Health Care Tradeoffs (Updated)

Ezra Klein wrote an interesting post Wednesday arguing that extending life through medical intervention is expensive and that tradeoffs and rationing have to be made.  The only question, then, is how much value is placed on that extra unit of health care and who’s making the valuation.

The inverse of the American health care system is the British health care system. Where we are the priciest, they are the cheapest. We refuse to make any explicit decisions, instead denying care based on criteria that makes the denial the fault of the patient rather than the system. You don’t have enough money for the treatment. They make all their decisions explicit, relying on criteria that makes the denial the fault of the system’s judgments. We don’t think that treatment worth the cost. Their system gives patients someone to be angry at. Ours has no connection to value. Their system creates more blame, ours engenders more tragedy.

What’s at issue here is rationing. In 2006, adjusted for purchasing power, the United Kingdom spent $2,760 per person on health care. America spent $6,714. It’s a difference of almost $4,000 per person, spread across the population. That’s $4,000 that can go into wages, or schools, or defense, or luxury, or mortgage-backed securities. And there’s no evidence that Britain’s aggregate outcomes are noticeable worse. But they do say “no” a lot more than we do. Their system refuses to pay high prices for medical technologies and pharmaceuticals that it judges insufficiently effective. They’ve forced themselves to make choice, because they have something we don’t have: A global budget.

I never found time to respond to this but several others have.  Andrew Sullivan has the most poignant retort:

One reason I’m a conservative is the British National Health Service. Until you have lived under socialism, it sounds like a great idea. It isn’t misery – although watching my parents go through the system lately has been nerve-wracking – but there is a basic assumption. The government collective decides everything. You, the individual patient, and you, the individual doctor, are the least of their concerns. I prefer freedom and the market to rationalism and the collective. That’s why I live here.

(It’s also, incidentally, a rejoinder to the hordes who question Sully’s right to call himself a “conservative.”) Steve Bainbridge agrees and wonders why Sully voted for Obama, since he’s much more likely to lead us in the direction of nationalized health care than McCain would have been.   Ron Chusid, meanwhile, agrees in theory with Andrew but adds, “Pragmatically we cannot ignore these differences in spending, especially considering the large number of American who are uninsured or under-insured.”

Noah Pollack, though, questions the premise of similar outcomes in the US and UK.  He cites David Gratzer, who in turn cites a Lancet Oncology study:

* The American five-year survival rate for prostate cancer is 99 percent, the European average is 78 percent, and the Scottish and Welsh rate is close to 71 percent. (English data were incomplete.)

* For the 16 different types of cancer examined in the study, American men have a five-year survival rate of 66 percent, compared with only 47 percent for European men. Among European countries, only Sweden has an overall survival rate for men of more than 60 percent.

* American women have a 63 percent chance of living at least five years after a cancer diagnosis, compared with 56 percent for European women. For women, only five European countries have an overall survival rate of more than 60 percent.

Ironically, Ezra has managed to engender a large cross-blog debate about the comparative merits of the US and UK systems despite his longstanding campaign to establish that as a canard. For example, his recent post THE CANADA/ENGLAND FALLACY correctly notes,

It’s natural to look to England. It’s just not all that useful. We will never have a situation in this country where you are not allowed to purchase your own care on the private market. It won’t happen, it’s not under consideration, and it’s not a plausible outcome of any plans being seriously examined. Conversely, something like France, where the government provides base insurance and the private market offers supplementary products, or Germany, where heavily-regulated non-profits compete with each other to offer coverage, is fairly likely.

While extremely dubious of further nationalizing our system, I agree that a UK-style system is incredibly unlikely to emerge here and we’re much more likely to have a public-private hybrid that simply leans ever more public.   I’m not philosophically opposed to the idea, since health care isn’t a pure market (there’s little elasticity of demand, for one thing) and the current system is incredibly inefficient.  But I do fear disencentivizing research and the provision of cutting edge resources and the general DMV-ization of health care.

UPDATE (Dave Schuler)

I’ve written a lot on this subject over the years but my observations are too long for the comments section and too intrusive to include in the update. I’ve put those observations, along with a substantial bibliography of my old posts on this subject, at The Glittering Eye.

Photo by Flickr user Erik K Veland under Creative Commons license.

