I am wary of cancer survival rates as a measure of the quality of healthcare, since you can improve your stats by detecting more harmless cancers. Cancer screening programs can save lives by early detection of cancers that would otherwise become untreatable, but they also detect cancers that would have never become dangerous.
Not if the cancers that are identified didn't need medical attention. If that is the case then you are wasting resources on cancers that may not need it. (This is just hypothetical, I have no idea if this actually happens).
Additionally, you may identify someone as having cancer. They then receive treatment which can significantly negatively impact their quality of life. But its possible they didnt need that treatment at that time and could have lived many years (or even the rest of their life) without undergoing that detrimental treatment. (Again, hypothetical)
An example of where the cancer survival rates can mislead:
Suppose there is a type of cancer with 100% fatality rate after 10 years. Nothing you can do to treat it changes that.
Country A aggressively screens for it and detects it in the first year. Their patients survive 9 years after diagnosis.
Country B doesn't proactively screen and detects it as symptoms get bad in year 8. Their patients survive 1 year after diagnosis.
Country A spends much more on screening and looks like it has better survival rate, but in reality country A isn't doing any better at helping people with the cancer live longer.
It does seem like a virtue. But it's a virtue that may be incorrectly counted. Consider three systems - one detects a moderate number of cancers late and does a moderate job of treating them; one detects cancers a few years earlier but does no better at treating them so that people live just as long; one detects no more cancers but treats them more effectively so that people live on average a few years longer. The metric that has been discussed might treat the second and third as being equally good, even though the third seems much better than the second while the second is only a tiny bit better than the first.
Possibly, but the point is that it makes comparisons of cancer survival rate at a proxy for healthcare quality less meaningful. Without accounting for it, you don't know if a lower survival rate is due to less screening or worse quality care (or both or neither).
Aren't they better done as survival rate for someone with a Stage X cancer of a certain type? I suppose within stages there is still a range so perhaps early diagnosis still skews this? But I imagine not as much...
Yes and no. Even within a stage, patients that have symptoms (and were diagnosed based on those symptoms) tend to do worse than patients without symptoms (that were diagnosed based on screening), even if you try and control for everything.
You can also improve the stats by detecting a cancer earlier. If you can detect it five years earlier than otherwise, you have increased your "cancer survival time" by five years, but in fact haven't increased anybody's lifespan.
Very good point! Researchers call this "lead-time bias". In effect, if the measure of efficacy of a screening program is "years survived after detection", a program that finds a problem (cancer, or anything else) earlier will appear to improve outcomes even if it does not.
There are a couple of ways to get around this (i am by no means an expert). One way (taking mammography as an example) is to look at all-cause survival in people with breast cancer in people screened and not screened with mammograms. If the mammograms are detecting cancers earlier but not really changing over-all survival, then there should be no difference. But if the cancers that are detected early are treated more effectively and lengthen life, then the overall survival will be higher in the screened group.
All that said, most people (certainly all serious researchers) are pretty aware of lead time bias in the evaluation of screening programs, and so when those statistics are cited it's with heavy caveats or with some contextualization. In other words, I don't think anyone serious is advancing any policy proposals based solely on survival from time of detection (let me know if I'm wrong!).
As an aside, from a socio-political standpoint, screening programs can be pretty sticky! Again using mammography as an example: There are always very bitter debates whenever the appropriate age of mammography comes up. On the one side, some argue that screening younger women for breast cancer is wasteful, because of how rare breast cancer is in younger women and the undue distress that it causes someone to receive a very early stage breast cancer diagnosis when the cancer was so slow growing/small that they would have been better off never finding out about it. On the other side, intense screening find cases, and all the people who become cases generally credit the screening program with saving their life! Thus you end up with a big, sometimes politically quite powerful and effective survivorship community strongly in favor of screening.
Yes. Screening programs can be sticky. Mammography in healthy young women with no family history or known genetic tendency for breast cancer is a really bad idea. Not only is the base rate is very low, there is the further problem that the test is less sensitive in young women (the breast tissue is more likely to have harmless bits that cannot be distinguished from cancer). Again, I think Australia is doing a good job on this. They invite women in the 50-74 age range for regular mammographies, discourage low risk younger women from getting regular mammographies, but still offer free mammographies from age 40. I would imagine that most countries with a public health system are similar on this.
Let me add that in Emanuel JAMA study, Australia did best on colon cancer survival and the US did best on breast cancer survival. This is pretty clearly linked to early detection. Australia has an effective national screening program for colon cancer (starting at age 50), and the US does more mammograms on young women with no family history of breast cancer than all or nearly all other countries (whereas Australia does not recommend mammographies before age 50). I believe that the evidence supports the Australian approach in both cases. But at any rate, screening clearly has a big effect on survival statistics independently of the quality of care for cancer patients.
Screening for cancer always seems to do better when the metric is survival post diagnosis (see my comment above re: lead time bias). The authors write, in the discussion:
"That outcome [good breast cancer survival] is very likely due to the high rate of mammogram screening in the US, which is associated with higher rates of diagnosis of small cancers.22,23 However, if undetected, most of these small cancers would not have progressed to large cancers and caused death. Consequently, there is a high 5-year survival rate but not a lower overall breast cancer mortality rate because mammography does not increase detection of larger tumors."
Colon cancer is different because when screening for colon cancer with colonoscopy, you can also remove pre-cancerous polyps, so it's both diagnostic and therapeutic.
To clarify the Australian colon cancer screening isn't give every single old person a colonoscopy - it's mail every old person a cup to shit in, which is much cheaper and less invasive. If the sample comes back as problematic, then you get the colonoscopy.
Of course. A good thing about it is that they remind people to do the test and make it easy and free. I bet they get a substantially higher compliance rate than if people had to go to a clinic and/or pay a small fee.
In the us we get TV ads for the box to shit in (because you need a prescription for this). It's an animated talking box that walks up to people eating in public and this somehow isn't a health code violation.
(We also have an animated talking box that sells car insurance. Does the insurance box ever gets taken into a home and shit in?)
An important point too is that all colon cancer ends up being serious if not addressed. That is definitely not the case for breast cancer (or prostate for that matter).
Re. Developing countries: I have dual citizenship to Costa Rica, and my experience there was nothing but positive.
I got a weird GI parasite from somewhere in the jungle and got seen free of charge and with no wait time, and received excellent care.
I do know that if you are rich, you can pay more for decreased wait times, single luxury rooms in hospitals, and more attention; but as far as I know that care is pretty much the same.
I also have family friends that live way out in the sticks (No phone lines, no running water, no power 'till the last couple years), and can get complicated treatment for eg rheumatoid arthritis with no charge (But with significant wait time and some amount of travel).
All in all, if I had a choice, I would rather have CR care than US care.
This is funny to me, 'cause when I was a kind in the 90's we still had no power or running water and cooked with wood; but I at the same time every couple months a guy in a pickup truck would show up from the ministry of health to the one room school house and do any vaccinations/basic health checkup stuff you needed.
There was also health ministry war propaganda EVERYWHERE: "Get you fucking shots!" "Wash you hands!" "Don't shit near running water!" "Drain stagnant pools where you find them!" (There was a pretty bad dengue outbreak at the time.)
I had an airbnb landlady who insisted that Costa Rica was paradise and she was gonna sell her home in the states and retire there (to her second home) "soon", repeatedly throughout my interactions with her. She had mentioned the medical care being really good. That airbnb listing is now run by her son, so either she died or she's living in Costa Rica now!
I am in general skeptical of studies that try to use health outcomes to measure the quality of the health care system, including the one GummyBearDoc cites, for the same reason I think one should be skeptical of studies using educational outcomes to measure the quality of the education system. Namely, there is so much outside the system that affects outcomes (Freddie deBoer of course bangs this drum a lot in education) that even if you try to control for those things you'll probably still miss important confounders. Do the genetics, lifestyle choices, stress level, etc etc etc of American rich people affect how well they do after a heart attack vs average people in other developed countries? Probably! And probably not in a way that the health care system can do much about, or that you can readily control for in a study like this.
Also, while we're doing anecdotes: in a lot of places in the US, if you want a single-payer-style healthcare system, you can choose Kaiser Permanente as your insurer. I'm a longtime Kaiser member and pretty big fan, and their care pathways always seem very efficient and well-designed to me, though I am told (more anecdotes!) that the quality varies by region and e.g. Northern CA Kaiser is better than Southern CA Kaiser, so I may be biased. In any case I'd attach more credence to studies comparing Kaiser-like systems within the US to other more "traditional" systems than to international comparisons, because at least in those internal-to-the-US comparisons the patient populations are all Americans with American genetics, lifestyles, and stressors.
Kaiser recently acquired Group Health, another HMO from WA state, which I used for about 13 years. GH was great for all the normal stuff, but when something unusual happened to me and I developed a rare but well known mental health problem, they completely fell through. They failed to see what was happening, repeatedly kept trying the same treatments, some of which were counterproductive and made it worse, and eventually their bungling cost me my ability to work and even my ability to function in day-to-day life. It's been a slow and painful road since then, and I'm nowhere near where I used to be.
When I first thought of signing up, a friend told that their nickname was "Group Death" and that they simply didn't pay doctors enough money to retain the good ones. I should have listened. And from what I've heard, this isn't an uncommon pattern - they do well on the most common stuff (their Urgent Care was always great), but can't handle anything out of the ordinary.
But hey, maybe other parts of Kaiser aren't like that.
Yes, but I would presume that most of the people on the ground remain the same. (Quick googling seems to confirm this.) Change there would only occur if Kaiser started hiring better people.
To be clear, the problem wasn't directly to do with overarching corporate policy, let alone the brand name slapped on top. It was that too many of the people on the ground seemed to go about their jobs as if they were automatons following a checklist. There were exceptions, enough to make me think that this wasn't entirely management's fault, except insofar as management created an environment where this sort of attitude could settle in and thrive.
The OP said that regional branches of Kaiser differ in their reputation, and today that's what I'd classify this as. But if similar problems persist in other regional branches of Kaiser, then I would suspect that the acquisition isn't going to change things in the former GH territory.
About 1/3 of those counties are the Washington DC-area suburbs, where I live, and the most of the others look similar: suburbs of large cities. But don't think of small enclaves of mansions. US counties are large and the counties on this list have *most* of the residents of the DC suburbs. And maybe half the residents of the whole DC/Baltimore/Arlington MSA.
People here are different from the typical US resident along many dimensions, some even more so than income (education, for example). But I wouldn't say our health care is one of the most important dimensions where we differ. We mostly all have the same kind of insurance most Americans do, from the same companies, and go through the same bureaucracies to get care. Maybe our hospitals are a little better staffed and equipped? And it's the suburbs so nobody is a 2 hour drive from a hospital.
But still, when people say "gold-plated health care for rich Americans," I'd think of like concierge care, paying out of pocket to fly to the best hospital in the country (world?) for any given procedure, that kind of thing. Not of a standard-issue government employee in the DC burbs using UnitedHealth or Aetna.
Sounds like counties are too big a unit. What you want is outcomes for smaller geographic areas (which may not be available), because you can then look at super-rich gated communities and the like.
Loren-I think this is exactly the point that the study authors are trying to make! Most people think that US healthcare is a mess, but if you're pretty rich you can get around some of the problems with the way we deliver care. I think the authors are making the point that the ability to side step these issues is much less than one would think, unless you're truly, phenomenally rich. And I think the "gold-plated" care you describe is a lot more rare most people suspect.
Hey, Nicholas, thanks for the comment and let me do my best to persuade you that this study is compelling.
First, I agree that there should be some skepticism here. As an example, say someone did a study comparing health outcomes in two countries, discovered that country X had better outcomes than country Y, and concluded that country X had a better healthcare system/healthcare quality than country Y. I would say that conclusion is pretty flawed!
But that's not what this study is! In the case of the heart attack data, it is looking at only white people from the wealthiest 1% of zip codes (even more granular than county level data). This is an extremely cherry picked group of people who should have the very best healthcare outcomes. The median income is $117,000. Compare that to the average citizen in Norway, whose median income is $51,000. If I asked you, who is more likely to die after a heart attack, the average person in Norway, or a white person who lives in one of the 1% wealthiest zip codes in the US, I think you'd probably say the rich person in the US!
That's not what we find! The rich Americans die 12% of the time, all Norwegians die 10% of the time. Maybe you're right! Maybe a combination of genetics, lifestyle choices, stress, etc, etc, mean even being more than twice as rich doesn't buy you the health outcomes achievable in the average citizen in Norway. But that would also be pretty shocking.
So in summary, I agree with your general premise that you should approach these studies with skepticism, however this particular study is so overwhelmingly biased in favor of the US, that the fact that the US still doesn't come out on top is really surprising, and interesting.
"Maybe a combination of genetics, lifestyle choices, stress, etc, etc, mean even being more than twice as rich doesn't buy you the health outcomes achievable in the average citizen in Norway. But that would also be pretty shocking."
This would not be shocking at all. The obesity rates alone vary by a large amount and change outcomes by large amounts.
I would be more shocked if the average Norwegian hospital was using some more effective practices in dealing with heart attacks that the average US hospitals are not using. Yet, if there is some claim that the average Norwegian hospital is doing better, what could be the cause of them doing better, if not the condition of the patients they are trying to treat?
Let me take a stab at this--what might norway be doing better than the US to promote better outcomes 30 days post a myocardial infraction.
First, I'm starting with a huge handicap. I've never been to Norway and I only know the American system.
1. Ok now let's take a person with a heart attack. Likely they have new chest pain, or shortness of breath, and they call an ambulance. In the US the abulance system is a mish-mash of local companies, some town ambulance cores, and some hospitals who have their own ambulance cores. Meanwhile in Norway, there's one, national ambulance system (https://en.wikipedia.org/wiki/Emergency_medical_services_in_Norway). I would suspect that this would lead to a more streamlined and consistent path from where you got sick to the hospital but this is conjecture.
2. Ok so the patient gets to the emergency room. They're quickly diagnosed with a myocardial infarction and taken to the cardiac catheterization lab where the blockage is found and stented open, or they're diagnosed with coronary disease so bad that they need open-heart surgery. I work at a tertiary care center in the US and I think we are EXCELLENT at this part, and I imagine Norway is too! Probably not a big source of variation.
3. If you got a stent, there are two medicines that are CRITICAL to take for at least some period of time, aspirin, and another medicine that prevents clotting (usually either ticagrelor or clopidogrel). These medicines prevent a clot from forming inside the fresh stent. Missing them for even a day or two puts you at ENORMOUS risk for a heart attack. So we do our best to proactively address any barriers for patients getting these medicines. This is pretty painful; I usually have to prescribe the medicine, call the pharmacy, wait on hold, and then ask the pharmacist what the patient's co-pay will be. If it's high, I prescribe the other medicine. You would be shocked how often this administrative step falls through the cracks. Again, no idea how this works in Norway.
4. Cardiac rehabilitation is a supervised exercise program for people after they had heart attacks. It has been shown to significantly reduce mortality after a heart attack. We always prescribe cardiac rehab in the US, but patients routinely say it's a nightmare to sign up, it's very difficult to find out from insurance if it's going to be covered, and often you have to pay "up front" and get reimbursed after approval if you don't want to wait before you start. Again, no idea how this works in Norway, but I would not say it works well in the US. I have had extremely wealthy patients with excellent insurance bemoan how opaque and confusing the process of getting these services can be.
I agree with you that the way we open blocked coronaries is likely just as good if not better than the way Norway does! But the interventional cardiologist spends about 2 or so hours with you, and the rest of the time you're interacting with a healthcare system which, in the US, is fragmented and requires interacting with a very stubborn bureaucracy. Making sure folks are getting to hospitals quickly, making sure they have access to important medicines, and getting them into rehab are all relatively low tech interventions that rely much more on coordination/cooperation rather than who has the fanciest equipment or best trained doctors.
Regarding obesity, a lot of people have brought up this point. Perhaps this is the entirety of the effect! But I think that's unlikely.
It's very hard to find numbers just describing obesity rates in whites only in the top 1% of US counties. The overall obesity rate in Norway is 23% (https://journals.sagepub.com/doi/full/10.1177/0272989X20971589). If you look at the counties represented in the list, they are mostly in rich states, like Massachusetts, New York, New Jersey, Maryland, Virginia, Colorado, and California, where overall obesity rates are between 24-30%. The states with the highest prevalence of obesity (places like the deep south and midwest) are not really represented in the sample). Black and hispanic people have much higher rates of obesity, so not including them in the study brings those numbers down. Likewise, the relationship between income and obesity is complex. At least when looking at incomes up to 77k, (I can't find data for lower) white men seem to get MORE obese with wealth while white women get less obese with wealth. I still suspect the wealthiest 1% of counties have less overall obesity than the US as a whole. But even if you're not willing to take that supposition at face value, removing black and hispanic people from the analysis likely brings down the rates by 3-5% (obesity is VERY prevalent in those communities: https://www.cdc.gov/nchs/data/databriefs/db50.pdf). So that puts you at an estimated rate of obesity IN THIS SMALL SEGMENT OF THE US population at 20-24%, which is pretty comparable to Norway.
It's fun to look for the flaws in a study, and it's good practice to think critically. But, I'm surprised at how eager everyone is to defend the US healthcare system. I am a well off physician living in a wealthy neighborhood, and have a great network of friends who are also doctors who make it easy to get access to good and timely care...and I still find it a nightmare to deal with hospital billing departments, my own (very "good") insurance company, and the lack of coordination amongst different aspects of my healthcare.
I hope what I wrote was persuasive! If not, tell me! But please come back with some #'s of your own!
Even just thinking about MI alone, there are so many confounders, honestly I have doubts that the results are meaningful.
Did you control for the age of the patient? This seems like a very obvious confounder. The richest Americans tend to also be the oldest Americans. Someone who has an MI at age 90 is much less likely to survive than someone who has an MI at age 50, even if the person who is 50 receives "worse" health care.
Do you control for procedures like pre-emptive stenting? How common is this in Norway? If a rich American complains of angina, they can get a coronary CT and pre-emptively stent any problematic vessels before an MI, so they won't end up in your study. Your sample will be enriched for people who -chose- to avoid the doctor despite symptoms, who are also likely to have other co-morbidities and health issues that are not under control.
There are plenty of other factors you introduce by focusing on the rich that you have to control for.
1. Your post reads as if I conducted this study. Just to clarify--not my study, I didn't write it! I'm a pulmonologist and my research involves mostly mice and cells.
3. When you discuss "pre-emptive stenting" I think what you're referring to is stenting for stable coronary artery disease. A large, rigorous, high profile study comparing stenting for stable CAD vs. treating with medicine found no difference in 5 year mortality. It was called ISCHEMIA, and here is a link: https://www.nejm.org/doi/full/10.1056/nejmoa1915922. So while it's an interesting hypothesis I don't think it holds water.
4. I agree, 100% that controlling for more factors is better. There might be some counterintuitive reason why rich people might do worse than one might expect on these metrics. I guess I don't understand why there ALSO couldn't be some counterintuitive reason why rich Americans do about the same (or even a little worse) on some important health metrics than the average person in our peer countries, who have pretty different healthcare systems.
Living in Canada we only have public healthcare, for rich or poor alike (except for cosmetic surgery). You'd be surprised what gets classified as cosmetic surgery though, if the patient is willing to pay for it.
And of course, being close to the USA, Canadians who can afford it and want better care go to the USA and pay big money to do it, so in that way we really do have a two-tiered system.
Hmm, thinking about it, I remember some news articles about Canadian professional athletes who always seemed to be able to skip the line in hospitals too, and get an MRI the same day or a flu vaccine without a wait. Not sure what's going on there.
Canada does have a fair amount of private care, its just not something most people are aware of. Some of it probably comes pretty close to violating the Canada Health Act, though the CHA mostly just incentivizes care to be delivered publicly rather than demands it so there's flexibility. There are grandfathered in private hospitals like Shouldice, there are private surgical clinics in Ontario and BC, there are private physicians who don't bill OHIP at all, and Quebec is basically operating an entire parallel private system. The latter example very explicitly violates the CHA, but the Feds look the other way because Quebec.
On top of that we've seen less direct privatization where US private equity firms have been buying up clinics (that still take provincial insurance and serve the public). Ontario under Kathleen Wynne also privatized a lot of the physical infrastructure of our public hospitals, so that the buildings are privately owned and leased back to the government in exchange for monopoly contracts on substandard housekeeping, maintenance, parking, food, etc. Its an extremely expensive system that also leads to worse services, but it was "successful" in getting a lot of debt off government balance sheets, and other provinces had been looking at following that model pre-pandemic.
For disease specific comparisons of healthcare systems I think it makes more sense to do the comparison between the same ethnic groups. Especially because some diseases like sickle cell anemia can be so ethno-specific.
The Netherlands expat's comments about the Dutch healthcare system brings me back and is totally accurate.
I also lived in the Netherlands for several years. I saw my doctor once. This wasn't because I was never sick. For instance, I came down with shingles while there; it was diagnosed by the receptionist.
That's not an exaggeration. I called and explained my malady - the pain, itching, etc. She asked where it was occurring and if I had a rash there. Then she asked its shape, and then if it looked like [her description of shingles].
When I said yes, she informed me I have shingles. I was not familiar with it then - I only knew it was not good - and asked if I needed to go to their office or seek treatment. She responded not, explaining: "It's very painful and contagious, so we'd prefer not to see you here."
I don't recall if they called anything in for me, but if they did it wasn't much. I just rested and suffered, and when I was feeling OK and had no more rash returned to work (no issues missing work - that aspect of relaxed, semi-socialist northern Europe was wonderful).
The whole experience was so different from American healthcare it's almost impossible to convey. It was the lack of formality or any hint of "cover your arse" tests or treatments driven by fear of lawsuits - yes. But it also was just a cultural difference in how the medical profession functioned and the populace interacted with it.
I found something similar dealing with law and business there. Lawyers played a much smaller role there in corporate structures than in Anglo-Saxon companies. This was largely to the companies' advantage, as they moved nimbly and made major decisions based on commercial concerns, not legal ones.
On the other hand, it also could be laughably inefficient. For instance, once my consulting team evaluated merger and acquisition ideas for a very large company (essentially identifying how it could spend several billion dollars on strategic acquisitions abroad) without any legal input - we thus did not know that several of the markets we were looking at were simply closed off to foreign acquisitions, off-limits with our work and analysis being a waste of time.
I also saw Dutch companies fail to exact every benefit they could from negotiations on several occasions. Their lack of legal counsel meant they did not realize the leverage and opportunities they had when, for instance, a contracting counterparty had breached an agreement or allowed an option to expire. Often the Dutch company just enforced the spirit of the agreement and deal the parties intended to make, rather than what their lawyers ultimately wrote down for them to sign.
As I said, it could be refreshing, and despite some marginal losses/inefficiency I think the arrangement ultimately worked to their advantage (not least in creating a higher trust society, where companies in negotiations were not constantly worried about being screwed and trying to screw each other).
Unless you think that for some reason the Dutch health care system is more likely to have receptionists capable of diagnosing diseases than the American system, this was a coincidence and should have no bearing on how you compare the systems.
I apologize if I was unclear. That example was illustrative, not the sole incident.
My point (and repeated experience) was the Dutch system did not value formality or official certitude, which the American system demands (in many fields, not just healthcare).
I suspect the receptionist was actually a nurse of some type and had some medical training. But the point is not whether that person who answered the office phone had a degree or not. Shingles is distinctive. Anyone sensible and experienced in maladies that frequently appear at a GP's office can identify it, as she did. What was remarkable to me was that is where the conversation ended. They did not ask me to go in, while feeling horrid and possibly being contagious, so the doctor could sign a form and formally make the diagnosis. My problem was addressed; doing anything further for me would have been a waste of time, even if I cannot imagine the process ending there in the U.S.
As I said, this was not an isolated incident. The various winter colds and bugs I caught - again, was advised not to bother going in for them. We had questions of sexual health - addressed in one very brief joint conversation with a nurse, where here we'd have gone in for a battery of tests only to end up at the same place.
The impetus for my comment was the comment quoted in the post reciting the complaint about the Dutch system - that for a huge number of issues which occupy an enormous amount of resources over here to little effect (as there is little we can do about them besides usual sickness remedies and symptom relievers), the doctors don't do anything. You may not find our experiences remarkable - you can assign them whatever weight you want when comparing the systems; I had my own experiences which I am perfectly capable of comparing, thank you very much - but those of us who actually have experienced it hold a different view.
In America that receptionist would be guilty of practicing medicine without a license. Not a joke, if you don’t have the credentials then it is illegal for you to diagnose in a professional capacity.
Plus in America telling a client to stay home means the doctor doesn’t get paid to diagnose them. Receptionists know who pays their salaries and what they want, and generally what they want is to see more paying clients.
My concern with studies like the one cited by GummyBearDoc is that they do not control for the likely lower baseline health of Americans due to different lifestyle choices, leading to higher rates of e.g. obesity, diabetes, and, as far as I can tell for the most part, smoking rates compared to most other developed nations as well as reduced biking/walking as major transportation modes (https://worldpopulationreview.com/country-rankings/obesity-rates-by-country for obesity prevalences; the same site has numbers for diabetes and smoking, citing the WHO). Other nations may have different popular lifestyle choices that negatively impact health that are more common than in the US. However, I'd be curious to see an estimate of how much of the difference in e.g. life expectancy and healthcare cost between the US and other nations that can be attributed to differences in lifestyle choices that affect major risk factors such as obesity, diabetes, and smoking.
And the real question of how much the US is subsidizing R&D budgets is not a function of how much US pharma companies spend on R&D relative to other nations' pharmaceutical companies, but what percentage of all pharmaceutical companies' (whether from the US or otherwise) profits come from the US. I believe the US accounts for most of the profits of even EU pharmaceutical companies (https://www.vox.com/policy-and-politics/22702855/build-build-better-plan-medicare-negotiate-drug-prices; this article quotes an estimate of >60% of global pharma profits come from the US and has an interesting discussion of this question of lost innovation if drug prices are capped in the US).
