An American Health Care System

After WWII, nearly every European country adopted some kind of socialized health care system. There is much to learn from their experiences since then, though one of the most important lessons is that systems are highly dependent on cultural context -- in other words, what works in one country will not necessarily work in another, and what fails in one country may work fine in another.

The first step the US will need to take is to decide what the goals are of the system. The Netherlands papers on health care commonly refer to equity, quality, and efficiency as the three goals of the Netherlands health care system. Something which delivers one is not acceptable if it compromises the others. It is likely that the US would not adopt these three axes precisely, but they do provide a useful lens with which to view the current US health care system and discuss its shortcomings.

Equity: The US health care system is obviously not equitable. Currently, 18% of Americans are uninsured, many more are underinsured. The quality of coverage/care provided under different insurance plans varies widely, and regulation currently seems to be anti-patient (such as recent laws to prevent a patient from suing their HMO) rather than protective of the patient. Additionally, many care providers refuse to accept Medicare and/or Medicaid patients, resulting in a separate (and probably not equal) set of providers available to patients on these systems.

Quality: It is frequently proclaimed that we have the best health care system on the planet! However, this simply does not appear to be the case. In terms of measures such as expected life span and infant mortality rate the US measures average or below compared to other first-world countries. The primary mechanism for maintaining quality in the US health care system is the malpractice law suit. However, studies on malpractice litigation consistently show that there is a poor correlation between medical errors that cause harm to the patient and malpractice litigation. The problem goes both ways: most law suits decide in favor of the physician (that whatever harm resulted was simply not the physician's fault), and medical record reviews show that most serious medical errors are never seen in court (see the Harvard Medical Practice Study). Clearly, a different mechanism of ensuring quality is needed.

Efficiency: The one way in which the US health care system is the best is that we spend the most money on it. Including private and public spending, we spend twice as much as the average first-world country on our health care. Clearly our system is woefully inefficient

Why is this system not working? I think we can divide that analysis into two categories:

There are several assumptions that are made in any free market which are clearly untrue for the health care sector.

Perverse incentivizing:

The term showed up in a Dutch article on health care systems, and I've grown fond of it. What it basically means is follow the money: what behaviors are rewarded, which are discouraged? To analyze this thoroughly we'd have to look at each of the many players in the health care system: patients, physicians, hospital departments, hospitals, insurances (and the different kids of insurances: Medicaid, HMO's, etc.), customers of insurances (sometimes individuals but usually businesses), etc. Think about it for a while, but I'll highlight some of the bigger problems.

We've already touched on some of them. Doctors are generally incentivized to CYA, with the exception of HMO's which simply give doctors a list of things they aren't allowed to do, rather than encourage actual cost-consciousness. Patients are incentivized to avoid getting care, and treat themselves with OTC medicines if possible.

Hospitals are generally for-profit. True, they are run by people who probably are compassionate, but what is rewarded is profit. Thus hospitals are incentivized to charge as much as they can until the insurance won't pay any more, then boot you out as quickly as possible. If you don't have insurance, they are incentivized to do the minimum allowable by law and then boot you out... or simply refuse to accept uninsured patients except on emergency, which is what a lot of hospitals do. Patients are then incentivized to only come in on emergency service, creating delays in the emergency room.

Insurance companies are for-profit as well. Thus, the ideal for an insurance company is to charge as high of a premium as possible and never pay anything out. From the market viewpoint the only force that should limit this is the customer's willingness to pay the premium: obviously, if the insurance really pays for *nothing*, no one will buy it. However, anyone who's ended up in the cogs of the insurance machinery lately will likely have observed that the insurance companies seem to try everything they can to weasel out of paying. It's not in our preferred provider plan, you didn't get the service pre-approved, it's a pre-existing condition, that treatment is not covered in your plan: see sub-sub-subsection 113 on page 4223 of your plan. And believe me, the picture isn't any rosier from the viewpoint of a business trying to negotiate insurance coverage for its employees. The prices keep going up every year (they went up 25% in one year I was working for the veterinary hospital) and offering less coverage for the money. Large corporations can often negotiate better deals, which means that you're better off working for a big business than a small one... which is another perversity that I won't discuss here.

The idea behind the market forces movement here in Europe is to align financial incentives with the values of equity, quality, and efficiency. One expert even said, If you start paying doctors based on their outcomes, you'll see outcomes improve (he was wrong, they don't). Aligning the market forces is a very tricky business, and I'm not convinced it will work... but eliminating market forces that are working against you is essential.

What can we learn from the European experience? Here are some examples:

What things are peculiar to the American system?

Then, at last, the question: what should we do? The first thing any realistic liberal should do is assemble a think tank to think about the problem. Preferably with a few representatives from other country's health care systems, or at least some well traveled Americans. They should spend at least six months learning everything they can about what has gone before (I've spent about six days on it, as part of my current Master's program, but I've barely scratched the surface) and then set to work designing an equitable, effective, efficient, and sustainable health care system. It won't be perfect, but it'll be a hell of a lot better than pretending we have nothing to learn from other countries' successes and mistakes.

Given my six days of information, I'd propose something like this: