Friday, May 05, 2006

Expensive and ineffective health care

Paul Krugman writes an interesting op-ed on a US study suggesting that although Americans spend 40% more on health than do the British they are sicker. The study's conclusions are worth citing:

‘The US population in late middle age is less healthy than the equivalent British population for diabetes, hypertension, heart disease, myocardial infarction, stroke, lung disease, and cancer. Within each country, there exists a pronounced negative socioeconomic status (SES) gradient with self-reported disease so that health disparities are largest at the bottom of the education or income variants of the SES hierarchy. This conclusion is generally robust to control for a standard set of behavioral risk factors, including smoking, overweight, obesity, and alcohol drinking, which explain very little of these health differences. These differences between countries or across SES groups within each country are not due to biases in self-reported disease because biological markers of disease exhibit exactly the same patterns. To illustrate, among those aged 55 to 64 years, diabetes prevalence is twice as high in the US and only one fifth of this difference can be explained by a common set of risk factors. Similarly, among middle-aged adults, mean levels of C-reactive protein are 20% higher in the US compared with England and mean high-density lipoprotein cholesterol levels are 14% lower. These differences are not solely driven by the bottom of the SES distribution. In many diseases, the top of the SES distribution is less healthy in the US as well’.

Krugman suggests that the US has achieved a sort of 'inverse miracle': Americans spend much more per person on health care than any other nation – in 2004 about 16% of GDP, it is larger than the food production sector - yet it has lower life expectancy and higher infant mortality than Canada, Japan and most of Europe.

Why? A lack of universal health insurance is a factor in the poor health of lower-income Americans but almost all upper-income Americans have insurance and their health is often worse too. Another reason seems to be that US medicine is error prone. Bad habits are part of the story as Americans are more obese. But a statistical analysis suggests that bad habits don’t explain that much. One explanation lies in the excessive workloads and stress in US society:

‘Full-time American workers work, on average, about 46 weeks per year; full-time British, French and German workers work only 41 weeks a year. ….our workaholic economy is actually more destructive of the ‘family values’ we claim to honor than the European economies in which regulations and union power have led to shorter working hours.

Maybe overwork, together with the stress of living in an economy with a minimal social safety net, damages our health as well as our families.’

These arguments are part of the reason I am not overly concerned about studies that suggest Australian labour productivity is only 80% of US levels. If productivity gains enjoyed in the US do depend on poor health outcomes, does it matter? It’s the same feeling I get when people comment on the low salaries paid to academics compared to people who work 70 hour weeks in stressful business environment. It is a matter of sorting out priorities and balancing material gains against quality of life and health outcomes.

Final comments: On the basis of the claims above the productivity of at least 16% of the US economy (their health care sector) is poor. Proposals to reform the effectiveness of the US system are capably reviewed by Paul Krugman and Robin Wells here – they support a universal health care system.

9 comments:

civitas said...

This study was actually a British study, leading me at least, to suspect that it might have been commissioned to prop up an undeniably ailing NHS.

Krugman would be willing to overlook any short coming in the NHS, of which there are many, just read the Guardian on any day, to plump for nationalized care.

civitas said...

Here are the affiliations of the studies authors:

University College London and Institute for Fiscal Studies (Dr Banks), Department of Epidemiology, University College London (Dr Marmot) and Institute for Fiscal Studies (Ms Oldfield), London, England; and RAND Corp, Santa Monica, Calif (Dr Smith).

RAND, of course, paid for the study. But it was done by the British.

conrad said...

If we must worry about workloads and stress, I think you'll find that the average worker in Hong Kong does 49 hours a week (as of last weeks statistics), but also has the second highest life expectancy in the world (Japan has the highest -- and I bet they are working a fair bit too -- but they tend to have an even better diet). The social security net is also quiet possibly even worse than the US (no minimum wage -- although 50% of the population live in poor quality public housing).

I would think that the relationship in this case is completely non-linear. If your population has a good diet, the effect of other things (stress, over-work, pollution...) seems to be compensated for.

hc said...

hi civitas, Fair enough comment but I'd like to assess the arguments as well as the nationality of the authors. I am not sure the conclusions are that unique.

It seems to me that Americans worry overly about the implications of moral hazard in health care - there are inefficiencies and excess use as is obvious from the Australian experience - but overall giving everyone access to basic medical services seems to me a reasonable social objective. And any accompaning inefficiencies can be well-afforded in wealthy societies like the US, UK, Canada and Australia.

hc said...

Conrad, I worked a bit in Hong Kong last year with around 30 young HK businesspeople. My impression was that they were subject to high levels of work-related stress. Indeed they told me they were. I am a bit surprised their mortality is so good. But, like the Japanese, they are adapt at handling stress

Krugman, by the way, wasn't assuming that overwork was the answer. It was half conjecture. He was genuinely puzzled by the empirical findings.

civitas said...