As pointed out though, profits do not necessarily translate to research spending. I'd love a regulation mandating a (large) percentage of net profits be reinvested in R&D and even one limiting ad spend, though obviously those are likely to never pass.
Those lifestyle issues don't arise at random though. A lot of countries spend money and set laws to reduce smoking and obesity, in part because of the costs to public health care. Eg if a country spends money on anti smoking advertising campaigns, gives people nicotine gum, etc and that reduces lung cancer in the future, why shouldn't that count, if giving people medicine to treat or prevent cancer would?
Anti-smoking campaigns and nicotine gum do sometimes count as health spending. Medicaid covers nicotine gum in some states, and anti-smoking advice tends to be more cost effective (in terms of QUALYs) than most health spending.
I think this could help, but I doubt moving to the US and being exposed to, e.g., widely available sugary/processed American foods wouldn't still have a pretty significant effect (that's an interesting study in itself; health effects of moving to the US from other industrialized nations and from non-industrialized nations). I think it'd be better to just do a study that controls directly for a wide class of lifestyle choices and see whether the outcomes for non-smokers, non-heavy-drinkers, non-obese, etc. people are similar across countries. Likely a biased observation, but the life expectancies in several (middle to upper middle class) American Midwest (e.g., 90% white, mostly third-plus-generation American) subdivisions in the Chicagoland area near where I grew up are in the mid to upper 80s and low 90s (though as some pointed out to me, that could partly be due to large numbers of older people moving there; the subdivision in the 90s did have tons of young families and kids however).
Then we should expect immigrants to have lower lifespans than their nations of origin, no?
According to the following article, life expectancy at birth for ethnically Japanese people in the US was actually slightly higher than life expectancy in Japan for the 2012-2016 period; 89.89 years for women, 83.55 years for men in the US, compared to 87.14 years for women and 80.98 years for men in Japan.
Now, these figures aren't strictly comparable - I'm sure they're using different methodologies, for one, and for two, I'm pretty sure immigrants are on average going to be both healthier (uprooting your whole life is a big ask when you're chronically ill) and wealthier (moving to the US can't possibly be cheap) than people who stay in their country of origin.
Mind, your basic point is correct, but the effect is slower than you imagine; it happens over generations. First generation immigrants have better life expectancies than second generation immigrants, who are better off than third:
An additional complicating factor here is that life expectancy can also be determined by the quality of healthcare you received as a child; but all of these factors, I believe, can be mostly mitigated simply by comparing immigrants from a common nation of origin, across countries. There's still going to be some selection effects at play - I imagine different personalities, on average, will choose different countries to move to - but it does, I believe, minimize the effect of all other factors.
However, I have no idea how to get data for life expectancy of immigrants in other countries to begin comparisons; there might be a language barrier, or maybe I'm just using the wrong search terms, but I simply fail to be able to find anything.
Pretty sure there's going to be confounders with immigrants, too. I doubt immigrants are really a representative random sampling of the population that they're emigrating from - they likely represent either a specific slice of the culture or economic class of their home country (or both).
Sure, which is why I wouldn't suggesting comparing them to their nation of origin; unhealthy people probably aren't doing a whole lot of "Uprooting their lives and moving to another country far from their local support network".
Maybe someone could find a natural experiment where e.g. some US military people got randomly recalled from the Germany to the US, and look at what happened to their health.
Yes, in data from the KFF, I was surprised to see that the life expectancy of Asian Americans in New Jersey was greater than that of Japanese in Japan.
Remember that the study is ONLY wealthy Americans vs. average people in our peer countries. It's not looking at 99% of Americans, just an extremely well off slice of the population. So while in general, Americans might have worse baseline health/lifestyle choices, we're not looking at all Americans. Just white people who live in the richest 1% of counties in the US (and wealthiest zip codes in some cases).
Most people think that rich people in the US get the best healthcare in the world--it's pretty clear from this study that this might not be the case.
Even looking at the richest 1%, controlling for baseline health differences due to lifestyle choices of the populations being compared should still be part of the analysis. Otherwise you're not necessarily comparing the healthcare systems. Others have also pointed out that being rich might correspond to entirely different risk profiles than being middle class or lower class, e.g., more stressful work with longer hours, potentially larger and sizeable pockets of heavy drinking/hard drug use, more travel and worse sleep schedules compared to middle class citizens. I'm throwing out possible confounders here based on stereotypes and some personal experience and some of these may or may not actually matter, but they could all reasonably have huge effects on health outcomes and costs and so the point remains, any study trying to make this comparison should control for lifestyle choices.
You're spot on that adjusting for all the variables you describe would make the analysis stronger. But I don't think the lack of that adjustment makes the study meaningless.
I'm confused by your argument because it suggests that you think the richest 1% of Americans have shorter life expectancy than people who are middle class. I think that's a pretty controversial take that isn't supported by any evidence. If i'm wrong please share some evidence to the contrary! Here the first thing that popped up when I google income and life expectancy: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4866586/
Figure 4 shows that it basically goes up in a straight line. So while I could imagine a society where the top 1% is a group of stressed out, hard-partying, workaholics who find their way to an early grave, I don't think that situation represents reality.
Completely agree that the study might still show something interesting. Nonetheless, I think the fairly wide differences in obesity, diabetes, and smoking between the US and other nations could produce a large enough effect to put this study into question if not controlled for.
Re: rich being unhealthier than middle class: I definitely agree with you in general that it's also believable that wealthy Americans make healthier lifestyle choices as a whole than poorer Americans (that'd be my guess overall; nonetheless the specific things I listed could still be in play more for the rich than the poor). However, looking at wealth as the main regressor to make that claim would still not account for differences in lifestyle choice e.g. the rich could have other advantages (like better healthcare, especially relative to poorer Americans as is commonly believed) leading to better outcomes in spite of lifestyle choices (the negative correlation of smoking with life expectancy for the top quartile is about half of what it is for the bottom quartile in the study you cited in your reply; regardless, baseline differences across in the populations compared in the JAMA in e.g. smoking rates would still need to be accounted for). That second study you linked to also doesn't directly control for lifestyle confounders (though it does provide some correlations of health behaviors with geographic variation in life expectancy, it does not control its overall comparison of life expectancy vs. wealth/race/ethnicity/geographic region for significant health-related lifestyle choices).
Obviously there is no end to the confounders that could argued for. It just seems reasonable to me to control for major lifestyle choices that are known to have huge effects on healthcare outcomes and costs in all of these discussions comparing healthcare systems (and not necessarily only related to the JAMA study you originally linked to). I'll hopefully be able to look more into this in the future but not today!
I think lifestyle choices have large effects on health, while medicine's aggregate effects are smaller, and differences between different providers of medicine are smaller still, so if we're using only health outcomes without any lifestyle controls to compare different providers of medicine it's likely that the signal could be completely swamped by noise.
I think the problem is that health and lifestyle generally have a greater effect on one's health than the quality of healthcare. If you are going to claim a difference caused by health care, it has to be based on some difference in health care treatments. The difference in lifestyle and health is well documented.
When I visited Amsterdam I was amazed to see tons of adults bicycling everywhere, with very well developed bicycle paths. I thought that was awesome, because I bike a lot. In the US, almost everybody over college age uses automobiles instead, except a handful of people in rich dense areas like Santa Monica and Manhattan.
The complete list of US cities with >10% commuting by bicycle and median age >25 includes only Davis CA and Key West FL.
Both of them contain a college so that may be padding the numbers with college students. Apparently in the US, people over college age commuting by bicycle is just not done. (I did it anyway, for years, because driving is more stressful).
My intuition tells me that the unexpected bad outcomes for rich Americans compared to average Danes is due to Americans having more comorbidities. The actual _Medical Care_ in America seems, in my experience, quite excellent, but the overall _Health Care_ before you become so sick as to require a hospital bed seems rather dismal.
I suspect there is little monetary incentive in the US system in making people not need treatment?
Apologies if this has been discussed earlier, I didn't read the original post.
There are entire aisles in American supermarkets with food that's going to create disease in an otherwise-healthy person. We have warning messages on cigarettes, but no warning message on the cereal aisle or the baking aisle or the sugary drink aisle or the dessert aisle. ENTIRE AISLES creating poor health.
I'm trying to respond thoughtfully to everyone who comments on the study I shared in the comments, but I have to say I'm a little shocked how quick everyone is to defend the healthcare system in the US.
Many have made the point you're making, Fossegrimen, that maybe rich white Americans have worse baseline health than the average person in our peer countries. Income is an extremely strong predictor of life expectancy in the US (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4866586/) and the top 1% are in general, in pretty good health. Yet they still do worse after a heart attack than the average citizen in our peer nations.
I feel like there's 2 potential ways to explain this somewhat surprising finding:
1) Perhaps the care that the wealthiest Americans get is not "the best in the world".
2) It must be lifestyle, or genetics, or some other un-adjusted-for variable because there is ABSOLUTELY no way a normal person in Norway is getting better healthcare than a one per-center in the US.
For me, option 1 seems more plausible than option 2. Maybe there's a third option I'm missing?
I was trying to be a bit more nuanced than that, but it seems in too few words.
I don't have anything but anecdotal evidence, but I have experienced both Norwegian and US 1%-er healthcare and I would choose differently under different circumstances.
When I go to my Norwegian GP for my yearly checkup, he will take the usual tests, but we will also talk about diet, exercise, maybe scheduling the vacation to Spain around Christmas to fix that vitamin D deficiency etc. The whole thing seems to be an exercise in lifestyle fine-tuning to avoid getting sick in the first place. When I went for a checkup in the US, it was tests and goodbye, see you next year. The impression I got was that if they couldn't sell me a treatment, I was not worth their time.
On the other hand, I have also experienced trauma in both countries and in one I waited about 5 minutes for surgery, the other the same number of weeks. The actual surgery was more or less the same (fairly similar injuries too). Care during recovery was also somewhat better in the US.
Another example; In Norway if you got a BMI over 30 you qualify for a 6 month sick-leave stay at a "fat camp" where you learn to eat and exercise well. Then you get a one week stay at the same facility every year for 5 years as a follow-up program. I don't think there is anything even remotely similar in the US?
The point is that I would prefer to live and grow old under the Norwegian system, but if I were to be run over by a car, I would prefer that to happen in the US*. This is what I am trying to say by distinguishing between healthcare and medical care. Healthcare is in my opinion significantly more than patching people correctly together. In my personal experience, the US 1% treatment is excellent for that while the Norwegian system excels at making me a healthy old person.
My suspicion/explanation for my observations is that the financial incentives in the US system is slanted towards fixing sick people, not preventing them from getting sick; which I would think could lead to undesirable outcomes pretty similar to those in the article.
*: Given the traffic accident statistics, this is probably a good thing :P
Anecdotally I think it is highly likely that the top 1% in US are more obese than the average Norwegian. I just don’t seem the same level of obesity anywhere in the world as in the US. Really obese people seem quite rare in Norway.
Whoa, that is absolutely WILD about the "fat camp". Could you please post some sort of description so I could learn more about it? It's not that I don't believe you, just as an American it's so hard to imagine, since we really do have a lot of obesity here! That sounds like a potentially MASSIVE intervention.
That said, a 6 month guaranteed leave to combat obesity is very much a healthcare intervention! And I think the authors would say, because we don't make those sorts of investments here (ie large programatic interventions that are highly cost-effective in promoting health), a wealthy person in the US doesn't get to enjoy the same outcomes as ordinary citizens get to have in other countries.
Is from one of the camps, you'll probably need to run it through google translate or something. It turns out I was wrong a bout a few things too; corrections incoming:
* The automatic acceptance limit is BMI 40, not 30. The reason I thought it was 30 is my sister was accepted at just over 30, but she also had pre-diabetes and hypertension which lowers the BMI limit. I have no idea what the actual formula is.
* The 6 months is including the follow-up weeks so that the initial stay is more like 4
If you dig around a bit, you might find some ridiculous claims about 95% success rate or something. This is because they count only the ones who complete the full program. The actual success rate is probably more like 50% according to the people I know who has attended, as in only half of the ones who started show up at the last gathering.
I am not a healthcare specialist by any means, but I have a sister and a sister-in-law who has gone through this program so can relay some questions if you have specific ones.
Also, my point was not that this specific intervention was awesome, but that prevention is a big part of Norwegian (and AFAIK other Scandinavian) healthcare. There are probably lots of other interventions that are similar. Since I measure my health by timing my Saturday morning half-marathon run, I'm not in the target demographic for most of them.
Wow, I think that's really cool. I'll compare that to how morbid obesity (defined as BMI>35) is managed here in the US. Of course we use the doctor's visit to talk about diet and exercise but we also have to squeeze that around making sure we manage whatever medical problems the patient also has; i'd say we're able to talk about it for less than 5 minutes (my clinic is patients with pulmonary problems). If someone is morbidly obese, I'll ask them if they've considered bariatric surgery as this is the intervention with the strongest evidence base behind it. If they have diabetes i'll reach out to their endocrinologist about making sure they're on the diabetes medicines most likely to promote weight loss (a certain class slows down how quickly the stomach empties and so helps you feel fuller, longer, and also probably works in some ways we don't understand fully yet). If they don't have an endocrinologist I'll prescribe it myself.
Bariatric surgery is amazing! Every patient I've referred has had an incredible improvement in their health and quality of life. But I imagine it would work EVEN better if paired with an intense, lifestyle change focussed "camp" where someone focussed on exercise and changing their relationship with food.
If you'll allow me to quibble! At BMI 40, I wouldn't call anything you're doing "prevention". At that point you're treating a pretty advanced case of obesity. To me the difference in approach is the generosity of guaranteed leave to deal with this.
Thank you so much for telling me about Norway's approach to obesity! I really enjoyed learning about it.
We couldn't even do an obesity intervention like that here because of the fat acceptance lobby. It's not about the investment. That said, people do go to similar programs and insurance does pay for it. It pays for bariatric surgery as well.
I think you are absolutely right that the US Healthcare system does not give the best care in the world. In fact I think it is completely missing about half of what makes a good healthcare system. On the other hand, the acute medical care is pretty excellent.
> Several people brought up this idea of US drug prices subsidizing the world. There’s some evidence in support: the US contributes 58% of the OECD’s total pharmaceutical spending despite only having 24% of the OECD’s total population and 38% of its total GDP. This study has some slightly different data and doesn’t think that US drug companies innovate much more than foreign drug companies, but since most companies sells their drugs in most countries regardless of where they’re based, I don’t know if that proves anything.
I was one of the people who mentioned this in the prior thread, but I want to highlight that this is the wrong way to look at pharmaceutical research spending and "who is subsidizing who". *Where* the research dollars are spent is irrelevant. What is relevant is where the profits are made. A Swiss company can do all of its development in Switzerland, and then apply for FDA approval just like a US company with a research lab in the US can. The subsidy comes from the *opportunity* to sell here.
The correct way to measure this would be something like the total profit share of pharmaceutical companies by region of the world. It is probably possible to gather this up from SEC filings of the publicly traded companies, but it'd be a fair amount of work. However, I think its very likely that the research dollar comparison is actually significantly *under*stating the importance of the US market's subsidy to the rest of the world, despite that ratio already being quite large.
I'm not surprised in the least that there isn't much difference in the efficacy of health care. Health care in general seems to be a waste of resources. Instead we should focus our efforts to incentivizing positive lifestyle choices/habits.
A related phenomena is the widespread opinion that the rich should not get more medical care than the rest of us, i.e., that “income should not determine access to life itself” [36].
Interestingly, people given fruit to divide up divide among themselves divide it more equally when told that the fruit is a health aid, instead of something that tastes good [103].
[36] Victor R. Fuchs. Health, government, and irving fisher. Technical Report 6710, National Bureau of Economic Research, August 1998.
[103] M.E. Yarri and M. Bar-Hillel. On dividing justly. Social Choice and Welfare, 1:1–24, 1984.
...
Our main problem in health policy is a huge overemphasis on medicine. The U.S. spends one sixth of national income on medicine, more than on all manufacturing. But health policy experts know that we see at best only weak aggregate relations between health and medicine, in contrast to apparently strong aggregate relations between health and many other factors, such as exercise, diet, sleep, smoking, pollution, climate, and social status. Cutting half of medical spending would seem to cost little in health, and yet would free up vast resources for other health and utility gains. To their shame, health experts have not said this loudly and clearly enough.
Non-health-policy experts are probably shocked to hear my claims. Most students in my eight years of teaching health economics have simply not believed me, even after a semester of reviewing the evidence. Heroic medicine is just too central to our culture, a culture where economists like me have far less authority than doctors. Worse, even most standard textbooks in health economics fail to make the point clearly.
Children are told that medicine is the reason we live longer than our ancestors, and our media tell us constantly of promising medical advances. Millions of doctors are well aware that most medical journal articles describe gains from particular medical treatments, and these doctors usually give patients optimistic views about particular treatments.
In contrast, few doctors know that historians think medicine has played at best a minor role in our increased lifespans over the centuries. And only a few health policy experts now know about the dozens of studies of the aggregate health effects of medicine. Worse, these studies can seem muddled, with some showing positive, some showing negative, and some showing neutral effects of medicine on health.
So I want to say loudly and clearly what has yet to be said loudly and clearly enough: In the aggregate, variations in medical spending usually show no statistically significant medical effect on health. (At least they do not in studies with enough good controls.) It has long been nearly a consensus among those who have reviewed the relevant studies that differences in aggregate medical spending show little relation to differences in health, compared to other factors like exercise or diet. I not only want to make this point clearly; I want to dare other health policy experts to either publicly agree or disagree with this claim and its apparent policy implications.
...
Regions that paid more to have patients stay in intensive care rooms for one more day during their last six months of life were estimated, at a 2% significance level, to make patients live roughly forty fewer days, even after controlling for: individual age, gender, and race; zipcode urbanity, education, poverty, income, disability, and marital and employment status; and hospital-area illness rates. This same study, using the same controls, also estimated that a region spending $1,000 more overall in the last six months of life gave local patients somewhere between a gain of five days of life and a loss of twenty days of life (95% confidence interval). (I’m using a fifty days lost per 1% added mortality rule of thumb.)
The tiny effect of medicine found in large studies is in striking contrast to the large apparent effects we find even in small studies of other influences. For example, a 1998 Lantz, et al. study in the Journal of the American Medical Association of 3,600 adults over 7.5 years found large and significant lifespan effects: a three year loss for smoking, a six year gain for rural living, a ten year loss for being underweight, and about fifteen year losses each for low income and low physical activity (in addition to the usual effects of age and gender).
Note that someone willing to pay $1,000 to gain 2.5 days of life should be willing to spend about $1,000,000 to gain six years by living rurally, and $2,000,000 to gain fifteen years via high exercise. These figures seem to me to overestimate the observed eagerness to live rurally or to exercise.
Of course all of these studies look at correlation, not causation, between health and medicine. So they all leave open the possibility that someday studies with better controls will show stronger effects. For this reason, discussion of the health effects of medical spending variations usually turns eventually to our clearest evidence on the subject: the RAND health insurance experiment.
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Health paternalism seems particularly strong toward low status individuals. For example, great concern is expressed about the hard-to-clearly-document risk to babies from teen pregnancy [64], while little concern is expressed about the clearly-documented and substantial risks to babies from pregnancies of women over the age of forty. Great concern is expressed about liquor stores in poor neighborhoods, but not about the even larger liquor sales in rich neighborhoods.
As another example, blacks are 13% of US monthly drug users, about the same as their population fraction, but get 74% of drug-crime prison sentences [69]. Similarly, in Massachusetts those in the poorest zip codes are between 2.6 and 16.5 times more likely to end up in treatment for drug abuse than those in the richest zip codes, and yet are 54 times more
likely to end up in prison for drug crimes [15].
Similarly, it is notable that while there are many charities devoted to helping with health crises, few charities are devoted to helping with other sorts of crises with similar magnitude utility hits, such as divorce, falling out of love, unemployment, failed careers, breakup of friendships, etc. A further complication comes from the observation that while some charity behavior is outcome-oriented, much other charity behavior seems oriented more to creating the appearance of charity efforts [49].
Finally, it seems to me that politicians and others considered for positions of influence in health policy are frequently selected in part for how much they care about health. In contrast, it does not seem to matter much whether people who regulate electric utilities, for example, care much about electricity.
A straightforward, if apparently ad hoc, explanation for most of the above phenomena is that we care about others within our nation, that we tend to care about their health more than their happiness, and that this tendency is especially strong for low status people.
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We see very little correlation between having more medicine and more health, suggesting that there is much excess care and inefficiency. Patients prefer expensive complex treatments, and are suspicious of simple cheap treatments. Patients tend to be more aware of and interested in their doctor’s prestigious schools and jobs than of their treatment track record.
New heart attack treatments are among the most celebrated of recent medical innovations, and both medical spending and mortality improvements have increased more than average among the heart attack population. Assuming all this added mortality reduction is due to the added spending implies a low cost of about $10,000 per life-year [26, 25], which compares
favorably to typical value estimates of $75,000 to $175,000 per life-year [94].
Similar large benefits come if we assume all improvements in post attack mortality are due to medicine [24]. Also, assuming medical care is the cause of all heart attack mortality reduction not attributable to changes in identifiable risk factors such as blood pressure and smoking implies a large medical health benefit [53]. There is, however, no obvious reason to make these generous assumptions [81].
The most sophisticated statistical analysis to date, of 800,000 Medicare patients, estimated that adding a heart attack catheterization capability to a hospital, costs $70,000 per life year. This estimate, however, was only marginally significant (7% level) [71].
[25] David M. Cutler, Mark McClellan, and Joseph P. Newhouse. What has increased medical-care spending bought? American Economic Review, 88(2):132–136, May 1998.
[26] David M. Cutler, Mark McClellan, Joseph P. Newhouse, and Dahlia Remler. Are medical prices declining? evidence from heart attack treatments. Quarterly Journal of Economics, 113(4):991–994, November 1998.
Quite interesting. I am indeed not sure most medical spending make any difference, although some medical act really have huge impact (life or death, basically). Like after some trauma, in the few month following birth, and in very specific case. End of life and cancers, it's not clear, some things have a huge impact, some (big) things are expensive and in the end, probably make something awful even worse.
I do not know how much interventions which have a huge positive impact represent in term of % of medical spending.
And then, there are antibiotics which indeed make a huge difference, but I do not think it represent a big spending and is it part of what is called medical intervention? I have 2 experiences for it:
Belgium, where you need prescription (which get harder to get due to concern of overuse and resistance) but get partially re-funded (so it's cheap)....but it's really the full health system that is put to work...
And Thailand, where you can buy them as easily as a phad thai, just go in a pharmacy (which are super numerous) and buy what you want (ask the pharmacian advice if you are not sure). It's also super cheap, no refund but no doctor visit either, and I am not sure if this self-treatment count as medical act, or is like buying chicken stock or tiger balm?
Despite the constant campaign about antibiotic overuse that become a little bit frenetic in western Europe, I prefer the Thai system: faster, more efficient, at least in my case. The very few time I needed some, it was clear and urgent (local inflammation), and the pharmacian advice solved the stuff in half a day (the acute symptoms, had to take it longer of course). In Belgium, it would have been at least a few day slower, and those few days would have been crucial: for my ear infection, it may have caused damage and certainly one or 2 nights without sleep.
So for this particular case and for me: organized careful global medecine 0 - egoistical consumerist self-care 1.
The problem with antibiotic overuse is that healthy animals are fed antibiotics. Norway is the only country that I know of that has banned that practice, and they're only 4 million people on a 7 billion people planet.
I fully agree...This alone is worth a post, because public campaigns about antibiotic overuse heavily play the guilt card, narrative being that the uneducated public demand antibiotics when they are not needed (for viral infection for example) and do not follow the treatment throughout when they are needed, resulting in (multi)resistant bacteria and a lack of effective antibiotics.
That's 90% of the public message, only specialized documentaries mention nosocomial bacteries and antibiotic use in intensive breeding (used both as epidemy prevention in very dense animal communities and fattening/fastgrowing agents).
Amount of fear and guilt broadcasted in the modern western world is just out of control...
Raise alarm bells because poor indians use too much antibiotics to cure pneumonia? OK, but what are they supposed to do exactly? not use them so that they remain efficient when the rich get sick?
Also why raise alarm bell but not discuss the use of antibiotics for breeding and veterinary use, and checking what is the role of hospitals in the emergence of resistances? This should create resistance evolution hotspots too, more so (and resistance jump from one bacteria to another, so even resistance in bacteria not targeting humans but in close contact is a problem)...Maybe the economist article discuss that too, but it's behind a paywall so who knows?
Don't disagree! The article does address the challenge facing these countries. Most really hard problems have really hard trade offs.
The problem is not just limited to SE Asia - 100% I am against and concerned about antibiotic use in the agricultural sector.
Back to South Asia, there are wins to be had without trade offs. For instance, it was extremely common for doctors to recommend Indians take antibiotics when they had COVID. Obviously that won't do much, and given the number of people who are getting COVID it will lead to millions of unnecessary dosages of antibiotics. There are also concerns bout runoffs from factories, etc.
All that said, no one is arguing that people shouldn't take antibiotics when they really need to. If they're OTC and you're generally poorly educated, you're going to take them many times when you do not need them. This is not only bad for society, it is also not the best for your health.
My response was specifically addressing an earlier comment indicating a preference for how easy it was to get antibiotics OTC in Thailand. In places where clinics are readily available, I am opposed to OTC antibiotics. I understand there may be a need for OTC in rural and underserved communities, but do wish that the solution instead was for the government to do its job and provide some very basic health care clinics in those markets.
I agree with most of what you said, but not on the fact that otc antibiotic access is convenient and superior (for me) to the way you may get antibiotics in my western europe country (jumping through more and more hoops).
And i also like to clarify the core of our disagreement, at least what I think it is : i indeed agree that people should have access to antibiotics when they need to. But who decide they need to? I prefer a system where people decide (an advice from a doctor is helpful, sure, in most cases.) many people think someone (or something) else will decide if people need it.
for their own good, sure...
like more and more things, even for things as personal as health decision.
sure, many people are irresponsible and will make bad choices...
But it's important that ultimately, they decide.
they are adult... Yes, i know, I'm old fashioned ;-)
My take-home from this blog post & discussion is that two-tiered systems are the norm everywhere. At least on Europe. Both in countries that formally have a public single-payer system (UK, Scandinavia), and countries that formally have private insurance coverage all the way down (Germany, the Netherlands, Switzerland). Since basic insurance is mandatory, the basic insurance package is fixed, and basic contribution rates are also fixed, the latter countries are really only organizing first-tier health insurance in a different way than the “pure” public single-payer countries.
What really differs across countries (my hunch is this holds in many middle-income countries as well) is how much the basic insurance package gets you, and consequently how large/important the supplementary (voluntary) health insurance sector is for your health & well-being (plus out-of-pocket health care spending). With regard to the supplementary/second-tier voluntary systems you have the adverse selection problem, and all the messiness related to that, in a situation with competing health insurance companies. You see this in single payer countries too, as they all have private, supplementary health insurance top-ups you – or your employer – can buy. Plus out-of-pocket private health care spending, of course.
Not discussed in the blog post or comments section, but worth investigating: I believe there is a tendency in most countries (again, Europe is my main reference) that the basic package is getting smaller. Not necessarily by removing items in the package, but either by increasing co-payments, or having longer waiting lists. The deep driver for this is the ageing of European populations (the demographic transition and the accompanying epidemiological transition), which pushes up health care costs (older people need more care) while simultaneously limiting tax revenues (smaller working-age populations mean less tax revenues).
The US is different, but not THAT different. The US is a much bigger place than any other developed country and has a more veto-ridden political system, which combine to make it more difficult to introduce similar first-tier health care, as we all know. Still, it has managed to introduce three first-tier systems that are sort-of near substitutes to what you find in Europe: Medicaid for the poor, Medicare for the old, and veterans’ health care for a substantial portion of working-age people who would otherwise be on the barricades for even broader first-tier coverage in the US.
The historian Peter Baldwin once wrote a book titled The Narcissism of Minor Differences (with a nod to Freud), about welfare state differences between the US and Europe. He has a point.
"Not discussed in the blog post or comments section, but worth investigating: I believe there is a tendency in most countries (again, Europe is my main reference) that the basic package is getting smaller. Not necessarily by removing items in the package, but either by increasing co-payments, or having longer waiting lists. The deep driver for this is the ageing of European populations (the demographic transition and the accompanying epidemiological transition), which pushes up health care costs (older people need more care) while simultaneously limiting tax revenues (smaller working-age populations mean less tax revenues)."
This is definitely happening in the UK. The waiting list for treatment is now absolutely massive (in Wales, more than 20% of the entire population is now on it), and despite spending a huge amount of total government spending on the NHS, the problem is only getting worse. Taxes are already fairly high in the UK too so there's hardly any political appetite to raise taxes further to pay for the NHS.
Thanks for the UK info DW. Yet another way this apparently happens, in countries that rely on private insurance companies all the way down to the basic package (referring a Dutch student I have who wrote a text on her system), is by reducing the so-called health care allowance (which is money the government gives to citizens that are too poor to pay the mandatory contribution/premium for the basic insurance); or by lowering the income level for being eligible for the allowance. Governments can do combinations...
Health care costs rising is inevitable for two reasons.
1: Health care is a superior good. As people have more money, they want to buy more of it. (Even if it does little good, or even zero more good.)
2: There are new interventions created. We can keep people alive after heart attacks or multiple gunshot wounds when before they'd just be given a priest. (And I assert that a key way other countries have been very successful at containing costs by pumping the brakes on these new interventions. And people don't feel so bad because they live in genuinely happy ignorance.)
There's probably still a lot we can do to try to keep costs constrained, but those factors are going to push up health costs everywhere.
Agree that health care is a superior good. Implying that with rising income you want proportionally (even) more health care.
(2) can work in both directions, however. For example, it is less expensive to treat heart conditions now than thirty years ago. Then you had to sew through the rib cage to fix a clogged blood vessel. Now you can insert a stent through a minor insertion.
Population ageing is the main culprit. Children usually suffer for diseases that are cheap to prevent (vaccination) or fix (oral rehydration salts, antibiotics). Adults suffer from cancer, heart disease, need of hip replacements...more expensive, but we are becoming better at fixing that at reasonable prices. The main budget killer is the delayed degenerative diseases. Altzheimer and his ilk. They are hideosly expensive since people must be watched over 24/7.
One may of course hope that such cost increases are fixed by a much more deadly virus than covid coming along, before it is too late... :-)
> Third, no matter what your profit margin is, you’re still always incentivized to spend more money, right? If your profit margin is 10%, you can make $1 by selling $10 of care; if it’s 20%, you can make $2 by selling $10 of care, and so on. You always want to sell more care!
Absent legislation, there is no law of economics that says that the profit margin is a fixed percentage of whatever you sell. If your competitors cost $500/months, and you manage to spend less but still provide just as good care, then you can also charge $500/month, and pocket more profit.
Realistically, if you spend less, you probably do it by limiting your patients' choice in some way. So even if it's just as good care, at equal price people will probably prefer your competitors. So maybe you'll charge $490 or $450; but you still make more profit if the cost saving is bigger than how much less you can charge, which is likely if the extra choices your competitors provide are costly but have no benefit.
Scott is actually confusing things a bit here. Profit Margins are Prices/Average Costs minus 1 (e.g., P=1.2, AvC=1, PM=0.2 or 20%), and Average Costs are just Total Costs/Quantity produced by the firm.
But we know from microeconomic theory that firms set quantities such that Price equals Marginal Costs, not Average ones. So in fact the firm optimization problem says the Profit Margins on the last item produced (the marginal item) are 0, since Prices = Marginal Costs. So Marginal Profit Margin = Price/Marginal Cost - 1 = 0. Producing beyond this point would lower profits, not increase them as Scott suggests, even though profit margins are positive at this point.
The problem is, if the profit maximization condition yields a Profit Margin higher than the cap, the firm has to increase Average Costs until it respects the cap. Average Costs are composed of Fixed and Variable Costs. I won't go further into this, but the thing is, if the firm chooses to produce beyond the economical point of P = MC, it will increase quantities and thus increase Average Costs LESS then if it would simply add to Fixed Costs, because a increase in Variable Costs also increases the quantities in the denominator. So once the point P = MC is reached, the profit-maxizing firm has incentive to burn cash (add to fixed costs doing whatever) until the profit margin cap is reached WITHOUT increasing the quantity produced.
There's another complicating factor here, which is that while your profits as an insurance company are limited to a percentage of premium revenues, so is overhead spending. Insurers must spend at least 80% of revenues paying claims. That limits your ability to simply blow additional money on marketing or whatever.
I should point out that that's what the regulations say, anyway. I don't know if this actually works in practice, though. Maybe companies have figured out easy ways to skirt these regulations.
> But we know from microeconomic theory that firms set quantities such that Price equals Marginal Costs, not Average ones. So in fact the firm optimization problem says the Profit Margins on the last item produced (the marginal item) are 0, since Prices = Marginal Costs.
I don't think that true if the marginal item increases the amount of capital required, and we aren't considering capital costs as costs (in other words, if we are discussing accounting profit as opposed to economic profit, if I understand those terms correctly). (Accounting) profit is the cost of capital: the cost of investors postponing the use of their money, and risking it. If producing more takes more capital, then there will be (accounting) profit on every item.
Take a simple model where there are no economies of scale, and both capital requirements and all (other) costs are directly proportional to the amount sold. (E.g. a machine can produce a limited number of items, and the number of machines you need is proportional to the number of items you want to make. Or you need office buildings to house the paper pushers who process insurance claims, and the number of paper pushers you need is proportional to the number of customers.) In this model, "marginal" is always equal to "average". There will still be accounting profit, proportional to the amount sold. (But, on a competitive market, there'll be no economic profit, as far as I understand.)
Ok, if I'm getting this right, you're thinking about a model where marginal costs are constant (let's call them MC = k), and not increasing. The problem with your model is that the intuition of a price-taker in a perfectly competitive market breaks down. In this case, when you're solving the firm's optimization problem, if k < p (the price), then the firm would produce an infinite amount, and get infinite (economic) profit. Naturally, this is not possible. As the firm started flooding the market prices would go down and the cost of inputs would also likely go up (probably a mix of both).
In either case, what I've said before holds: the firm will have positive "profit margins" even though it cannot profitably increase output.
I'm simplyfing things a bit here of course, but this intuition holds in general even for non-competitive settings. A monopolist, for example, set quantities such that marginal revenues equal marginal costs, a perfectly competitive market is just a particular case where marginal revenues are constant and equal to the market price.
> The US has a whole industry dedicated to marketing drugs and medical services directly to patients, which just doesn't exist in most other countries.
I do see drug ads in Hungary.
However, it looks like prescription-only or subsidized drugs can't be advertised. That means only drugs people pay from their own pockets for can be advertised, which puts a limit on how expensive they can get.
There was one drug advertised on TV for a condition I have but I somehow tuned it out and didn't realize it was for me. My doctor recommended I go on it, and it's been a life-changer for a certain chronic condition I have -- it's essentially gone.
It's also rather expensive (partly by physical necessity), but there's this weird dance between the manufacturer and my insurance company and a discount card and it's somehow $0 out-of-pocket to me.
I'd like us to save money on this stuff if I could, but if a genie told me we could cut costs by 50% with a 10% chance that this drug never got invented, I wouldn't accept the deal. The system works to give us fucking amazing drugs.
Sounds like it would be more efficient to have lower budget advertisements targeting doctors, especially ones that specialize in certain illnesses.
Ideally it would allow for the advertisements to be cheaper and involve less 'fluff' like associating your product with yoga, painting, and picking up seashells on the beach.
Maybe. Maybe not. Surely the drug company has better information on this and better incentive, because they could save millions of dollars and give them to their executives and shareholders.
"Let's ban advertising because it's just a big waste" is a common socialist refrain.
"Let's ban advertising because it's just a big waste" is a common socialist refrain. I know that, though in this particular instance it seems far more plausible.
You don't typically need massive clinical trials on most products and services because a consumer can tell fairly quickly from experience whether it's worth the money or not.
Right, it definitely seems plausible. But if it's a waste why don't they companies stop doing it on their own?
Often there is no competition, so you're not trying to keep Pepsi customers buying Pepsi. Do people need to be reminded of this condition they have and to schedule an appointment with their doctor?
And how did my doctor know?
Y'know what, next time I see him, I'm gonna ask him.
At about $6.58 Billion/year, drug advertising in the U.S. is approximately 0.16% of total health care spending ($4.1 Trillion). I don't think completely eliminating that is enough for anyone to even really notice the sixth of a penny per dollar spending difference.
Damn excuse me for being behind the times, but I am once again stunned by how much the promise of the internet has come true. Particularly that last comment from Brazil: information from everywhere.
Regarding the R&D spending for drug research, wouldn't the more relevant metrics be the result of that R&D? Is a PHD scientist paid 200k$ in SF 4 times more productive than PHD scientist paid 50k€ in France? It's, obviously, less easy to measure than a $ amount (what is a new drug, what is a repackaging, how relevant are they each?), but I'm not, from an outside PoV, convinced there's that much difference.
> First of all, I think insurances mostly make less profit than that, so the cap probably doesn’t matter much in real life.
For the first few years after the ACA was passed, in North Carolina, BCBS sent me an annual refund of around $0.70 because they overspent on the bucket that includes "administrative, overhead, and marketing costs". So maybe they're not directly making a 20% profit, but they are/were definitely right up to the line on the "not healthcare" limit.
> Second, cost inflation seems to have decreased (or at least not worsened) since the ACA.
I can't argue with that. Possibly the rest of the ACA pushed enough efficiencies into the system that this single clause isn't having the negative effect that it otherwise would.
> Third, no matter what your profit margin is, you’re still always incentivized to spend more money, right? If your profit margin is 10%, you can make $1 by selling $10 of care; if it’s 20%, you can make $2 by selling $10 of care, and so on. You always want to sell more care!
That assumes your profit margin is fixed (like it is under the ACA). If it's not fixed, in addition to selling more care, you can sell your care more efficiently and continue to charge the same amount.
"the FDA does approvals for just the US (and it doesn't compete with any other US regulators to do the approvals)"
Would it make sense for the US Congress to empower a second agency to do drug approvals? No need to create a whole new agency, just let CDC or ATF have the power--it doesn't matter who, the goal here is to create competition. Thus, the two can compete, and drug companies can choose one or the other if one turns out to be cheaper, or faster, or less hassle.
"success is measured by how many people they can treat given a limited budget, not by how much profit they can make by doing lots of expensive treatments. That's the main difference between "capitalism" and "socialism" in this case -- it's the metric you use to measure success. NHS hospitals do a cost/benefit analysis on every treatment, and focus their efforts on the low-cost, high-benefit treatments"
How does the efficacy of the treatment have any impact on the hospital's bottom line? A person treated is a person treated regardless of whether the treatment is actually worthwhile.
The hospitals in the UK kind of approach healthcare spending backwards. They're given a budget and a population pool, and at the end of the year they want to have used their exact budget to treat their entire patient list of everything they had. They never achieve this, which is baked into the system and generally means the most expensive patients go without or fall into the private system. While the goal is impossible, efficiency is the primary tool for attempting to get as close as possible to having everyone treated. The more efficient they can be at treating common conditions means the more money they have left over to treat the rare and difficult ones.
Theoretically a health authority could try and pad their treatment numbers by over diagnosing easily treatable conditions (and I wouldn't put it past them to try) but they wouldn't gain much from this. Perhaps the administrators could hide other problems under such a smokescreen, but it's not the only figure being monitored so how successful they'd be long term is questionable. It would definitely be a scandal when it was uncovered as it would mean wasting public money on useless treatments for the benefit of the managers (again, I'm sure it happens but if you're caught at it you definitely lose your job).
I can see them optimizing for "efficiency" purely in terms of cost, but who is actually evaluating whether any treatments are useless or not? As Greg Cochran & Robin Hanson have pointed out, for most of the history of medicine basically all treatments were useless at BEST and frequently much worse than useless.
The UK has an independent agency NICE whose job is to evaluate the evidence for any clinical treatment or drug for the NHS. From what I can see they do a pretty good job of evaluating the evidence and use proper cost benefit methodology. The use £20k to £30k for a QUALY. Of course this sometimes gets criticised as people obviously in their case want a particular drug even though it might not be cost effective, but it’s surprisingly accepted by most people.
> They're given a budget and a population pool, and at the end of the year they want to have used their exact budget to treat their entire patient list of everything they had
That sounds like a great system. Things that have poor QALY/£ don't get funded.
Health care is always going to be some kind of socialism, either private or public. The healthy pay for the sick. The young for the old. From each healthy man according to his ability, to each sick man according to his need.
For that reason it’s probably better to turf out the middle man, and just actually socialise it.
The problem with socializing anything is that you lose the information provided by profit and loss, and without prices you have no idea how much of anything to provide. Politicians aren't stupid, but they have poor incentives even in the best system of government.
Bram Cohen had a good answer to people who think that the economies of health care is a free market, which Scott reproduced above.
Anyway I’m saying that the fully private sector insurance system mimics socialism by transferring to the needy (the sick) from the unneedy (the healthy). I’m saying it’s socialist, in that sense, anyway.
Insurance is socialist? I'm pretty sure this is a minority viewpoint. It either contracts insurance or expands socialism to the breaking point.
No, Bram's answer wasn't good. His claim, boiled down, is that people cannot plan for a time when they may lack capacity, e.g. people cannot write a will for the disposal of their assets after they die. And yet .... wills exist and many people have them.
His comments were right. I don’t see how your counter argument makes any sense - sure people can plan for the future in a will. What’s that got to do with healthcare purchases? When a person goes to the doctor he doesn’t decide on the prescription, when taken to hospital there’s very few or no purchasing decisions left to the patient.
Most healthcare spending isn't in emergency situations. In other words, you would have time to shop around, compare price, services, and find the option that is best suited to your needs, *if* non-emergency health care were more competitive, if services and *especially* prices were more transparent, and if patients weren't so insulated from prices.
I'm having some paving done. I don't choose where the paving company gets its asphalt. But I am shopping around to find the best price.
I go to a mechanic and I don't choose where they get their parts, but I can shop around and switch mechanics.
I think a lot of healthcare spending *could* be like that if it were easier for new providers to enter the market. We aren't currently there, of course. But, we're talking about ways to improve the current system.
Information about what? Normally we are talking about preferences. Markets are great at matching production to consumer preferences. And when we're talking about interior design or leisure travel or even food, that's awesome.
But medicine is emphatically not in the business of giving people the interventions they want. They whole idea is that they have an empirical, rational, expert consensus about what is indicated or standard-of-care for a given set of facts. Deviation from that, in either direction, is bad.
20% of standards of care get overturned every 7 years. Not just changed, but turned on their head. Note: 7 is just what I remember from an NPR story. Same for 20%. It's a lot. A shocking lot. Just as a ferinstance, butter used to be bad for your heart and margarine good. Now it's completely the opposite.
> They whole idea is that they have an empirical, rational, expert consensus about what is indicated or standard-of-care for a given set of facts
Given a body like NICE we can have that. But in America health care is mostly decided post-hoc by how the doctors fear lawyers will react. The "standard-of-care" is a ratchet that never loosens, even if we accidentally made a mistake and loosening is the right thing.
You must distinguish between creating a market for health care insurance and creating a market for health care services.
The market for health care insurance runs into the adverse selection problem, with all the fallout from that problem, including a forewer-arms-race between regulators and insurance companies about how to, or not to, offload high risks and chase after low risks.
In single payer health insurance systems you kill that market, but only that market. Everyone has to be members, low risks cannot exit, they must pay taxes (some countries label these taxes "contributions" for historical reasons) whether they like to or not. But since they know they will usually become higher risks as they grow older, or they have older famly members such as parents, not that many of them complain. Fewer than the median voter, anyway.
But single payer health care systems retain the market for health care services. And since the state qua insurer is a monopsonist (or near-monopsonist), the state should be able to use its market power to negatiate very acceptable (from the point of view of taxpayers) prices on health care services, including medicines.
That's how single payer systems usually work. Few countries with such systems have only publicly employed doctors or publicly owned hospitals treating patients in their country. There is competition among health service providers, often very much so.
"But single payer health care systems retain the market for health care services."
You still have the automobile health care problem. If the patient isn't paying, they want the best care possible. The single payer wants the lowest price possible regardless of quality. Incentives don't align in such a system.
No, the single payer does not want the lowest price regardless.
An intelligent monopsonist, i.e. state, knows that there is a quality factor involved, including the R&D costs to provide better services in the future.
...This does not mean that the state will always behave like that, that is as always an empirical question. But that is my prior, and looking at health care costs across countries I see little reason to adjust that prior very far downwards, not so far at least.
...in this context, remember that you must compare the possible market imperfections in this monopsonist situation not to the ideal-type market situation taught undergraduates in Economics 101. You must compare the situation to the posible market imperfections in a de facto private/competitive health insurance market, for example the situation in the US. Not everyone of our health economist colleagues would claim that the present relationship between US citizens; their employers who often but not always pay health insurance on their behalf; the health insurance companies seving both; the health service providers serving the customers while charging the insurance companies; the US federal covernment; the 50 state governments; aligns the incentives beetween these actors-in-the-game as assumed in Economics 101.
In short, you have to chose the system likely to have the fewest bugs.
Anyway, it is the imperfections in health insurance markets that has driven all "modern" states towards first-tier mandatory-health-insurance-for-the-basic-package systems, regardless of the ideological outlooks of the rulers in charge. Otto von Bismarck, who started it all, was an arch-conservative.
The guy who has written what is still the best theoretical overview of all of this is Nicholas Barr (then of LSE), in his old but still to-the-point article Economic Theory and The Welfare State, in Journal of Economic Literature vol XXX, pages 741-803. (He later wrote a 300-page-book about the same thing, but this old review article is better.)
Why wouldn't the single payer want to pay as little as possible? Oh, because they've been bought-and-paid-for by the health care providers? That's a government failure.
You can't wave your hands at market failure without acknowledging the even greater likelihood of government failure.
The US market for health care is not particularly free nor private, given the interventions in the market. Simply put, you cannot use the failure of government intervention to justify even more government intervention. Yet that happens routinely, as you point out above, undercutting your point.
I believe this debate went up-and-down after Scott's original blog post, and I have a hunch your priors are so embedded in your soul that nothing I could say would move you.
Plus it is now 22:35 in my time zone.
Only this: Governments do not always fail, if you consider the alternative: a society without a government. Hobbes made some points in Leviathan about what type of failures you may encounter in a society without a government.
Ok, but perhaps you meant to make an argument for rule by libertarian autocrats? If so, be aware that there is a huge Public Choice literature on the perverse incentive structures embedded in autocratic political systems. They make the government failures that can take place by democratically elected governments pale in comparisons.
As I said in my previous comment, it is about choosing the system with the fewest bugs. In this case: the fewest potential failures. Neither societies without governments or autocratic governments are likely to contain fewer bugs (i.e. potential failures) than democratically elected governments.
Ok, but perhaps your argument is that a democratically elected government that “only” regulates private insurance companies is less likely to display various types of government failures (when it comes to imposing effective versus dysfunctional regulations), compared to a democratically elected government that choses to run a mandatory first-tier health insurance system (be it a publicly administered system as in UK or a system of mandated basic insurance run by private companies, as in Germany)? To that I would reply: There is no reason for assuming that the first government is less exposed to the risk of lobbying by powerful interest groups, shady horse-trading in the parliament, tax breaks that serve vested interest, as well as every other possible “government failure” problem.
Thus shouting “but what about the possibility of government failure!" when discussing if it is more efficient if a democratic government runs a public single payer health insurance system, compared to if a democratic government issues mandatory regulations for competing private health insurance systems, is what is sometimes called a category mistake.
…It might even be the case that the US health insurance system, compared to the British or German, is even more at a risk of capture by vested interest and the like, since it is less transparent and see-through for voters, and even for experts. Vested interests thrive in darkness.
Be that as it may, all health insurance systems are either run by governments, or very heavily influenced by the regulations issued by governments. There is no escape.
That said, as I started out with I do not think the odds that I may make you adjust your priors is very great, and besides this thread is long enough.
Plus, it is not 22.57. Time to pour a glass of red wine, open Netflix and call it a day.
So if there is a quality difference, and the monopsonist insurer decides to pay provider x more than provider y, then we would still rely on some mechanism to pass the difference in costs onto the consumer, or they would all chose the more expensive provider. Insurers are inefficiently filling that gap now with different sets of provider coverages.
A more efficient system would be to force providers to charge all patients the same price, although different providers could charge different prices from each other. For example, the next Medicare agreement with providers could specify that the provider could not charge anyone more than they charge Medicare. This would provide the monopsony pricing power, but still allow for different insurance plans to provide set benefit levels, allowing people that can or want to pay more to do so, without pushing those costs on everyone else.
" If you wind up in a coma and are brought to an emergency room you can't open your eyes, discuss what the treatment will be and how much it's going to cost, do appropriate research and decide for yourself whether the doctors's recommendations for treatment are appropriate, decide that the amount being asked for is outrageous, find a potential competitor, have them open up a competing ER next door, and check in there. Every step of that can't happen."
I agree that's true for certain types of healthcare situations, but I don't think that represents a majority, or even a particularly large fraction, of US healthcare spending. It seems to be in the few % range:
Admittedly those numbers may be out of date, but I'd be surprised if they changed by more than a factor of a few in either direction, except maybe during COVID, and that's an outlier.
I still think the US healthcare market is really, really broken, but for the vast majority of use-cases I don't think there is some fundamental reason why consumer choice and competition couldn't improve quality and lower prices.
The argument is absurd. The claim is that people are incapable of planning for incapacity, and yet nearly everyone manages to write a will. And even if you don't write your own will, the government has a default will, which are usually pretty reasonable.
Yes its intellectually lazy. We see with housing insurance, flood insurance, car insurance, etc. that individuals are more than capable for planning for catastrophic events.
I'm not sold on the idea that drug companies spend more on marketing than R&D. That struck me as suspicious, so I did a bit of quick digging in the financial statements for 2020 for Pfizer, Eli Lilly, Astra Zeneca, Novartis, which were the first four names that sprung to mind. I suspect the issue is that pharmaceutical companies seem to simply lump all their overhead costs into a single line in the income statements labeled "Marketing, Selling, and Administrative costs." These numbers do not appear to be disaggregated later in the report, from what I can tell.
It appears to me that whoever came up with this "marketing exceeds R&D spending" take didn't make much of an attempt to separate actual marketing costs from all the other admin costs that were lumped into that line item like legal, compliance, accounting, HR, utilities, IT, executive compensation, etc. I won't try to paste the numbers in here because I'm guessing the formats will get all messed up, but suffice to say that for the four companies I looked at, total R&D spending for 2020 was $30.2 billion vs $43 billion in Admin. You would need Marketing/advertising to account for over 70% of total admin costs for it to exceed R&D spending. I wouldn't be surprised if it was the largest single admin cost, but over 70% of the total seems unrealistic. The only company this might be true for, I would guess, is Astra Zeneca, whose Admin costs of 11.2 billion were almost twice their R&D spending at 5.9 billion, which was a significantly higher ratio than their competitors, for whatever reason.
In short, I don't doubt that drug companies spend a lot on marketing, but the picture painted by pharmacychecker.com is not an accurate one, from what I can tell.
Hey Gordon, as a point of reference and as I'm sure you saw even in this small sample of companies, companies have very different strategies in terms of how much of spend is R&D vs. marketing. Some companies are very "science forward" which means they try to look for products that are highly impactful in small segments of the population who see a limited segment of physicians. For example, a medicine like imatinib (developed and marketed by Novartis) effectively cures CLL (a chronic luekemia) a disease treated by hematologist-oncologist which affects about 6,000 americans per year. It's easy to market a medicine like this because 1) the results speak for themselves and 2) it's a small segment of physicians who you have to educate and convince to prescribe the medicine. Developing something like imatinib is a deliberate strategy based on a go-to-market approach that is more appealing than trying to make a new high blood pressure medication. A new high blood pressure medication could be really wonderful in some way (maybe fewer side effects or only once per week instead of once per day), but the solutions that exist for blood pressure are mostly satisfactory, and many more doctors prescribe blood pressure medication, so it's much more difficult to market.
Second, love that you sanity checked a number that seemed crazy to you (and I apologize that I'm too lazy/otherwise occupied to do this myself), but the highest revenue pharmas, are J&J, Roche, Pfizer, Bayer, Roche, Novartis, Merck, GSK, Abbvie, and Sanofi (I left out SinoPharm because to my knowledge, they don't market any medicines in the United States). Lilly, Astra-Zeneca, and Novartis combined have about the total revenue of J&J. All that is to say that I'd need a broader survey of Market vs. R&D spend to have a good sense of that number.
Thanks for the reply. Yes, that's a good point about highly specialized drugs, and my four company sample is certainly not expected to be perfectly representative. Just as a quick note regarding your second paragraph though: I was trying to stick to companies that I at least have the (possibly mistaken) impression are primarily in the prescription drug biz. J&J, for example, is huge, but it looks like only 54% of its sales come from pharmaceuticals. 17% of its revenues come from its consumer products division, which includes all kinds of personal care products, and for which you would very much expect marketing costs to exceed R&D expenditures, because the potential returns to developing a new kind of mouthwash or shampoo are reeeeallly low. Obviously, that would very much skew the results unless you could separate out the cost of advertising soap and cotton swabs vs advertising spent on drugs that are kept behind the counter, and the company's 10k doesn't provide enough info to do that.
I think the same is likely true for Bayer, Roche, GSK, and probably some others, as well. That makes doing a more comprehensive review more difficult, but I would just point out that it appears that the people at that sketchy site Scott linked to did not even make a rudimentary attempt at this from, what I can see.
Thanks Gordon, the last paragraph is helpful context. I don't think you're mistaken! I just think that's a very small sample and there's tons of heterogeneity. Also very good point re: J&J.
I am also wondering how M&A activity is accounted for here.
Big Pharma is really about marketing, distribution, and scale. Yes they fund some direct research, but they acquire new drugs and treatments regularly. This is, fundamentally, R&D spending and should be counted as such.
If I make a company the spends $100M on marketing and $0 on R&D, but I buy 3 companies a year for a total of $1 B, I'm spending 10X on R&D what I'm spending on marketing.
Total drug advertising spending is $6.58 Billion/year. Total drug R&D is about $83 Billion in a non-COVID year. The idea that drug advertising is greater than drug R&D spending is off by about 12x.
Bram Cohen's argument -- that you cannot participate in a market process on your way to the ER -- is absurd. It's as if nothing else is subject to pre-negotiation, and thus doesn't exist. For example burial insurance (which exists). Or automobile insurance (you can't purchase insurance AFTER you've crashed your car). Or retirement funding (once you're retired, it's too late to plan on funding your retirement).
Even if he was right, ER medicine is only a fraction of the medical practice. The problem is medical economics in the US is that it's based on the automobile model. The doctor is the mechanic. The patient is the car. The insurance company is the owner. In this model, the car gets no opinion on the health care to be provided, and neither does the patient. With the difference being that everyone wants to be a Cadillac and have Cadillac health car.e
I'm glad to see the ACX/SSC commentariat continue to live up to my expectations—I came here to make a very similar argument, although the car metaphor is new to me.
I can't speak to how costs are distributed, but it seems uncontroversial to me me to say that the overwhelming majority of contacts with the health care system are non-emergency office visits. The biggest difficulty in market forces acting on health plans is the opacity of prices. It would be hard to intentionally design a system worse than the American system at answering, in advance, the question, "What is this service going to cost?"
Yup. I was getting physical therapy, which went fine. I had a small relapse and wanted another visit. Went into the office and said "If I'm paying out of pocket, how much would a visit with Susan cost?" They couldn't tell me.
And people think the US has a free market health care system! As if!
Emergency vs. non-emergency seems like a red herring to me. Yes, childbirth and oldness are both conditions which give you lots of advance notice, but you still cannot choose how much care to consume so the extra time doesn't give you much extra bargaining power.
Or is the idea that people should only make shop around for health insurance prior to becoming old or pregnant and if you leave it too late you're SOL? The dynamics still seem different to me than other long-term transactions like purchasing car insurance (you can always trade in an uninsurable car but you can't trade in a body) or retirement funding (you're not insuring, you're building up a fund that follows you from one job to another).
Not sure where I'm going with this other than that it feels nonsensical to use an insurance-style funding scheme for costs which we will all inevitably have, in greater or lesser amounts, close to the end of our lives. Would be great if Americans could buy catastrophic-only health insurance, like some people do for their cars, without screwing up price transparency for the rest of the market.
> but you still cannot choose how much care to consume
Lots of people would like to be spared extremely expensive interventions at the end-of-life, because they tend to fuck you up so you spend 60 days in pain/delirium instead of 40 days in minor pain with time to say good-bye.
Even ignoring the costs, it's hard to opt out of that, because of social and legal pressures to "do everything." But letting that go is the first step.
If the US prices are included in the OECD average, then your interpretation needs the "other" part removed. Yes, including the US prices will drive up the average.
There is still an ambiguity that could be addressed. Some people (including me) use “2.5X more” to mean “the reference amount plus 2.5 times the reference amount”, i.e. “2.5 times the reference amount more than the reference amount”, i.e. 3.5 times the reference amount.
For that reason we never *say* “2.5 times more”, but rather “3.5 times as much”, which is the locution I recommend to all. I don’t know which one Scott meant.
Re the first comment and "lol dumb americans pay twice as much for healthcare".... PEOPLE PAY WILLINGLY FOR THINGS UNRELATED TO MEDICAL OUTCOME, THIS IS OBVIOUS, WHY ARE YOU PRETENDING IT IS NOT. Are you all actually so ignorant of other countries that you really don't know?
Do you know one reason why healthcare is so much cheaper in Canada? One of many, many reasons is because in Canada, it doesn't really matter how sick you are or what you have, you're sharing your hospital room with at least one other patient. In America, private insurance pays hospitals extra so that rich Americans get private rooms.
Do private rooms improve health outcomes? I can't think of any reason why they would. And yet people willingly pay for them all the time. Why? Because people care about things other than just health outcomes, and they willingly pay for it. Ignoring that entirely and then saying "lol Americans just like wasting money" is disingenuous at best
I live in Montreal for three years (2011-2014). I didn't get sick often, but when I did I used the free clinic, because I was led to believe that finding a dedicated PCP was really hard.
I didn't have to pay money out of pocket to use the free clinic, but I did have to get there super early to get a place in line, still wait around for at least an hour or two without an ability to work remotely (no wifi), and I spent maybe 2 minutes with an actual doctor that really didn't seem happy to see me in the first place. In one case, this was just to get a Rx for a medication I had already been taking regularly in the States.
My health outcomes were perfectly acceptable, and I had more money in my pocket, but I wish I at least had option to pay a bit more for better service and an easy way to find a provider who could deliver that.
Having said all that, I'm not convinced that a demand for non-outcome related services is what is really driving US health costs. But maybe no one thing is *really* driving US health costs, and it's death by a thousand cuts, plus suffocation under a giant mount of red tape.
There are lots of countries where you can pay more to go to a private hospital to get your own room. Why do americans have such a strong revealed preference for this that they financially ruin themselves?
> And yet people willingly pay for them all the time
I don't think they do. You can't go to the hospital and say "I'd like a double-occupancy room for cheaper, please." Because when the hospital was built, it was built for single-occupancy rooms. You're getting it whether or not you think it's "worth it." Even if for some reason you *wanted* a roommate and wanted to pay *more* to get it, you couldn't.
I would love for there to be more choice, but a lot of the system is built not just with "more expensive by default" but "more expensive or nothing."
I just wanted to add that for the first analysis, it's a bit odd that they chose to focus on white people in these rich counties. What many don't realize is Asian and Hispanic individuals have far better health outcomes than white or black individuals in the US. In fact, national life expectancy for Asians in the US (~86 yrs, I don't remember the exact number off the top off my head) is higher than average life expectancy in the other top countries.
Regarding Medicare Advantage, I can say that my mother-in-law jumps on and off of it depending on her healthcare needs. So, when she's basically healthy she likes to be on a Medicare Advantage plan that provides lots of free goodies in the form of OTC (over the counter) benefits. While these are supposed to be limited to health expenditures, there are lots of shady pharmacies in NYC that take OTC credit but supply goods that don't really have much to do with healthcare. When she needed to have her knee replaced, none of the good doctors accepted her Medicare Advantage plan, so she switched to regular Medicare, got the procedure, and then switched back to Medicare Advantage. This is a good system for her for elective care, and I guess if she had a medical emergency her Medicare Advantage plan would be forced to pay, but I wonder what would happen if (God forbid) she were afflicted with a long term dire diagnosis like cancer?
A lot of the Medicare Advantage companies seem vaguely scammy to me, making money off of the fact that Medicare overpays significantly, but I guess that's not their fault? Still, I'm not really sure the USA would be better off if we all were placed on "Medicare Advantage for all."
I felt like Delesley's comment about the US system breaking the structure that capitalism needs to function spot on. Then, bizarrely, they go on to suggest that the US abandon capitalism.
"The reason your car won't drive is because the wheels fell off."
"Okay, so obviously the fix is to-"
"Buy a new car."
Wait, what? Doesn't it seem better to fix the system once we know what's wrong with it? Take the employer out of the system and I'm buying my own insurance. If I don't like how they keep costs opaque, or how they don't cover certain procedures - or how they DO cover too many, driving up my prices - I can switch.
"But there isn't a decent plan out there you'd pick." Sure, right NOW there isn't, because most Americans get their insurance from their employer or the government (VA, Medicaid, Medicare). If all you see are Yugo's in the Soviet Union it's not because people don't want to drive something better, it's because the current policies are actively cultivating an inferior product.
There's a historical story about how we got here (FDR trying to fend off the socialists and implementing employer subsidies, employers trying to get around WWII-era compensation caps by offering benefits). But there's also a practical reason: we're going to care for the sick and injured among us regardless. We need to accept that fact, which means subsidizing the cost of insuring low-income Americans. We also need to accept the fact that we're not getting rid of subsidies millions of Americans rely on, unless they themselves decide there's a better subsidy. So to my mind the best solution is this: we offer a significant voucher/subsidy to anyone who buys health insurance out on the open market and NOT from their employer. Employers already get that benefit and have for decades. It's past time we extended the health insurance subsidy to all Americans.
I don't disagree with any of that, but the cost of health *insurance* is just part of the problem. There also isn't enough competition or price transparency in health *care*.
There needs to be more low-cost but still decent quality options for routine procedures. That means providers have to compete on price, and that requires actual competition, price transparency, and price sensitivity on the part of the payer. This works reasonably well in nearly every other facet of life, and I have yet to hear a convincing argument for why it couldn't work in healthcare, with the possible exception of emergency care (which, as stated above, isn't a big fraction of US healthcare spending).
If routine care was more affordable then more providers could accept payment in cash without the need to go through third party insurance. Insurance could then focus on covering rare but expensive needs, like insurance does in most other contexts.
The problem is that the bureaucracy and entrenched interests and inertia in the system is *massive*. Changing things piecemeal seems unlikely to work, but overhauling the whole thing is politically infeasible and is also risky, because there are plenty of ways one could still end up with an even worse system.
I agree, which is why I proposed what I think is a relatively minor change that has the potential to allow the whole system to drift toward responsiveness to price signals. Right now one of the biggest barriers to prices sending signals that people can respond to is the shield they have been given by the employer-based healthcare system.
My current insurance provider was decided by my current employer. My previous provider was decided by my previous employer. Indeed, on two separate occasions I involuntarily changed providers while my wife was pregnant because I changed jobs. Not only was insurance not a definitive part of my employment decision, I had to make the decision to get a better job despite the fact that it made my insurance situation more difficult.
That's not just a dumb system. It's a system that incentivizes insurers to respond to an employer's needs, while ignoring the needs of individuals who actually use the service. Compare this to accident forgiveness from a car insurance company trying to woo you to switch. When was the last time you saw a commercial of a flightless bird or a lizard trying to convince you to switch your health insurance? So my insurer isn't responsive to my needs. Since I can't select my insurer, this is reciprocal. I'm not responsive to my insurer's needs either. The closest thing you get are employers trying to get employees into fitness programs, but it's too far removed from the price mechanism for any signal to operate effectively.
The only way to restore price signals is to dismantle the employer-based insurance environment. You can't do that so long as it's always cheaper for an individual to get insurance from their employer. Ironically, it would eventually be cheaper for everyone if everyone chose to not buy through an insurer, because it would restore the price signal and drive down prices while improving quality/innovation. But it's not better for any individual to do so on their own, therefore it won't happen without an outside nudge.
We learned during the debate over the ACA that any threat to dismantle the employer-based insurance model will be met with derision. People don't like their coverage, but they're understandably suspicious of being forced to switch because some government program mandates it. So you can't get rid of the employer-based system outright. You have to make it obsolete by getting everyone to switch to something better. Except we've already established that people won't switch as individuals.
The reason they won't switch is because it's more expensive. The reason it's more expensive is because employers get a subsidy to provide insurance as a benefit to employees. Taxpayers are paying to prop up a system that traps everyone into a limited choice situation. Okay, so let's use that same mechanism to get out of the broken system: subsidize individuals who buy health insurance on the open market NOT from their employer.
If our car repair industry was like our health repair, no one would *ever* quote you a price and they would laugh at you if you asked. Ivory tower intellectuals would say "obviously no one can buy auto repair on their own, there's no way to plan for that ahead of time, and there's no way to tell what it's going to cost, so the only way for it to work is for the government to run it."
I'm skeptical that requiring providers to give price quotes will fix the problem, but it wouldn't hurt and just might make comparison shopping possible.
I think a lot of solutions that follow the format, "pass a law to make this look like a normal market" are pushing on string. Unless you address the underlying cause for why health care is NOT a market, you'll never make any market-level progress.
In nearly every other market the socialist claim is usually that it's better to tradeoff market efficiencies for equity. The fact that in health care people consider socialism a more EFFICIENT alternative is a testament to how incredibly broken the US market is. If socialism is more viable, innovative, and effective than your so-called market, you know you've done something horribly wrong.
I gave the example car-repair market as one that could be fixed.
> The fact that in health care people consider socialism a more EFFICIENT alternative is a testament to how incredibly broken the US market is. If socialism is more viable, innovative, and effective than your so-called market, you know you've done something horribly wrong.
If I understand you, you're saying
* people want socialism in health care
* this means the system is broken
* this means we should implement socialism in health care
No, sorry my comment was unclear. What I was actually arguing is:
* Experience from most industries is that capitalism leads to greater productivity, efficiency, and innovation
* Capitalism tolerates/harnesses unequal distribution of profits
* In most industries, the argument for socialism is based on correction of inequality
* In most industries, the counterargument is that socialism will lead to a loss of productivity, efficiency, and innovation
Yet the story is bizarrely the opposite in health care:
* The current US system is unproductive, inefficient, and lacks innovation compared to other industries/countries
* Yet we still see massive inequalities in profit distribution
* The argument for socialism is almost never focused on inequality, though
* Proponents of socialized health care argue it is more productive, efficient, and innovative than the US system
The argument that socialism is operationally superior to capitalism is exclusive to health care. Yet the system of comparison is between a bunch of socialized systems versus the US system. The US system is, at best, a broken version of capitalism compared to nearly every other industry.
Therefore if we want better productivity, efficiency, and innovation in health care we should NOT look to socialism to provide that in the US system. Socialism only looks good in comparison to the US system, just like a Yugo looks good only in comparison to a car without wheels. We should fix what makes the US health care system not look like other functional capitalist industries.
> The current US system is unproductive, inefficient, and lacks innovation compared to other industries/countries
Unproductive: Not sure what you mean by "productive" as distinct from "efficient."
Inefficient: It does spend a lot more. RandomCriticalAnalysis[1] makes a good claim that it's just because we are richer and so spend more, but additional spending is never as useful as the earlier spending.
We could cut out spending by 20% and the loss in results would be none, or so small we couldn't notice it. But people don't *want* that. They want money spent on their problems! Robin Hanson has probably written a million words on this, and Arnold Kling's blog post [2] describes the social and political problems with being "efficient."
Innovative: I disagree completely. The US invents most of the stuff [3]. A lot of it probably isn't "efficient" because, like I said in the previous paragraph, all the low-hanging fruit has been eaten. So we can spend millions on getting a specific cancer to be 5% less deadly, because that's all that's left.
> Proponents of socialized health care argue it is more productive, efficient, and innovative than the US system
They argue it's more "productive" and "efficient" but I've never ever heard them claim it's more innovative.
> Socialism only looks good in comparison to the US system, just like a Yugo looks good only in comparison to a car without wheels
Okay, I get the point here. There's a lot broken with the US system. I'll accept for now the argument that a socialist system would be better, but I'm very skeptical that trying to change it into a socialist system would improve it. The same things that are broken in it today will be putting pressure on any reform effort. [4]
[3] and even the minority of drugs invented in Europe are financed by Americans
[4] HillaryCare had the potential to be a major transformation by squeezing doctors (in addition to putting in big barriers on inefficient procedures). Doctors lined up to make sure it didn't happen. Obamacare was way way more restrained, because the first thing he did was get doctors on board and make sure that they wouldn't be upset at all.
Yes, I've read RCA's post and I think it's fascinating. I'm not convinced that the US system isn't still broken, quite the opposite. However, I am NOT advocating for a transition to socialism. I'm claiming that the arguments in favor of socializing health care in the US reveal how broken and not market-oriented the US system is, and that this is a problem that should be addressed in a non-socialist way.
Productivity: This could be measured in number of patients treated, but that feels like a poor measure. Kind of like measuring food as calories consumed; grocery stores weren't considered 'capitalist propaganda' by Soviet communists just because of the quantity of things on the shelves. In most industries, we see an increase in available stock, variety, and range of prices. In the US system there is little selection available in variety and range of prices.
Arguments for innovation in socialized systems: I guess it depends on what you define as innovation. You could be looking specifically at drug development, but I see a lot of people arguing that the various centralized systems are able to innovate on price negotiation and care rationing strategies. In normal market systems, prices don't have to be 'negotiated' down, since there is an ongoing negotiation happening in the marketplace. In a normal market system, rationing happens automatically through the price mechanism. These prices in turn signal to potential suppliers where additional demand opportunities are, incentivizing new producers who increase supply, and alleviate rationing constraints.
Yet in the US system you have high prices that are continuously adjusted UPward, pricing many people out of the market (or driving them into bankruptcy) and effectively serving as a rationing of scarce resources. (I know many people who 'never go to the doctor', not because they have no need, but from fear of unknown costs. That's self-rationing through prices, but not a healthy market system.) Thus, the US system fails a comparison against socialist systems for innovation in rationing and price negotiation. That failure is not because it's a good example of a market system, but rather because it bears little resemblance to a market system.
Normally, the comparison is between a theoretical socialist system versus a working-but-flawed market capitalist system. In health care, the comparison is between a cadre of functioning socialist systems versus the completely broken US non-market-quazi-capitalist system.
I'm not interested in moving the US to a socialist system, but the current system isn't okay. I'm interested in repairing the US system to restore price signals. I'm just saying that the problem has gotten so bad that to many people even the socialist systems look like they're well run by comparison!
> I would like to know more about Medicare Advantage.
As it happens, I spent several years selling Medicare Advantage plans (as well as stand-alone Medicare drug plans and Medicare Supplements), so I’ll give you a modified version of the spiel I used to give new retirees.
To begin with, the government’s Medicare program has a long list of services they will cover, but you must pay the government a monthly premium ($170.10 in 2021), and Medicare will typically leave some out-of-pocket expense for you to pay when you get care (for most outpatient services, it’ll be 20% of the Medicare-approved amount). Medicare does NOT have any limit on out-of-pocket costs, so if you have a bad year, that can cost you quite a bit of money. Also, prescription drug coverage is not included, and must be purchased from a private insurance company. You may, however, see any doctor who takes Medicare, and are not required to get referrals to see specialists.
Medicare Advantage plans are private plans that are required to cover all the same services that Medicare covers, but may arrange the out-of-pocket costs differently - many have set copays for common services, for example, as the average person finds “doctor visits cost you $20, period” far more appealing than “doctor visits cost you 20% of some figure you may or may not be able to find out in advance“. Advantage plans also have a limit on out-of-pocket costs, and must cover your care 100% for the rest of the year if you hit the limit. They often include prescription drug coverage, and may include extras such as basic dental or gym memberships.
The disadvantages of Advantage plans (ho ho ho) are primarily related to networks and premium costs. If you take an Advantage plan, you must still pay the above-mentioned monthly Medicare premium to the government, and the Advantage plan may charge an additional premium of its own (or it may not, as these plans do get subsidized by the government). Your Advantage plan will also have its own network of doctors, and if you go outside this network in a non-emergency situation you may be charged more or denied coverage altogether. You CANNOT use government Medicare coverage while you are officially a member of an Advantage plan. Also, many of the cheaper Advantage plans are HMOs, which have the usual requirement that you get a referral from your assigned Primary Care doctor before seeing a specialist.
For comparison, a Medicare Supplement plan will simply fill in after Medicare, paying part/all of Medicare’s out-of-pocket costs, and will usually cover you at any doctor that takes Medicare. Supplement premiums are usually much higher than Advantage plan premiums, though, and also you can’t easily switch into them any time you want - since they’re technically optional, the company can ask you health questions and reject you if you’re unhealthy, in contrast to Advantage plans which have to take (almost) all applicants. Also, modern supplements can’t include prescription drug coverage, so you have to buy a separate drug plan.
Medicare prescription drug coverage… man, that’s a whole separate mess all on its own, and this comment is already pretty long. Let’s just say it’s a lot more complex and annoying than common non-Medicare drug coverage.
Regarding health outcome comparisons, I'm most interested in seeing a study of outcomes for a broad spectrum of rare conditions. I would posit that the effective care for all common conditions quickly is disseminated among rich countries, so I am not surprised to see no difference from higher spending. For the most part you find broad societal pressure and sufficient scale to ensure that no one is withheld the best treatment for childhood leukemia due to $. As you get to more niche treatments, lacking scale and awareness, my prior would be that there's no where in the world you'd rather be than the US. *
*I say broad spectrum because other countries may have individual treatment centers for niche conditions that are superior, that's always possible and even likely. But in a hypothetical situation where I'm drawing from a hat full of rare, niche diseases and am asked what country I'm going to be treated in before pulling, I'd pick US.
I am wary of cancer survival rates as a measure of the quality of healthcare, since you can improve your stats by detecting more harmless cancers. Cancer screening programs can save lives by early detection of cancers that would otherwise become untreatable, but they also detect cancers that would have never become dangerous.
Even to the extend that cancer survival rate meusures screening programs, isn't the precence of such a program a virtueof that system?
Not if the cancers that are identified didn't need medical attention. If that is the case then you are wasting resources on cancers that may not need it. (This is just hypothetical, I have no idea if this actually happens).
Additionally, you may identify someone as having cancer. They then receive treatment which can significantly negatively impact their quality of life. But its possible they didnt need that treatment at that time and could have lived many years (or even the rest of their life) without undergoing that detrimental treatment. (Again, hypothetical)
Oncologist here. You are 100% correct. Increases screening can find stuff that would never have caused a problem in the first place.
That’s one reason we don’t screen for prostate cancer anymore.
An example of where the cancer survival rates can mislead:
Suppose there is a type of cancer with 100% fatality rate after 10 years. Nothing you can do to treat it changes that.
Country A aggressively screens for it and detects it in the first year. Their patients survive 9 years after diagnosis.
Country B doesn't proactively screen and detects it as symptoms get bad in year 8. Their patients survive 1 year after diagnosis.
Country A spends much more on screening and looks like it has better survival rate, but in reality country A isn't doing any better at helping people with the cancer live longer.
It does seem like a virtue. But it's a virtue that may be incorrectly counted. Consider three systems - one detects a moderate number of cancers late and does a moderate job of treating them; one detects cancers a few years earlier but does no better at treating them so that people live just as long; one detects no more cancers but treats them more effectively so that people live on average a few years longer. The metric that has been discussed might treat the second and third as being equally good, even though the third seems much better than the second while the second is only a tiny bit better than the first.
Possibly, but the point is that it makes comparisons of cancer survival rate at a proxy for healthcare quality less meaningful. Without accounting for it, you don't know if a lower survival rate is due to less screening or worse quality care (or both or neither).
Aren't they better done as survival rate for someone with a Stage X cancer of a certain type? I suppose within stages there is still a range so perhaps early diagnosis still skews this? But I imagine not as much...
Yes and no. Even within a stage, patients that have symptoms (and were diagnosed based on those symptoms) tend to do worse than patients without symptoms (that were diagnosed based on screening), even if you try and control for everything.
You can also improve the stats by detecting a cancer earlier. If you can detect it five years earlier than otherwise, you have increased your "cancer survival time" by five years, but in fact haven't increased anybody's lifespan.
Very good point! Researchers call this "lead-time bias". In effect, if the measure of efficacy of a screening program is "years survived after detection", a program that finds a problem (cancer, or anything else) earlier will appear to improve outcomes even if it does not.
There are a couple of ways to get around this (i am by no means an expert). One way (taking mammography as an example) is to look at all-cause survival in people with breast cancer in people screened and not screened with mammograms. If the mammograms are detecting cancers earlier but not really changing over-all survival, then there should be no difference. But if the cancers that are detected early are treated more effectively and lengthen life, then the overall survival will be higher in the screened group.
