Because most philosophies that frown on reproduction don't survive.

Tuesday, July 28, 2009

How to Get There from Here

There's been much discussion of late about what other country's health care apparatus the US should consider emulating, and in such discussions France is often mentioned. Now, all cheerful ribbing against the French aside, their health care system is not nearly as "socialized" or nearly as afflicted by treatment denials and waiting lists as those of the UK or Canada. It is also rather more like the system that the US already has, in that it is a hybrid public/private system, though in their case there is a guaranteed base level of coverage everyone has through the government (funded via a hefty payroll tax -- not unlike Medicare) which most people supplement with private coverage. Most doctors are in private practice, and 25% do not even accept the public plan, just as some practices in the US do not accept Medicare. However, everyone does have that minimum level of coverage, and the French spend a lower percentage of their GDP on health care than the US (11% versus 16%) which when you take into account that France's GDP per capita is a good deal smaller than that of the US (which is the polite, economist way of saying it's a poorer country) works out to the US spending about twice as many dollars per person on health care, while still not having universal coverage.

So what are we waiting for? Why don't we go enact the French system here right now? Why doesn't Obama put on a jaunty beret, dangle a cigarette coolly from the corner of his mouth, hoist a glass of wine, and just say, "Oui, nous pouvons."

Well, these things are often not quite as simple as they seem. It turns out that the French savings are rather hard to reproduce. This paragraph from a recent National Journal piece packs a lot of problems into a short space:
What is the answer? The main thing is pay -- above all, doctors' pay. A physician in France is typically paid about a third of what his counterpart in the United States receives. A French doctor's salary, in some cases, would barely be sufficient in the United States to cover his or her medical liability insurance, to say nothing of paying down the enormous debt accumulated while training.

A Business Week piece from a couple years back seems to be working with the same data and provide specific figures:
To make all this affordable, France reimburses its doctors at a far lower rate than U.S. physicians would accept. However, French doctors don't have to pay back their crushing student loans because medical school is paid for by the state, and malpractice insurance premiums are a tiny fraction of the $55,000 a year and up that many U.S. doctors pay. That $55,000 equals the average yearly net income for French doctors, a third of what their American counterparts earn. Then again, the French government pays two-thirds of the social security tax for most French physicians—a tax that's typically 40% of income.

Now honestly, that 1/3 figure sounds odd to me, and it's net income, which means comparing two very disparate tax codes. So I looked around for some more data. Catherine Rampell of the NY Times Economix blog links to a congressional study with definite figures that ring truer to me. Using salaries adjusted for purchasing power parity, thus giving a good comparison of real living standards adjusted for the price of goods and services in both countries, US general practitioners average $161k/yr versus $91k/yr in France. For specialists, it's $230k/yr in the US versus $149/yr in France. So US doctors would have to be hit with a 35-45% pay cut in order to get them down to French levels. Associated with that, it's highly likely that the people building and servicing medical technology and software as well as the non-doctors involved in running health care facilities make more than in France, so there's probably a pay cut to hand out there as well in order to get overall medical spending down.

Once you start to contemplate these things, it becomes clear that it would take a restructuring of our entire economy and educational system to get anything close to the cost of the French system. Whether one likes the idea or not, it's not something that would ever make it through congress. And if a similar structure were implemented without those cost savings (if one really considers what would effectively mean shrinking the economy as a whole a savings) it would cost rather more than our current one.

This does not mean that we should therefore do nothing, but it does mean that we need to think not so much in terms of making large structural changes to achieve an instant savings (this is likely impossible) but rather along the lines of setting forces in motion that will gradually drive costs down, while making sure to take care of those in need in the meantime. Driving costs down in the long term would probably mean, among other things:

- Pushing for more medical schools and/or more acceptance of foreign medical degrees.
- Serious medical malpractice reform.
- Regulatory changes in regards to allowing some types of care to be handled by a nurse or pharmacist rather than requiring a doctor.
- Simplifying Medicare paperwork and regulatory compliance.

Taking care of those in the mean time would require some sort of highly means tested program for identifying those needing assistance in getting coverage, and either providing it directly through a government program or providing incentives for private insurance to accept these people via some sort of subsidy or tax break.


TS said...

"Health care" is so broad that I'd like to see the rates of inflation per health care segment. The solutions you mention aim toward making the costs of doctors cheaper, which makes sense because typically human labor is most costly. Still, other possible costs:

-drugs (with R&D built-into price)
-high-tech machines
-end of life care
-emergency room care (subsidized in the case of the uninsured)
-other ??

Be interesting to see what part these other costs play and what percentage they are contributing to the rising costs.

ockraz said...

I was on a progressive blog recently where someone was championing the Japanese health care system. From what I understand, the Japanese doctors would envy the French!

Rebekka said...

In my experience with universal health care in Denmark I would say you nailed it re: malpractice and administrative costs. The malpractice system as you have it in the US does not exist in Denmark, in fact settlements for injuries sustained during treatment or diagnostics are paid out regardless of whether or not anyone was "at fault", and the system for penalising health professionals for malpractice is separate from the financial settlements.

The administrative systems are worlds apart - health professionals do not use time or energy discussing the patients' needs for or applying for treatment or procedures. If the patient needs them according to the doctor, the patient gets them, period.

