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.
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.
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.
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.
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).
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.
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.
> 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.
...
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.
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.
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.
> 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 $450; but you still make more profit if the cost saving is bigger than how much less you can charge, which is likely if the extra choices your competitors provide are costly but have no benefit.
> The US has a whole industry dedicated to marketing drugs and medical services directly to patients, which just doesn't exist in most other countries.
I do see drug ads in Hungary.
However, it looks like prescription-only or subsidized drugs can't be advertised. That means only drugs people pay from their own pockets for can be advertised, which puts a limit on how expensive they can get.
Damn excuse me for being behind the times, but I am once again stunned by how much the promise of the internet has come true. Particularly that last comment from Brazil: information from everywhere.
Regarding the R&D spending for drug research, wouldn't the more relevant metrics be the result of that R&D? Is a PHD scientist paid 200k$ 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.
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.
" 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.
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.
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
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 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 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.
A significant amount of drug marketing is giving doctors free samples - which they frequently use to give to people that couldn't otherwise afford the drug. So mandating that pharma spend less on marketing would likely just hurt those least likely to afford drugs in the first place.
"You are allowed to get private insurance if you earn more than a certain amount or if you are self-employed. The system is either-or: either you have the mandatory (single payer) insurance or you have the private one."
The second sentence isn't entirely accurate:
1. You can have private extra insurance designed for use on top of the mandatory kind, to get things not covered by the mandatory one and/or some extra perks like insurance paying for a single room in hospital, or treatment by the... "chief doctor" (no idea about the relative names of positions in German vs US hospitals, but it's the highest ranking doctor position).
This exception to the either-or principle is relatively common.
2. It is possible to STAY insured by mandatory insurance while ALSO getting full private coverage; it's just that you can't necessarily get back in the mandatory one once you leave (which is one possible reason to do that I guess?)
3. You can get full private coverage while you're still in a situation (eg income below cutoff) where the "mandatory" insurance is actually mandatory.
2 & 3 are very rare for the obvious reason that you're essentially paying twice for healthcare; I wasn't even aware that this was a thing until about 2 years ago. There are some very particular circumstances under which it can make sense, and I don't know of any data about how many people do something like this, but I expect it is incredibly rare.
Under Point II for the first highlight for Austin.
On the specific point of looking at GDP and research spending comparisons.
If the US is paying twice as much as other countries for drugs at the point of a patient getting them, then why would we be surprised that the US is highly inefficient in researching drugs as well?
Not all, but a large portion of research is funded through a myriad of government grants. Look at any other area of what is essentially government contracting work and you'll find enormous amounts of graft and cost inflation. If haliburton can sell a $500 toilet seat lid or charge $300k a year for truck driving in Iraq and such....I don't see any reason for this to be different.
Certainly Scott makes this point afterwards to a degree as well. It is about research output in my view, not even the number of approved drugs which people fixate on. If some drug comes to market and it is underpinned by lots of German university reserach work in the 20 years prior to that...but it happens to be a US company who puts the drug over the edge, then counting the number of approved drugs, the amount of dollars spent, etc. is no good.
Even counting the number of papers published isn't very good and it quickly becomes quite subjective and nuanced of which papers actually matter in terms of advancing science. Some US paper fiend who squeaks 3 papers out of 1 grant and is gaming their H-index like crazy vs some other European researcher (who isn't immune to similar publish or perish pressures) writes 1 paper based on 3 years of funding....counting papers becomes a game of how many milestones the grant agency puts into their process and isn't all that closely related to actually advancing scientific understanding.
So I'd say it is easy to get very lose in the weeds and need to get several experts to write extensive histories on a single drug to try to determine which research actually mattered in terms of making the discover and development and sale to market of a given drug.
And in the US where every single other aspect in healthcare is costing 2-3x more than in other OECD countries....money is just a terrible proxy for scientific output or innovation. I'm not sure there even is a good proxy for this, but considering how the US is getting ripped off across the board, I'd be disinclined to use a 2x spending rate vs Europe for research spending as an idea holding any meaning at all.
I like the format of breaking up the comments into related sections, but I'd appreciate if you repeated the section titles in the body rather than just at the top. It's hard to remember what section IV is by the time you read all the way to it. :)
Some other thoughts that I was surprised didn't come up:
1. Missing from a lot of this discussion is level of HEALTH in USA vs other countries. The population in the USA is, on average, worse than pretty much every other first world country. Obesity, heart disease, diabetes: Americans are far more likely to have these conditions than their peers in the rest of the world. This makes comparing health outcomes tricky. Who is more likely to survive a heart attack: a rich American who is morbidly obese and diabetic or an average Frenchman in average health? The prevalence of serious co-morbidities will have ripple effects across every aspect of health care: treatment outcomes, infant mortality, cancer rates, costs, etc. This isn't to say that the American health care system doesn't add to those issues, but I think there are issues within the American health care system that become uniquely terrible due to the uniquely terrible health of Americans vs the rest of the developed world.