All that said, most people (certainly all serious researchers) are pretty aware of lead time bias in the evaluation of screening programs, and so when those statistics are cited it's with heavy caveats or with some contextualization. In other words, I don't think anyone serious is advancing any policy proposals based solely on survival from time of detection (let me know if I'm wrong!).
As an aside, from a socio-political standpoint, screening programs can be pretty sticky! Again using mammography as an example: There are always very bitter debates whenever the appropriate age of mammography comes up. On the one side, some argue that screening younger women for breast cancer is wasteful, because of how rare breast cancer is in younger women and the undue distress that it causes someone to receive a very early stage breast cancer diagnosis when the cancer was so slow growing/small that they would have been better off never finding out about it. On the other side, intense screening find cases, and all the people who become cases generally credit the screening program with saving their life! Thus you end up with a big, sometimes politically quite powerful and effective survivorship community strongly in favor of screening.
Yes. Screening programs can be sticky. Mammography in healthy young women with no family history or known genetic tendency for breast cancer is a really bad idea. Not only is the base rate is very low, there is the further problem that the test is less sensitive in young women (the breast tissue is more likely to have harmless bits that cannot be distinguished from cancer). Again, I think Australia is doing a good job on this. They invite women in the 50-74 age range for regular mammographies, discourage low risk younger women from getting regular mammographies, but still offer free mammographies from age 40. I would imagine that most countries with a public health system are similar on this.
Let me add that in Emanuel JAMA study, Australia did best on colon cancer survival and the US did best on breast cancer survival. This is pretty clearly linked to early detection. Australia has an effective national screening program for colon cancer (starting at age 50), and the US does more mammograms on young women with no family history of breast cancer than all or nearly all other countries (whereas Australia does not recommend mammographies before age 50). I believe that the evidence supports the Australian approach in both cases. But at any rate, screening clearly has a big effect on survival statistics independently of the quality of care for cancer patients.
Screening for cancer always seems to do better when the metric is survival post diagnosis (see my comment above re: lead time bias). The authors write, in the discussion:
"That outcome [good breast cancer survival] is very likely due to the high rate of mammogram screening in the US, which is associated with higher rates of diagnosis of small cancers.22,23 However, if undetected, most of these small cancers would not have progressed to large cancers and caused death. Consequently, there is a high 5-year survival rate but not a lower overall breast cancer mortality rate because mammography does not increase detection of larger tumors."
Colon cancer is different because when screening for colon cancer with colonoscopy, you can also remove pre-cancerous polyps, so it's both diagnostic and therapeutic.
Thanks!
To clarify the Australian colon cancer screening isn't give every single old person a colonoscopy - it's mail every old person a cup to shit in, which is much cheaper and less invasive. If the sample comes back as problematic, then you get the colonoscopy.
Of course. A good thing about it is that they remind people to do the test and make it easy and free. I bet they get a substantially higher compliance rate than if people had to go to a clinic and/or pay a small fee.
In the us we get TV ads for the box to shit in (because you need a prescription for this). It's an animated talking box that walks up to people eating in public and this somehow isn't a health code violation.
(We also have an animated talking box that sells car insurance. Does the insurance box ever gets taken into a home and shit in?)
An important point too is that all colon cancer ends up being serious if not addressed. That is definitely not the case for breast cancer (or prostate for that matter).
Re. Developing countries: I have dual citizenship to Costa Rica, and my experience there was nothing but positive.
I got a weird GI parasite from somewhere in the jungle and got seen free of charge and with no wait time, and received excellent care.
I do know that if you are rich, you can pay more for decreased wait times, single luxury rooms in hospitals, and more attention; but as far as I know that care is pretty much the same.
I also have family friends that live way out in the sticks (No phone lines, no running water, no power 'till the last couple years), and can get complicated treatment for eg rheumatoid arthritis with no charge (But with significant wait time and some amount of travel).
All in all, if I had a choice, I would rather have CR care than US care.
https://www.newyorker.com/magazine/2021/08/30/costa-ricans-live-longer-than-we-do-whats-the-secret related
This is funny to me, 'cause when I was a kind in the 90's we still had no power or running water and cooked with wood; but I at the same time every couple months a guy in a pickup truck would show up from the ministry of health to the one room school house and do any vaccinations/basic health checkup stuff you needed.
There was also health ministry war propaganda EVERYWHERE: "Get you fucking shots!" "Wash you hands!" "Don't shit near running water!" "Drain stagnant pools where you find them!" (There was a pretty bad dengue outbreak at the time.)
I had an airbnb landlady who insisted that Costa Rica was paradise and she was gonna sell her home in the states and retire there (to her second home) "soon", repeatedly throughout my interactions with her. She had mentioned the medical care being really good. That airbnb listing is now run by her son, so either she died or she's living in Costa Rica now!
Costa Rica generally seems like a very interesting good example on a lot of measures.
Everything except the all-important hot-sauce metric. Ticos have a bland palate. Makes the place almost unlivable.
It's fucking WILD. The ingredients are +/- as good as you can get anywhere, the cooking is just about the worst.
Whenever I'm down there I mainly eat fish, fruit, and lizano.
I am in general skeptical of studies that try to use health outcomes to measure the quality of the health care system, including the one GummyBearDoc cites, for the same reason I think one should be skeptical of studies using educational outcomes to measure the quality of the education system. Namely, there is so much outside the system that affects outcomes (Freddie deBoer of course bangs this drum a lot in education) that even if you try to control for those things you'll probably still miss important confounders. Do the genetics, lifestyle choices, stress level, etc etc etc of American rich people affect how well they do after a heart attack vs average people in other developed countries? Probably! And probably not in a way that the health care system can do much about, or that you can readily control for in a study like this.
Also, while we're doing anecdotes: in a lot of places in the US, if you want a single-payer-style healthcare system, you can choose Kaiser Permanente as your insurer. I'm a longtime Kaiser member and pretty big fan, and their care pathways always seem very efficient and well-designed to me, though I am told (more anecdotes!) that the quality varies by region and e.g. Northern CA Kaiser is better than Southern CA Kaiser, so I may be biased. In any case I'd attach more credence to studies comparing Kaiser-like systems within the US to other more "traditional" systems than to international comparisons, because at least in those internal-to-the-US comparisons the patient populations are all Americans with American genetics, lifestyles, and stressors.
Ugh.
Kaiser recently acquired Group Health, another HMO from WA state, which I used for about 13 years. GH was great for all the normal stuff, but when something unusual happened to me and I developed a rare but well known mental health problem, they completely fell through. They failed to see what was happening, repeatedly kept trying the same treatments, some of which were counterproductive and made it worse, and eventually their bungling cost me my ability to work and even my ability to function in day-to-day life. It's been a slow and painful road since then, and I'm nowhere near where I used to be.
When I first thought of signing up, a friend told that their nickname was "Group Death" and that they simply didn't pay doctors enough money to retain the good ones. I should have listened. And from what I've heard, this isn't an uncommon pattern - they do well on the most common stuff (their Urgent Care was always great), but can't handle anything out of the ordinary.
But hey, maybe other parts of Kaiser aren't like that.
To be clear, your experience was before Kaiser acquired them, right?
Yes, but I would presume that most of the people on the ground remain the same. (Quick googling seems to confirm this.) Change there would only occur if Kaiser started hiring better people.
To be clear, the problem wasn't directly to do with overarching corporate policy, let alone the brand name slapped on top. It was that too many of the people on the ground seemed to go about their jobs as if they were automatons following a checklist. There were exceptions, enough to make me think that this wasn't entirely management's fault, except insofar as management created an environment where this sort of attitude could settle in and thrive.
The OP said that regional branches of Kaiser differ in their reputation, and today that's what I'd classify this as. But if similar problems persist in other regional branches of Kaiser, then I would suspect that the acquisition isn't going to change things in the former GH territory.
The study measures "rich Americans" by using residents of the top 1% richest counties by median income. This is the list, based on their source (roughly 3k US counties, so top 1% = top 30): https://www2.census.gov/programs-surveys/saipe/tables/2015/highlights-tables-2015/releasesummary-county2015-all.xls
About 1/3 of those counties are the Washington DC-area suburbs, where I live, and the most of the others look similar: suburbs of large cities. But don't think of small enclaves of mansions. US counties are large and the counties on this list have *most* of the residents of the DC suburbs. And maybe half the residents of the whole DC/Baltimore/Arlington MSA.
People here are different from the typical US resident along many dimensions, some even more so than income (education, for example). But I wouldn't say our health care is one of the most important dimensions where we differ. We mostly all have the same kind of insurance most Americans do, from the same companies, and go through the same bureaucracies to get care. Maybe our hospitals are a little better staffed and equipped? And it's the suburbs so nobody is a 2 hour drive from a hospital.
But still, when people say "gold-plated health care for rich Americans," I'd think of like concierge care, paying out of pocket to fly to the best hospital in the country (world?) for any given procedure, that kind of thing. Not of a standard-issue government employee in the DC burbs using UnitedHealth or Aetna.
Sounds like counties are too big a unit. What you want is outcomes for smaller geographic areas (which may not be available), because you can then look at super-rich gated communities and the like.
The heart attack data used zip codes, not counties, and the result held up, for what it's worth.
Loren-I think this is exactly the point that the study authors are trying to make! Most people think that US healthcare is a mess, but if you're pretty rich you can get around some of the problems with the way we deliver care. I think the authors are making the point that the ability to side step these issues is much less than one would think, unless you're truly, phenomenally rich. And I think the "gold-plated" care you describe is a lot more rare most people suspect.
Hey, Nicholas, thanks for the comment and let me do my best to persuade you that this study is compelling.
First, I agree that there should be some skepticism here. As an example, say someone did a study comparing health outcomes in two countries, discovered that country X had better outcomes than country Y, and concluded that country X had a better healthcare system/healthcare quality than country Y. I would say that conclusion is pretty flawed!
But that's not what this study is! In the case of the heart attack data, it is looking at only white people from the wealthiest 1% of zip codes (even more granular than county level data). This is an extremely cherry picked group of people who should have the very best healthcare outcomes. The median income is $117,000. Compare that to the average citizen in Norway, whose median income is $51,000. If I asked you, who is more likely to die after a heart attack, the average person in Norway, or a white person who lives in one of the 1% wealthiest zip codes in the US, I think you'd probably say the rich person in the US!
That's not what we find! The rich Americans die 12% of the time, all Norwegians die 10% of the time. Maybe you're right! Maybe a combination of genetics, lifestyle choices, stress, etc, etc, mean even being more than twice as rich doesn't buy you the health outcomes achievable in the average citizen in Norway. But that would also be pretty shocking.
So in summary, I agree with your general premise that you should approach these studies with skepticism, however this particular study is so overwhelmingly biased in favor of the US, that the fact that the US still doesn't come out on top is really surprising, and interesting.
"Maybe a combination of genetics, lifestyle choices, stress, etc, etc, mean even being more than twice as rich doesn't buy you the health outcomes achievable in the average citizen in Norway. But that would also be pretty shocking."
This would not be shocking at all. The obesity rates alone vary by a large amount and change outcomes by large amounts.
I would be more shocked if the average Norwegian hospital was using some more effective practices in dealing with heart attacks that the average US hospitals are not using. Yet, if there is some claim that the average Norwegian hospital is doing better, what could be the cause of them doing better, if not the condition of the patients they are trying to treat?
Static-
Let me take a stab at this--what might norway be doing better than the US to promote better outcomes 30 days post a myocardial infraction.
First, I'm starting with a huge handicap. I've never been to Norway and I only know the American system.
1. Ok now let's take a person with a heart attack. Likely they have new chest pain, or shortness of breath, and they call an ambulance. In the US the abulance system is a mish-mash of local companies, some town ambulance cores, and some hospitals who have their own ambulance cores. Meanwhile in Norway, there's one, national ambulance system (https://en.wikipedia.org/wiki/Emergency_medical_services_in_Norway). I would suspect that this would lead to a more streamlined and consistent path from where you got sick to the hospital but this is conjecture.
2. Ok so the patient gets to the emergency room. They're quickly diagnosed with a myocardial infarction and taken to the cardiac catheterization lab where the blockage is found and stented open, or they're diagnosed with coronary disease so bad that they need open-heart surgery. I work at a tertiary care center in the US and I think we are EXCELLENT at this part, and I imagine Norway is too! Probably not a big source of variation.
3. If you got a stent, there are two medicines that are CRITICAL to take for at least some period of time, aspirin, and another medicine that prevents clotting (usually either ticagrelor or clopidogrel). These medicines prevent a clot from forming inside the fresh stent. Missing them for even a day or two puts you at ENORMOUS risk for a heart attack. So we do our best to proactively address any barriers for patients getting these medicines. This is pretty painful; I usually have to prescribe the medicine, call the pharmacy, wait on hold, and then ask the pharmacist what the patient's co-pay will be. If it's high, I prescribe the other medicine. You would be shocked how often this administrative step falls through the cracks. Again, no idea how this works in Norway.
4. Cardiac rehabilitation is a supervised exercise program for people after they had heart attacks. It has been shown to significantly reduce mortality after a heart attack. We always prescribe cardiac rehab in the US, but patients routinely say it's a nightmare to sign up, it's very difficult to find out from insurance if it's going to be covered, and often you have to pay "up front" and get reimbursed after approval if you don't want to wait before you start. Again, no idea how this works in Norway, but I would not say it works well in the US. I have had extremely wealthy patients with excellent insurance bemoan how opaque and confusing the process of getting these services can be.
I agree with you that the way we open blocked coronaries is likely just as good if not better than the way Norway does! But the interventional cardiologist spends about 2 or so hours with you, and the rest of the time you're interacting with a healthcare system which, in the US, is fragmented and requires interacting with a very stubborn bureaucracy. Making sure folks are getting to hospitals quickly, making sure they have access to important medicines, and getting them into rehab are all relatively low tech interventions that rely much more on coordination/cooperation rather than who has the fanciest equipment or best trained doctors.
Regarding obesity, a lot of people have brought up this point. Perhaps this is the entirety of the effect! But I think that's unlikely.
It's very hard to find numbers just describing obesity rates in whites only in the top 1% of US counties. The overall obesity rate in Norway is 23% (https://journals.sagepub.com/doi/full/10.1177/0272989X20971589). If you look at the counties represented in the list, they are mostly in rich states, like Massachusetts, New York, New Jersey, Maryland, Virginia, Colorado, and California, where overall obesity rates are between 24-30%. The states with the highest prevalence of obesity (places like the deep south and midwest) are not really represented in the sample). Black and hispanic people have much higher rates of obesity, so not including them in the study brings those numbers down. Likewise, the relationship between income and obesity is complex. At least when looking at incomes up to 77k, (I can't find data for lower) white men seem to get MORE obese with wealth while white women get less obese with wealth. I still suspect the wealthiest 1% of counties have less overall obesity than the US as a whole. But even if you're not willing to take that supposition at face value, removing black and hispanic people from the analysis likely brings down the rates by 3-5% (obesity is VERY prevalent in those communities: https://www.cdc.gov/nchs/data/databriefs/db50.pdf). So that puts you at an estimated rate of obesity IN THIS SMALL SEGMENT OF THE US population at 20-24%, which is pretty comparable to Norway.
It's fun to look for the flaws in a study, and it's good practice to think critically. But, I'm surprised at how eager everyone is to defend the US healthcare system. I am a well off physician living in a wealthy neighborhood, and have a great network of friends who are also doctors who make it easy to get access to good and timely care...and I still find it a nightmare to deal with hospital billing departments, my own (very "good") insurance company, and the lack of coordination amongst different aspects of my healthcare.
I hope what I wrote was persuasive! If not, tell me! But please come back with some #'s of your own!
Even just thinking about MI alone, there are so many confounders, honestly I have doubts that the results are meaningful.
Did you control for the age of the patient? This seems like a very obvious confounder. The richest Americans tend to also be the oldest Americans. Someone who has an MI at age 90 is much less likely to survive than someone who has an MI at age 50, even if the person who is 50 receives "worse" health care.
Do you control for procedures like pre-emptive stenting? How common is this in Norway? If a rich American complains of angina, they can get a coronary CT and pre-emptively stent any problematic vessels before an MI, so they won't end up in your study. Your sample will be enriched for people who -chose- to avoid the doctor despite symptoms, who are also likely to have other co-morbidities and health issues that are not under control.
There are plenty of other factors you introduce by focusing on the rich that you have to control for.
Hey Daniel-
1. Your post reads as if I conducted this study. Just to clarify--not my study, I didn't write it! I'm a pulmonologist and my research involves mostly mice and cells.
2. Re: age, they did control for age. Did you take a look at the study? Here's a link: https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2774561.
3. When you discuss "pre-emptive stenting" I think what you're referring to is stenting for stable coronary artery disease. A large, rigorous, high profile study comparing stenting for stable CAD vs. treating with medicine found no difference in 5 year mortality. It was called ISCHEMIA, and here is a link: https://www.nejm.org/doi/full/10.1056/nejmoa1915922. So while it's an interesting hypothesis I don't think it holds water.
4. I agree, 100% that controlling for more factors is better. There might be some counterintuitive reason why rich people might do worse than one might expect on these metrics. I guess I don't understand why there ALSO couldn't be some counterintuitive reason why rich Americans do about the same (or even a little worse) on some important health metrics than the average person in our peer countries, who have pretty different healthcare systems.
Hope that was helpful!
Living in Canada we only have public healthcare, for rich or poor alike (except for cosmetic surgery). You'd be surprised what gets classified as cosmetic surgery though, if the patient is willing to pay for it.
And of course, being close to the USA, Canadians who can afford it and want better care go to the USA and pay big money to do it, so in that way we really do have a two-tiered system.
Hmm, thinking about it, I remember some news articles about Canadian professional athletes who always seemed to be able to skip the line in hospitals too, and get an MRI the same day or a flu vaccine without a wait. Not sure what's going on there.
Canada does have a fair amount of private care, its just not something most people are aware of. Some of it probably comes pretty close to violating the Canada Health Act, though the CHA mostly just incentivizes care to be delivered publicly rather than demands it so there's flexibility. There are grandfathered in private hospitals like Shouldice, there are private surgical clinics in Ontario and BC, there are private physicians who don't bill OHIP at all, and Quebec is basically operating an entire parallel private system. The latter example very explicitly violates the CHA, but the Feds look the other way because Quebec.
On top of that we've seen less direct privatization where US private equity firms have been buying up clinics (that still take provincial insurance and serve the public). Ontario under Kathleen Wynne also privatized a lot of the physical infrastructure of our public hospitals, so that the buildings are privately owned and leased back to the government in exchange for monopoly contracts on substandard housekeeping, maintenance, parking, food, etc. Its an extremely expensive system that also leads to worse services, but it was "successful" in getting a lot of debt off government balance sheets, and other provinces had been looking at following that model pre-pandemic.
For disease specific comparisons of healthcare systems I think it makes more sense to do the comparison between the same ethnic groups. Especially because some diseases like sickle cell anemia can be so ethno-specific.
I admit, compiling data on the US healthcare system is one hell of a chore and that that level of specificity may not be possible.
The Netherlands expat's comments about the Dutch healthcare system brings me back and is totally accurate.
I also lived in the Netherlands for several years. I saw my doctor once. This wasn't because I was never sick. For instance, I came down with shingles while there; it was diagnosed by the receptionist.
That's not an exaggeration. I called and explained my malady - the pain, itching, etc. She asked where it was occurring and if I had a rash there. Then she asked its shape, and then if it looked like [her description of shingles].
When I said yes, she informed me I have shingles. I was not familiar with it then - I only knew it was not good - and asked if I needed to go to their office or seek treatment. She responded not, explaining: "It's very painful and contagious, so we'd prefer not to see you here."
I don't recall if they called anything in for me, but if they did it wasn't much. I just rested and suffered, and when I was feeling OK and had no more rash returned to work (no issues missing work - that aspect of relaxed, semi-socialist northern Europe was wonderful).
The whole experience was so different from American healthcare it's almost impossible to convey. It was the lack of formality or any hint of "cover your arse" tests or treatments driven by fear of lawsuits - yes. But it also was just a cultural difference in how the medical profession functioned and the populace interacted with it.
I found something similar dealing with law and business there. Lawyers played a much smaller role there in corporate structures than in Anglo-Saxon companies. This was largely to the companies' advantage, as they moved nimbly and made major decisions based on commercial concerns, not legal ones.
On the other hand, it also could be laughably inefficient. For instance, once my consulting team evaluated merger and acquisition ideas for a very large company (essentially identifying how it could spend several billion dollars on strategic acquisitions abroad) without any legal input - we thus did not know that several of the markets we were looking at were simply closed off to foreign acquisitions, off-limits with our work and analysis being a waste of time.
I also saw Dutch companies fail to exact every benefit they could from negotiations on several occasions. Their lack of legal counsel meant they did not realize the leverage and opportunities they had when, for instance, a contracting counterparty had breached an agreement or allowed an option to expire. Often the Dutch company just enforced the spirit of the agreement and deal the parties intended to make, rather than what their lawyers ultimately wrote down for them to sign.
As I said, it could be refreshing, and despite some marginal losses/inefficiency I think the arrangement ultimately worked to their advantage (not least in creating a higher trust society, where companies in negotiations were not constantly worried about being screwed and trying to screw each other).
Unless you think that for some reason the Dutch health care system is more likely to have receptionists capable of diagnosing diseases than the American system, this was a coincidence and should have no bearing on how you compare the systems.
I apologize if I was unclear. That example was illustrative, not the sole incident.
My point (and repeated experience) was the Dutch system did not value formality or official certitude, which the American system demands (in many fields, not just healthcare).
I suspect the receptionist was actually a nurse of some type and had some medical training. But the point is not whether that person who answered the office phone had a degree or not. Shingles is distinctive. Anyone sensible and experienced in maladies that frequently appear at a GP's office can identify it, as she did. What was remarkable to me was that is where the conversation ended. They did not ask me to go in, while feeling horrid and possibly being contagious, so the doctor could sign a form and formally make the diagnosis. My problem was addressed; doing anything further for me would have been a waste of time, even if I cannot imagine the process ending there in the U.S.
As I said, this was not an isolated incident. The various winter colds and bugs I caught - again, was advised not to bother going in for them. We had questions of sexual health - addressed in one very brief joint conversation with a nurse, where here we'd have gone in for a battery of tests only to end up at the same place.
The impetus for my comment was the comment quoted in the post reciting the complaint about the Dutch system - that for a huge number of issues which occupy an enormous amount of resources over here to little effect (as there is little we can do about them besides usual sickness remedies and symptom relievers), the doctors don't do anything. You may not find our experiences remarkable - you can assign them whatever weight you want when comparing the systems; I had my own experiences which I am perfectly capable of comparing, thank you very much - but those of us who actually have experienced it hold a different view.
In America that receptionist would be guilty of practicing medicine without a license. Not a joke, if you don’t have the credentials then it is illegal for you to diagnose in a professional capacity.
Plus in America telling a client to stay home means the doctor doesn’t get paid to diagnose them. Receptionists know who pays their salaries and what they want, and generally what they want is to see more paying clients.
My concern with studies like the one cited by GummyBearDoc is that they do not control for the likely lower baseline health of Americans due to different lifestyle choices, leading to higher rates of e.g. obesity, diabetes, and, as far as I can tell for the most part, smoking rates compared to most other developed nations as well as reduced biking/walking as major transportation modes (https://worldpopulationreview.com/country-rankings/obesity-rates-by-country for obesity prevalences; the same site has numbers for diabetes and smoking, citing the WHO). Other nations may have different popular lifestyle choices that negatively impact health that are more common than in the US. However, I'd be curious to see an estimate of how much of the difference in e.g. life expectancy and healthcare cost between the US and other nations that can be attributed to differences in lifestyle choices that affect major risk factors such as obesity, diabetes, and smoking.
And the real question of how much the US is subsidizing R&D budgets is not a function of how much US pharma companies spend on R&D relative to other nations' pharmaceutical companies, but what percentage of all pharmaceutical companies' (whether from the US or otherwise) profits come from the US. I believe the US accounts for most of the profits of even EU pharmaceutical companies (https://www.vox.com/policy-and-politics/22702855/build-build-better-plan-medicare-negotiate-drug-prices; this article quotes an estimate of >60% of global pharma profits come from the US and has an interesting discussion of this question of lost innovation if drug prices are capped in the US).
As pointed out though, profits do not necessarily translate to research spending. I'd love a regulation mandating a (large) percentage of net profits be reinvested in R&D and even one limiting ad spend, though obviously those are likely to never pass.
Those lifestyle issues don't arise at random though. A lot of countries spend money and set laws to reduce smoking and obesity, in part because of the costs to public health care. Eg if a country spends money on anti smoking advertising campaigns, gives people nicotine gum, etc and that reduces lung cancer in the future, why shouldn't that count, if giving people medicine to treat or prevent cancer would?
Because it's not part of the health care system. Of course the US has spent quite a bit on anti-smoking to great success.
Exactly, those costs are entirely driven by lifestyle choices people make, which I believe should be controlled for/excluded from these analyses.
Anti-smoking campaigns and nicotine gum do sometimes count as health spending. Medicaid covers nicotine gum in some states, and anti-smoking advice tends to be more cost effective (in terms of QUALYs) than most health spending.
Compare first-generation immigrants, whose culture artifacts in this regard should be pretty similar.
So, do first-generation Japanese immigrants do better in Germany, or in the US?
I think this could help, but I doubt moving to the US and being exposed to, e.g., widely available sugary/processed American foods wouldn't still have a pretty significant effect (that's an interesting study in itself; health effects of moving to the US from other industrialized nations and from non-industrialized nations). I think it'd be better to just do a study that controls directly for a wide class of lifestyle choices and see whether the outcomes for non-smokers, non-heavy-drinkers, non-obese, etc. people are similar across countries. Likely a biased observation, but the life expectancies in several (middle to upper middle class) American Midwest (e.g., 90% white, mostly third-plus-generation American) subdivisions in the Chicagoland area near where I grew up are in the mid to upper 80s and low 90s (though as some pointed out to me, that could partly be due to large numbers of older people moving there; the subdivision in the 90s did have tons of young families and kids however).