Harry, in assessing the arguments, we must face the fact that the study was done by people who are no doubt, not fans of the way the US finances healthcare. It's a huge factor in the outcome of the study and cannot be ignored. Then again, check out any issue of the Guardian to discover how satisfied Brits are with the NHS.

"It seems to me that Americans worry overly about the implications of moral hazard in health care"

Actually, I find that it's NOT Americans who are most concerned with this. I find it's mostly people outside the US who seem puzzled about why we don't change to a more (since we already have some level of nationalized care) nationalized system, although if you pick up any British or Canadian publication, you'll have to wonder why we would even consider it.

" - there are inefficiencies and excess use as is obvious from the Australian experience - but overall giving everyone access to basic medical services seems to me a reasonable social objective."

Since the California healthcare system has basically been ruined by giving access to free healthcare to millions of non-Americans, I find the idea that the US doesn't already give everyone access to basic medical service unreasonable.

"And any accompaning inefficiencies can be well-afforded in wealthy societies like the US, UK, Canada and Australia."

I have direct experience with the NHS, and I wouldn't trade what we have for it for any amount of money. My mother-in-law, a German citizen, we brought to the US TWICE for healthcare the German system denied her, based on age.

Canada is moving more towards the US system since there are millions in Canada who cannot even find a doctor. Health CARE and health INSURANCE are not the same thing.

Canadians cannot access what Americans would consider basic services without waiting until it's too late for many of them. Do you know how long Canadians wait for services?

I think people outside need to recognize that if Americans wanted a system more similar to what others have, we'd already have it.

civitas said...

Harry, forgot one thing, sorry.

We must face the fact that no system works perfectly for everyone within it. I believe that the US system works better for more people within it than any other healthcare system in the world.

What strikes me as so odd is the acceptance in some circles of the idea that it's ok for everyone to get less or worse service as long as no one gets more or better. And you have to believe this is ok in order to defend a system like the NHS, a system that many people within Britain go outside of by buying private insurance to get better service. The vast majority of Brits are left to fend for themselves with the NHS.

hc said...

civitas, In the Australian system everyone is covered for basic medical care but - unlike the Canadian system - you can take out private insurance to get additional cover. Also physicians do not need to bulk bill the government - they can charge a fee that exceeds the fee rebated by government. The extra insurance provides quicker access to elective surgery and doctor-of-choice selection. Purchasing private cover is encouraged by tax penalties if you don't. So its a mixed system.

WEe spend a much smaller fraction of out GDP on healh than does the US and standards of care are good if not perfect. There are hospital waiting lists.

I've obviously touched a nerve by criticising the US system and I wouldn't presume to tell Americans how to run their health care. The reason for our interest is that some in Australia seek to weaken the universal cover component of the system. I was less interested in criticising the US system than in presenting an argument that critiques this line of thought here.

civitas said...

"civitas, In the Australian system everyone is covered for basic medical care"

covered with insurance. Not care. Even in Australia there are people without basic medical CARE. And in the US, people without insurance access basic medical care every day.

"but - unlike the Canadian system - you can take out private insurance to get additional cover."

Actually, the Canadian Supreme Court just ruled that people could not be prevented from buying private insurance. It's a shame the Canadian people had to sue their own system for that right.

"Purchasing private cover is encouraged by tax penalties if you don't. So its a mixed system."

Most systems are, including the US system.

"WEe spend a much smaller fraction of out GDP on healh than does the US and standards of care are good if not perfect."

Do most people want to hear that every expense has been spared when it comes to their healthcare? That certainly is not a plus in my own view. Americans are clearly willing to spend more than others are for healthcare. And increasingly, those in failing nationalized systems, such as Canada and Britain, are trying to spend more for their healthcare than their systems are willing or able to. Canadians had to sue for the right to spend more, does that not tell you something?

"I've obviously touched a nerve by criticising the US system and I wouldn't presume to tell Americans how to run their health care."

It isn't your criticism of US healthcare that touches a nerve, as I wouldn't trade what we have for what anyone else has, it is your misunderstanding of it, as evidenced by your idea that spending a lower % of GDP on healthcare as others do, is something Americans should or would want to emulate. Americans find it very odd when others boast of how much less they spend on healthcare than we do. What else is money for than to buy what one wants?

"The reason for our interest is that some in Australia seek to weaken the universal cover component of the system."

Certainly nationalized systems are being "weakened", as evidenced by Canada, where people had to sue to get around nationalized care and the NHS, where anyone who can, pays their way around the system through private insurance. But rather then looking at it as weakening, why not see it as offering choice?

"I was less interested in criticising the US system than in presenting an argument that critiques this line of thought here."

I think you have to look at what people are demanding in the way of healthcare. If this is what you are interested in, why not look at Canada's system or Britain's system, both of which are moving closer to the US model and ask why they are doing so?

If I sound frustrated, it's because the same old arguments are always dragged out, such as the % of spending on healthcare, yet people never listen to those of us in favor of higher spending for healthcare as to WHY we believe it's OK, even preferable, to spend more for it.