Wednesday, March 3, 2021

Goodman on single payer

With the current focus on "equity" and "disadvantage," even in the midst of a pandemic, one might yearn for the simplicity of a government run system. Surely if health care were free at the point of delivery, paid for by taxes, all the inequities of health care would disappear, no? (Sure we might all get bad health care, but we'd all get the same health care, no?) 

No. John Goodman has a nice Forbes article explaining why and giving the evidence from UK and Canada. Bottom line: Nothing is free. Everything is rationed. If it is not rationed by price, it is rationed by political access or personal connections. Markets are the great leveler, as anyone can get money but it's hard to get friends and connections. 

When Britain founded the National Health Service

It was often said "health care is a right." Aneurin Bevan, father of the NHS, declared, “the essence of a satisfactory health service is that rich and poor are treated alike, that poverty is not a disability and wealth is not advantaged."

30 years after the NHS began the Working Group on Inequalities in Health investigated and  

The Black Report found little evidence that the creation of the NHS had equalized health care access or health care outcomes at all. Here are the words of Patrick Jenkin, secretary of state for social services, in his introduction to the report: 

“It will come as a disappointment to many that over long periods since the inception of the NHS there is generally little sign of health inequalities in Britain actually diminishing, and in some cases they may be increasing. ..”

.. 30 years after Britain had nationalized its health care system and replaced private care with public care, it appears that inequalities in access to health care and health care outcomes were not any different than if the NHS had never been established at all!

The Black report concluded

the Group has reached the view that the causes of health inequalities are so deep rooted that only a major and wide-ranging programme of public expenditure is capable of altering the pattern

They don't mean public expenditure on health. They mean redistribution and public expenditure to eliminate economic and social inequality that leads to health inequality even when it is provided free and supported by taxes! That was 1980. 

About two decades later, ..a second study, .. was conducted. The findings? Not only had inequalities not diminished since the publication of the Black Report, they appeared to actually have gotten worse. 

In Canada, studies find that the wealthy and powerful have significantly greater access to medical specialists than less-well-connected poor people. High-profile patients enjoy more frequent services, shorter waiting times and greater choice of specialists. Moreover, among the non-elderly white population, low-income Canadians are 22% more likely to be in poor health than their U.S. counterparts.

How does inequity persist if it's given away free by the government? Goodman: 

But of greater interest is to understand why inequalities persist in systems nominally dedicated to their removal.

...In Britain, health care access and health care outcomes are known to vary radically by postcode... In general, the hospitals with the largest budgets, the most modern equipment and the best doctors are located in the areas of the country where the highest-income Britons live. And that’s not an accident. Where hospital funds are spent is just as much a political decision as any other decision government makes. 

Rich people know how to get the government to locate a hospital in their area, and how to put up a fuss if it's not. That's the whole point of "privilege!" 

Second, higher-income Britons and Canadians are more likely to have a social relationship with their doctors. In both countries there are long waiting lists for hospital procedures. The patient who has dinner with her doctor at a country club is more likely to be able to jump the queue than a carpenter, bricklayer or other tradesman. ...

...higher-income, better-educated people are almost always more successful at navigating bureaucratic systems. The British NHS is not like Walmart, which continuously monitors its sales in order to make sure it always has in stock whatever its customers want, when they want it. It’s more like a Department of Motor Vehicles, where the lives of employees are improved if the customers get tired of waiting and go home. Rationing by waiting is as much an obstacle to care as rationing by price. It seems that the talents and skills that allow people to earn high incomes in the economic marketplace are similar to the talents and skills that are useful in successfully circumventing bureaucratically managed waiting lines.

Bottom line: Decades of experience with non-price rationing of health care in countries with cultures very similar to our own provides a ton of evidence that the poor, racial minorities and other marginalized groups rarely make it to the front of the waiting lines.

If I were cynical I might suggest this explains the puzzle that ultra-wealthy coastal elites want single payer most, and actual people experiencing low incomes are less enthused. The latter have more experience with the actual operation of government services. The former all know a great doctor. 

I had occasion to look up per capita GDP by the way. Canada: $46,194. UK $42,330. US: $65,297. The whole package, whatever it is, does not look that appetizing, no matter how much you like hockey, rugby, and cricket. 

24 comments:

  1. The current chaos in Covid vaccine priorities provides a warning about government control of medical triage.

    A simple fair way to apportion scarce vaccine was to step down by age, which is easily verifiable and clear.

    Now, a 23-year old teaching assistant (via Zoom) has priority over 64-year-old widow. The state identified weed-shop clerks as essential heath-care providers and claims the right to redirect vaccines to relieve ‘inequities’, however defined.


    The lesson to me is that government control of health care triage would be a universe of special antidemocratic deals.

    ReplyDelete
  2. The current chaos in Covid vaccine priorities provides a warning about government control of medical triage.

    A simple fair way to apportion scarce vaccine was to step down by age, which is easily verifiable and clear.

