm being misleading, I'll explain exactly how one is measured. Financial equality is given as:
const x sum([pow(abs(marginal_cost(p) - average_marginal_cost),3) for p in people])
The index simply does not measure the effectiveness of health care systems. At best, health care effectiveness is only one component of a broader index.
PS: If anything the best number to look for would be the quality of care vs cost.
The fastest way to save money on US heath care would be to ban or more tightly regulate medical advertising in the US. In one day you could save 8+ billion a year in direct costs and far more than that in indirect costs. (If a drug company is spending a 100 million on advertising they think it's driving more than 100 million in extra sales + 20% over head from insurance companies etc.)
Concerning quality of care vs cost, that's also irrelevant. I don't want health care, I want health. Health outcomes vs cost are the relevant quantity, but it has not actually been shown that quality of care significantly affects health outcomes.
I submitted an article on this topic previously: http://news.ycombinator.com/item?id=775284
Bottom line, the US spends more than Germany AND we don't get free health spas. So we definitely lose on this one.
The Germans don't get "free" health spas, each person pays more money to the government and the government in turn allocates more funds toward non-life-threatening treatment (so that the voters are kept happy.)
I'm not in the position to analyze what that "free spa" is at the cost of (most of us reading this are not), but it's at the cost of something (those with more serious healthcare needs perhaps?).
No one "gets free _____" from their government.
"According to the American Medical Association, stress is a factor in more than 75% of sickness today. And according to the World Health Organization, stress is America’s #1 Health Problem." -- quote from some randomly googled site.
As for TR Reid, he knows more than most about exactly how the UK's NHS works, and how it doesn't result in everybody dying - he lived in London for several years (he was the WaPo bureau chief there), and his son (who was in my son's history class) had several serious hospitalizations.
I doubt this.
All kinds of stuff slips through on the weekends though.
That's actually a terrible argument. The US does have the finest health care in the world--what we don't have is a means for absolutely everyone to afford it.