FILED UNDER: Bureaucracy, Economics and Business, Health, , , , , , , , , , , , ,
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. odograph says:

    I have been told that the US system overspends in the last 30 days, on terminal conditions. I’m fine with being “rationed” in that situation. Load me up with the morphine and wish me well.

    I have also been told that every medical system rations, they just do it different places. We ration the uninsured, while another system might not allocate chemotherapy to a 90 year-old with a new cancer.

  2. odograph says:

    BTW, I think a voucher system(*) is the market-lover’s choice for national healthcare. The unfortunate thing is that by standing out of the fight, and opposing national healtchare, market-lovers may miss their chance. The may end up with a very nationalized system because they yielded their place at the table.

    * – essentially I take my voucher to Blue Cross or to Kaiser.

  3. John Burgess says:

    I think the UK already has a hybrid system. All my British friends have private health insurance–which allows one to go to any doctor one wishes–to supplement the basic NHS. They use the NHS for run of the mill things, but rely on their insurance when something serious happens.

  4. Dave Schuler says:

    I think the UK already has a hybrid system.

    John’s right. Their system has been somewhat liberalized (marketized?) over the years.

  5. odograph says:

    (A gentle aside: I did let myself get pulled into this repetition of the American health care drama, but I really do think the here-and-now, the new jobs reports etc., are where policy-blogs should be looking. “Plan X” has not been proposed for health care, but “Plan X, Y, Z” are being tried for the economy.)

  6. Steve Verdon says:

    You don’t have enough money for the treatment.

    Ability (or more acurately inability) to pay will not result in the denial of treatment.

    What’s at issue here is rationing.

    The obvious come back here is that the market is a mechanism for rationing.

    John’s right. Their system has been somewhat liberalized (marketized?) over the years.

    Similarly with Canada, and France is looking to have more market based health care…or at least they were.

  7. odograph says:

    The obvious come back here is that the market is a mechanism for rationing.

    A strange thought, on so many levels:

    1) Does he mean he would unroll current health subsidies for the poor?

    2) Does he simply mean that current subsidies are sufficient, and after that the non-poor can ration their care?

    3) Does he only mean this for “extra” or “ultra” care or does he mean that basic care should be rationed in the market?

    (NPR had a weird story about a company offering “loss of health insurance” insurance. That is you take out a new policy that only pays in the event you lose your original policy. Rates are steep, 10% of the current premium. It’s a shocker and shows how broken our system is … not so much for the plan existing, but for them having to charge so much.)

  8. Dave Schuler says:

    A market is a mechanism for allocating goods. Any good that is rivalrous and excludable will be rationed by some mechanism under any foreseeable system.

  9. Roberta says:

    I’m curious about those statistics showing higher survival rates in the US than in Europe. Do we know how the populations were derived? If, in the US, only people who could afford to enter treatment are counted, while in Europe, everyone entered treatment on the government’s dime, then there’s a built-in bias, making the US look better because a large number of poorer, ergo less healthy people in the US with the diagnosis were systematically excluded from the study because they didn’t receive treatment (or, perhaps, diagnosis in the first place).

  10. odograph says:

    Sure Dave, but compare it to public education in the US. We provide free education K-12, and then after that “basic care” break it out with a little more market action. College has costs, subsidies, subsidized loans, etc., etc.

    If someone said an equivalent “a market is a mechanism for allocating goods” in that arena we might wonder if they were endorsing the status quo, or a policy shift in one direction or the other.

  11. Steve Verdon says:

    We provide free education K-12…

    No we don’t. Subsidized education is provided.

    If someone said an equivalent “a market is a mechanism for allocating goods” in that arena we might wonder if they were endorsing the status quo, or a policy shift in one direction or the other.

    You are the only one wondering.

  12. MarkedMan says:

    Just recently discovered OTB and like it very much, but I found a couple of things about this post that bothered me. Or rather, not with his post, but the ones he quoted.

    1) The survival rates for cancer in Europe vs. the US cannot be directly compared. Anyone who has followed this debate for any length of time should know that the death rates from cancer are roughly the same. It is hard to believe in the good faith of anyone still using this as an argument. (So how can the survival rates from cancer be so dramatically lower, but the death rates be the same? Because the US diagnoses cancers much earlier (if you have insurance) and here’s the important part, specifically those cancers that early intervention does not help. The most glaring example is prostrate cancer. The commonest forms of early intervention have no statistical advantage from doing nothing. In Europe, they would not find the cancer until it is significantly farther along. In the US, we find it early (if you have insurance) and treat. Since this is a slow moving cancer, and early intervention has no better outcome than doing nothing, I would say the Europeans are probably right. Why provide expensive treatment that has no benefit? In any case, the end result is equivalent rates of Prostrate Cancer in Europe and the US. However, in the US the cancer is caught early and “treated”, so we take credit for a five year survival, even though doing nothing would have had the same outcome. In fact, even if the doctor and patient agree to do nothing, we still get credit for a high five year survival rate.)

    2. Comparing people caught in the jaws of the UK health system to those in the US is specious for two reasons: first, the UK system is considered one of the worst in Europe, so to use it as the basis of comparison is stacking the deck. But the second reason is more important. Even in the UK, the people that are better off have supplemental, i.e. private, insurance. So you should be comparing the British who rely strictly on the government system to their equivalents in the US, in other words, Americans with no health insurance.

  13. odograph says:

    We provide free education K-12…

    No we don’t. Subsidized education is provided.

    We don’t charge anything to parents here in California. Free tuition, free textbooks.

  14. odograph says:

    If someone said an equivalent “a market is a mechanism for allocating goods” in that arena we might wonder if they were endorsing the status quo, or a policy shift in one direction or the other.

    You are the only one wondering.

    Seems like you had an opportunity there, to say exactly where you would draw the medical (or educational) line.

  15. Steve Verdon says:

    We don’t charge anything to parents here in California. Free tuition, free textbooks.

    Right and the laws of thermodynamics don’t hold either and Barack Obama has a magic energy pony.

    Tuition is not paid directly by the parent, but indirectly via property taxes. So it isn’t free. The benefits are focused on the households with kids, but the costs are distributed amongst all households. A situation ripe for abuse, waste, fraud and corruption.

    Seems like you had an opportunity there, to say exactly where you would draw the medical (or educational) line.

    I already have, more than once.

  16. odograph says:

    We don’t charge anything to parents here in California. Free tuition, free textbooks.

    Right and the laws of thermodynamics don’t hold either and Barack Obama has a magic energy pony.

    Tuition is not paid directly by the parent, but indirectly via property taxes. So it isn’t free. The benefits are focused on the households with kids, but the costs are distributed amongst all households. A situation ripe for abuse, waste, fraud and corruption.

    I guess you are back to looking for conflicts wherever you can, even when you really agree with my meaning.

    I think most people use the word “subsidized” to mean a price is paid directly, but bought down by a 3rd party.

    It is pretty preposterous to suppose that I thought education K-12 was free like the air we breathe … but if you have an emotional need for conflict I guess you’ll find it where you will.

    Really you should have some self-control. Ask yourself “am I bending the meaning of this sentence just so I can get mad about it?”

    And really the odd thing is that it is disservice to your own discourse. If you want to state an alternate plan for k-12 education, you could. You don’t need to mire yourself in the semantics of “free k-12 education.” Chances are everyone reading this know what that means to sufficient detail.

  17. Brett says:

    Ugh, not Gratzer again. He got in some trouble back in the 2008 Republican Primaries when Giuliani cited a work of his as a reason for slamming the NHS in an ad. Factcheck.org has a good page on it, including how Gratzer was criticized by the researchers he cited for distorting their figures, and how he tried to weasel out of being called on it.

    As for the greater article, I actually am rather wary of the NHS Model, although I do support Universal Health Care (in the form of a French- or Canadian-style single payer system, or a hybrid of the two with some American elements). At least in the single-payer system, all the government is supposed to do is set the rates (and in an ideal world, create incentives for more doctors so as to keep a large supply of them out there). The doctors ultimately make the decision on how important your priority is in terms of getting treated, and if you don’t like that, you can go to another doctor.

  18. Joel says:

    Research incentives are largely government (NIH) driven, FWIW.

  19. tacitus says:

    It’s natural to look to England. It’s just not all that useful. We will never have a situation in this country where you are not allowed to purchase your own care on the private market.

    This is a completely bogus comment from Klein. There has been a private healthcare system working alongside the NHS in Britain for decades. When I worked for a British company 25 years ago, they provided private health insurance as a standard benefit, and I used it too, with no additional out-of-pocket expenses.