Then we should expect immigrants to have lower lifespans than their nations of origin, no?
According to the following article, life expectancy at birth for ethnically Japanese people in the US was actually slightly higher than life expectancy in Japan for the 2012-2016 period; 89.89 years for women, 83.55 years for men in the US, compared to 87.14 years for women and 80.98 years for men in Japan.
https://read.dukeupress.edu/demography/article/58/5/1631/178726/Examining-Ethnic-Variation-in-Life-Expectancy
https://www.statista.com/statistics/611813/japan-life-expectnancy-total-gender/
Now, these figures aren't strictly comparable - I'm sure they're using different methodologies, for one, and for two, I'm pretty sure immigrants are on average going to be both healthier (uprooting your whole life is a big ask when you're chronically ill) and wealthier (moving to the US can't possibly be cheap) than people who stay in their country of origin.
Mind, your basic point is correct, but the effect is slower than you imagine; it happens over generations. First generation immigrants have better life expectancies than second generation immigrants, who are better off than third:
https://vanderbilthustler.com/44862/featured/breakthrough-asian-american-life-expectancy-research-conducted-by-vanderbilt-doctoral-student/
An additional complicating factor here is that life expectancy can also be determined by the quality of healthcare you received as a child; but all of these factors, I believe, can be mostly mitigated simply by comparing immigrants from a common nation of origin, across countries. There's still going to be some selection effects at play - I imagine different personalities, on average, will choose different countries to move to - but it does, I believe, minimize the effect of all other factors.
However, I have no idea how to get data for life expectancy of immigrants in other countries to begin comparisons; there might be a language barrier, or maybe I'm just using the wrong search terms, but I simply fail to be able to find anything.
Pretty sure there's going to be confounders with immigrants, too. I doubt immigrants are really a representative random sampling of the population that they're emigrating from - they likely represent either a specific slice of the culture or economic class of their home country (or both).
Sure, which is why I wouldn't suggesting comparing them to their nation of origin; unhealthy people probably aren't doing a whole lot of "Uprooting their lives and moving to another country far from their local support network".
Maybe someone could find a natural experiment where e.g. some US military people got randomly recalled from the Germany to the US, and look at what happened to their health.
Yes, in data from the KFF, I was surprised to see that the life expectancy of Asian Americans in New Jersey was greater than that of Japanese in Japan.
Hey riles, thanks for the comment.
Remember that the study is ONLY wealthy Americans vs. average people in our peer countries. It's not looking at 99% of Americans, just an extremely well off slice of the population. So while in general, Americans might have worse baseline health/lifestyle choices, we're not looking at all Americans. Just white people who live in the richest 1% of counties in the US (and wealthiest zip codes in some cases).
Most people think that rich people in the US get the best healthcare in the world--it's pretty clear from this study that this might not be the case.
Even looking at the richest 1%, controlling for baseline health differences due to lifestyle choices of the populations being compared should still be part of the analysis. Otherwise you're not necessarily comparing the healthcare systems. Others have also pointed out that being rich might correspond to entirely different risk profiles than being middle class or lower class, e.g., more stressful work with longer hours, potentially larger and sizeable pockets of heavy drinking/hard drug use, more travel and worse sleep schedules compared to middle class citizens. I'm throwing out possible confounders here based on stereotypes and some personal experience and some of these may or may not actually matter, but they could all reasonably have huge effects on health outcomes and costs and so the point remains, any study trying to make this comparison should control for lifestyle choices.
You're spot on that adjusting for all the variables you describe would make the analysis stronger. But I don't think the lack of that adjustment makes the study meaningless.
I'm confused by your argument because it suggests that you think the richest 1% of Americans have shorter life expectancy than people who are middle class. I think that's a pretty controversial take that isn't supported by any evidence. If i'm wrong please share some evidence to the contrary! Here the first thing that popped up when I google income and life expectancy: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4866586/
Figure 4 shows that it basically goes up in a straight line. So while I could imagine a society where the top 1% is a group of stressed out, hard-partying, workaholics who find their way to an early grave, I don't think that situation represents reality.
Completely agree that the study might still show something interesting. Nonetheless, I think the fairly wide differences in obesity, diabetes, and smoking between the US and other nations could produce a large enough effect to put this study into question if not controlled for.
Re: rich being unhealthier than middle class: I definitely agree with you in general that it's also believable that wealthy Americans make healthier lifestyle choices as a whole than poorer Americans (that'd be my guess overall; nonetheless the specific things I listed could still be in play more for the rich than the poor). However, looking at wealth as the main regressor to make that claim would still not account for differences in lifestyle choice e.g. the rich could have other advantages (like better healthcare, especially relative to poorer Americans as is commonly believed) leading to better outcomes in spite of lifestyle choices (the negative correlation of smoking with life expectancy for the top quartile is about half of what it is for the bottom quartile in the study you cited in your reply; regardless, baseline differences across in the populations compared in the JAMA in e.g. smoking rates would still need to be accounted for). That second study you linked to also doesn't directly control for lifestyle confounders (though it does provide some correlations of health behaviors with geographic variation in life expectancy, it does not control its overall comparison of life expectancy vs. wealth/race/ethnicity/geographic region for significant health-related lifestyle choices).
Obviously there is no end to the confounders that could argued for. It just seems reasonable to me to control for major lifestyle choices that are known to have huge effects on healthcare outcomes and costs in all of these discussions comparing healthcare systems (and not necessarily only related to the JAMA study you originally linked to). I'll hopefully be able to look more into this in the future but not today!
I think lifestyle choices have large effects on health, while medicine's aggregate effects are smaller, and differences between different providers of medicine are smaller still, so if we're using only health outcomes without any lifestyle controls to compare different providers of medicine it's likely that the signal could be completely swamped by noise.
I think the problem is that health and lifestyle generally have a greater effect on one's health than the quality of healthcare. If you are going to claim a difference caused by health care, it has to be based on some difference in health care treatments. The difference in lifestyle and health is well documented.
When I visited Amsterdam I was amazed to see tons of adults bicycling everywhere, with very well developed bicycle paths. I thought that was awesome, because I bike a lot. In the US, almost everybody over college age uses automobiles instead, except a handful of people in rich dense areas like Santa Monica and Manhattan.
The complete list of US cities with >10% commuting by bicycle and median age >25 includes only Davis CA and Key West FL.
https://www.city-data.com/advanced/search.php#body?fips=0&csize=l&sc=3&sd=0&states=ALL&near=&nam_crit1=6532&b6532=10&e6532=MAX&i6532=0&nam_crit2=5195&b5195=10000&e5195=MAX&i5195=1&nam_crit3=4048&b4048=26&e4048=MAX&i4048=1&ps=20&p=0
Both of them contain a college so that may be padding the numbers with college students. Apparently in the US, people over college age commuting by bicycle is just not done. (I did it anyway, for years, because driving is more stressful).
My intuition tells me that the unexpected bad outcomes for rich Americans compared to average Danes is due to Americans having more comorbidities. The actual _Medical Care_ in America seems, in my experience, quite excellent, but the overall _Health Care_ before you become so sick as to require a hospital bed seems rather dismal.
I suspect there is little monetary incentive in the US system in making people not need treatment?
Apologies if this has been discussed earlier, I didn't read the original post.
There are entire aisles in American supermarkets with food that's going to create disease in an otherwise-healthy person. We have warning messages on cigarettes, but no warning message on the cereal aisle or the baking aisle or the sugary drink aisle or the dessert aisle. ENTIRE AISLES creating poor health.
I'm trying to respond thoughtfully to everyone who comments on the study I shared in the comments, but I have to say I'm a little shocked how quick everyone is to defend the healthcare system in the US.
Many have made the point you're making, Fossegrimen, that maybe rich white Americans have worse baseline health than the average person in our peer countries. Income is an extremely strong predictor of life expectancy in the US (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4866586/) and the top 1% are in general, in pretty good health. Yet they still do worse after a heart attack than the average citizen in our peer nations.
I feel like there's 2 potential ways to explain this somewhat surprising finding:
1) Perhaps the care that the wealthiest Americans get is not "the best in the world".
2) It must be lifestyle, or genetics, or some other un-adjusted-for variable because there is ABSOLUTELY no way a normal person in Norway is getting better healthcare than a one per-center in the US.
For me, option 1 seems more plausible than option 2. Maybe there's a third option I'm missing?
I was trying to be a bit more nuanced than that, but it seems in too few words.
I don't have anything but anecdotal evidence, but I have experienced both Norwegian and US 1%-er healthcare and I would choose differently under different circumstances.
When I go to my Norwegian GP for my yearly checkup, he will take the usual tests, but we will also talk about diet, exercise, maybe scheduling the vacation to Spain around Christmas to fix that vitamin D deficiency etc. The whole thing seems to be an exercise in lifestyle fine-tuning to avoid getting sick in the first place. When I went for a checkup in the US, it was tests and goodbye, see you next year. The impression I got was that if they couldn't sell me a treatment, I was not worth their time.
On the other hand, I have also experienced trauma in both countries and in one I waited about 5 minutes for surgery, the other the same number of weeks. The actual surgery was more or less the same (fairly similar injuries too). Care during recovery was also somewhat better in the US.
Another example; In Norway if you got a BMI over 30 you qualify for a 6 month sick-leave stay at a "fat camp" where you learn to eat and exercise well. Then you get a one week stay at the same facility every year for 5 years as a follow-up program. I don't think there is anything even remotely similar in the US?
The point is that I would prefer to live and grow old under the Norwegian system, but if I were to be run over by a car, I would prefer that to happen in the US*. This is what I am trying to say by distinguishing between healthcare and medical care. Healthcare is in my opinion significantly more than patching people correctly together. In my personal experience, the US 1% treatment is excellent for that while the Norwegian system excels at making me a healthy old person.
My suspicion/explanation for my observations is that the financial incentives in the US system is slanted towards fixing sick people, not preventing them from getting sick; which I would think could lead to undesirable outcomes pretty similar to those in the article.
*: Given the traffic accident statistics, this is probably a good thing :P
Anecdotally I think it is highly likely that the top 1% in US are more obese than the average Norwegian. I just don’t seem the same level of obesity anywhere in the world as in the US. Really obese people seem quite rare in Norway.
Whoa, that is absolutely WILD about the "fat camp". Could you please post some sort of description so I could learn more about it? It's not that I don't believe you, just as an American it's so hard to imagine, since we really do have a lot of obesity here! That sounds like a potentially MASSIVE intervention.
That said, a 6 month guaranteed leave to combat obesity is very much a healthcare intervention! And I think the authors would say, because we don't make those sorts of investments here (ie large programatic interventions that are highly cost-effective in promoting health), a wealthy person in the US doesn't get to enjoy the same outcomes as ordinary citizens get to have in other countries.
https://www.avonova.no/rehabilitering/overvekt-rehabilitering/
Is from one of the camps, you'll probably need to run it through google translate or something. It turns out I was wrong a bout a few things too; corrections incoming:
* The automatic acceptance limit is BMI 40, not 30. The reason I thought it was 30 is my sister was accepted at just over 30, but she also had pre-diabetes and hypertension which lowers the BMI limit. I have no idea what the actual formula is.
* The 6 months is including the follow-up weeks so that the initial stay is more like 4
If you dig around a bit, you might find some ridiculous claims about 95% success rate or something. This is because they count only the ones who complete the full program. The actual success rate is probably more like 50% according to the people I know who has attended, as in only half of the ones who started show up at the last gathering.
I am not a healthcare specialist by any means, but I have a sister and a sister-in-law who has gone through this program so can relay some questions if you have specific ones.
Also, my point was not that this specific intervention was awesome, but that prevention is a big part of Norwegian (and AFAIK other Scandinavian) healthcare. There are probably lots of other interventions that are similar. Since I measure my health by timing my Saturday morning half-marathon run, I'm not in the target demographic for most of them.
Wow, I think that's really cool. I'll compare that to how morbid obesity (defined as BMI>35) is managed here in the US. Of course we use the doctor's visit to talk about diet and exercise but we also have to squeeze that around making sure we manage whatever medical problems the patient also has; i'd say we're able to talk about it for less than 5 minutes (my clinic is patients with pulmonary problems). If someone is morbidly obese, I'll ask them if they've considered bariatric surgery as this is the intervention with the strongest evidence base behind it. If they have diabetes i'll reach out to their endocrinologist about making sure they're on the diabetes medicines most likely to promote weight loss (a certain class slows down how quickly the stomach empties and so helps you feel fuller, longer, and also probably works in some ways we don't understand fully yet). If they don't have an endocrinologist I'll prescribe it myself.
Bariatric surgery is amazing! Every patient I've referred has had an incredible improvement in their health and quality of life. But I imagine it would work EVEN better if paired with an intense, lifestyle change focussed "camp" where someone focussed on exercise and changing their relationship with food.
If you'll allow me to quibble! At BMI 40, I wouldn't call anything you're doing "prevention". At that point you're treating a pretty advanced case of obesity. To me the difference in approach is the generosity of guaranteed leave to deal with this.
Thank you so much for telling me about Norway's approach to obesity! I really enjoyed learning about it.
We couldn't even do an obesity intervention like that here because of the fat acceptance lobby. It's not about the investment. That said, people do go to similar programs and insurance does pay for it. It pays for bariatric surgery as well.
The US economy would shut down if everyone with a BMI over 30 could take a 6-month leave-of-absence.
ETA to my recent comment (why can't I edit?):
I think you are absolutely right that the US Healthcare system does not give the best care in the world. In fact I think it is completely missing about half of what makes a good healthcare system. On the other hand, the acute medical care is pretty excellent.
As an American provider of acute care, I'll take that as a compliment! =)
> Several people brought up this idea of US drug prices subsidizing the world. There’s some evidence in support: the US contributes 58% of the OECD’s total pharmaceutical spending despite only having 24% of the OECD’s total population and 38% of its total GDP. This study has some slightly different data and doesn’t think that US drug companies innovate much more than foreign drug companies, but since most companies sells their drugs in most countries regardless of where they’re based, I don’t know if that proves anything.
I was one of the people who mentioned this in the prior thread, but I want to highlight that this is the wrong way to look at pharmaceutical research spending and "who is subsidizing who". *Where* the research dollars are spent is irrelevant. What is relevant is where the profits are made. A Swiss company can do all of its development in Switzerland, and then apply for FDA approval just like a US company with a research lab in the US can. The subsidy comes from the *opportunity* to sell here.
The correct way to measure this would be something like the total profit share of pharmaceutical companies by region of the world. It is probably possible to gather this up from SEC filings of the publicly traded companies, but it'd be a fair amount of work. However, I think its very likely that the research dollar comparison is actually significantly *under*stating the importance of the US market's subsidy to the rest of the world, despite that ratio already being quite large.
It's probably better to compare prices, as looking at total sales conflates price and quantity sold.
I'm not surprised in the least that there isn't much difference in the efficacy of health care. Health care in general seems to be a waste of resources. Instead we should focus our efforts to incentivizing positive lifestyle choices/habits.
Robin Hanson has studied this extensively.
Main paper:
https://mason.gmu.edu/~rhanson/showcare.pdf
Health care funding levels and patient outcomes:
http://doi.wiley.com/10.1002/hec.1173
http://www.nber.org/papers/w6513.pdf
http://journals.sagepub.com/doi/10.1177/1077558703254101
http://annals.org/article.aspx?doi=10.7326/0003-4819-138-4-200302180-00007
...
A related phenomena is the widespread opinion that the rich should not get more medical care than the rest of us, i.e., that “income should not determine access to life itself” [36].
Interestingly, people given fruit to divide up divide among themselves divide it more equally when told that the fruit is a health aid, instead of something that tastes good [103].
[36] Victor R. Fuchs. Health, government, and irving fisher. Technical Report 6710, National Bureau of Economic Research, August 1998.
[103] M.E. Yarri and M. Bar-Hillel. On dividing justly. Social Choice and Welfare, 1:1–24, 1984.
...
Our main problem in health policy is a huge overemphasis on medicine. The U.S. spends one sixth of national income on medicine, more than on all manufacturing. But health policy experts know that we see at best only weak aggregate relations between health and medicine, in contrast to apparently strong aggregate relations between health and many other factors, such as exercise, diet, sleep, smoking, pollution, climate, and social status. Cutting half of medical spending would seem to cost little in health, and yet would free up vast resources for other health and utility gains. To their shame, health experts have not said this loudly and clearly enough.
Non-health-policy experts are probably shocked to hear my claims. Most students in my eight years of teaching health economics have simply not believed me, even after a semester of reviewing the evidence. Heroic medicine is just too central to our culture, a culture where economists like me have far less authority than doctors. Worse, even most standard textbooks in health economics fail to make the point clearly.
Children are told that medicine is the reason we live longer than our ancestors, and our media tell us constantly of promising medical advances. Millions of doctors are well aware that most medical journal articles describe gains from particular medical treatments, and these doctors usually give patients optimistic views about particular treatments.
In contrast, few doctors know that historians think medicine has played at best a minor role in our increased lifespans over the centuries. And only a few health policy experts now know about the dozens of studies of the aggregate health effects of medicine. Worse, these studies can seem muddled, with some showing positive, some showing negative, and some showing neutral effects of medicine on health.
So I want to say loudly and clearly what has yet to be said loudly and clearly enough: In the aggregate, variations in medical spending usually show no statistically significant medical effect on health. (At least they do not in studies with enough good controls.) It has long been nearly a consensus among those who have reviewed the relevant studies that differences in aggregate medical spending show little relation to differences in health, compared to other factors like exercise or diet. I not only want to make this point clearly; I want to dare other health policy experts to either publicly agree or disagree with this claim and its apparent policy implications.
...
Regions that paid more to have patients stay in intensive care rooms for one more day during their last six months of life were estimated, at a 2% significance level, to make patients live roughly forty fewer days, even after controlling for: individual age, gender, and race; zipcode urbanity, education, poverty, income, disability, and marital and employment status; and hospital-area illness rates. This same study, using the same controls, also estimated that a region spending $1,000 more overall in the last six months of life gave local patients somewhere between a gain of five days of life and a loss of twenty days of life (95% confidence interval). (I’m using a fifty days lost per 1% added mortality rule of thumb.)
The tiny effect of medicine found in large studies is in striking contrast to the large apparent effects we find even in small studies of other influences. For example, a 1998 Lantz, et al. study in the Journal of the American Medical Association of 3,600 adults over 7.5 years found large and significant lifespan effects: a three year loss for smoking, a six year gain for rural living, a ten year loss for being underweight, and about fifteen year losses each for low income and low physical activity (in addition to the usual effects of age and gender).
Note that someone willing to pay $1,000 to gain 2.5 days of life should be willing to spend about $1,000,000 to gain six years by living rurally, and $2,000,000 to gain fifteen years via high exercise. These figures seem to me to overestimate the observed eagerness to live rurally or to exercise.
Of course all of these studies look at correlation, not causation, between health and medicine. So they all leave open the possibility that someday studies with better controls will show stronger effects. For this reason, discussion of the health effects of medical spending variations usually turns eventually to our clearest evidence on the subject: the RAND health insurance experiment.
...
Health paternalism seems particularly strong toward low status individuals. For example, great concern is expressed about the hard-to-clearly-document risk to babies from teen pregnancy [64], while little concern is expressed about the clearly-documented and substantial risks to babies from pregnancies of women over the age of forty. Great concern is expressed about liquor stores in poor neighborhoods, but not about the even larger liquor sales in rich neighborhoods.
As another example, blacks are 13% of US monthly drug users, about the same as their population fraction, but get 74% of drug-crime prison sentences [69]. Similarly, in Massachusetts those in the poorest zip codes are between 2.6 and 16.5 times more likely to end up in treatment for drug abuse than those in the richest zip codes, and yet are 54 times more
likely to end up in prison for drug crimes [15].
Similarly, it is notable that while there are many charities devoted to helping with health crises, few charities are devoted to helping with other sorts of crises with similar magnitude utility hits, such as divorce, falling out of love, unemployment, failed careers, breakup of friendships, etc. A further complication comes from the observation that while some charity behavior is outcome-oriented, much other charity behavior seems oriented more to creating the appearance of charity efforts [49].
Finally, it seems to me that politicians and others considered for positions of influence in health policy are frequently selected in part for how much they care about health. In contrast, it does not seem to matter much whether people who regulate electric utilities, for example, care much about electricity.
A straightforward, if apparently ad hoc, explanation for most of the above phenomena is that we care about others within our nation, that we tend to care about their health more than their happiness, and that this tendency is especially strong for low status people.
...
We see very little correlation between having more medicine and more health, suggesting that there is much excess care and inefficiency. Patients prefer expensive complex treatments, and are suspicious of simple cheap treatments. Patients tend to be more aware of and interested in their doctor’s prestigious schools and jobs than of their treatment track record.
https://www.overcomingbias.com/2019/06/our-prestige-obsession.html
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New heart attack treatments are among the most celebrated of recent medical innovations, and both medical spending and mortality improvements have increased more than average among the heart attack population. Assuming all this added mortality reduction is due to the added spending implies a low cost of about $10,000 per life-year [26, 25], which compares
favorably to typical value estimates of $75,000 to $175,000 per life-year [94].
Similar large benefits come if we assume all improvements in post attack mortality are due to medicine [24]. Also, assuming medical care is the cause of all heart attack mortality reduction not attributable to changes in identifiable risk factors such as blood pressure and smoking implies a large medical health benefit [53]. There is, however, no obvious reason to make these generous assumptions [81].
The most sophisticated statistical analysis to date, of 800,000 Medicare patients, estimated that adding a heart attack catheterization capability to a hospital, costs $70,000 per life year. This estimate, however, was only marginally significant (7% level) [71].
[25] David M. Cutler, Mark McClellan, and Joseph P. Newhouse. What has increased medical-care spending bought? American Economic Review, 88(2):132–136, May 1998.
[26] David M. Cutler, Mark McClellan, Joseph P. Newhouse, and Dahlia Remler. Are medical prices declining? evidence from heart attack treatments. Quarterly Journal of Economics, 113(4):991–994, November 1998.
Quite interesting. I am indeed not sure most medical spending make any difference, although some medical act really have huge impact (life or death, basically). Like after some trauma, in the few month following birth, and in very specific case. End of life and cancers, it's not clear, some things have a huge impact, some (big) things are expensive and in the end, probably make something awful even worse.
I do not know how much interventions which have a huge positive impact represent in term of % of medical spending.
And then, there are antibiotics which indeed make a huge difference, but I do not think it represent a big spending and is it part of what is called medical intervention? I have 2 experiences for it:
Belgium, where you need prescription (which get harder to get due to concern of overuse and resistance) but get partially re-funded (so it's cheap)....but it's really the full health system that is put to work...
And Thailand, where you can buy them as easily as a phad thai, just go in a pharmacy (which are super numerous) and buy what you want (ask the pharmacian advice if you are not sure). It's also super cheap, no refund but no doctor visit either, and I am not sure if this self-treatment count as medical act, or is like buying chicken stock or tiger balm?
Despite the constant campaign about antibiotic overuse that become a little bit frenetic in western Europe, I prefer the Thai system: faster, more efficient, at least in my case. The very few time I needed some, it was clear and urgent (local inflammation), and the pharmacian advice solved the stuff in half a day (the acute symptoms, had to take it longer of course). In Belgium, it would have been at least a few day slower, and those few days would have been crucial: for my ear infection, it may have caused damage and certainly one or 2 nights without sleep.
So for this particular case and for me: organized careful global medecine 0 - egoistical consumerist self-care 1.
The problem with antibiotic overuse is that healthy animals are fed antibiotics. Norway is the only country that I know of that has banned that practice, and they're only 4 million people on a 7 billion people planet.
I fully agree...This alone is worth a post, because public campaigns about antibiotic overuse heavily play the guilt card, narrative being that the uneducated public demand antibiotics when they are not needed (for viral infection for example) and do not follow the treatment throughout when they are needed, resulting in (multi)resistant bacteria and a lack of effective antibiotics.
That's 90% of the public message, only specialized documentaries mention nosocomial bacteries and antibiotic use in intensive breeding (used both as epidemy prevention in very dense animal communities and fattening/fastgrowing agents).
Amount of fear and guilt broadcasted in the modern western world is just out of control...
Rampant use of antibiotics in southeast Asia due to OTC sales is becoming an incredible problem. Here's a recent Economist article on it: https://www.economist.com/asia/2022/01/22/drug-resistant-infections-kill-almost-13m-people-a-year
The West is right to be raising alarm bells about this. I would argue we aren't raising sufficient alarm bells.
Don't Look Up.
Raise alarm bells because poor indians use too much antibiotics to cure pneumonia? OK, but what are they supposed to do exactly? not use them so that they remain efficient when the rich get sick?
Also why raise alarm bell but not discuss the use of antibiotics for breeding and veterinary use, and checking what is the role of hospitals in the emergence of resistances? This should create resistance evolution hotspots too, more so (and resistance jump from one bacteria to another, so even resistance in bacteria not targeting humans but in close contact is a problem)...Maybe the economist article discuss that too, but it's behind a paywall so who knows?
Don't disagree! The article does address the challenge facing these countries. Most really hard problems have really hard trade offs.
The problem is not just limited to SE Asia - 100% I am against and concerned about antibiotic use in the agricultural sector.
Back to South Asia, there are wins to be had without trade offs. For instance, it was extremely common for doctors to recommend Indians take antibiotics when they had COVID. Obviously that won't do much, and given the number of people who are getting COVID it will lead to millions of unnecessary dosages of antibiotics. There are also concerns bout runoffs from factories, etc.
All that said, no one is arguing that people shouldn't take antibiotics when they really need to. If they're OTC and you're generally poorly educated, you're going to take them many times when you do not need them. This is not only bad for society, it is also not the best for your health.
