21 November 2005

What's the best way to fund our health service?

Despite spending nearly twice the amount on health that we do (14.6% of GDP compared to our 7.7% of GDP), the US has infant mortality rates, comparable with the third world in its big cities.

The US has the best healthcare in the world available for the very rich, but appalling healthcare provision for the large percentage of its population that can't afford the health premiums.

In terms of cancer deaths, despite their massive extra health spending, the US compares badly with us.

They have 322 deaths per 100,000, compared to our 254 deaths per 100,000.

I know there are other factors involved here, but the biggest single factor that cause cancer- that of smoking prevalence, is actually lower in the US. The UK has 26% of adults smoking, compared to the US figure of 21%.

The UK also has a higher life expectancy.

This suggests to me that the extra costs in administration that private health firms have of determining and collecting individual premiums and of advertising costs make a massive difference. These are serious inefficiencies that the NHS doesn't have to worry about.

21 comments:

  1. Neil: I'd suggest this as a good source of comparative data, rather than just selecting a couple of measures from NationMaster that back up only your own argument:

    http://www.nao.org.uk/publications/Int_Health_Comp.pdf

    On some things, the US is worse than the UK. On most, they are not - the cancer survival stats are also the other way round to the figures you have posted, and the size of the numbers is significantly different. I'd like to see the OECD data for 2005, but it costs a small fortune, I'm afraid. The link you have posted is the only data I have seen that has the US as worse than the UK in cancer survival rates. All others I have seen show the opposite, which makes me wonder what the difference between the data sources is, especially as the OECD use the WHO database, which shows the US with a better survival rate!

    I'd guess life expectancy in the US is worse because they have higher levels of poverty, however defined, and because of higher obesity levels. Neither country has much to boast about on this front, however - we're far lower than Japan, for example.

    This suggests to me that the extra costs in administration that private health firms have of determining and collecting individual premiums and of advertising costs make a massive difference. These are serious inefficiencies that the NHS doesn't have to worry about.

    That's a nice theory, but you don't have any data to back it up, do you? 'suggests' is a weasel word used to push prejudice and dogma in place of a proper argument from facts.

    And there are plenty of things that are simply factually wrong with your post, like this:

    'appalling healthcare provision for the large percentage of its population that can't afford the health premiums.'

    The US population is about 300 million. The number uninsured in about 40 million. Bear in mind that this oft-debunked stat includes people who switch jobs and are out of work for a small time, as well as those who choose not to buy insurance (a rational and sensible decision for the young, fit and single...). But I'll be generous to you and assume that all 40 million can't afford health insurance premiums. That's still only 13% of Americans who 'can't afford the health premiums', hardly a 'large percentage'. Those people are guaranteed care at any hospital that takes Medicaid or Medicare patients, although they may end up going bankrupt when they start having to pay for it. The people who end up dead in the UK are people who in the US would just end up broke, but alive. I know which I'd prefer.

    As for this:

    the US has infant mortality rates, comparable with the third world in its big cities.

    Sure, but if you pick a subset of a population like that, you can easily manipulate it to suit your prejudices. My guess is that infant mortality rates in some poor boroughs of London are 'comparable with the third world', but that just tells you about inequalities and poverty, not healthcare in aggregate. Let's have a grown up discussion, shall we?

    This:

    biggest single factor that cause cancer- that of smoking prevalence

    suggests a lack of understanding of medical matters. Although smoking is a risk factor for certain forms of cancer (lung, obviously...), it certainly isn't for others (prostate, for example), and it certainly isn't the 'single biggest factor'. Age, for example, is a bigger risk factor than smoking prevalence. That said, smoking is the single biggest preventable risk factor. You ought to be more precise.

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  2. Those people are guaranteed care at any hospital that takes Medicaid or Medicare patients, although they may end up going bankrupt when they start having to pay for it. The people who end up dead in the UK are people who in the US would just end up broke, but alive. I know which I'd prefer.

    Are you saying that in America, a hospital will provide treatment to a patient, even though it knows (or suspects) that rather than settling his bill he will instead claim bankrupcy protection and default?

    Why would a hospital do this? Why would the hospital's shareholders not file a lawsuit against the directors for allowing this policy to continue? No other publicly traded company would expect to be able to get away with this sort of behaviour.

    This smacks of, to put it kindly, nonsense. Either you don't understand what "bankrupt" means, or you don't understand how corporate governance works. Which is it?

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  3. The people who end up dead in the UK are people who in the US would just end up broke, but alive.

    Do you have any evidence for that, or are you just trying to push prejudice and dogma in place of a proper argument from facts?

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  4. Oh, and another thing: how are the mentally ill, and other people who may not be in the best position to look after their own interests, treated in the insurance model?

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  5. Oh, and another thing: how are the mentally ill, and other people who may not be in the best position to look after their own interests, treated in the insurance model?

    Oh, you'll like this.

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  6. Andrew: The Nationmaster cancer figures are taken from the OECD, which is a reliable source. Unfortunately the link you left is partially missing so I can't get it to work. If you could post it again, I'll take a look.

    Not all of my stats are taken from Nationmaster, the figures on US infant mortality are from two different sources.

    I chose cancer mortality, infant mortality and life expectancy because they are good indicators of the quality of a country's healthcare. The US seems to perform badly against us on all three despite spending vast amounts more than us on healthcare.
    What else does this suggest apart from that their private insurance system is inefficient?

    It seems reasonable to suppose from this that the vast amounts these US health companies spend on advertising and on collecting and determining premiums would make a difference. These are costs that are of no benefit to someone's health and they are costs that the NHS doesn't have to worry about.

    "My guess is that infant mortality rates in some poor boroughs of London are 'comparable with the third world', but that just tells you about inequalities and poverty, not healthcare in aggregate."

    Andrew, I am talking about figures for 'whole cities' not just sections. Even you wouldn't claim there are whole cities in the UK whose infant mortality is comparable with the third world, in the US there are cities like this. Maybe the extra poverty over there does make these figures worse, but it does also reflect the disparity of healthcare provision.

    "The US population is about 300 million. The number uninsured in about 40 million. Bear in mind that this oft-debunked stat includes people who switch jobs and are out of work for a small time"

    On top of the 40 million uninsured there are many millions that have limited insurance cover. Nearly everyone's cover is limited to a figure that can mean that a lot of cancer treatments are out of reach to most people in the US.

    The point about the US system is, that when you fall ill and you need healthcare the most, you are also the least able to afford it.

    On the smoking-cancer risk point, you are right, I should have put 'biggest preventable risk' not 'biggest cause', but you got the jist of what I meant on this point.

    Anon: Thanks for the example of how US private provision rips off the elderly and mentally ill.

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  7. Andrew: here's a quote taken from one of the links I provide. I think this sums up infant mortality in the US very well.

    "High levels of spending on personal health care reflect America's cutting-edge medical technology and treatment. But the paradox at the heart of the US health system is that, because of inequalities in health financing, countries that spend substantially less than the US have, on average, a healthier population. A baby boy from one of the top 5 per cent richest families in America will live 25 per cent longer than a boy born in the bottom 5 per cent and the infant mortality rate in the US is the same as Malaysia, which has a quarter of America's income."

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  8. as well as those who choose not to buy insurance (a rational and sensible decision for the young, fit and single...)

    You've got to be kidding me.

    I am one of those people who compulsively rejects extended warranties ("but sir, what if your TV breaks?", "then I'll bloody well buy a new one"), and always insures his car third party. However, as a young, fit and until recently single man, whilst going about my young fit man daily business of jumping out of flying things, cycling up tall things and (generally not on the same day) skiing down them, I expose myself to the risk of injuries which would be financially crippling if I had to cover the cost myself.

    Amusingly, for each of those activities, I expose myself to rather greater risk by getting in a car and driving there, so you can't even say that my extremity (dude!) is to blame. These are what we call low probability, high consequence events. There are of course even lower probability, even higher consequence healthcare events which happen to young fit people, such as cancer.

    In no way can you reasonably characterise not choosing health insurance as rational behaviour. It's nuts, of a rather libertoonian variety. You don't see a lot of your sort in the wild, at least in Britain.

    Neil, glad you liked the California conservator story. It came via Jerry Pournelle's site. Perhaps Andrew could find views more to his liking there.

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  9. Peter: Do you have any evidence for that, or are you just trying to push prejudice and dogma in place of a proper argument from facts?

    Yes, survival rates. See the link above, and repeated here:

    http://www.nao.org.uk/publications/Int_Health_Comp.pdf

    I'm not sure what you mean about it not working, Neil. I've just copied and pasted it into a separate browser, and it works fine for me.

    Anonymous (how brave...):This smacks of, to put it kindly, nonsense. Either you don't understand what "bankrupt" means, or you don't understand how corporate governance works. Which is it?

    I don't think you understand how the US healthcare system works. The Medicaid/Medicare hospitals have a legal requirement to treat and stabilise anyone who presents with an illness, regardless of financial status. I'd consider it good corporate governance not to break the law. So either you don't understand the US healthcare system, or you don't understand corporate governance. Which is it?

    Peter: how are the mentally ill, and other people who may not be in the best position to look after their own interests, treated in the insurance model?