    Now, a 23-year old teaching assistant (via Zoom) has priority over 64-year-old widow. The state identified weed-shop clerks as essential heath-care providers and claims the right to redirect vaccines to relieve ‘inequities’, however defined.


    The lesson to me is that government control of health care triage would be a universe of special antidemocratic deals.

    ReplyDelete
  3. The current chaos in Covid vaccine priorities provides a warning about government control of medical triage.

    A simple fair way to apportion scarce vaccine was to step down by age, which is easily verifiable and clear.

    Now, a 23-year old teaching assistant (via Zoom) has priority over 64-year-old widow. The state identified weed-shop clerks as essential heath-care providers and claims the right to redirect vaccines to relieve ‘inequities’, however defined.


    The lesson to me is that government control of health care triage would be a universe of special antidemocratic deals.

    ReplyDelete
  4. The U.S. approach is reducible to this: employment = access to medical care. If you are under the age of 65 years and not in school, unless you have private means or your employer offers a health-care plan, the only access to medical and/or hospital services is often in the emergency ward of a large teaching hospital in the central core of a large metropolitan urban area. The recent expansion of Medicaid under 'Obama-care' provides an alternative avenue to health-care services for the poor/under-employed or unemployable.

    In the Canadian provinces, employment is not a criterion for access to health-care services relating to medically-necessary procedures. In either the USA or Canada, poverty brings challenges and foreshortened life expectancy. Canada and the USA are too different to draw unassailable generalizations as to which country's poor are healthier and which country's poor are not as healthy, etc.

    Personal experience and study in both systems indicates to me that Goodman's essay is well off the mark. Medical doctors and surgeons in Canada are independent practitioners, and apart from their source of income generated by medically necessary procedures, they are at liberty to pursue private practice incomes outside the Canadian medicare system if they so choose to do so. The only difference between access to specialists as between Canada and the USA is the 'referral' system that governs access to specialists in the Canadian health-care system.

    As for a 'free market' in vaccines, look no further than the contrast between the vaccine availability in the so-called 'developed nations' and that in the not 'developed nations', esp. Africa, and Mexico (where, this past week, the president has been seen publically begging for access to American supplies of vaccines for his country because his country can't afford to compete price-wise or financially against the USA for access.) A 'free market' does not preclude a market hegamon cornering the available supply of vaccines, as the USA has done. Now, imagine that same scenario played out in your community or state--he who has the gold rules. In short, in a 'free market' there is no assurance that social welfare is maximized, or that private interest is aligned with the public interest.

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  5. "low-income Canadians are 22% more likely to be in poor health than their U.S. counterparts." That has nothing to do with health care provision.

    Maybe Canada is doing poorly with covid vaccines, I'm not sure.

    But after living in Canada for 26 years, and America for the last 7, I'll take the Canadian health care system over the literal nightmare that is the American health insurance (and health care) system, any day. For paying such a huge amount more on health care per capita, Americans get little to show for it.
    Perhaps you just love wasting countless hours on the phone with an insurance company that will end up fraudulently denying your claim, because that is their strategy. If it isn't enough thousands of dollars for anyone to bother filing a lawsuit over, the insured is just guaranteed to lose.

    ReplyDelete
    Replies
    1. Then, one should stay in Canada.

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    2. Do you say the same thing to everyone else who lives in a state that has income tax? Do you live in a state with no income tax? If not, why haven't you moved then?
      Nice attempt at trolling.

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    3. Where does nearly all the medical innovation come from?

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    4. While Obamacare was being legislated we had subhumans speaking before Congress about Canadian 'friends' they knew who came to the US for medical treatment. These were of course conservative whores.

      I wanted SOMEONE to bring in a Canadian who HAD come to the US for treatment. I wanted them to say, out loud, that they preferred the US system.

      Republicans and conservatives in general are subhuman soulless animals.

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  6. Social Capital as a component of wealth? Seems to be that way..

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  7. This might be a good time to reference James Galbraith's great 2003 essay on soft American budgets.
    His point is that we have tolerated huge (if gradual) increases in Medicare and Medicaid spending, which means that rationing has been rare.
    Whereas countries like Britain and Canada where all health spending is on the federal budget have to make hard decisions about closing hospitals, laying off doctors, and not approving super-expensive treatments.

    Today's advocates of single payer either trust secretly in MMT, or they are wholly convinced that their payment efficiencies will make tight budgets unnecessary.

    http://www.levyinstitute.org/pubs/ppb72.pdf

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  8. Nitpick, doesn't it make more sense to make GDP per capita comparisons using PPP? Do that, and its U.S. $65.3k, U.K. $49.9k, and Canada $51.7k. Still not flattering, but less extreme.

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  9. I have no expertise in economics, but I do wonder why health care is 2 to 3 times more expensive per capita in the US than in any other developed country, while the outcomes are not remarkably better and a significant portion of the population is still uninsured. I would prefer not to receive ideologically motivated and probably false explanations such as: the excess goes to insurance company profits or the excess goes to defending against legal claims, unless you can demonstrate that half the medical budget actually disappears down those particular holes.

