Many Democratic Congressmen, member of the Obama administration, and others writing about American health care envy the 'European" health deliver system since they attribute Europe's lower mortality rates, despite much lower per capita spending on health care than by the US, partly to the European model of health care delivery. This model involves government domination of spending on medical care that involves extensive government regulation and rationing of access to medical care. Envy of the European model explains why the Democratic proposed "reforms" of the American system involve large increases in government involvement in health care, including a government-run health insurance plan.
In evaluating whether envy of the European approach is justified, it is crucial to determine whether the higher mortality rates in the US than in many European countries is due to defects in the American health delivery system, or to other factors. Mortality rates are affected not only by health care, for they are also very much dependent on personal behavior, such as smoking, eating habits, exercise, stress, how carefully individuals follow the medical advise they receive, and many other kinds of behavior under the control of individuals rather than the medical profession. The US has relatively high incidences of obesity, partly because Americans consume lots of high fat and high cholesterol foods, and Americans were heavy smokers in the past, just to mention a few unhealthy forms of behavior. Perhaps then the higher US mortality rates are due much more to differences in personal habits and personal care than to defects in the US health delivery system?
One way to separate health care from personal behavior is to consider survival from serious diseases, such as various cancers and cardiovascular diseases. In my post on health care on June 7 of this year I referred to a study published in Lancet in 2007 that compares five-year cancer survival rates for the US, the United Kingdom, and the European Union as a whole. The study examines early diagnosis, early treatment, and access to the best drugs, and finds that the United States does very well on all three criteria. As a result, five-year cancer survival rates are much better in the US: they are about 65% for both men and women, whereas they are much lower in these other countries, especially for men.
Early diagnosis helps survival, but it may also distort comparisons of five or even ten-year survival rates since some cancers would be discovered at very early stages. An alternative that avoids this distortion is to compare age-adjusted mortality rates for different diseases. Early detection and other medical care that improved life prospects would show up as lower mortality rates. A recent excellent unpublished study by Samuel Preston and Jessica Ho of the University of Pennsylvania compare mortality rates for breast and prostate cancer. These are two of the most common and deadly forms of cancer-in the United States prostate cancer is the second leading cause of male cancer deaths, and breast cancer is the leading cause of female cancer deaths. These forms of cancer also appear to be less sensitive to known attributes of diet and other kinds of non-medical behavior than are lung cancer and many other cancers.
These authors show that the fraction of men receiving a PSA test, which is a test developed about 25 years ago to detect the presence of prostate cancer, is far higher in the US than in Sweden, France, and other countries that are usually said to have better health delivery systems. Similarly, the fraction of women receiving a mammogram, a test developed about 30 years ago to detect breast cancer, is also much higher in the US. The US also more aggressively treats both these (and other) cancers with surgery, radiation, and chemotherapy than do other countries.
Preston and Hu show that this more aggressive detection and treatment were apparently effective in producing a better bottom line since death rates from breast and prostate cancer declined during the past 20 by much more in the US than in 15 comparison countries of Europe and Japan. US death rate rates from prostate cancer went from about 7% above those of the comparison countries in 1990 to over 20 % below the average of these other countries in recent years, or almost a 30% greater fall in US rates. American death rates from breast cancer declined from about 10% above the average of these other countries in 1990 to slightly lower.
These results suggest that the US health care system does deliver better control over serious diseases than systems in other advanced countries. Of course, American health care delivery is much more expensive, so a natural question would be whether the greater apparent benefits are sufficient to justify the greater cost?
To get a very rough answer to this question, suppose generously that the American health care system adds 1 life year on average to persons above age 50 compared to what they would have with the average health care system in the 15 comparison countries used by Preston and Hu. Suppose also that people over age 50 value each additional life year by $120,00- since this is a ballpark figure often used for the average American, the dollar value may be lower (or higher!) for older persons. Given that about 4 million Americans reach age 50 each year, the aggregate value placed on these additional life years with these assumptions would be close to $500 billion. This is a little over 4% of American GDP, so this assumed improvement in mortality rates, even aside from improvements in the quality of life, could justify much of the additional spending by the US on health care compared to other wealthy countries.