2. I also think that a lot of people gloss over the unique challenges that the USA faces that are not as prevalent in a lot of countries it is compared to. The USA has an extremely diverse population, spread across an extremely large area. Comparing the USA which has an incredibly diverse population of over 300 million spread across 3.8 MILLION sq miles to a country like the Netherlands which has a mostly homogenous population of only 17 million within 16 THOUSAND sq miles seems like a fools errand to me. I'm skeptical that you could copy and paste the health care system from another country, even one like the seemingly fantastic German system, into America and have similar fantastic results.
My big question when reading about all these healthcare systems that have government subsidies for private insurance is what value do the private insurance companies add? I always thought that the health insurers just skim 20 cents off every dollar spent on healthcare without providing much in return, but if other countries use this model successfully maybe they do help in some way.
Perhaps the simplest fix for the US system would be for the government to give everyone a health care voucher to buy private insurance. Probably combine it with a public option as an alternative competing plan. That way people can keep their insurance if they want, and it's decoupled from employment.
"If I asked you, based on priors, who has better outcomes after a heart attack, white people in the richest counties in America (average income ~$100k), to people in Denmark (average income ~$51k) (see the supplement for some of this data: https://bit.ly/3KsUP71), I think most people would say America?"
This seems wrong to me, and only vaguely related to quality of health care. I expect the average（even top 1％ income）American who has a heart attack to be in worse shape than the average Dane (more obese, more likely to be diabetic, have other health issues) and so even with better health care would expect their outcomes to be worse.
"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!"
No!! You sell any and all care that brings in more marginal revenue than its marginal cost, then you stop. This maximizes your profit. Your profit percentage is then your profit divided by the amount you spent.
A percentage cap on profits messes this up by stopping you from selling certain profitable goods/services depending on how much profit you've already made. You can get around this by tacking on additional, unnecessary zero-profit care to increase your total sales figures, which makes your profit percentage appear lower, so you can then go back to selling stuff you make money on.
If the rule is really cutting insurers' profit margins (which I'm skeptical of because they generally have small margins regardless), then it is indeed pushing everyone to spend extra money on unnecessary treatment.
One additional complication is from the “social determinants” of healthcare, which in some cases are an even bigger factor than the “medical treatment” determinants of health. This is obliquely thought of by referring to the high income populations doing better. But, you can see this observed in “social care” spend. Some of this social care spend helps you live longer. Whether that be in education (eg is "the social education of take flu vaccines when elderly leads to better health", did that come from the health budget or social budget?) many health outcomes are heavily influenced by non-medical factors (drinking, air pollution, obesity etc.)
So, in eg Norway, they spend 25% of GDP on social care (public/govt, OECD). Not quite apple-to-apple but the US only spends 18.7% of GDP on this. (The US does more via tax breaks, and other indirect social spend. Also US govt provides tax breaks for companies using private health insurance, in effect a type of social subsidy’ it’s a taxable benefit in eg UK).
Some of the social care system/spend is leading to better health outcomes but some of it remains outside an healthcare system analysis, My personal view is some of the better eg Dutch, Norway, Swiss outcomes are from the good social care system return, potentially).
Finally, an observation: the UK (under)spend has been for a very long time. The UK has spend c 3 percentage points below the OECD average (ie about 8-9% vs OECD av. 11-12% approx although all starts lower in 1970)) on healthcare for over 50 years! - that means it get average-ish/below-average-ish outcomes on extremely low spend (that’s in the region of $500m - $1tn… in cumulative underspend vs average over those years) . Unsure if they have spent it wisely elsewhere though…
"The business about health care being a bizarro world where normal economics rules don't apply is true, but it's true in that it's inherently broken. To have efficient markets you need good consumer information, the ability to easily comparison shop and change vendors, easy entry and exit of vendors from the market....."
All true, but you also need more clueful consumers. Unless you already have a fair amount of specialized knowledge and/or a lot of time on your hands, neither you nor I nor the average frustrated patient knows whether a given course of treatment is:
*consistent with the consensus of state of the art medical practice
*consistent with an informed minority of legit medical opinion
*contraindicated in your particular case
*effective, but superseded by faster/cheaper/better treatments
*169% pure quackery
*effective, but you could get the same thing cheaper at the other clinic down the lane
*effective, but I wouldn't let this particular doctor touch me, even if I had just been shot
*only treats symptoms
*something else
Look at the folks trying folk remedies for COVID and ask yourself what it would take to get them up to speed.
