Category: Health Care

The monsters who eat escargot

“France is the latest country to fill American conservatives’ need for a foreign boogeyman that will keep liberals in their place.”

Jonathan Chait

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Instead of just ridiculing the conservative argument, let’s take it seriously for a moment. Near as I can tell, they seem to be saying this: Liberals want bigger government. Europe has bigger government. Bad things are happening to Europe. Q.E.D.

Do conservatives have even a germ of a point here? No. It’s true that liberals admire some things that Europe does, and it’s also true that Europe has some highly destructive policies. But there’s almost no overlap between the two. By almost all accounts, the single most damaging aspect of European and French policy is the absurdly restrictive rules on firing employees, which discourage businesses from hiring anybody and result in high unemployment.

I’ve never, ever heard an American liberal call for emulating French labor regulations. You do, on the other hand, hear liberals praising France’s effective public transportation and, above all, its healthcare system. Tanner’s column doesn’t try to cite France’s advanced rapid transit as a cause of social decay, but it does mention its “universal national healthcare system.”

This is particularly laughable. France’s healthcare system does cover everybody, has far more doctors per capita than the U.S. and produces better health outcomes. Is this lavish socialist system bankrupting the country? Far from it. France spends about 10% of its national income on healthcare, as opposed to 15% in the U.S. In fact, we’re the country being bankrupted by its healthcare system, which is by far the most market-intensive in the advanced world. Skyrocketing healthcare costs are discouraging job growth and strangling the automobile industry, among others.

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Drugs, patents and profits

“We recognize that patents are a way to provide incentives for research, but where is the economic research that shows that they are the most efficient way? You won’t find it, because economists have mostly chosen to ignore the issue.”

Dean Baker has a pair of posts (Bird flu, bird brains, and economists and Drug patents v. the free market: where are the economists?) on the subject of the social and economic costs of drug patents, with an endorsement of an approach that might work better.

…to restate the basic case, drug patents are government granted monopolies that impose huge economic and social costs (such as people being denied access to life-saving drugs). Drug patents serve a purpose, they provide incentives to research new drugs, but it is far from clear that patents are the best way to provide such incentives. While economists have researched endlessly the cost of much smaller protectionist barriers (e.g. tariffs and quotas on shoes and pants), the literature examining the relative merits of drug patents and alternative methods of supporting research is extremely thin. It is hard to explain why economists pay so much attention to a relatively unimportant policy and so little to a policy that has huge implications.

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We recognize that patents are a way to provide incentives for research, but where is the economic research that shows that they are the most efficient way? You won’t find it, because economists have mostly chosen to ignore the issue.

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My favored alternative is direct public funding of approximately $30 billion a year, as would be provided under the Free Market Drug Act (FMDA) introduced by Dennis Kucinch in the last session of Congress. This would effectively double government funding for biomedical research, since it already is spending approximately $30 billion a year through the National Institutes of Health (NIH).

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One last point on the risk issue: it is important to be clear on who does what. The vast majority of the drug industry’s research is contracted out, mostly to university based researchers. Presumably, this would continue to be the case with the FMDA, so the argument has to be that the results would be far worse if the contracts and the checks came from a government sponsored corporation, rather than the drug industry.

Krugman: A Private Obsession

“Our system is desperately in need of reform.”

Paul Krugman is frustrated by the irrational difficulty of reforming health care in the United States.

Our system is desperately in need of reform. Yet it will be very hard to get useful reform, for two reasons: vested interests and ideology.

I’ll have a lot more to say about vested interests and health care in future columns, but let me emphasize one key point: a lot of big companies are essentially in the business of wasting health care resources.

The most striking inefficiency of our health system is our huge medical bureaucracy, which is mainly occupied in trying to get someone else to pay the bills. A good guess is that two million to three million Americans are employed by insurers and health care providers not to deliver health care, but to pass the buck to other people.

Yet any effort to reduce this waste would hurt powerful, well-organized interests, which have already demonstrated their power to block reform. Remember the “Harry and Louise” ads that doomed the Clinton health plan? The actors may have seemed like regular folks, but the ads were paid for by the Health Insurance Association of America, an industry lobbying group that liked the health care system just the way it was.

But vested interests aren’t the only obstacle to fixing our health care system. We also have a big problem with ideology.

You see, America is ruled by conservatives, and they have a private obsession: they believe that more privatization, not less, is always the answer. And their faith persists even when the evidence clearly points to a private sector gone bad.

Healthcare roundup

Healthcare roundup from Ezra Klein and Angry Bear, via Kevin Drum.

Kevin Drum summarizes a good collection of recent healthcare posts:

HEALTHCARE ROUNDUP….There’s been a bunch of healthcare blogging in the past couple of weeks. Here are a couple of roundups that are worth taking a look at if you haven’t already:

Ezra Klein has collected his snapshots of national healthcare systems in other countries here. The complete set includes Japan, Germany, Canada, Britain, and France.

Angry Bear pulls together all his recent healthcare links here.

I especially recommend Kash’s post about waiting times. One of the main bugaboos that Americans have about national healthcare is the fear that it means long waiting times for office visits and elective surgery. But it just ain’t so. As Kash points out, some countries have long waiting times and others don’t. There’s nothing inherent in national healthcare that causes long waiting times and there’s nothing inherent in the U.S. system that eliminates them. It all depends on how much money you spend, what your priorities are, and how well you run things.

Add to that Paul Krugman’s column today, Passing the Buck:

The United States spends far more on health care than other advanced countries. Yet we don’t appear to receive more medical services. And we have lower life-expectancy and higher infant-mortality rates than countries that spend less than half as much per person. How do we do it?