Of course, the assumption that the American health system produces one additional life year for each person over age 50 may be much too generous, and perhaps older people place a much smaller value on an additional year than $120,000. Still, these calculations suggest that America should hesitate without additional evidence of the type I have used before jumping on the European bandwagon, and conducting radical surgery on the American health care delivery system.
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Posted by: Anonymous | 07/30/2009 at 06:28 PM
Isn't lung cancer the largest killer of women in the United States, and isn't a great part of the breast cancer situation reliant on a huge public advocacy campaign which funds the research?
Heart disease is the top killer in the us overall, why not use that as a comparison?
Why not question why most clinics charge $375 for 4 sutures if you have insurance and $750 if you do not.
Posted by: Anonymous | 07/30/2009 at 08:01 PM
"Why not question why most clinics charge $375 for 4 sutures if you have insurance and $750 if you do not."
Why is any price the price? Because people pay it.
The difference in medicine is that people are not able to negotiate or haggle over a price when he or she is in need of urgent care.
It would be an interesting study to see if the urgency of a procedure influences the size of the gap between the insurance company negotiated price and the general price.
Still, even in non-urgent situations a gap would be expected to exist. It is no different for anything else. Let's say I tell a bar owner that I'll bring 100 people to his bar on the condition that we get $2 Budweisers. I'll probably be able to get that deal before the guy who's negotiating for himself and only himself.
See insurance companies for what they are. Not the evil profit making machines they are painted to be, but negotiating powerhouses among other purposes such as risk pricers.
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Posted by: Anonymous | 08/04/2009 at 10:09 PM
You have not been into a French cafe or British pub lately. The assertion that in these countries, people live "healthier lifestyles" is one that is really not a valid one. Both the French and the British still smoke like chimneys, the Swiss have diets loaded with eggs and cheeses etc and they are not the low fat versions. The consume as much, if not more alcohol.
There is no real argument in this.
As it stands, the government directly or indirectly subsidizes about 60 percent of the cost of health care in the United States. Medicare, Medicaid and Federal Employees insurance makes up a portion of this, but not a large portion. The majority comes from various government grants to businesses that provide health care for their employees, the tax breaks that employers get for giving them, and other area. The HHS has 300 different grant, and awards 75,000 of them a year. This accounts for 60 percent of all government grant monies.
The private sector is singularly unequipped to create a national risk pool. It is not in their interests to. The only way the private sector handles health care is by creating risk pools in which they can exclude those most likely to need the insurance, and only include those less likely to use it.
There is NO solution that can be solved by resorting to the private sector alone. The best solution is a mixed on, as exists in France.
France has created the best health care system in the world. It IS single payer. But the government does not administer a single program. The private insurance industry administers all of the French health care system. The catch is that the insurance companies are not the gatekeeper. That was what the doctors demanded to come into the deal. They get the last word on what the insurance system MUST pay for. The insurance companies make money administering the program, but they make even more selling add on policies that cover the patient's co payments, etc.
The national health system pays 70 percent, the patient pays 30. But because of these add on private insurance policies, the French have one of the lowest out of pocket expenses in the world. About 7.7 percent.
The Doctors are happy, the insurance companies are happy, and the patients are very happy.
Posted by: Anonymous | 08/09/2009 at 10:46 PM
P.S. the current health care system in America costs the average household 20,000 dollars a year (117 million households divided into 2.4 trillion dollars in health care) The government spends about 500 billion to insure a total of about 78 million people on Medicare, Medicaid and Federal Employees health insurance. The figure of 47 million uninsured that has been batted round for years is rather low, and currently excludes the about 6.6 million unemployed who have lost their health coverage and to be even more succinct are less likely to get a job that does offer it than they were when they were hired for their last job. Since an all time high in 2000 of 64.3 percent of working Americans who had job based health insurance, today, the figure is 59.2 percent. There is no sign that the rate of employer based health care will go up again and the rate at which employers are dropping coverage is accellerating.