Or, Charles Krauthammer, a man not exactly known for self-effacing modesty, put it thusly: "I am a medical doctor. Board certified in neurology and psychiatry. I cannot even read journals of immunology."
> NHS hospitals do a cost/benefit analysis on every treatment, and focus their efforts on the low-cost, high-benefit treatments. If you want the hospital to do an MRI, or something fancy, then they will not agree unless your condition is life-threatening.
This is factually inaccurate. I have had an MRI done on me by the NHS, and my condition was a bad back; unpleasant but not particularly life-threatening.
I skimmed the infant/maternal mortality portion of the 'Comparing Health outcomes ...' piece and I did not see the term 'age adjusted' in there once which is a bright yellow flag. A CTL-F for 'adjusted' brings up 5 hits and none of them in the infant/maternal section which is a bright red flag. We KNOW that older maternal ages correlate with infant and maternal mortality, and we know that college educated white women have been having children later in life. There is a high enough likelihood that the top income counties in the US have an abnormal maternal age and it 100% should be checked and included in the paper one way or the other. Broadly speaking I would put zero weight on this paper (in either direction) without a fully comprehensive demographic breakdown. Either I missed it here or they didn't do it for the most obvious example I could think of, if it is the latter then the paper is of no value because they can't possible have tried (in good faith) to make these adjustments. If I missed it I fully retract this statement.
Just to add a bit of clarification on the German system: The insurers in the public system are a special type of private sector organizations, they are not run for profit and don't have owners or shareholders so to speak. This makes them somewhat similar to mutual insurance. If they do turn a profit that profit is to be redistributed to the members (policyholders).
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.
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.
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.
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.
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).
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.
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.
> 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.
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
...
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.
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.
Scott: you formatted your response to Erik's comment as if it were part of his comment.
> 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 $450; but you still make more profit if the cost saving is bigger than how much less you can charge, which is likely if the extra choices your competitors provide are costly but have no benefit.
The comment about the UK and Netherlands focusing on cost effective treatments seems similar to the argument here https://www.newyorker.com/magazine/2021/08/30/costa-ricans-live-longer-than-we-do-whats-the-secret for why Costa Rica has a higher life expectancy than the US. Lots of spending on community level preventative care, less on expensive cancer treatments
> The US has a whole industry dedicated to marketing drugs and medical services directly to patients, which just doesn't exist in most other countries.
I do see drug ads in Hungary.
However, it looks like prescription-only or subsidized drugs can't be advertised. That means only drugs people pay from their own pockets for can be advertised, which puts a limit on how expensive they can get.
Damn excuse me for being behind the times, but I am once again stunned by how much the promise of the internet has come true. Particularly that last comment from Brazil: information from everywhere.
Regarding the R&D spending for drug research, wouldn't the more relevant metrics be the result of that R&D? Is a PHD scientist paid 200k$ 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.
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.
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.
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.
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
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, ..."
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 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 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.
A significant amount of drug marketing is giving doctors free samples - which they frequently use to give to people that couldn't otherwise afford the drug. So mandating that pharma spend less on marketing would likely just hurt those least likely to afford drugs in the first place.
Regarding Germany:
"You are allowed to get private insurance if you earn more than a certain amount or if you are self-employed. The system is either-or: either you have the mandatory (single payer) insurance or you have the private one."
The second sentence isn't entirely accurate:
1. You can have private extra insurance designed for use on top of the mandatory kind, to get things not covered by the mandatory one and/or some extra perks like insurance paying for a single room in hospital, or treatment by the... "chief doctor" (no idea about the relative names of positions in German vs US hospitals, but it's the highest ranking doctor position).
This exception to the either-or principle is relatively common.
2. It is possible to STAY insured by mandatory insurance while ALSO getting full private coverage; it's just that you can't necessarily get back in the mandatory one once you leave (which is one possible reason to do that I guess?)
3. You can get full private coverage while you're still in a situation (eg income below cutoff) where the "mandatory" insurance is actually mandatory.
2 & 3 are very rare for the obvious reason that you're essentially paying twice for healthcare; I wasn't even aware that this was a thing until about 2 years ago. There are some very particular circumstances under which it can make sense, and I don't know of any data about how many people do something like this, but I expect it is incredibly rare.
Under Point II for the first highlight for Austin.
On the specific point of looking at GDP and research spending comparisons.
If the US is paying twice as much as other countries for drugs at the point of a patient getting them, then why would we be surprised that the US is highly inefficient in researching drugs as well?
