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Health Care Afloat Tes V the United Sta Ersus Canada

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Health Care Afloat Tes V the United Sta Ersus Canada Keeping Health Care Afloat tes V The United Sta ersus Canada By Uwe E. Reinhardt For most of the 20th century, Americans basked in the unquestioned faith that theirs was the best health system in the world. That belief was not totally unfounded. No nation trains physicians better than the United States. Its hospitals set the standards in terms of techni- Fcal sophistication and sheer luxury of accommodation. The nation’s pharmaceutical, biotech and medical-device industries remain global leaders, both in terms of technology and the sheer volume of inno- vations. Finally, for terminally ill patients who can afford the bills, America is often viewed as the last hope. Doubts, though, are surfacing. Most notably, the rapidly rising cost of health care has begun to price more and more Americans out of the private system. Less noticed but equally disturbing, there is reason to believe that the average quality of care is slipping. the cost Measured in terms of purchasing power, Americans spent almost twice as much per capita on health care in 2003 ($6,100) as Canadians ($3,200) and Germans ($3,000), and half again more than the Swiss ($4,100) – even though both Germany and Switzerland have much older, and thus medically needier, populations than the United States. 36 The Milken Institute Review william rieser william Second Quarter 2007 37 rationing health care Remarkably, these enormous variations in According to the widely respected Milli- spending don’t track independent measures man Medical Index, the average American of the quality of care, medical outcomes or family with private insurance consumed even patient satisfaction. Indeed, a study by $13,382 in medical services in 2006. Yet about Katherine Baicker (Harvard) and Amitabh one-third of American families have an in- Chandra (Harvard) suggests a negative corre- come below $40,000 per year. Thus, it is not lation between a state’s Medicare spending surprising that the number of Americans per person and an independent ranking of without health insurance has risen inexorably quality of care. The authors conclude that during the past two decades, even during pe- states relying more on general practitioners riods of economic boom. The total stood at tend to have more effective care and lower 37 million in 1993; it is now 46 million and spending than states more dependent on expected to exceed 50 million within a few medical specialists. years. In the Sun Belt states, roughly a quarter This paradox extends to international of the population is uninsured. comparisons. A 2005 survey by Common- wealth Fund found that 34 percent of Ameri- CITIZENS’ VIEWS ABOUT HEALTH SYSTEMS can patients reported that they had been SYSTEM WORKS FUNDAMENTAL SYSTEM NEEDS victims of various sorts of medical errors, WELL, ONLY MINOR CHANGES TO BE COMPLETELY CHANGES ARE NEEDED ARE NEEDED REBUILT compared with 27 percent in Australia, 30 percent in Canada, 23 percent in Germany ALL ADULTS, 2004 Canada 21% 63% 14% and 22 percent in Britain. And many of those United States 16% 47% 33% errors are far from trivial: a 1999 report by the PATIENTS WITH HEALTH PROBLEMS, 2005 National Academy of Science’s Institute of 21 61 17 Canada % % % Medicine estimated that 44,000 to 98,000 United States 23% 44% 30% Americans lose their lives in hospitals each source: Cathy Schoen et al. Health Affairs 2003/2005. year because of avoidable medical snafus. Smarter use of modern information tech- the quality nology is thought to be the most effective way In a 2003 report in the New England Journal to reduce medical errors. Yet America’s pri- of Medicine on a nationwide research project, mary-care physicians now lag behind their Elizabeth McGlynn and her RAND colleagues colleagues in Europe in use of electronic clin- reported that U.S. adults received on average ical information systems. It is no small irony only about 55 percent of the care generally that one notable exception is the U.S. Depart- recommended for their conditions. Earlier, ment of Veterans Affairs health care system, John Wennberg and his associates at Dart- the only model of purely socialized medicine mouth had published data showing that total left in the world outside of Cuba. Indeed, the Medicare spending per benefi ciary varied Institute of Medicine concluded that the VA across regions by a factor of close to three, was the national leader in the smart use of in- even after adjustments for differences in fees, formation technology and quality control. age, gender and severity of illness. By the same token, the pride Americans take in their easy access to high-tech medical UWE REINHARDT is the James Madison professor of equipment and procedures is probably mis- political economy at Princeton University. placed. As the Institute of Medicine puts it, 38 The Milken Institute Review “there is substantial evidence documenting health-insurance systems that operate within overuse of