Eventually and not too long in the distant future, the rate at which employers provide heath care to employees will fall below fifty percent.
Another thing to ponder is that there have been many estimates that indicate that in a very short time, the cost of providing ALL employees who have employer based health care in the United States will exceed the profits of companies outside of the health insurance sector. The only option at this point is to shift more of the cost onto the employee, or simply stop providing the insurance.
This is only logical as the increase in the cost of insurance is annually greatly exceeding the annual growth of the entire U.S. economy.
Or the government will have to subsidize even more of the shortfall than it already does. This will mean that allowing corporation to deduct the cost of health insurance as a business expense will not cut it. The government will have to offer direct grants of some sort to employers who provide it, but this will only be treading water. Only the largest corporations will be able to do so.
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Posted by: Anonymous | 08/10/2009 at 09:44 PM
Another measure of health care effectiveness is infant mortality. The United States ranks 46th in the world (CIA World Factbook, 2009 est.).
In your cost-effectiveness calculations you should balance the number of life years gained to the over-50s against life-years lost due to the surplus death of infants, as compared against other developed nations. This would strongly skew your analysis the other way.
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In order to compare health systems you have to look at the overall picture. Selecting, say, cancer rates as opposed to, say, liver disease cannot but mislead. Becker must know this.
The blunt fact is that overall, US healthcare provision is inferior to that in some, but not all, European countries. It is plainly inferior to France for example (I am not claiming that the French system is perfect.)
The real problem is that US healthcare is both very expensive (a much higher percentage of GDP than in either the UK or France) and overall gives poor results. How can this be so? Because for those fully covered, healthcare is superior than in many European states. For those not fully covered by insurance, it is significantly worse.
How much collective provision do you want? Some public goods are already collectively provided (education, police, fire). To what extent do you want to move to a collective provision of healthcare. Overall, it will be cheaper, but will involve the rich paying for the poor, in some way. You cast your vote and take a choice. However, it is quite clear that US healthcare is not as good for the population as a whole as, say, that in France.
As an aside, the only countries we have proper obesity figues for are the US and UK. In France and elsewhere in the EU the figures are compiled on a basis of submissions by individuals. They are as a result wholly unreliable and hopelessly underestimate obesity rates.
Cigarette sales in continental Europe are significantly higher than in the US, by comparison. Saying that Americans have worse lifestyles than, say, the Spanish is frankly silly.
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In order to compare health systems you have to look at the overall picture. Selecting, say, cancer rates as opposed to, say, liver disease cannot but mislead. Becker must know this.
The blunt fact is that overall, US healthcare provision is inferior to that in some, but not all, European countries. It is plainly inferior to France for example (I am not claiming that the French system is perfect.)
The real problem is that US healthcare is both very expensive (a much higher percentage of GDP than in either the UK or France) and overall gives poor results. How can this be so? Because for those fully covered, healthcare is superior than in many European states. High cost, high end care for those covered is better. For those not fully covered by insurance, it is significantly worse.
How much collective provision do you want? Some public goods are already collectively provided (education, police, fire). To what extent do you want to move to a collective provision of healthcare? Overall, it will be cheaper and better, but will involve the rich paying for the poor in some way. You cast your vote and take a choice. However, it is quite clear that US healthcare is not as good for the population as a whole as, say, that in France.
As an aside, the only countries we have proper obesity figues for are the US and UK. In France and elsewhere in the EU the figures are compiled on a basis of submissions by individuals. They are as a result wholly unreliable and hopelessly underestimate obesity rates.
Cigarette sales in continental Europe are significantly higher than in the US, by comparison. Saying that Americans have worse lifestyles than, say, the Spanish is frankly silly.
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