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    Replies
    1. I once read something on a blog called random-critical-analysis that suggested (1) excess disposable income is generally spent on complex personal services like healthcare and education and (2) U.S. people have a whole lot more excess disposable income than people in other countries, so (3) healthcare and education inevitably cost a whole bunch more in the U.S. than other (poorer) countries.

      I'm not sure I 100% agree with that myself, but offer it to satisfy your request to avoid any politically sensitive explanations. It's the most plausible thing I've heard that doesn't skew towards either political side.

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    2. I have no objection to a politically sensitive explanation. However the explanation ought to flow from the facts rather than the facts from the explanation. If a business found that its production costs were twice that of a competitor for a functionally equivalent product, it would first try to find out where the money was being spent.

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    3. The demand curve for health care in the U.S. has been shifting rightward for reasons discussed, and others, e.g. demographics. But the supply for health care has been constrained by a myriad of regulations and and rent-seeking so that it has not expanded as fast. The result is higher health care costs. Why did UK and Canada not experience same? They constrain demand and supply and can effectively set the price in these markets. But I think the point is that this price is not consistent with market equilibrium and so has a spillover effect in the form of rationed access. I am sure that I have read on this blog that the only true long-term cost containment is vigorous supply-side competition. Perhaps that's where policy should be directed?

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  10. It is not possible for a person who thinks in free market terms to accept it is possible for the various forms of centrally managed health care to be better. However, we also as humans value very highly the last years of life—-if money spent is an indicator (maybe not—-it could be disease is the indicator). So, while free market is better (I believe) there are no miracles available to us regardless of system. Still, it can be “purchased” more cheaply, and that is a benefit directly regardless of life span.

    The biggest critique of “free markets” is under service of the poor or even middle class. Of course, that makes no sense. We can service the needy better, if we can service the remainder less expensively. Healthcare is unique. No price transparency—-zero. Multiple pricing schemes for the same service. Poor ability to assess who or what provides better results. Unequal tax treatment by nature of one’s employment. Treating fundamentally “non-insurance” events as if they were insurance events.

    I am far from knowledgeable. Except to say, I cannot imagine an industry so huge yet so convoluted as is our “health care” industry. But like every bureaucracy in the history of man, good or bad, they are almost if not literally impossible to change once they are entrenched.

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  11. I cannot defend either the US health care system or any of those foreign systems. All have flaws. But rationing, regulation, and constraints operate on the supply side as well. The US makes it much harder than those other countries to get a medical degree or to practice. Procedures that require a doctor here can be handled by qualified nurses elsewhere. Hospitals (even non-profits) have local monopolies in many areas, and exploit them.

    Reform of the supply side of health care is essential, and can make a bg difference in cost and access.

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    1. These are important considerations. However, I looked up physicians per 1000 persons here

      https://data.worldbank.org/indicator/SH.MED.PHYS.ZS

      For example: Canada: 2.6; US: 2.6; UK: 2.8; France: 3.3.

      Also you have probably noticed the trend of providing routine care by nurses and PA's in quick-care type facilities.

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    2. Also doctors lobbying to prevent nurse practitioners and P.A.s from doing any more complicated tasks.

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  12. So many countries (e.g., Mexico) have tried some form of nationalized health care (or "single payer") with varying levels of outcome and efficiency. Why is it they haven't thrown in the towel and called up the big U.S. insurance companies to come over and set up a private system so that they can burden private employers with providing health benefits, except for the retired (and the poor and government workers) who are on the government plan, and for workers between jobs and entrepreneurs who who get to purchase their own insurance? When I travel and visit hospitals around the world, most people cannot even believe my description of the hodgepodge that we see in the U.S.

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  13. Long standing question to which I've never gotten a straight answer.
    When people write about how much money is spent in the health care system in the US, are they referring to the list prices or the actual cash that moves from individual --> 3rd party payers -->actual providers?

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  14. "Rich people know how to get the government to locate a hospital in their area, and how to put up a fuss if it's not." - not in Britain. All of the good hospitals pre-date the NHS by centuries. My local world class hospital, St Thomas', was founded over 800 years ago.

    Rich people join private health schemes like BUPA and are either treated in private wings of NHS hospitals or in private hospitals. The NHS was always a public/private hybrid. The primary care practitioners are almost all private businesses, and senior hospital doctors will attend to both NHS and private patients.

    There are better hospitals in wealthy areas because everything's better in wealthy areas - that's why rich people live in them.

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    1. This is a great point, which as an economist always attuned to incentives and unintended consequences, I should have anticipated. If the government builds great hospitals in poor areas, people with means who want good health care will buy up the houses near the hospitals. If the mountain will not come to Muhammad, Muhammad will go to the mountain, and gentrify the place too.

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