many services – services for which guidelines set by the federal government in the potential risk of harm outweighs the po- Ottawa. The federal rules encourage uniform- tential benefi ts.” ity through the mechanism of cost sharing, A glaring example of this tendency has just as the Medicaid system for the poor does been the precipitous use of autologous bone in the United States. It is why so many outsid- marrow transplantation, which had been used ers speak of “Canada’s national health sys- profl igately in the treatment of breast cancer. tem,” as if it were a single entity. More than 30,000 women suffered through The tax-fi nanced provincial insurance sys- that expensive, highly risky and painful pro- tems procure physician services, hospital ser- cedure before careful studies showed it to be vices and sundry other health services from a ineffective. mixed for-profi t and not-for-profi t delivery system that is not drastically different from looking across the border the American delivery system – although it is With growing evidence that American health much more constrained by the market clout care promises more than it delivers, Ameri- characteristic of systems in which a single cans have begun to look elsewhere for lessons government payer does the negotiating on on how to fi nance and manage health care. In behalf of consumers. this inquiry, neighboring Canada is particu- For the comprehensive set of services cov- larly apt for a number of reasons. ered under the Health Canada Act, patients First, the training of physicians and nurses typically enjoy fi rst-dollar coverage. The pub- in Canada and the United States is similar, lic insurance systems cover about 70 percent greatly facilitating the movement of health of total health outlays, with the remainder care professionals between the two countries. paid through private insurance or out-of- Second, with the exception of Quebec, Cana- pocket. These latter services include dental dians and Americans share many cultural and vision care, long-term care and home traits that affect behavior toward the health care, and prescription drugs for the non-poor system – in particular, language and media. and non-elderly. Third, Canada has consistently spent only In June 2005, the Supreme Court of Cana- about half as much per person on health care da ruled that the prohibition of private insur- in real terms as the United States, yet often ance for medically necessary services to which ranks higher in measurable health outcomes. access is restricted by waiting time infringes Finally, opinion surveys suggest that Canadi- on citizens’ rights. That ruling has opened the ans are happier with their health care system door to the development of two-tier health than their counterparts south of the border. insurance and health care in Canada, a devel- One in three Americans say their system opment generating heated debate. should be “completely rebuilt,” compared with just one in seven Canadians. The Advantages of Single-Payer Systems Although much maligned by free-market a snapshot of devotees, single-payer (typically the govern- canada’s health system ment) health insurance systems do have a Canada’s health system actually consists of 13 number of advantages over market-oriented distinct provincial tax-fi nanced single-payer systems. First, by virtue of their administrative Second Quarter 2007 39 rationing health care ministrative monstrosity, a truly bizarre mé- simplicity, single-payer systems are the ideal lange of thousands of payers with payment platforms for a uniform information infra- systems that differ for no socially benefi cial structure, based on common nomenclature reasons, as well as staggeringly complex pub- and technical processes. The single-payer sys- lic systems with mind-boggling administered tem of Taiwan, for example, can track health prices and other rules expressing distinctions spending by provider and patient virtually as that can only be regarded as weird.” they happen. In the United States, the lag be- Third – and very important – a single- tween delivering service and recognizing its payer system is the ideal platform for an egal- expense can easily exceed one year. itarian distribution ethic in health care. Cana- Second, because the administrative struc- dians seem sincerely to believe that good ture of single-payer health insurance tends to health care is a right. And though Americans be simple, the administrative cost of operat- pay lip service to this ideal too, socioeconom- ing such systems tends to be low. Taiwan’s sys- ic status plays a major role in access to basic tem, for example, spends less than 2 percent human services. of outlays on administration – as, incidentally, Consider the legislators of my home state, does the U.S. single-payer Medicare program New Jersey, who apparently think nothing of for the elderly. By contrast, private insurers in limiting compensation to a pediatrician to the United States spend 15 to 25 percent on $30 for a Medicaid offi ce visit, while bestow- administration, marketing and profi ts.
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