Also we don't use the emergency room as much as Americans do because there's a night clinic of primary care physicians (they all do 1 shift a month) - when you call a doctor answers the phone and basically figures out if you should a) wait and call your regular doctor, b) come to the night clinic, c) get a house call, d) go to the emergency room.

There are only a few things that are partially paid by the "user" - medicines (sliding scale by how much you spend in the course of a year), physical therapy (for non-chronic diseases), chiropractors and acupressurists (this is new), and home care for people who are not over 65 (except actual nursing care at home, which is "free" for everyone as needed), dental care for everyone over 18 (braces are included in children's dental, which is covered 100%). There's probably others but I can't think of them now, and I'm rambling anyway - my point was administrative costs and malpractice are really areas that suck huge amounts of money out of the American health care system - while not actually providing health care for those costs.

Anon said...

Not sure how realistic Denmark is as a model - it's something of an anomaly. It's a homogenous, affluent country with little violence resulting in fewer emergency room visits due to shootings or premature crack-addicted babies, etc...

Kate said...

More and more these discussions (and I've been reading 'Pushed' on maternal care recently where this also came up as a reason for poor medical outcomes vs. cost) seem to come back to this: why the heck are US physicians paying what amounts to a good blue collar wage (or more!) in malpractice insurance????!!! And what can we do to change that so that Doctors can go back to practicing medicine rather than pushing through the max. number of patients at the max. rates? How do other countries manage to avoid these issues? And is there any evidence that the rampant tort abuse in the US actually makes anyone safer?

Rebekka said...

LOL on the happiest country thing. Danes ALWAYS have something to complain about (and if they're running low, the weather is guaranteed to be miserable).

The point is not that the US should copy Denmark (or Sweden or Norway, which are more or less comparable in terms of health care although there are minor differences). Or France, or Germany, or the UK, or Canada, or all the other countries that have universal access to health care. At this point it's IMPOSSIBLE for the US to just adopt another country's plan for health care. You guys aren't European, and you aren't Canadian either.

It's much more realistic to look at the areas where Americans spend a lot without actually purchasing HEALTH CARE for those dollars - like malpractice and administration, and find AMERICAN ways to solve that. Go ahead and use France or the UK or Denmark as inspiration, look at how other countries handle aspects of things, and use "good old-fashioned American ingenuity" to see if you can't maybe incorporate some of the good, workable ideas into an American plan.

While I'm not sure what premature crack-addicted babies are doing in an emergency room, I will readily admit that there is very little violence here in terms of what Americans are used to (in fact whenever there is a knifing or - stop the presses - a shooting (almost all of which happens in Copenhagen), everyone bemoans the fact that soon we will be living in American conditions). Victims of serious violence or accidents here in Copenhagen rarely go to a normal ER, they are taken directly to the trauma center at the university hospital (a hospital which otherwise does not even have an ER). My point in including the comment about night clinics staffed by primary care physicians was that I thought that something like that could maybe be useful in the debate about health care over there - not that the Danish model as such should be adopted part and parcel.

Wouldn't it be cheaper, more effective, more efficient, and just plain old better if Americans could cut down on their use of ER services for things that could be handled by primary care physicians? Wouldn't you rather have a doctor pay you a house call at 3am to examine your feverish baby so you could avoid sitting in an ER for hours waiting until the doctors are done with that gunshot victim?

Darwin said...

At this point it's IMPOSSIBLE for the US to just adopt another country's plan for health care. You guys aren't European, and you aren't Canadian either.

It's much more realistic to look at the areas where Americans spend a lot without actually purchasing HEALTH CARE for those dollars - like malpractice and administration, and find AMERICAN ways to solve that.

Very good point.

crankywife said...

I have a lot of family in the health care professions, dr's and nurses. And we think the solution is fairly simple though not politically correct. Tort reform and illegal immigration. Those are two big money bleeds for the health care industries. Dr.s and hospitals pay through the nose for malpractice insurance, and big payouts dictate a lot of policies that cost big bucks throughout the whole system. Illegal immigrants are a huge block of people who are uninsured and who use emergency rooms for all their medical needs, clogging out real emergencies (like gunshot wounds). If you fix these two main areas, the rest of the uninsured could be dealt with on an individual basis. Lower costs mean less expensive insurance premiums for the young and healthy. It also means hospitals could do more "charity" work for the needy if they made up a smaller portion of the overall population. Right now my mother's practice is 40% uninsured, therefore unpaid, illegals. She's a hospital based specialist and can not turn away anyone the hospital does not turn away.

TS said... malpractice and administration

"Malpractice is about one percent of health care spending, even if you add defensive medicine that doctors do to prevent lawsuits. It's a tiny, tiny fraction. You could solve the entire malpractice problem; you would still have a big problem with health care costs. It's important to some doctors in some specialties, but it's really not what's driving health care costs. It's a lot of new technology and a lot of demanding patients." (From here, fwiw)

On administrative costs, a different story:

"One-fifth of health insurance premium dollars are not being spent on health care, but are consumed by the insurers. What does not show up in these numbers is the cost of the administrative burden that these insurers place on the health care delivery system. The billing and insurance related functions for physicians and hospitals burn up another 12 percent or so of the premium dollar (Kahn et al, Health Affairs, Nov/Dec 2005). Add these together, and that is about one-third of the premium dollar."