Reid Errs on International Health Comparisons

Tonight President Obama will renew his pitch for more political control of medicine. One important part of the debate is how the U.S. compares to other nations. Recently the Denver Post republished an article from the Washington Post by T. R. Reid on the matter.

As my dad and I have pointed out (and again), the U.S. outperforms various European nations by measures such as cancer survival and access to technology.

As is also well documented, nations with the most severe political controls of medicine ration care (see also Patient Power). To take just one recent example, see the following article in the British Telegraph: “Sentenced to death on the NHS: Patients with terminal illnesses are being made to die prematurely under an NHS scheme to help end their lives, leading doctors have warned.”

However, the fundamental choice is not between the current American system and some system similar to that of some other nation. The fact is that American medicine is already mostly controlled by politicians, and in that respect it already resembles the politically controlled systems throughout Canada and Europe. To the degree that American medicine fails, it fails because politicians have mucked it up. Where health care in other nations succeeds, that is largely to the extent that it retains some elements of freedom and borrows the successes of American innovations.

Reid definitely comes at the matter with the presumption that it’s the government’s job to ensure “universal coverage.” It is not. Rather, it is the government’s job to protect individual rights, including rights to offer and purchase health care and insurance on a free market, by voluntary exchange. The fact that government has violated rather than protected our rights is what has created the medical mess in which we now live. (For a historical survey, see the article by Lin Zinser and Paul Hsieh.)

If government would protect our rights rather than interfere in medicine, health care would be better in quality, lower in cost, and widely accessible. It is ironically the political crusade for “universal coverage” and care that leads to skyrocketing costs, rationing, and widespread difficulties in getting good health care.

Part of Reid’s confusion is to treat politically controlled insurance and health providers as “private.” If politicians control something, it is not “private” in any meaningful sense, even if the ownership is nominally so.

With an eye toward Reid’s mistaken premises, then, let’s evaluate his arguments.

Reid helpfully concedes that U.S. health is hardly a free market:

In some ways, health care is less “socialized” overseas than in the United States. Almost all Americans sign up for government insurance (Medicare) at age 65. In Germany, Switzerland and the Netherlands, seniors stick with private insurance plans for life.

Meanwhile, the U.S. Department of Veterans Affairs is one of the planet’s purest examples of government-run health care.

However, Reid seems to think this counts as a reason for expanding political controls in the U.S.

Reid grants that Canadian health features waiting lines. However, he claims, “studies by the Commonwealth Fund and others report that many nations — Germany, Britain, Austria — outperform the United States on measures such as waiting times for appointments and for elective surgeries.”

Reid simply misstates the survey results.

Here’s what the Commonwealth Fund actually says, contrary to Reid’s summary: “The U.S. patients reported relatively longer waiting times for doctor appointments when they were sick, but relatively shorter waiting times to be seen at the emergency department, see a specialist, and have elective surgery.”

The survey also notes that the difference is partly attributable to the fact that some Americans lack health insurance, and this is primarily a problem resulting from political controls of insurance, which drive up costs.

It would have been helpful had Reid pointed out some of the other findings of the survey.

On the matter of doctor visits, the question is “Waited 6 days or longer for a doctor appointment (last time sick or needed medical attention.” Australia came in at 10 percent of surveyed “sicker adults,” Canada at 36 percent, Germany at 13 percent, New Zealand at 3 percent, the UK at 15 percent, and the U.S. at 23 percent. Notice that this question pertains to a patient’s scheduling of a doctor visit, not necessarily the availability of doctors.

On the question of waiting four or more hours in the emergency room, only Germany beats the U.S.

“Waited 4 weeks or longer to see a specialist?” The U.S. comes in at 23 percent, compared to 57 percent in Canada and 60 percent in the UK.

“Waited 4 months of longer for elective surgery?” The U.S. stands at 8 percent, while Canada is at 33 percent and the UK at 41 percent.

All that said, such surveys are inherently limited in reliability. For example, people in different cultures might have very different ideas about when a doctor’s visit is “needed.” And people are not likely to try to see a specialist or get elective surgery if they think their attempts will be fruitless, so the U.S. might perform even better than the survey results indicate.

But, again, it is not enough just to compare the U.S. against other nations. We have to get at the underlying causes of problems in the U.S. and abroad.

Writing for Reason, Shikha Dalmia points out:

The fact of the matter is that America’s health care system is like a free market in the same way that Madonna is like a virgin — i.e. in fiction only. If anything, the U.S. system has many more similarities than differences with France and Germany. [A]part from England, most European countries have a public-private blend, not unlike what we have in the U.S.

Dalmia points out that government pays for nearly half of all health care dollars in the U.S. and “directly covers about a third of all Americans through Medicare (the public program for the elderly) and Medicaid (the public program for the poor).” The U.S. also forces emergency rooms to provide care without compensation.

Dalmia adds, “This is not radically different from France, where the government offers everyone basic public coverage, of course — but a whopping 90% of the French also buy supplemental private insurance to help pay for the 20% to 40% of their tab that the public plan doesn’t cover.”

Moreover, a significant minority of Germans “opt out of the public system altogether and rely solely on private coverage.”

What about rationing? Dalmia points out:

Struggling with exploding costs, the French government has tried several times—only to back off in the face of a public outcry—to prod doctors into using only standardized treatments. In 1994, it started imposing fines of up to roughly $4,000 on doctors who deviated from “mandatory practice guidelines.” It switched from this “sticks” to a “carrots” approach four years later, and tried handing bonuses to doctors who adhered to the guidelines.

Meanwhile, in Germany, “sickness funds” — the equivalent of insurance companies—have imposed strict budgets on doctors for prescription drugs. Doctors who exceed their cap are simply denied reimbursement, something that forces them to prescribe less effective invasive procedures for problems that would have been better treated with drugs. But the most potent form of rationing in France and Germany—and indeed much of Europe — is not overt but covert: delayed access to cutting-edge drugs and therapies that become available to American patients years in advance.

Cato’s Michael Tanner has written both an op-ed and a longer policy paper about international comparisons. He points out:

Those countries with national health care systems that work better, such as France, the Netherlands and Switzerland, are successful to the degree that they incorporate market mechanisms such as competition, cost-consciousness, market prices, and consumer choice, and eschew centralized government control.

In France, for example, co-payments run between 10 and 40 percent, and physicians can balance bill over and above government reimbursement rates, something not allowed in the U.S. Medicare program. On average, French patients pay roughly as much out of pocket as do Americans. The Swiss government pays a smaller percentage of health care spending than does the U.S.

In his longer paper, Tanner goes into more detail on the health policies of particular countries.

Reid also argues that American insurance, which he laughably calls “free enterprise,” has higher administrative overhead than other countries. I do not doubt that this is true despite the fact that Reid is probably ignoring the relevant administrative costs elsewhere (such as tax compliance). But this is only true because American politicians have totally screwed up the insurance market, turning insurance into expensive pre-paid health care. (See my article, “What is Health Insurance?”

Finally, Reid argues that it’s “cruel” if politicians don’t force insurers to ignore pre-existing conditions. I’ve addressed the matter in a first and second article. The upshot is that insurers and consumers have the right to enter voluntary contracts, and insurance controls create bad incentives and higher costs, leading to cries for more controls.

In general, Reid attempts to make his case by omitting the relevant facts.