20 Oct 2006 Huffington Post Beware: A Little Knowledge Is A Dangerous Thing, Part II
David Hogberg continues his newest two-part series on health care, begun yesterday:
What Is Single Payer?
The facts are clear: Single-payer systems work and they save money. The Germans, French, Australians, Swiss, and Canadians all benefit from universal health care at less than half the cost that Americans pay for an incomplete system. Our for-profit health care system is a gambling scheme with the explicit goal of excluding the sick.
A single-payer system is one in which one entity, usually the government, acts as the payer — it collects all taxes and pays all the expenses for health care. Of the countries that Fleetwood lists, only Canada has a single-payer system. The others have multi-payer systems, in which there is a mix of public and private funding sources. Indeed, Switzerland (pdf) has a health care system that is more market-based than our own.
I’ve already shown in the first post of this series that in some very important ways the American system outperforms the single-payer systems of Canada and Britain, but let me throw a bit more cold water on the idea that “single-payer systems work and they save money.” In Canada, currently 1.2 million people are unable to find a family doctor due to shortages. According to Dr. David Gratzer, a few towns each year hold lotteries to see who gets to see the doctor. And if you have the time, check out this teaser for a documentary about the Canadian health care system that shows, among other things, a woman named Diane Gorsuch, who had appointments for open-heart surgery cancelled twice and died of a heart attack before her third appointment.
In Britain, about 61,000 surgeries are cancelledeach year. This results in circumstances like what happened to Mavis Skeet, whose cancer became inoperable after her operation was cancelled four times. And, of course, there are the waiting lists, which resulted in Brian Booy becoming the ultimate victim of bureaucracy in that he finally got an appointment for his bypass surgery a year after he had died from a heart attack.
U.S. Has A Free Market System
Fleetwood writes, “Why has our vaunted free enterprise system — which has produced such great benefits in delivery of most goods and services — failed so completely with regard to this most fundamental need?”
A good answer is that we don’t really have a free market system in U.S. health care. About 50% of health care costs are paid for by either federal or state governments. The private sector is dominated by a third-party payer system, where patients (consumers) do not pay the provider directly (as they do in a true free market); instead, providers are paid by insurance companies, thereby insulating patients from the cost of health care. This confusion leads Fleetwood to his next mistake.
For Health Care, People Won’t Act As Consumers
Simple, buyers don’t shop for health care. Sick people don’t negotiate with doctors or hospitals or drug companies. They don’t care what it costs; insurance or the government will pay. This vulnerability has been exploited and hijacked by greedy doctors, drug companies, insurers, personal injury lawyers, HMOs, and hospitals. About 50% of health care funds never even get to doctors or hospitals — which themselves run bloated operations.
That patients don’t act as consumers with regard to health care is not the “natural order” of things. It is due to a fluke born of myopic public policy in the 1930s. During that time, FDR’s Administration imposed wage controls on the economy, so employers had to find another way to attract employees. They ended up giving pre-tax health insurance benefits to attract employees. Eventually the IRS approved the practice, and Congress formalized it in the 1950s. Thus, employers pay for the health insurance of the employee, and the insurance companies pick up the tab for health care. Before the 1930s, patients often paid directly for health care. I hope that, aided by innovations such as health savings accounts, they soon will again.
18,000 Die From Lack of Health Insurance Coverage
Fleetwood gets this one slightly wrong: “18,000 Americans die each year for lack of care according to the Institute of Medicine.” It is not due to lack of care, but lack of health insurance, according to the Institute of Medicine. Yet, the Institute of Medicine’s estimate was actually drawn from many other studies on insurance and health outcomes. Dr. David Gratzer notes that many of the studies yield results that are mixed at best. One study by Dr. John Ayanian and others found that women with private insurance were more likely to survive breast cancer than those uninsured. However, some data in the study showed that those who were uninsured had a higher survival rate than women covered by Medicaid. As Gratzer puts it, “Taking their conclusion one step further, it would seem that the nation’s poor would do better if we scrapped Medicaid.” In short, no one really knows the effect that insurance has on the likelihood of death.
Medicare Is A Great System
Fleetwood suggests this in his first post, and I’m not going to go into it in depth because I’ve gone on too long, and I have a policy analysis on this coming out soon and going into detail here might give the game away. I’ll just refer you to this study that shows that on 16 out of 40 quality indicators, Medicare recipients received the appropriate care less than two-thirds of the time.
In short, Fleetwood’s “analysis” appears to come from doing little more than reading some headlines. Digging deeper shows that our health care system performs very well and that claims that single-payer health care is better are misleading.