Not all, but a large portion of research is funded through a myriad of government grants. Look at any other area of what is essentially government contracting work and you'll find enormous amounts of graft and cost inflation. If haliburton can sell a $500 toilet seat lid or charge $300k a year for truck driving in Iraq and such....I don't see any reason for this to be different.
Certainly Scott makes this point afterwards to a degree as well. It is about research output in my view, not even the number of approved drugs which people fixate on. If some drug comes to market and it is underpinned by lots of German university reserach work in the 20 years prior to that...but it happens to be a US company who puts the drug over the edge, then counting the number of approved drugs, the amount of dollars spent, etc. is no good.
Even counting the number of papers published isn't very good and it quickly becomes quite subjective and nuanced of which papers actually matter in terms of advancing science. Some US paper fiend who squeaks 3 papers out of 1 grant and is gaming their H-index like crazy vs some other European researcher (who isn't immune to similar publish or perish pressures) writes 1 paper based on 3 years of funding....counting papers becomes a game of how many milestones the grant agency puts into their process and isn't all that closely related to actually advancing scientific understanding.
So I'd say it is easy to get very lose in the weeds and need to get several experts to write extensive histories on a single drug to try to determine which research actually mattered in terms of making the discover and development and sale to market of a given drug.
And in the US where every single other aspect in healthcare is costing 2-3x more than in other OECD countries....money is just a terrible proxy for scientific output or innovation. I'm not sure there even is a good proxy for this, but considering how the US is getting ripped off across the board, I'd be disinclined to use a 2x spending rate vs Europe for research spending as an idea holding any meaning at all.
I like the format of breaking up the comments into related sections, but I'd appreciate if you repeated the section titles in the body rather than just at the top. It's hard to remember what section IV is by the time you read all the way to it. :)
On insurers' profits and the "medical loss ratio" test in the ACA: An NBER working paper shows that this led insurers to raise costs rather than cut premiums. https://pnhp.org/news/insurers-use-medical-loss-ratios-to-cheat-us/
Some other thoughts that I was surprised didn't come up:
1. Missing from a lot of this discussion is level of HEALTH in USA vs other countries. The population in the USA is, on average, worse than pretty much every other first world country. Obesity, heart disease, diabetes: Americans are far more likely to have these conditions than their peers in the rest of the world. This makes comparing health outcomes tricky. Who is more likely to survive a heart attack: a rich American who is morbidly obese and diabetic or an average Frenchman in average health? The prevalence of serious co-morbidities will have ripple effects across every aspect of health care: treatment outcomes, infant mortality, cancer rates, costs, etc. This isn't to say that the American health care system doesn't add to those issues, but I think there are issues within the American health care system that become uniquely terrible due to the uniquely terrible health of Americans vs the rest of the developed world.
2. I also think that a lot of people gloss over the unique challenges that the USA faces that are not as prevalent in a lot of countries it is compared to. The USA has an extremely diverse population, spread across an extremely large area. Comparing the USA which has an incredibly diverse population of over 300 million spread across 3.8 MILLION sq miles to a country like the Netherlands which has a mostly homogenous population of only 17 million within 16 THOUSAND sq miles seems like a fools errand to me. I'm skeptical that you could copy and paste the health care system from another country, even one like the seemingly fantastic German system, into America and have similar fantastic results.
My big question when reading about all these healthcare systems that have government subsidies for private insurance is what value do the private insurance companies add? I always thought that the health insurers just skim 20 cents off every dollar spent on healthcare without providing much in return, but if other countries use this model successfully maybe they do help in some way.
Perhaps the simplest fix for the US system would be for the government to give everyone a health care voucher to buy private insurance. Probably combine it with a public option as an alternative competing plan. That way people can keep their insurance if they want, and it's decoupled from employment.
"If I asked you, based on priors, who has better outcomes after a heart attack, white people in the richest counties in America (average income ~$100k), to people in Denmark (average income ~$51k) (see the supplement for some of this data: https://bit.ly/3KsUP71), I think most people would say America?"
This seems wrong to me, and only vaguely related to quality of health care. I expect the average（even top 1％ income）American who has a heart attack to be in worse shape than the average Dane (more obese, more likely to be diabetic, have other health issues) and so even with better health care would expect their outcomes to be worse.
"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!"
No!! You sell any and all care that brings in more marginal revenue than its marginal cost, then you stop. This maximizes your profit. Your profit percentage is then your profit divided by the amount you spent.