My response was specifically addressing an earlier comment indicating a preference for how easy it was to get antibiotics OTC in Thailand. In places where clinics are readily available, I am opposed to OTC antibiotics. I understand there may be a need for OTC in rural and underserved communities, but do wish that the solution instead was for the government to do its job and provide some very basic health care clinics in those markets.
I agree with most of what you said, but not on the fact that otc antibiotic access is convenient and superior (for me) to the way you may get antibiotics in my western europe country (jumping through more and more hoops).
And i also like to clarify the core of our disagreement, at least what I think it is : i indeed agree that people should have access to antibiotics when they need to. But who decide they need to? I prefer a system where people decide (an advice from a doctor is helpful, sure, in most cases.) many people think someone (or something) else will decide if people need it.
for their own good, sure...
like more and more things, even for things as personal as health decision.
sure, many people are irresponsible and will make bad choices...
But it's important that ultimately, they decide.
they are adult... Yes, i know, I'm old fashioned ;-)
They learned it by watching us!
My take-home from this blog post & discussion is that two-tiered systems are the norm everywhere. At least on Europe. Both in countries that formally have a public single-payer system (UK, Scandinavia), and countries that formally have private insurance coverage all the way down (Germany, the Netherlands, Switzerland). Since basic insurance is mandatory, the basic insurance package is fixed, and basic contribution rates are also fixed, the latter countries are really only organizing first-tier health insurance in a different way than the “pure” public single-payer countries.
What really differs across countries (my hunch is this holds in many middle-income countries as well) is how much the basic insurance package gets you, and consequently how large/important the supplementary (voluntary) health insurance sector is for your health & well-being (plus out-of-pocket health care spending). With regard to the supplementary/second-tier voluntary systems you have the adverse selection problem, and all the messiness related to that, in a situation with competing health insurance companies. You see this in single payer countries too, as they all have private, supplementary health insurance top-ups you – or your employer – can buy. Plus out-of-pocket private health care spending, of course.
Not discussed in the blog post or comments section, but worth investigating: I believe there is a tendency in most countries (again, Europe is my main reference) that the basic package is getting smaller. Not necessarily by removing items in the package, but either by increasing co-payments, or having longer waiting lists. The deep driver for this is the ageing of European populations (the demographic transition and the accompanying epidemiological transition), which pushes up health care costs (older people need more care) while simultaneously limiting tax revenues (smaller working-age populations mean less tax revenues).
The US is different, but not THAT different. The US is a much bigger place than any other developed country and has a more veto-ridden political system, which combine to make it more difficult to introduce similar first-tier health care, as we all know. Still, it has managed to introduce three first-tier systems that are sort-of near substitutes to what you find in Europe: Medicaid for the poor, Medicare for the old, and veterans’ health care for a substantial portion of working-age people who would otherwise be on the barricades for even broader first-tier coverage in the US.
The historian Peter Baldwin once wrote a book titled The Narcissism of Minor Differences (with a nod to Freud), about welfare state differences between the US and Europe. He has a point.
"Not discussed in the blog post or comments section, but worth investigating: I believe there is a tendency in most countries (again, Europe is my main reference) that the basic package is getting smaller. Not necessarily by removing items in the package, but either by increasing co-payments, or having longer waiting lists. The deep driver for this is the ageing of European populations (the demographic transition and the accompanying epidemiological transition), which pushes up health care costs (older people need more care) while simultaneously limiting tax revenues (smaller working-age populations mean less tax revenues)."
This is definitely happening in the UK. The waiting list for treatment is now absolutely massive (in Wales, more than 20% of the entire population is now on it), and despite spending a huge amount of total government spending on the NHS, the problem is only getting worse. Taxes are already fairly high in the UK too so there's hardly any political appetite to raise taxes further to pay for the NHS.
Thanks for the UK info DW. Yet another way this apparently happens, in countries that rely on private insurance companies all the way down to the basic package (referring a Dutch student I have who wrote a text on her system), is by reducing the so-called health care allowance (which is money the government gives to citizens that are too poor to pay the mandatory contribution/premium for the basic insurance); or by lowering the income level for being eligible for the allowance. Governments can do combinations...
Health care costs rising is inevitable for two reasons.
1: Health care is a superior good. As people have more money, they want to buy more of it. (Even if it does little good, or even zero more good.)
2: There are new interventions created. We can keep people alive after heart attacks or multiple gunshot wounds when before they'd just be given a priest. (And I assert that a key way other countries have been very successful at containing costs by pumping the brakes on these new interventions. And people don't feel so bad because they live in genuinely happy ignorance.)
There's probably still a lot we can do to try to keep costs constrained, but those factors are going to push up health costs everywhere.
Agree that health care is a superior good. Implying that with rising income you want proportionally (even) more health care.
(2) can work in both directions, however. For example, it is less expensive to treat heart conditions now than thirty years ago. Then you had to sew through the rib cage to fix a clogged blood vessel. Now you can insert a stent through a minor insertion.
Population ageing is the main culprit. Children usually suffer for diseases that are cheap to prevent (vaccination) or fix (oral rehydration salts, antibiotics). Adults suffer from cancer, heart disease, need of hip replacements...more expensive, but we are becoming better at fixing that at reasonable prices. The main budget killer is the delayed degenerative diseases. Altzheimer and his ilk. They are hideosly expensive since people must be watched over 24/7.
One may of course hope that such cost increases are fixed by a much more deadly virus than covid coming along, before it is too late... :-)
Scott: you formatted your response to Erik's comment as if it were part of his comment.
You're right, thanks, fixed.
> Third, no matter what your profit margin is, you’re still always incentivized to spend more money, right? If your profit margin is 10%, you can make $1 by selling $10 of care; if it’s 20%, you can make $2 by selling $10 of care, and so on. You always want to sell more care!
Absent legislation, there is no law of economics that says that the profit margin is a fixed percentage of whatever you sell. If your competitors cost $500/months, and you manage to spend less but still provide just as good care, then you can also charge $500/month, and pocket more profit.
Realistically, if you spend less, you probably do it by limiting your patients' choice in some way. So even if it's just as good care, at equal price people will probably prefer your competitors. So maybe you'll charge $490 or $450; but you still make more profit if the cost saving is bigger than how much less you can charge, which is likely if the extra choices your competitors provide are costly but have no benefit.
Scott is actually confusing things a bit here. Profit Margins are Prices/Average Costs minus 1 (e.g., P=1.2, AvC=1, PM=0.2 or 20%), and Average Costs are just Total Costs/Quantity produced by the firm.
But we know from microeconomic theory that firms set quantities such that Price equals Marginal Costs, not Average ones. So in fact the firm optimization problem says the Profit Margins on the last item produced (the marginal item) are 0, since Prices = Marginal Costs. So Marginal Profit Margin = Price/Marginal Cost - 1 = 0. Producing beyond this point would lower profits, not increase them as Scott suggests, even though profit margins are positive at this point.
The problem is, if the profit maximization condition yields a Profit Margin higher than the cap, the firm has to increase Average Costs until it respects the cap. Average Costs are composed of Fixed and Variable Costs. I won't go further into this, but the thing is, if the firm chooses to produce beyond the economical point of P = MC, it will increase quantities and thus increase Average Costs LESS then if it would simply add to Fixed Costs, because a increase in Variable Costs also increases the quantities in the denominator. So once the point P = MC is reached, the profit-maxizing firm has incentive to burn cash (add to fixed costs doing whatever) until the profit margin cap is reached WITHOUT increasing the quantity produced.
There's another complicating factor here, which is that while your profits as an insurance company are limited to a percentage of premium revenues, so is overhead spending. Insurers must spend at least 80% of revenues paying claims. That limits your ability to simply blow additional money on marketing or whatever.
I should point out that that's what the regulations say, anyway. I don't know if this actually works in practice, though. Maybe companies have figured out easy ways to skirt these regulations.
> But we know from microeconomic theory that firms set quantities such that Price equals Marginal Costs, not Average ones. So in fact the firm optimization problem says the Profit Margins on the last item produced (the marginal item) are 0, since Prices = Marginal Costs.
I don't think that true if the marginal item increases the amount of capital required, and we aren't considering capital costs as costs (in other words, if we are discussing accounting profit as opposed to economic profit, if I understand those terms correctly). (Accounting) profit is the cost of capital: the cost of investors postponing the use of their money, and risking it. If producing more takes more capital, then there will be (accounting) profit on every item.
Take a simple model where there are no economies of scale, and both capital requirements and all (other) costs are directly proportional to the amount sold. (E.g. a machine can produce a limited number of items, and the number of machines you need is proportional to the number of items you want to make. Or you need office buildings to house the paper pushers who process insurance claims, and the number of paper pushers you need is proportional to the number of customers.) In this model, "marginal" is always equal to "average". There will still be accounting profit, proportional to the amount sold. (But, on a competitive market, there'll be no economic profit, as far as I understand.)
Ok, if I'm getting this right, you're thinking about a model where marginal costs are constant (let's call them MC = k), and not increasing. The problem with your model is that the intuition of a price-taker in a perfectly competitive market breaks down. In this case, when you're solving the firm's optimization problem, if k < p (the price), then the firm would produce an infinite amount, and get infinite (economic) profit. Naturally, this is not possible. As the firm started flooding the market prices would go down and the cost of inputs would also likely go up (probably a mix of both).
In either case, what I've said before holds: the firm will have positive "profit margins" even though it cannot profitably increase output.
I'm simplyfing things a bit here of course, but this intuition holds in general even for non-competitive settings. A monopolist, for example, set quantities such that marginal revenues equal marginal costs, a perfectly competitive market is just a particular case where marginal revenues are constant and equal to the market price.
The comment about the UK and Netherlands focusing on cost effective treatments seems similar to the argument here https://www.newyorker.com/magazine/2021/08/30/costa-ricans-live-longer-than-we-do-whats-the-secret for why Costa Rica has a higher life expectancy than the US. Lots of spending on community level preventative care, less on expensive cancer treatments
> The US has a whole industry dedicated to marketing drugs and medical services directly to patients, which just doesn't exist in most other countries.
I do see drug ads in Hungary.
However, it looks like prescription-only or subsidized drugs can't be advertised. That means only drugs people pay from their own pockets for can be advertised, which puts a limit on how expensive they can get.
Most drug ads in the US are for prescription-only drugs in my experience and they always end with "ask your doctor about _____".
There was one drug advertised on TV for a condition I have but I somehow tuned it out and didn't realize it was for me. My doctor recommended I go on it, and it's been a life-changer for a certain chronic condition I have -- it's essentially gone.
It's also rather expensive (partly by physical necessity), but there's this weird dance between the manufacturer and my insurance company and a discount card and it's somehow $0 out-of-pocket to me.
I'd like us to save money on this stuff if I could, but if a genie told me we could cut costs by 50% with a 10% chance that this drug never got invented, I wouldn't accept the deal. The system works to give us fucking amazing drugs.
Sounds like it would be more efficient to have lower budget advertisements targeting doctors, especially ones that specialize in certain illnesses.
Ideally it would allow for the advertisements to be cheaper and involve less 'fluff' like associating your product with yoga, painting, and picking up seashells on the beach.
Maybe. Maybe not. Surely the drug company has better information on this and better incentive, because they could save millions of dollars and give them to their executives and shareholders.
"Let's ban advertising because it's just a big waste" is a common socialist refrain.
"Let's ban advertising because it's just a big waste" is a common socialist refrain. I know that, though in this particular instance it seems far more plausible.
You don't typically need massive clinical trials on most products and services because a consumer can tell fairly quickly from experience whether it's worth the money or not.
Right, it definitely seems plausible. But if it's a waste why don't they companies stop doing it on their own?
Often there is no competition, so you're not trying to keep Pepsi customers buying Pepsi. Do people need to be reminded of this condition they have and to schedule an appointment with their doctor?
And how did my doctor know?
Y'know what, next time I see him, I'm gonna ask him.
One would hope most doctors knew about treatments in their specialty without ads…
At about $6.58 Billion/year, drug advertising in the U.S. is approximately 0.16% of total health care spending ($4.1 Trillion). I don't think completely eliminating that is enough for anyone to even really notice the sixth of a penny per dollar spending difference.
Damn excuse me for being behind the times, but I am once again stunned by how much the promise of the internet has come true. Particularly that last comment from Brazil: information from everywhere.
Regarding the R&D spending for drug research, wouldn't the more relevant metrics be the result of that R&D? Is a PHD scientist paid 200k$ in SF 4 times more productive than PHD scientist paid 50k€ in France? It's, obviously, less easy to measure than a $ amount (what is a new drug, what is a repackaging, how relevant are they each?), but I'm not, from an outside PoV, convinced there's that much difference.
> First of all, I think insurances mostly make less profit than that, so the cap probably doesn’t matter much in real life.
For the first few years after the ACA was passed, in North Carolina, BCBS sent me an annual refund of around $0.70 because they overspent on the bucket that includes "administrative, overhead, and marketing costs". So maybe they're not directly making a 20% profit, but they are/were definitely right up to the line on the "not healthcare" limit.
> Second, cost inflation seems to have decreased (or at least not worsened) since the ACA.
I can't argue with that. Possibly the rest of the ACA pushed enough efficiencies into the system that this single clause isn't having the negative effect that it otherwise would.
> Third, no matter what your profit margin is, you’re still always incentivized to spend more money, right? If your profit margin is 10%, you can make $1 by selling $10 of care; if it’s 20%, you can make $2 by selling $10 of care, and so on. You always want to sell more care!
That assumes your profit margin is fixed (like it is under the ACA). If it's not fixed, in addition to selling more care, you can sell your care more efficiently and continue to charge the same amount.
"the FDA does approvals for just the US (and it doesn't compete with any other US regulators to do the approvals)"
Would it make sense for the US Congress to empower a second agency to do drug approvals? No need to create a whole new agency, just let CDC or ATF have the power--it doesn't matter who, the goal here is to create competition. Thus, the two can compete, and drug companies can choose one or the other if one turns out to be cheaper, or faster, or less hassle.
"success is measured by how many people they can treat given a limited budget, not by how much profit they can make by doing lots of expensive treatments. That's the main difference between "capitalism" and "socialism" in this case -- it's the metric you use to measure success. NHS hospitals do a cost/benefit analysis on every treatment, and focus their efforts on the low-cost, high-benefit treatments"
How does the efficacy of the treatment have any impact on the hospital's bottom line? A person treated is a person treated regardless of whether the treatment is actually worthwhile.
The hospitals in the UK kind of approach healthcare spending backwards. They're given a budget and a population pool, and at the end of the year they want to have used their exact budget to treat their entire patient list of everything they had. They never achieve this, which is baked into the system and generally means the most expensive patients go without or fall into the private system. While the goal is impossible, efficiency is the primary tool for attempting to get as close as possible to having everyone treated. The more efficient they can be at treating common conditions means the more money they have left over to treat the rare and difficult ones.
Theoretically a health authority could try and pad their treatment numbers by over diagnosing easily treatable conditions (and I wouldn't put it past them to try) but they wouldn't gain much from this. Perhaps the administrators could hide other problems under such a smokescreen, but it's not the only figure being monitored so how successful they'd be long term is questionable. It would definitely be a scandal when it was uncovered as it would mean wasting public money on useless treatments for the benefit of the managers (again, I'm sure it happens but if you're caught at it you definitely lose your job).
I can see them optimizing for "efficiency" purely in terms of cost, but who is actually evaluating whether any treatments are useless or not? As Greg Cochran & Robin Hanson have pointed out, for most of the history of medicine basically all treatments were useless at BEST and frequently much worse than useless.
The UK has an independent agency NICE whose job is to evaluate the evidence for any clinical treatment or drug for the NHS. From what I can see they do a pretty good job of evaluating the evidence and use proper cost benefit methodology. The use £20k to £30k for a QUALY. Of course this sometimes gets criticised as people obviously in their case want a particular drug even though it might not be cost effective, but it’s surprisingly accepted by most people.
> They're given a budget and a population pool, and at the end of the year they want to have used their exact budget to treat their entire patient list of everything they had
That sounds like a great system. Things that have poor QALY/£ don't get funded.
Health care is always going to be some kind of socialism, either private or public. The healthy pay for the sick. The young for the old. From each healthy man according to his ability, to each sick man according to his need.
For that reason it’s probably better to turf out the middle man, and just actually socialise it.
The problem with socializing anything is that you lose the information provided by profit and loss, and without prices you have no idea how much of anything to provide. Politicians aren't stupid, but they have poor incentives even in the best system of government.
Bram Cohen had a good answer to people who think that the economies of health care is a free market, which Scott reproduced above.
Anyway I’m saying that the fully private sector insurance system mimics socialism by transferring to the needy (the sick) from the unneedy (the healthy). I’m saying it’s socialist, in that sense, anyway.
Insurance is socialist? I'm pretty sure this is a minority viewpoint. It either contracts insurance or expands socialism to the breaking point.
No, Bram's answer wasn't good. His claim, boiled down, is that people cannot plan for a time when they may lack capacity, e.g. people cannot write a will for the disposal of their assets after they die. And yet .... wills exist and many people have them.
His comments were right. I don’t see how your counter argument makes any sense - sure people can plan for the future in a will. What’s that got to do with healthcare purchases? When a person goes to the doctor he doesn’t decide on the prescription, when taken to hospital there’s very few or no purchasing decisions left to the patient.
Thanks for your reply.
Most healthcare spending isn't in emergency situations. In other words, you would have time to shop around, compare price, services, and find the option that is best suited to your needs, *if* non-emergency health care were more competitive, if services and *especially* prices were more transparent, and if patients weren't so insulated from prices.
I'm having some paving done. I don't choose where the paving company gets its asphalt. But I am shopping around to find the best price.
I go to a mechanic and I don't choose where they get their parts, but I can shop around and switch mechanics.
I think a lot of healthcare spending *could* be like that if it were easier for new providers to enter the market. We aren't currently there, of course. But, we're talking about ways to improve the current system.
It looks like an improvement would be a more government owned or backed system.
Information about what? Normally we are talking about preferences. Markets are great at matching production to consumer preferences. And when we're talking about interior design or leisure travel or even food, that's awesome.
But medicine is emphatically not in the business of giving people the interventions they want. They whole idea is that they have an empirical, rational, expert consensus about what is indicated or standard-of-care for a given set of facts. Deviation from that, in either direction, is bad.
20% of standards of care get overturned every 7 years. Not just changed, but turned on their head. Note: 7 is just what I remember from an NPR story. Same for 20%. It's a lot. A shocking lot. Just as a ferinstance, butter used to be bad for your heart and margarine good. Now it's completely the opposite.
I think people should have the right and ability to choose the care they want, even if that means ignore the expert consensus.
> They whole idea is that they have an empirical, rational, expert consensus about what is indicated or standard-of-care for a given set of facts
Given a body like NICE we can have that. But in America health care is mostly decided post-hoc by how the doctors fear lawyers will react. The "standard-of-care" is a ratchet that never loosens, even if we accidentally made a mistake and loosening is the right thing.
You must distinguish between creating a market for health care insurance and creating a market for health care services.
The market for health care insurance runs into the adverse selection problem, with all the fallout from that problem, including a forewer-arms-race between regulators and insurance companies about how to, or not to, offload high risks and chase after low risks.
In single payer health insurance systems you kill that market, but only that market. Everyone has to be members, low risks cannot exit, they must pay taxes (some countries label these taxes "contributions" for historical reasons) whether they like to or not. But since they know they will usually become higher risks as they grow older, or they have older famly members such as parents, not that many of them complain. Fewer than the median voter, anyway.
But single payer health care systems retain the market for health care services. And since the state qua insurer is a monopsonist (or near-monopsonist), the state should be able to use its market power to negatiate very acceptable (from the point of view of taxpayers) prices on health care services, including medicines.
That's how single payer systems usually work. Few countries with such systems have only publicly employed doctors or publicly owned hospitals treating patients in their country. There is competition among health service providers, often very much so.
"But single payer health care systems retain the market for health care services."
You still have the automobile health care problem. If the patient isn't paying, they want the best care possible. The single payer wants the lowest price possible regardless of quality. Incentives don't align in such a system.
If there's a flat rate, the patient can't just demand premium care. The doctor is getting $X.
(Unless they pay out-of-pocket themselves for that premium experience.)
No, the single payer does not want the lowest price regardless.
An intelligent monopsonist, i.e. state, knows that there is a quality factor involved, including the R&D costs to provide better services in the future.
...This does not mean that the state will always behave like that, that is as always an empirical question. But that is my prior, and looking at health care costs across countries I see little reason to adjust that prior very far downwards, not so far at least.
...in this context, remember that you must compare the possible market imperfections in this monopsonist situation not to the ideal-type market situation taught undergraduates in Economics 101. You must compare the situation to the posible market imperfections in a de facto private/competitive health insurance market, for example the situation in the US. Not everyone of our health economist colleagues would claim that the present relationship between US citizens; their employers who often but not always pay health insurance on their behalf; the health insurance companies seving both; the health service providers serving the customers while charging the insurance companies; the US federal covernment; the 50 state governments; aligns the incentives beetween these actors-in-the-game as assumed in Economics 101.
In short, you have to chose the system likely to have the fewest bugs.
Anyway, it is the imperfections in health insurance markets that has driven all "modern" states towards first-tier mandatory-health-insurance-for-the-basic-package systems, regardless of the ideological outlooks of the rulers in charge. Otto von Bismarck, who started it all, was an arch-conservative.
The guy who has written what is still the best theoretical overview of all of this is Nicholas Barr (then of LSE), in his old but still to-the-point article Economic Theory and The Welfare State, in Journal of Economic Literature vol XXX, pages 741-803. (He later wrote a 300-page-book about the same thing, but this old review article is better.)
Why wouldn't the single payer want to pay as little as possible? Oh, because they've been bought-and-paid-for by the health care providers? That's a government failure.
You can't wave your hands at market failure without acknowledging the even greater likelihood of government failure.
The US market for health care is not particularly free nor private, given the interventions in the market. Simply put, you cannot use the failure of government intervention to justify even more government intervention. Yet that happens routinely, as you point out above, undercutting your point.
Concerning your last post Russ:
I believe this debate went up-and-down after Scott's original blog post, and I have a hunch your priors are so embedded in your soul that nothing I could say would move you.
Plus it is now 22:35 in my time zone.
Only this: Governments do not always fail, if you consider the alternative: a society without a government. Hobbes made some points in Leviathan about what type of failures you may encounter in a society without a government.
Ok, but perhaps you meant to make an argument for rule by libertarian autocrats? If so, be aware that there is a huge Public Choice literature on the perverse incentive structures embedded in autocratic political systems. They make the government failures that can take place by democratically elected governments pale in comparisons.
As I said in my previous comment, it is about choosing the system with the fewest bugs. In this case: the fewest potential failures. Neither societies without governments or autocratic governments are likely to contain fewer bugs (i.e. potential failures) than democratically elected governments.
Ok, but perhaps your argument is that a democratically elected government that “only” regulates private insurance companies is less likely to display various types of government failures (when it comes to imposing effective versus dysfunctional regulations), compared to a democratically elected government that choses to run a mandatory first-tier health insurance system (be it a publicly administered system as in UK or a system of mandated basic insurance run by private companies, as in Germany)? To that I would reply: There is no reason for assuming that the first government is less exposed to the risk of lobbying by powerful interest groups, shady horse-trading in the parliament, tax breaks that serve vested interest, as well as every other possible “government failure” problem.
Thus shouting “but what about the possibility of government failure!" when discussing if it is more efficient if a democratic government runs a public single payer health insurance system, compared to if a democratic government issues mandatory regulations for competing private health insurance systems, is what is sometimes called a category mistake.
…It might even be the case that the US health insurance system, compared to the British or German, is even more at a risk of capture by vested interest and the like, since it is less transparent and see-through for voters, and even for experts. Vested interests thrive in darkness.
Be that as it may, all health insurance systems are either run by governments, or very heavily influenced by the regulations issued by governments. There is no escape.
That said, as I started out with I do not think the odds that I may make you adjust your priors is very great, and besides this thread is long enough.
Plus, it is not 22.57. Time to pour a glass of red wine, open Netflix and call it a day.
What you can do is look at other more successful, more socialist systems. This is a question of empiricism not ideology.
So if there is a quality difference, and the monopsonist insurer decides to pay provider x more than provider y, then we would still rely on some mechanism to pass the difference in costs onto the consumer, or they would all chose the more expensive provider. Insurers are inefficiently filling that gap now with different sets of provider coverages.
A more efficient system would be to force providers to charge all patients the same price, although different providers could charge different prices from each other. For example, the next Medicare agreement with providers could specify that the provider could not charge anyone more than they charge Medicare. This would provide the monopsony pricing power, but still allow for different insurance plans to provide set benefit levels, allowing people that can or want to pay more to do so, without pushing those costs on everyone else.
Regarding arguments like this:
" If you wind up in a coma and are brought to an emergency room you can't open your eyes, discuss what the treatment will be and how much it's going to cost, do appropriate research and decide for yourself whether the doctors's recommendations for treatment are appropriate, decide that the amount being asked for is outrageous, find a potential competitor, have them open up a competing ER next door, and check in there. Every step of that can't happen."
I agree that's true for certain types of healthcare situations, but I don't think that represents a majority, or even a particularly large fraction, of US healthcare spending. It seems to be in the few % range:
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0258182
https://www.politifact.com/factchecks/2013/oct/28/nick-gillespie/does-emergency-care-account-just-2-percent-all-hea/
Admittedly those numbers may be out of date, but I'd be surprised if they changed by more than a factor of a few in either direction, except maybe during COVID, and that's an outlier.
I still think the US healthcare market is really, really broken, but for the vast majority of use-cases I don't think there is some fundamental reason why consumer choice and competition couldn't improve quality and lower prices.
The argument is absurd. The claim is that people are incapable of planning for incapacity, and yet nearly everyone manages to write a will. And even if you don't write your own will, the government has a default will, which are usually pretty reasonable.
