Tuesday, April 25, 2006


Healthcare costs: The deception continues

An editorial in the British medical journal The Lancet casts a skeptical eye on the universal health insurance plan recently enacted by the state of Massachusetts. It concludes—

[T]he greatest weakness of the bill is that it does little to tackle the biggest challenge facing the US health-care system and the reason why health insurance is unaffordable: cost. US health-care spending continues to spiral upwards, far outpacing inflation, and now consumes 16% of US gross domestic product, far more than is spent by other developed nations. Even the supporters of the Massachusetts reform acknowledge that their programme will run short of money in its third year. Unless some way is found to control costs, by reducing unnecessary and wasteful care, for example, and driving down the high administrative costs of private health insurance, the Massachusetts reform plan will likely collapse in a few years as other celebrated state reform initiatives have done before.

There are a number of factors that contribute to the high cost of medical care, so I was interested in which factors The Lancet had selected: (1) unnecessary and wasteful care and (2) high administrative costs of private health insurance.

First a word about those two factors:

(1) By pointing to "unnecessary and wasteful care" without mentioning its cause, the reader may be subtly misled into believing that the problem of high medical costs is the fault of malingerers and "overuse" of the health system by people of that ilk. The ill but uninsured individual becomes the healthcare equivalent of Ronald Reagan's mythic "welfare queen," whom he accused of abusing the public welfare system. I'll dub this bête noire of the healthcare system the "healthcare queen."1 The healthcare queen will be poor and most likely a "person of color" (though the color may actually be due to any number of diseases).

There are a number of reasons for "unnecessary and wasteful care" that have everything to do with the physicians and nothing to do with the patient—(a) physician investments in hospitals and laboratories, (b) uncertainty as to the diagnosis, thus using specialist referrals as a way of getting a second opinion, (c) substitution of tests for actual time spent listening to and examining the patient, which allows the doctor to use his time "more efficiently"—that is, to see more patients and earn more money. And then there's the malpractice bugaboo, of which there was an interesting Q&A a few months back in The New Yorker.

(2) The "high administrative cost of private health insurance" has an easy solution: End private health insurance. Any reduction put into effect by the insurers will be marginal—a lack of capitalist incentives, you know—and there really is no justification for a system of private insurance other than providing the insurers the pleasure of earning huge profits. That private insurance is somehow more efficient than government insurance is as close to a complete lie as you can come to in economics, most of which is pretty dishonest to begin with.

Now let me mention another factor in high healthcare costs that slipped the editorial mind of The Lancet: physician income.2 And it's strange that they didn't mention it because it has been discussed recently in the UK. Only last Sunday Richard Gray observed in The Scotsman—

In the past week GPs [general practitioners] came under the spotlight with revelations that they are being paid as much as £250,000 [$450,000] a year in some parts of the country as a result of new contracts. Although only a few will pick up this much, the average family doctor is still earning more than £100,000 a year [$180,000], with GPs in Scotland able to pick up £1,500 [$3,200] for providing a single night of on-call cover.

And today Scotland on Sunday reveals that hospital consultants in Scotland can be paid in excess of £200,000 [$360,000] a year, more than half of which is accounted for by bonuses and overtime payments under their new contracts.

And these are the doctors suffering under British socialized medicine! Imagine what it's like for doctors in the U.S.

Most of our American physicians are staunch supporters of the free market and neoliberal economics, but it turns out that the free market is good for everybody but them. Don't mention to your doctor that you'd like to see more medical schools opened or more foreign doctors certified to practice in the U.S.—unless you're well on your way to recovery.

Of course, I'm not denying the original thrust of the Lancet editorial—that Massachusetts will have a hard time keeping down the costs of the program. But what does that really have to do with Massachusetts and state-mandated universal healthcare? The problem of healthcare costs must be faced by all states along with the federal government. Why single out Massachusetts?

In any case, the public should be continually reminded of the facts that NY Times columnist Nicholas Kristof laid out recently—

If the U.S. had an infant mortality rate as good as Cuba's, we would save an additional 2,212 American babies a year.

Yes, Cuba's. Babies are less likely to survive in America, with a health care system that we think is the best in the world, than in impoverished and autocratic Cuba. According to the latest C.I.A. World Factbook, Cuba is one of 41 countries that have better infant mortality rates than the U.S.

Singapore has the best infant mortality rate in the world: 2.3 babies die before the age of 1 for every 1,000 live births.3 Sweden, Japan and Iceland all have a rate that is less than half of ours.

If we had a rate as good as Singapore's, we would save 18,900 babies each year....

[F]or all their ruthlessness, China's dictators have managed to drive down the infant mortality rate in Beijing to 4.6 per thousand; in contrast, New York City's rate is 6.5.

We should celebrate this freedom that we enjoy in America - by complaining about and working to address pockets of poverty and failures in our health care system. It's simply unacceptable that the average baby is less likely to survive in the U.S. than in Beijing or Havana.

Related post
First American graduate from Cuban medical school (8/26/05)


1A search of Google reveals that although the right-wingers have thought of the phrase, their usage is quite different. They are using it as an epithet for Hillary Clinton: "the socialist healthcare queen." [back]

2A year ago Princeton economist and NY Times columnist Paul Krugman wrote in "The Medical Money Pit,"

Why is the price of U.S. health care so high? One answer is doctors' salaries: although average wages in France and the United States are similar, American doctors are paid much more than their French counterparts. Another answer is that America's health care system drives a poor bargain with the pharmaceutical industry. Above all, a large part of America's health care spending goes into paperwork. A 2003 study in The New England Journal of Medicine estimated that administrative costs took 31 cents out of every dollar the United States spent on health care, compared with only 17 cents in Canada.


3Kristoff seems to be trying to make a distinction between levels of healthcare in "autocratic" vs. "democratic" countries. But Singapore is far more autocratic than Cuba. Just don't expect to read that in the NY Times. [back]

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