A percentage cap on profits messes this up by stopping you from selling certain profitable goods/services depending on how much profit you've already made. You can get around this by tacking on additional, unnecessary zero-profit care to increase your total sales figures, which makes your profit percentage appear lower, so you can then go back to selling stuff you make money on.
If the rule is really cutting insurers' profit margins (which I'm skeptical of because they generally have small margins regardless), then it is indeed pushing everyone to spend extra money on unnecessary treatment.
One additional complication is from the “social determinants” of healthcare, which in some cases are an even bigger factor than the “medical treatment” determinants of health. This is obliquely thought of by referring to the high income populations doing better. But, you can see this observed in “social care” spend. Some of this social care spend helps you live longer. Whether that be in education (eg is "the social education of take flu vaccines when elderly leads to better health", did that come from the health budget or social budget?) many health outcomes are heavily influenced by non-medical factors (drinking, air pollution, obesity etc.)
So, in eg Norway, they spend 25% of GDP on social care (public/govt, OECD). Not quite apple-to-apple but the US only spends 18.7% of GDP on this. (The US does more via tax breaks, and other indirect social spend. Also US govt provides tax breaks for companies using private health insurance, in effect a type of social subsidy’ it’s a taxable benefit in eg UK).
Some of the social care system/spend is leading to better health outcomes but some of it remains outside an healthcare system analysis, My personal view is some of the better eg Dutch, Norway, Swiss outcomes are from the good social care system return, potentially).
Finally, an observation: the UK (under)spend has been for a very long time. The UK has spend c 3 percentage points below the OECD average (ie about 8-9% vs OECD av. 11-12% approx although all starts lower in 1970)) on healthcare for over 50 years! - that means it get average-ish/below-average-ish outcomes on extremely low spend (that’s in the region of $500m - $1tn… in cumulative underspend vs average over those years) . Unsure if they have spent it wisely elsewhere though…
See WHO on social determinants: https://www.who.int/health-topics/social-determinants-of-health#tab=tab_1
https://www.oecd.org/social/expenditure.htm
Blog/link on UK spend over 50 years on health linking to OECD etc. data.
https://www.thendobetter.com/investing/2019/3/4/uk-life-expectancy-and-healthcare-spend
Bram Cohen writes:
"The business about health care being a bizarro world where normal economics rules don't apply is true, but it's true in that it's inherently broken. To have efficient markets you need good consumer information, the ability to easily comparison shop and change vendors, easy entry and exit of vendors from the market....."
All true, but you also need more clueful consumers. Unless you already have a fair amount of specialized knowledge and/or a lot of time on your hands, neither you nor I nor the average frustrated patient knows whether a given course of treatment is:
*consistent with the consensus of state of the art medical practice
*consistent with an informed minority of legit medical opinion
*contraindicated in your particular case
*effective, but superseded by faster/cheaper/better treatments
*169% pure quackery
*effective, but you could get the same thing cheaper at the other clinic down the lane
*effective, but I wouldn't let this particular doctor touch me, even if I had just been shot
*only treats symptoms
*something else
Look at the folks trying folk remedies for COVID and ask yourself what it would take to get them up to speed.
Or, Charles Krauthammer, a man not exactly known for self-effacing modesty, put it thusly: "I am a medical doctor. Board certified in neurology and psychiatry. I cannot even read journals of immunology."
> NHS hospitals do a cost/benefit analysis on every treatment, and focus their efforts on the low-cost, high-benefit treatments. If you want the hospital to do an MRI, or something fancy, then they will not agree unless your condition is life-threatening.
This is factually inaccurate. I have had an MRI done on me by the NHS, and my condition was a bad back; unpleasant but not particularly life-threatening.
I skimmed the infant/maternal mortality portion of the 'Comparing Health outcomes ...' piece and I did not see the term 'age adjusted' in there once which is a bright yellow flag. A CTL-F for 'adjusted' brings up 5 hits and none of them in the infant/maternal section which is a bright red flag. We KNOW that older maternal ages correlate with infant and maternal mortality, and we know that college educated white women have been having children later in life. There is a high enough likelihood that the top income counties in the US have an abnormal maternal age and it 100% should be checked and included in the paper one way or the other. Broadly speaking I would put zero weight on this paper (in either direction) without a fully comprehensive demographic breakdown. Either I missed it here or they didn't do it for the most obvious example I could think of, if it is the latter then the paper is of no value because they can't possible have tried (in good faith) to make these adjustments. If I missed it I fully retract this statement.
Just to add a bit of clarification on the German system: The insurers in the public system are a special type of private sector organizations, they are not run for profit and don't have owners or shareholders so to speak. This makes them somewhat similar to mutual insurance. If they do turn a profit that profit is to be redistributed to the members (policyholders).