Yes its intellectually lazy. We see with housing insurance, flood insurance, car insurance, etc. that individuals are more than capable for planning for catastrophic events.
What do you mean by that? The question is whether people shop around when the event happens.
No, and nobody expects to, which is why people plan ahead. If you don't, then you deserve whatever happens to you.
really? did you plan for when you are rushed unconscious to the ER?
Of course not. That's why Bram is right and I am wrong.
I'm not sold on the idea that drug companies spend more on marketing than R&D. That struck me as suspicious, so I did a bit of quick digging in the financial statements for 2020 for Pfizer, Eli Lilly, Astra Zeneca, Novartis, which were the first four names that sprung to mind. I suspect the issue is that pharmaceutical companies seem to simply lump all their overhead costs into a single line in the income statements labeled "Marketing, Selling, and Administrative costs." These numbers do not appear to be disaggregated later in the report, from what I can tell.
It appears to me that whoever came up with this "marketing exceeds R&D spending" take didn't make much of an attempt to separate actual marketing costs from all the other admin costs that were lumped into that line item like legal, compliance, accounting, HR, utilities, IT, executive compensation, etc. I won't try to paste the numbers in here because I'm guessing the formats will get all messed up, but suffice to say that for the four companies I looked at, total R&D spending for 2020 was $30.2 billion vs $43 billion in Admin. You would need Marketing/advertising to account for over 70% of total admin costs for it to exceed R&D spending. I wouldn't be surprised if it was the largest single admin cost, but over 70% of the total seems unrealistic. The only company this might be true for, I would guess, is Astra Zeneca, whose Admin costs of 11.2 billion were almost twice their R&D spending at 5.9 billion, which was a significantly higher ratio than their competitors, for whatever reason.
In short, I don't doubt that drug companies spend a lot on marketing, but the picture painted by pharmacychecker.com is not an accurate one, from what I can tell.
Hey Gordon, as a point of reference and as I'm sure you saw even in this small sample of companies, companies have very different strategies in terms of how much of spend is R&D vs. marketing. Some companies are very "science forward" which means they try to look for products that are highly impactful in small segments of the population who see a limited segment of physicians. For example, a medicine like imatinib (developed and marketed by Novartis) effectively cures CLL (a chronic luekemia) a disease treated by hematologist-oncologist which affects about 6,000 americans per year. It's easy to market a medicine like this because 1) the results speak for themselves and 2) it's a small segment of physicians who you have to educate and convince to prescribe the medicine. Developing something like imatinib is a deliberate strategy based on a go-to-market approach that is more appealing than trying to make a new high blood pressure medication. A new high blood pressure medication could be really wonderful in some way (maybe fewer side effects or only once per week instead of once per day), but the solutions that exist for blood pressure are mostly satisfactory, and many more doctors prescribe blood pressure medication, so it's much more difficult to market.
Second, love that you sanity checked a number that seemed crazy to you (and I apologize that I'm too lazy/otherwise occupied to do this myself), but the highest revenue pharmas, are J&J, Roche, Pfizer, Bayer, Roche, Novartis, Merck, GSK, Abbvie, and Sanofi (I left out SinoPharm because to my knowledge, they don't market any medicines in the United States). Lilly, Astra-Zeneca, and Novartis combined have about the total revenue of J&J. All that is to say that I'd need a broader survey of Market vs. R&D spend to have a good sense of that number.
Thanks for the reply. Yes, that's a good point about highly specialized drugs, and my four company sample is certainly not expected to be perfectly representative. Just as a quick note regarding your second paragraph though: I was trying to stick to companies that I at least have the (possibly mistaken) impression are primarily in the prescription drug biz. J&J, for example, is huge, but it looks like only 54% of its sales come from pharmaceuticals. 17% of its revenues come from its consumer products division, which includes all kinds of personal care products, and for which you would very much expect marketing costs to exceed R&D expenditures, because the potential returns to developing a new kind of mouthwash or shampoo are reeeeallly low. Obviously, that would very much skew the results unless you could separate out the cost of advertising soap and cotton swabs vs advertising spent on drugs that are kept behind the counter, and the company's 10k doesn't provide enough info to do that.
I think the same is likely true for Bayer, Roche, GSK, and probably some others, as well. That makes doing a more comprehensive review more difficult, but I would just point out that it appears that the people at that sketchy site Scott linked to did not even make a rudimentary attempt at this from, what I can see.
Thanks Gordon, the last paragraph is helpful context. I don't think you're mistaken! I just think that's a very small sample and there's tons of heterogeneity. Also very good point re: J&J.
I am also wondering how M&A activity is accounted for here.
Big Pharma is really about marketing, distribution, and scale. Yes they fund some direct research, but they acquire new drugs and treatments regularly. This is, fundamentally, R&D spending and should be counted as such.
If I make a company the spends $100M on marketing and $0 on R&D, but I buy 3 companies a year for a total of $1 B, I'm spending 10X on R&D what I'm spending on marketing.
Total drug advertising spending is $6.58 Billion/year. Total drug R&D is about $83 Billion in a non-COVID year. The idea that drug advertising is greater than drug R&D spending is off by about 12x.
Bram Cohen's argument -- that you cannot participate in a market process on your way to the ER -- is absurd. It's as if nothing else is subject to pre-negotiation, and thus doesn't exist. For example burial insurance (which exists). Or automobile insurance (you can't purchase insurance AFTER you've crashed your car). Or retirement funding (once you're retired, it's too late to plan on funding your retirement).
Even if he was right, ER medicine is only a fraction of the medical practice. The problem is medical economics in the US is that it's based on the automobile model. The doctor is the mechanic. The patient is the car. The insurance company is the owner. In this model, the car gets no opinion on the health care to be provided, and neither does the patient. With the difference being that everyone wants to be a Cadillac and have Cadillac health car.e
I'm glad to see the ACX/SSC commentariat continue to live up to my expectations—I came here to make a very similar argument, although the car metaphor is new to me.
I can't speak to how costs are distributed, but it seems uncontroversial to me me to say that the overwhelming majority of contacts with the health care system are non-emergency office visits. The biggest difficulty in market forces acting on health plans is the opacity of prices. It would be hard to intentionally design a system worse than the American system at answering, in advance, the question, "What is this service going to cost?"
Yup. I was getting physical therapy, which went fine. I had a small relapse and wanted another visit. Went into the office and said "If I'm paying out of pocket, how much would a visit with Susan cost?" They couldn't tell me.
And people think the US has a free market health care system! As if!
I don’t believe you’re correct. IIRC a significant portion of spending is on neonatal and end of life inpatient care.
This is true, but most of that care is still delivered in a non-emergency setting.
Emergency vs. non-emergency seems like a red herring to me. Yes, childbirth and oldness are both conditions which give you lots of advance notice, but you still cannot choose how much care to consume so the extra time doesn't give you much extra bargaining power.
Or is the idea that people should only make shop around for health insurance prior to becoming old or pregnant and if you leave it too late you're SOL? The dynamics still seem different to me than other long-term transactions like purchasing car insurance (you can always trade in an uninsurable car but you can't trade in a body) or retirement funding (you're not insuring, you're building up a fund that follows you from one job to another).
Not sure where I'm going with this other than that it feels nonsensical to use an insurance-style funding scheme for costs which we will all inevitably have, in greater or lesser amounts, close to the end of our lives. Would be great if Americans could buy catastrophic-only health insurance, like some people do for their cars, without screwing up price transparency for the rest of the market.
> but you still cannot choose how much care to consume
Lots of people would like to be spared extremely expensive interventions at the end-of-life, because they tend to fuck you up so you spend 60 days in pain/delirium instead of 40 days in minor pain with time to say good-bye.
Even ignoring the costs, it's hard to opt out of that, because of social and legal pressures to "do everything." But letting that go is the first step.
Non native speaker here, sorry.
I'm having trouble understanding this sentence:
"the US spends 2.5x more on medications than OECD average, ..."
Is the following interpretation correct based on the formula and the paper?
"The US spends 2.5 **times** as much on medications as **other** OECD members on average, ..."
If the US prices are included in the OECD average, then your interpretation needs the "other" part removed. Yes, including the US prices will drive up the average.
There is still an ambiguity that could be addressed. Some people (including me) use “2.5X more” to mean “the reference amount plus 2.5 times the reference amount”, i.e. “2.5 times the reference amount more than the reference amount”, i.e. 3.5 times the reference amount.
For that reason we never *say* “2.5 times more”, but rather “3.5 times as much”, which is the locution I recommend to all. I don’t know which one Scott meant.
Re the first comment and "lol dumb americans pay twice as much for healthcare".... PEOPLE PAY WILLINGLY FOR THINGS UNRELATED TO MEDICAL OUTCOME, THIS IS OBVIOUS, WHY ARE YOU PRETENDING IT IS NOT. Are you all actually so ignorant of other countries that you really don't know?
Do you know one reason why healthcare is so much cheaper in Canada? One of many, many reasons is because in Canada, it doesn't really matter how sick you are or what you have, you're sharing your hospital room with at least one other patient. In America, private insurance pays hospitals extra so that rich Americans get private rooms.
Do private rooms improve health outcomes? I can't think of any reason why they would. And yet people willingly pay for them all the time. Why? Because people care about things other than just health outcomes, and they willingly pay for it. Ignoring that entirely and then saying "lol Americans just like wasting money" is disingenuous at best
People snore. Not ME of course.
I live in Montreal for three years (2011-2014). I didn't get sick often, but when I did I used the free clinic, because I was led to believe that finding a dedicated PCP was really hard.
I didn't have to pay money out of pocket to use the free clinic, but I did have to get there super early to get a place in line, still wait around for at least an hour or two without an ability to work remotely (no wifi), and I spent maybe 2 minutes with an actual doctor that really didn't seem happy to see me in the first place. In one case, this was just to get a Rx for a medication I had already been taking regularly in the States.
My health outcomes were perfectly acceptable, and I had more money in my pocket, but I wish I at least had option to pay a bit more for better service and an easy way to find a provider who could deliver that.
Having said all that, I'm not convinced that a demand for non-outcome related services is what is really driving US health costs. But maybe no one thing is *really* driving US health costs, and it's death by a thousand cuts, plus suffocation under a giant mount of red tape.
There are lots of countries where you can pay more to go to a private hospital to get your own room. Why do americans have such a strong revealed preference for this that they financially ruin themselves?
> And yet people willingly pay for them all the time
I don't think they do. You can't go to the hospital and say "I'd like a double-occupancy room for cheaper, please." Because when the hospital was built, it was built for single-occupancy rooms. You're getting it whether or not you think it's "worth it." Even if for some reason you *wanted* a roommate and wanted to pay *more* to get it, you couldn't.
I would love for there to be more choice, but a lot of the system is built not just with "more expensive by default" but "more expensive or nothing."
I just wanted to add that for the first analysis, it's a bit odd that they chose to focus on white people in these rich counties. What many don't realize is Asian and Hispanic individuals have far better health outcomes than white or black individuals in the US. In fact, national life expectancy for Asians in the US (~86 yrs, I don't remember the exact number off the top off my head) is higher than average life expectancy in the other top countries.
Regarding Medicare Advantage, I can say that my mother-in-law jumps on and off of it depending on her healthcare needs. So, when she's basically healthy she likes to be on a Medicare Advantage plan that provides lots of free goodies in the form of OTC (over the counter) benefits. While these are supposed to be limited to health expenditures, there are lots of shady pharmacies in NYC that take OTC credit but supply goods that don't really have much to do with healthcare. When she needed to have her knee replaced, none of the good doctors accepted her Medicare Advantage plan, so she switched to regular Medicare, got the procedure, and then switched back to Medicare Advantage. This is a good system for her for elective care, and I guess if she had a medical emergency her Medicare Advantage plan would be forced to pay, but I wonder what would happen if (God forbid) she were afflicted with a long term dire diagnosis like cancer?
A lot of the Medicare Advantage companies seem vaguely scammy to me, making money off of the fact that Medicare overpays significantly, but I guess that's not their fault? Still, I'm not really sure the USA would be better off if we all were placed on "Medicare Advantage for all."
I felt like Delesley's comment about the US system breaking the structure that capitalism needs to function spot on. Then, bizarrely, they go on to suggest that the US abandon capitalism.
"The reason your car won't drive is because the wheels fell off."
"Okay, so obviously the fix is to-"
"Buy a new car."
Wait, what? Doesn't it seem better to fix the system once we know what's wrong with it? Take the employer out of the system and I'm buying my own insurance. If I don't like how they keep costs opaque, or how they don't cover certain procedures - or how they DO cover too many, driving up my prices - I can switch.
"But there isn't a decent plan out there you'd pick." Sure, right NOW there isn't, because most Americans get their insurance from their employer or the government (VA, Medicaid, Medicare). If all you see are Yugo's in the Soviet Union it's not because people don't want to drive something better, it's because the current policies are actively cultivating an inferior product.
There's a historical story about how we got here (FDR trying to fend off the socialists and implementing employer subsidies, employers trying to get around WWII-era compensation caps by offering benefits). But there's also a practical reason: we're going to care for the sick and injured among us regardless. We need to accept that fact, which means subsidizing the cost of insuring low-income Americans. We also need to accept the fact that we're not getting rid of subsidies millions of Americans rely on, unless they themselves decide there's a better subsidy. So to my mind the best solution is this: we offer a significant voucher/subsidy to anyone who buys health insurance out on the open market and NOT from their employer. Employers already get that benefit and have for decades. It's past time we extended the health insurance subsidy to all Americans.
I don't disagree with any of that, but the cost of health *insurance* is just part of the problem. There also isn't enough competition or price transparency in health *care*.
There needs to be more low-cost but still decent quality options for routine procedures. That means providers have to compete on price, and that requires actual competition, price transparency, and price sensitivity on the part of the payer. This works reasonably well in nearly every other facet of life, and I have yet to hear a convincing argument for why it couldn't work in healthcare, with the possible exception of emergency care (which, as stated above, isn't a big fraction of US healthcare spending).
If routine care was more affordable then more providers could accept payment in cash without the need to go through third party insurance. Insurance could then focus on covering rare but expensive needs, like insurance does in most other contexts.
The problem is that the bureaucracy and entrenched interests and inertia in the system is *massive*. Changing things piecemeal seems unlikely to work, but overhauling the whole thing is politically infeasible and is also risky, because there are plenty of ways one could still end up with an even worse system.
It's a humdinger of a pickle.
I agree, which is why I proposed what I think is a relatively minor change that has the potential to allow the whole system to drift toward responsiveness to price signals. Right now one of the biggest barriers to prices sending signals that people can respond to is the shield they have been given by the employer-based healthcare system.
My current insurance provider was decided by my current employer. My previous provider was decided by my previous employer. Indeed, on two separate occasions I involuntarily changed providers while my wife was pregnant because I changed jobs. Not only was insurance not a definitive part of my employment decision, I had to make the decision to get a better job despite the fact that it made my insurance situation more difficult.
That's not just a dumb system. It's a system that incentivizes insurers to respond to an employer's needs, while ignoring the needs of individuals who actually use the service. Compare this to accident forgiveness from a car insurance company trying to woo you to switch. When was the last time you saw a commercial of a flightless bird or a lizard trying to convince you to switch your health insurance? So my insurer isn't responsive to my needs. Since I can't select my insurer, this is reciprocal. I'm not responsive to my insurer's needs either. The closest thing you get are employers trying to get employees into fitness programs, but it's too far removed from the price mechanism for any signal to operate effectively.
The only way to restore price signals is to dismantle the employer-based insurance environment. You can't do that so long as it's always cheaper for an individual to get insurance from their employer. Ironically, it would eventually be cheaper for everyone if everyone chose to not buy through an insurer, because it would restore the price signal and drive down prices while improving quality/innovation. But it's not better for any individual to do so on their own, therefore it won't happen without an outside nudge.
We learned during the debate over the ACA that any threat to dismantle the employer-based insurance model will be met with derision. People don't like their coverage, but they're understandably suspicious of being forced to switch because some government program mandates it. So you can't get rid of the employer-based system outright. You have to make it obsolete by getting everyone to switch to something better. Except we've already established that people won't switch as individuals.
The reason they won't switch is because it's more expensive. The reason it's more expensive is because employers get a subsidy to provide insurance as a benefit to employees. Taxpayers are paying to prop up a system that traps everyone into a limited choice situation. Okay, so let's use that same mechanism to get out of the broken system: subsidize individuals who buy health insurance on the open market NOT from their employer.
If our car repair industry was like our health repair, no one would *ever* quote you a price and they would laugh at you if you asked. Ivory tower intellectuals would say "obviously no one can buy auto repair on their own, there's no way to plan for that ahead of time, and there's no way to tell what it's going to cost, so the only way for it to work is for the government to run it."
I'm skeptical that requiring providers to give price quotes will fix the problem, but it wouldn't hurt and just might make comparison shopping possible.
I think a lot of solutions that follow the format, "pass a law to make this look like a normal market" are pushing on string. Unless you address the underlying cause for why health care is NOT a market, you'll never make any market-level progress.
In nearly every other market the socialist claim is usually that it's better to tradeoff market efficiencies for equity. The fact that in health care people consider socialism a more EFFICIENT alternative is a testament to how incredibly broken the US market is. If socialism is more viable, innovative, and effective than your so-called market, you know you've done something horribly wrong.
I gave the example car-repair market as one that could be fixed.
> The fact that in health care people consider socialism a more EFFICIENT alternative is a testament to how incredibly broken the US market is. If socialism is more viable, innovative, and effective than your so-called market, you know you've done something horribly wrong.
If I understand you, you're saying
* people want socialism in health care
* this means the system is broken
* this means we should implement socialism in health care
Is that right?
No, sorry my comment was unclear. What I was actually arguing is:
* Experience from most industries is that capitalism leads to greater productivity, efficiency, and innovation
* Capitalism tolerates/harnesses unequal distribution of profits
* In most industries, the argument for socialism is based on correction of inequality
* In most industries, the counterargument is that socialism will lead to a loss of productivity, efficiency, and innovation
Yet the story is bizarrely the opposite in health care:
* The current US system is unproductive, inefficient, and lacks innovation compared to other industries/countries
* Yet we still see massive inequalities in profit distribution
* The argument for socialism is almost never focused on inequality, though
* Proponents of socialized health care argue it is more productive, efficient, and innovative than the US system
The argument that socialism is operationally superior to capitalism is exclusive to health care. Yet the system of comparison is between a bunch of socialized systems versus the US system. The US system is, at best, a broken version of capitalism compared to nearly every other industry.
Therefore if we want better productivity, efficiency, and innovation in health care we should NOT look to socialism to provide that in the US system. Socialism only looks good in comparison to the US system, just like a Yugo looks good only in comparison to a car without wheels. We should fix what makes the US health care system not look like other functional capitalist industries.
Thanks for the corrections. This is useful.
> The current US system is unproductive, inefficient, and lacks innovation compared to other industries/countries
Unproductive: Not sure what you mean by "productive" as distinct from "efficient."
Inefficient: It does spend a lot more. RandomCriticalAnalysis[1] makes a good claim that it's just because we are richer and so spend more, but additional spending is never as useful as the earlier spending.
We could cut out spending by 20% and the loss in results would be none, or so small we couldn't notice it. But people don't *want* that. They want money spent on their problems! Robin Hanson has probably written a million words on this, and Arnold Kling's blog post [2] describes the social and political problems with being "efficient."
Innovative: I disagree completely. The US invents most of the stuff [3]. A lot of it probably isn't "efficient" because, like I said in the previous paragraph, all the low-hanging fruit has been eaten. So we can spend millions on getting a specific cancer to be 5% less deadly, because that's all that's left.
> Proponents of socialized health care argue it is more productive, efficient, and innovative than the US system
They argue it's more "productive" and "efficient" but I've never ever heard them claim it's more innovative.
> Socialism only looks good in comparison to the US system, just like a Yugo looks good only in comparison to a car without wheels
Okay, I get the point here. There's a lot broken with the US system. I'll accept for now the argument that a socialist system would be better, but I'm very skeptical that trying to change it into a socialist system would improve it. The same things that are broken in it today will be putting pressure on any reform effort. [4]
[1] https://randomcriticalanalysis.com/why-conventional-wisdom-on-health-care-is-wrong-a-primer/
[2] Linked by Scott, at https://arnoldkling.substack.com/p/some-health-economics-for-scott-alexander
[3] and even the minority of drugs invented in Europe are financed by Americans
[4] HillaryCare had the potential to be a major transformation by squeezing doctors (in addition to putting in big barriers on inefficient procedures). Doctors lined up to make sure it didn't happen. Obamacare was way way more restrained, because the first thing he did was get doctors on board and make sure that they wouldn't be upset at all.
Yes, I've read RCA's post and I think it's fascinating. I'm not convinced that the US system isn't still broken, quite the opposite. However, I am NOT advocating for a transition to socialism. I'm claiming that the arguments in favor of socializing health care in the US reveal how broken and not market-oriented the US system is, and that this is a problem that should be addressed in a non-socialist way.
Productivity: This could be measured in number of patients treated, but that feels like a poor measure. Kind of like measuring food as calories consumed; grocery stores weren't considered 'capitalist propaganda' by Soviet communists just because of the quantity of things on the shelves. In most industries, we see an increase in available stock, variety, and range of prices. In the US system there is little selection available in variety and range of prices.
Arguments for innovation in socialized systems: I guess it depends on what you define as innovation. You could be looking specifically at drug development, but I see a lot of people arguing that the various centralized systems are able to innovate on price negotiation and care rationing strategies. In normal market systems, prices don't have to be 'negotiated' down, since there is an ongoing negotiation happening in the marketplace. In a normal market system, rationing happens automatically through the price mechanism. These prices in turn signal to potential suppliers where additional demand opportunities are, incentivizing new producers who increase supply, and alleviate rationing constraints.
Yet in the US system you have high prices that are continuously adjusted UPward, pricing many people out of the market (or driving them into bankruptcy) and effectively serving as a rationing of scarce resources. (I know many people who 'never go to the doctor', not because they have no need, but from fear of unknown costs. That's self-rationing through prices, but not a healthy market system.) Thus, the US system fails a comparison against socialist systems for innovation in rationing and price negotiation. That failure is not because it's a good example of a market system, but rather because it bears little resemblance to a market system.
Normally, the comparison is between a theoretical socialist system versus a working-but-flawed market capitalist system. In health care, the comparison is between a cadre of functioning socialist systems versus the completely broken US non-market-quazi-capitalist system.
I'm not interested in moving the US to a socialist system, but the current system isn't okay. I'm interested in repairing the US system to restore price signals. I'm just saying that the problem has gotten so bad that to many people even the socialist systems look like they're well run by comparison!
> I would like to know more about Medicare Advantage.
As it happens, I spent several years selling Medicare Advantage plans (as well as stand-alone Medicare drug plans and Medicare Supplements), so I’ll give you a modified version of the spiel I used to give new retirees.
To begin with, the government’s Medicare program has a long list of services they will cover, but you must pay the government a monthly premium ($170.10 in 2021), and Medicare will typically leave some out-of-pocket expense for you to pay when you get care (for most outpatient services, it’ll be 20% of the Medicare-approved amount). Medicare does NOT have any limit on out-of-pocket costs, so if you have a bad year, that can cost you quite a bit of money. Also, prescription drug coverage is not included, and must be purchased from a private insurance company. You may, however, see any doctor who takes Medicare, and are not required to get referrals to see specialists.
Medicare Advantage plans are private plans that are required to cover all the same services that Medicare covers, but may arrange the out-of-pocket costs differently - many have set copays for common services, for example, as the average person finds “doctor visits cost you $20, period” far more appealing than “doctor visits cost you 20% of some figure you may or may not be able to find out in advance“. Advantage plans also have a limit on out-of-pocket costs, and must cover your care 100% for the rest of the year if you hit the limit. They often include prescription drug coverage, and may include extras such as basic dental or gym memberships.
The disadvantages of Advantage plans (ho ho ho) are primarily related to networks and premium costs. If you take an Advantage plan, you must still pay the above-mentioned monthly Medicare premium to the government, and the Advantage plan may charge an additional premium of its own (or it may not, as these plans do get subsidized by the government). Your Advantage plan will also have its own network of doctors, and if you go outside this network in a non-emergency situation you may be charged more or denied coverage altogether. You CANNOT use government Medicare coverage while you are officially a member of an Advantage plan. Also, many of the cheaper Advantage plans are HMOs, which have the usual requirement that you get a referral from your assigned Primary Care doctor before seeing a specialist.
For comparison, a Medicare Supplement plan will simply fill in after Medicare, paying part/all of Medicare’s out-of-pocket costs, and will usually cover you at any doctor that takes Medicare. Supplement premiums are usually much higher than Advantage plan premiums, though, and also you can’t easily switch into them any time you want - since they’re technically optional, the company can ask you health questions and reject you if you’re unhealthy, in contrast to Advantage plans which have to take (almost) all applicants. Also, modern supplements can’t include prescription drug coverage, so you have to buy a separate drug plan.
Medicare prescription drug coverage… man, that’s a whole separate mess all on its own, and this comment is already pretty long. Let’s just say it’s a lot more complex and annoying than common non-Medicare drug coverage.
"If I ran the zoo, I would say that drug companies must set prices in other countries as a ration of their per-capita GDP to America's."
Ireland absolutely BTFO
Regarding health outcome comparisons, I'm most interested in seeing a study of outcomes for a broad spectrum of rare conditions. I would posit that the effective care for all common conditions quickly is disseminated among rich countries, so I am not surprised to see no difference from higher spending. For the most part you find broad societal pressure and sufficient scale to ensure that no one is withheld the best treatment for childhood leukemia due to $. As you get to more niche treatments, lacking scale and awareness, my prior would be that there's no where in the world you'd rather be than the US. *
*I say broad spectrum because other countries may have individual treatment centers for niche conditions that are superior, that's always possible and even likely. But in a hypothetical situation where I'm drawing from a hat full of rare, niche diseases and am asked what country I'm going to be treated in before pulling, I'd pick US.