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Think about how crazy all of this is. At a rough guess, between two million and three million Americans are employed by insurers and health care providers not to deliver health care, but to pass the buck for that care to someone else. And the result of all their exertions is to make the nation poorer and sicker.

Why do we put up with such an expensive, counterproductive health care system? Vested interests play an important role. But we also suffer from ideological blinders: decades of indoctrination in the virtues of market competition and the evils of big government have left many Americans unable to comprehend the idea that sometimes competition is the problem, not the solution.

The Best Care Anywhere

When it comes to health care, it’s a government bureaucracy that’s setting the standard for maintaining best practices while reducing costs, and it’s the private sector that’s lagging in quality.

In my last post, I mentioned Paul Krugman’s mention of Phillip Longman’s Washington Monthly article on the remarkable turnaround of the Veterans’ Health Administration system.

But when it comes to health care, it’s a government bureaucracy that’s setting the standard for maintaining best practices while reducing costs, and it’s the private sector that’s lagging in quality. That unexpected reality needs examining if we’re to have any hope of understanding what’s wrong with America’s health-care system and how to fix it. It turns out that precisely because the VHA is a big, government-run system that has nearly a lifetime relationship with its patients, it has incentives for investing in quality and keeping its patients well—incentives that are lacking in for-profit medicine.

One reason is that the market incentives in our privatized health care system are dysfunctional. For example,

Or suppose an HMO decides to invest in improving the quality of its diabetic care anyway. Then not only will it risk seeing the return on that investment go to a competitor, but it will also face another danger as well. What happens if word gets out that this HMO is the best place to go if you have diabetes? Then more and more costly diabetic patients will enroll there, requiring more premium increases, while its competitors enjoy a comparatively large supply of low-cost, healthier patients. That’s why, Casalino says, you never see a billboard with an HMO advertising how good it is at treating one disease or another. Instead, HMO advertisements generally show only healthy families.

And cost?

The [VHA] system runs circles around Medicare in both cost and quality. Unlike Medicare, it’s allowed by law to negotiate for deep drug discounts, and does. Unlike Medicare, it provides long-term nursing home care. And it demonstrably delivers some of the best, if not the best, quality health care in the United States with amazing efficiency. Between 1999 and 2003, the number of patients enrolled in the VHA system increased by 70 percent, yet funding (not adjusted for inflation) increased by only 41 percent. So the VHA has not only become the health care industry’s best quality performer, it has done so while spending less and less on each patient.

Longman concludes,

As the health-care crisis worsens, and as more become aware of how dangerous and unscientific most of the U.S. health-care system is, maybe we will find a way to get our minds around these strange truths. Many Americans still believe that the U.S. health-care system is the best in the world, and that its only major problems are that it costs too much and leaves too many people uninsured. But the fact remains that Americans live shorter lives, with more disabilities, than people in countries that spend barely half as much per person on health care. Pouring more money into the current system won’t change that. Nor will making the current system even more fragmented and driven by short-term profit motives. But learning from the lesson offered by the veterans health system could point the way to an all-American solution.

Longman is skeptical of our ability to move directly to universal health care, where a VHA-style system would work well. Instead, he argues for an expansion of the VHA to cover more people.

I hope he’s wrong about universal health care.

America’s Senior Moment

Paul Krugman on demographics, Social Security, and health care.

In the March 10 NYRB, economist Paul Krugman uses a review of The Coming Generational Storm: What You Need to Know About America’s Economic Future, by Laurence J. Kotlikoff and Scott Burns, to address demographics, Social Security, and health care.

Krugman’s a dandy writer, but he’s never been at his best in the cramped confines of his NY Times columns. The NRYB format–nearly 6,000 words here–lets Krugman stretch out, and the results are well worth the longer read.

Let’s sneak a peek at Krugman’s wrap-up.

Unless something very unexpected happens, Kotlikoff and Burns’s vision of an America that in 2030 has an older population than Florida today will come to pass. It’s also quite possible that the state of the nation will be as bad as they suggest in their opening account. But one won’t be the result of the other, and in a perverse way exaggerating the demographic challenge makes that grim future more likely.

Here’s how the debate is really playing out, in four easy steps:

1. Talking heads and other opinion leaders perceive the issue of an aging population not as it is—a middle-sized problem that can be dealt with through ordinary changes in taxing and spending—but as an immense problem that requires changing everything. This perception is, alas, fueled by books like The Coming Generational Storm, which blur the distinction between the costs imposed by an aging population and the expense of paying for medical advances.

2. Because the demographic problem is perceived as being much bigger than it really is, the spotlight is off the gross irresponsibility of current fiscal policy. As you may have noticed, right now everyone is talking about Social Security, and nobody is talking about the stunning shift from budget surplus to budget deficit since Bush took office.

3. The focus on Social Security— the one part of the federal budget that is actually being run responsibly—is, in practice, offering the architects of our budget deficit an opportunity to do even more damage.

4. Finally, we’re not having a serious national discussion about the bigger problem of paying for health care, and we probably can’t in today’s ideological climate.

Krugman has long since come over to the universal health care side.

Systems that provide universal coverage, like those of France or Canada, are much cheaper to run than our market-based system, yet they yield better results with respect to life expectancy and infant mortality. Or if you don’t trust foreign examples, consider the remarkable renaissance of the Veterans’ Administration hospital system, described in an important article by Phillip Longman in the February Washington Monthly: he shows that the VA system’s centralization of information and control over resources allow it to provide better care at lower costs than any private system.

Longman’s article is online as well. Read ’em both.