Tuesday, April 11, 2006

Superjumbo: Universal Healthcare Part I

After MDH’s post about Unfucking the Donkey, I knew I had to sit down and actually write the Healthcare thing.

Last summer I spent several weeks cooped up with Dilettante and he grilled me endlessly on healthcare. It was painful and tedious, but after three days of nothing but healthcare discussion, I think I had a decent solution to healthcare for all and good arguments as to why universal healthcare is good not just for people but for business too. It was actually from this (and a conversation a while back with MDH) that The White Papers was conceived.

This is a really long post- so it will be done in installments.

First- The Current Cost of Healthcare

We massively outspend countries with comparable standards of living on healthcare.

The latest numbers I can get are from the OECD report of 2003 using numbers from 2001 (the same numbers my political science textbook uses, by the way) and does not (obviously) include the increase in spending from the new Medicare prescription drug plan or inflation.

Of the 30 countries analyzed in the report, we spent the most at 13.9% of GDP on healthcare. The other top two were Switzerland (10.9) and Germany (10.7) but the average was 8.4%. If you look to the UK, they spend 7.3% and Mexico spends 5.6%.

If you look at the numbers for PPP (purchasing power parity- or the lumping of similar goods and services into one basket across different economic systems so that different systems can be examined together) Americans spend $4887 each to get the same types of care that Brits get for $1992 and Mexicans get for $586 (add that little number to your immigration debate). We spend more than twice the average of all the countries surveyed if you use PPP numbers.

All that spending and privatization hasn’t made us any healthier.

Let’s compare the UK and the US. We know that they spend about half of what we do on healthcare either by PPP or GDP. From that we would expect them to have worse health statistics (if the idea that spending more improves services is true). However they have slightly higher life expectancy rates (UK 80.6 years for women and 75.9 years for men compared to US 80 years for women and 74.6 years for men) and lower infant mortality rates (5 deaths per thousand for the UK, 7 for the US). Stats are from the UN Statistics Division

Switzerland and Germany are kicking our ass in the life expectancy and child mortality rates. Germany and Switzerland both have infant mortality rates of 4 per thousand).

Mexico doesn’t do as well. Their life expectancy is lower (72.4 for men and 77.4 for women) and child mortality is 21 deaths per thousand.

What all this shows is that we could certainly reduce the cost we spend on healthcare (though not to Mexico’s level) while maintaining or even improving life expectancy and child mortality.

All that spending, and 15.7% of the population is without healthcare. And that number is growing.

From the US Census of 2004, 45.8 million people in the US are without health insurance. That’s about 5.8 million more people without health insurance than in 2000 and 13.8 million more people than in 1988. But we spent $1.9 trillion on healthcare in 2004.

So some simple math:
If there are about 300 million people in the US and we spent $1.9 trillion covering everyone then the average healthcare payout would be about $6330 per person per year.

If you remove 46 million from the population for the people who aren’t covered then that spending increases to about $7451 per insured person per year.

Most people that did have insurance had it through private employers (58.9%) but those numbers are decreasing while numbers of people receiving health insurance through government programs (particularly Medicaid) are increasing.

If most of the population is insured by employers, hiring new employees is expensive and employers are looking to cut those costs

So it’s about $7500 to provide an employee health care on top of wages and taxes. Large employers are increasingly not offering healthcare (Wal-Mart) or requiring employees to shoulder a greater burden of the cost. They are also cutting plans that include insuring dependants and spouses, or promised benefits to retirees.

Small businesses (a large portion of the businesses in the US) either can’t offer health insurance because the cost is too high or can’t hire new employees and expand because they can’t pay for coverage on the new employees.

In the last recession, the biggest challenge to hiring new workers (and decreasing unemployment) was the cost of health benefits for new employees.

Next Time: What would universal healthcare look like in the US


DeeK said...

You might add that foriegn firms can compete more effectively since their workers healthcare is covered by the government. Ford and GM (yeah I know their cars suck, but people still buy them) spend $1500 per car on healthcare. So people, in general, from other countries get better coverage and their firms can compete more effectively. A win-win for them.

The Red Queen said...

I might include it- but then what would you write in comments? Keep em coming- after writing this my brain hurts.

MdH said...

There are a couple of things that will have to be addressed in any health care story in the US. Culture, innovation, rationing, & the economy. It may be the RQ is planning to thrash this out in upcoming posts…but I’ll just start the strawman story for her benefit.

Cultural issues influence public perceptions on this issue. Europe has a long commitment to a social market economy that has frankly been absent in the US. The public in Europe has made a decision that they are willing to pay higher taxes (61% in France for example, or 58% in the UK) in order to enjoy socialized healthcare & comprehensive unemployment & retirement protections from the government. Americans have traditional eschewed this approach. It just doesn’t resonate with the rugged individualist, “he pulled himself up by his bootstraps,” Hiratio Alger, mythos that pervades our thinking (I’m using the masculine on purpose here).

There are a number of studies that suggest that medical innovation & the diffusion of new technology is one of the primary drivers for rapidly climbing healthcare costs. Any universal health strategy will have to deal with this issue. Do we slow innovation to control costs? France, who by all accounts has a fucking fantastic system, has been desperately grappling with surging costs for years. I know that there’s waste out there that can be trimmed out, but I thinks its pretty much a truism that a large portion of new technology (drugs, artery stents, MRIs, etc) are driven by the potential for large profits. Which brings us to…

Rationing. I know, I know…there’s rationing now, & universal care would rationalize rationing (as it were). But there are tough decisions to be made here. What level of care is “just” & how do we decide who gets what? It’s obvious that “basic care” (whatever that might end up being) is better than having no care at all. But universal coverage will take those decisions out of the market & bring them into public decision making…& it ain’t simple. What do you do when all other forms of treatment have failed on little Jimmy & all that remains is a wildly expensive drug that only works in one out of a hundred cases. I know…right now Jimmy wouldn’t get the drug. But that’s only a greedy corporation refusing to help a little boy (par for the course), in a universal care world…the government is saying we can’t offer that drug because it’s too expensive. I submit that’s something else.

Economic growth. This one is also pretty damn big. There’s pretty good information/studies/data that social market economies grow a good deal slower that the American model. Even the social democrats in Europe feel compelled to admit that this is true. France has about double the unemployment of the US with a real crisis (much publicized lately) in opportunities for younger workers (23% I think).

All this being said…it seems obvious that a (very strong) case can be made for a slower growth, 35 hour work week, socially just, higher quality of life, approach to government. But these issues will have to be grappled with in a way that resonates with the American public…& that’s a tougher proposition.

DeeK said...

mdh reminds me of a tangential issue that is better addressed sooner than later: life expectancy.

Presently, the viewpoint infers that we should all live as long as possible. Hey, I enjoy the fact that old age is not as bad as it used to be, but sooner or later people living longer and longer will tax all related systems. Pensions and social security will at some point not be able to keep up with a growing senior population. Though geriatrics may be generally healthier than they used to be, they still will tend to require more health services than younger ones. What about nuring homes? They are already expensive for most, but will society want to build more?

What do we do? End research that promises longer life? Allow people only a certain amount of health care throughout their lifetime? Yes, a serious discussion needs to be had regarding these issues. I wish us luck!

The Red Queen said...

Yes MDH- those issues will be discussed in the next post as well as how to keep care competitive while also assuring minimum care.

Truth is, we have minimum care now. In an emergency the unisured gets treated at the emergency room at a greater cost to everyone. the individuals that come in are charged a rate higher than those that have insurance and when they can't pay the cost is offset by hospitals increasing overall costs to insured patients. But if the uninsured had access to (less expensive)preventative care then a large portion of emergency care costs could be eliminated while providing better benefits to the patient.