    Ten years ago my mother opted to go private to have shoulder surgery when the NHS waiting list for the procedure was about 8-10 weeks long, and my brother-in-law, who owns and runs a small business, pays for personal private health insurance because it gives him additional options as to where and when he gets treatment.

    None of us is wealthy — all middle class people (my mother is a retired schoolteacher) — and yet we were and are afforded and can afford the option of private healthcare, should we wish it.

    That is not to say the NHS has failed us. Far from it. Both my parents owe their lives to the timely and excellent care provided by the NHS. But going private is always an option, and is an option taken by hundreds of thousands of British people each and every year.

  20. tacitus says:

    Regarding the life-expectancy of cancer patients in the USA and countries with universal healthcare. It’s true that the American system provides better access to the latest (and usually most expensive) treatments, which does translate to better results.

    However, the gap used to be much wider and has narrowed considerably over the past few years as governments strive to accommodate these more expensive treatments in their budgets.

    But it remains a fact that overall, the universal healthcare systems perform close to the American private system in terms of overall results (e.g. life expectancy and infant mortality) for far less the cost. There is no doubt that those systems are proving to be much more efficient at delivering healthcare to their citizens.

    No system is perfect, and I very much doubt the USA will suddenly adopt an NHS-like system anyway, but something has to be done before the majority of Americans are priced out of the market altogether.

  21. Jeff says:

    I can’t help wondering what would have happened to a friend of mine if she’d been living in the USA. She’s French, living in Marseille (although I met her some 20 years ago here in the states), and is unemployed. Thus she has little money. This last June she had a physical (paid for by the French government) and they discovered a tumor in one of her breasts. She had the tumor surgically removed (again, free to her), and during the course of the operation they discovered a second tumor under her armpit, which they also removed.

    She has since completed six chemotherapy treatments, and she has just started radiation therapy that will continue daily through January. Again, all is free to her. Is she cured of cancer? We don’t yet know. But what would her condition be if, instead of living in France, she’d been living here in the States, jobless and without money, and with the cancer, undetected, spreading daily through her body.

    And there’s the example of another friend of mine: a freelance artist who died several years ago. Because he was an artist, he never had much money, and thus he couldn’t afford insurance. His tooth became infected and he didn’t visit a doctor (no money, no insurance). Finally, when his arm began to swell up, he went to the local hospital emergency room, but it was too late. His infection had developed into blood poisoning, and he died hours later. And I can’t help wondering…some sort of universal health care might have saved his life.

    Just my two cents worth.

  22. tacitus says:

    Jeff, I don’t blame you for wondering. I left my last job last year and procrastinated for several months before getting private health insurance. During that time I developed an ear infection that didn’t clear up after an initial trip to the local walk-in clinic.

    Even with something that minor, I was extremely worried that the treatment would escalate to something that would cost me thousands of dollars, and I hesitated for several days before getting some follow-up treatment. I was lucky, the ear problem did clear up, and soon after I decided it was too stressful to be without any insurance so I finally signed up for some.

    I have a friend who refused to see a doctor for months about constant severe indigestion after even small meals, and he *had* excellent health insurance. He was paranoid about having a pre-existing chronic condition on his health record just in case he ever decided to quit his job and would have to pay massive premiums because of it.

    He was lucky too. When he finally did go, the problem was still manageable, but if it had been something more serious, he could have died.

  23. MNPundit says:

    I have always preferred the French system myself as a good hybrid that doesn’t kill private insurance (which I hate because health should not be for profit but what can you do?).

  24. FOARP says:

    It’s natural to look to England. It’s just not all that useful. We will never have a situation in this country where you are not allowed to purchase your own care on the private market.

    Wrong! The Canadian system might not allow private health care, but there are many private health care providers in the UK, BUPA being the biggest one. It is quite possible for a British citizen to go their entire life without using the NHS.

  25. truthynesslover says:

    My father has an appointment to see his dermatologist in may,next year.He has had skin cancer removed many times.If thats the soonest a specialist can see him is that not rationed care?He has blue cross blue shield,not a crappy plan.

  26. jean power says:

    My brother had back pain for a year,he had a job but no insurance so he didnt go to a doctor.He self treated with pain killers until he woke up one day to find he couldnt get out of bed.He called an ambulance and he went to the emergency room.There he found he had testicular cancer that has spread and wrapped around his spine.He was treated with chemo and surgery and had 3 discs replaced.He is now pretty much unable to work,sit for long or even bend over.How expensive is that?