    Under Medicaid, in the US, I'd imagine. To be clear though, I'm not advocating that the UK adopt the US model, which I think is pretty crappy. I'm just saying that the US has generally better health outcomes than we do, which is to be expected as they spend twice as much as a proportion of GDP on healthcare.

    Neil: The Nationmaster cancer figures are taken from the OECD, which is a reliable source.

    And the OECD claims to take their stats from the WHO, which is the source I've checked, and shows the opposite conclusion. As we can't check the OECD data directly, except by NationMaster's interpretation of it, which we can't verify to be correct, I'm sceptical of your link's accuracy. The ultimate source (the WHO) shows the reverse conclusion, as does the National Audit Office report - the US has better cancer survival stats than the UK.

    the figures on US infant mortality are from two different sources.

    Indeed, and infant mortality is worse in the US than the UK, which I conceded, and hazarded an explanation for - higher poverty levels and extremes.

    What else does this suggest apart from that their private insurance system is inefficient?

    Cultural differences. The obvious two being obesity levels and relative poverty extremes.

    It seems reasonable to suppose from this that the vast amounts these US health companies spend on advertising and on collecting and determining premiums would make a difference. These are costs that are of no benefit to someone's health

    That's not true - advertising directs consumers to the best available healthcare at the lowest price. Determining premiums accurately rewards those who make better health decisions. The NHS does neither, to our eventual cost.

    I am talking about figures for 'whole cities' not just sections. Even you wouldn't claim there are whole cities in the UK whose infant mortality is comparable with the third world, in the US there are cities like this.

    Neil, neither of your links talks about figures for whole cities being worse than the world world. One of them compares four 'first world' cities. The other is an attack by the UN on the US for higher infant mortality rates in general, but particularly amongst black people. That doesn't say that there are 'whole cities in the US whose infant mortality is comparable with the third world' at all, and you know it.

    On top of the 40 million uninsured there are many millions that have limited insurance cover. Nearly everyone's cover is limited to a figure that can mean that a lot of cancer treatments are out of reach to most people in the US.

    And you have some evidence for this? It is odd, then, that in spite of this lack of coverage, they have better cancer survival rates than we do, no?

    The point about the US system is, that when you fall ill and you need healthcare the most, you are also the least able to afford it.

    That's simply not true. If you can't afford it, you're generally covered by Medicaid. If you are employed, you're covered by your employer's scheme. If you fall through the gaps, you get treated anyway, then go bankrupt when the bill comes. I'd rather be alive and broke than dead.

    Anonymous (not sure if you're the same brave soul as above...):In no way can you reasonably characterise not choosing health insurance as rational behaviour.

    Of course you can. If you have no dependents, and you're willing to take the risks of driving to extreme sports events, then that's your problem, not mine. I'd personally rather spend my cash on expensive cars and skydiving than on health insurance, but I'm in the enviable position of having no kids and being young and healthy.

    There are of course even lower probability, even higher consequence healthcare events which happen to young fit people, such as cancer.

    Indeed there are, but if you held some kind of insurance against every possible low impact, high severity event, you'd go broke pretty quickly. Balancing your priorities and your assets against your tolerance for risk is important. It's called risk management.

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  10. Eek - meant low frequency, not low impact...

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  11. Andrew: From the link you provide, the cancer figures you quote are taken from 'standardised' OECD figures for 2002, whereas mine are taken from 'actual incidence' OECD figures for 2004.

    So my link is more up to date and uses actual figures rather than manipulated figures.

    Also the cancer death rates you quote are almost identical anyway, at US=176 and UK=185 deaths per 100,000. The more up to date 'actual incidence' figures are US=322, UK=254 deaths per 100,000. The fact your figures are lower suggests that a lot of cancer deaths are being ignored in your link for some reason.

    But thanks for the link because there are some eye opening figures on there that back up my argument.

    The US public health expenditure alone is more than our total expenditure on the NHS, but on top of this, the US spends another 120% of the public health expenditure budget on private provision.

    Despite this they still have worse cancer death rates and infant mortality rates than the UK.

    What does this suggest about the efficiency of their system?

    According to your link, the US spends $4631 a head per annum on health compared to our $1737 a head per annum. Seems like the US is getting a raw deal on healthcare.

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  12. I should have said 'public health expenditure as percentage of US GDP greater than NHS spending as percentage of UK GDP', but hopefully you guessed this is what I meant.

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  13. So my link is more up to date and uses actual figures rather than manipulated figures.

    Actually, if you check the WHO website, you can get the 2005 figures, and the US figures are still better than the UK. I have no idea why the disparity between our stats is so great, but as we can't see the OECD stats, nor the methodology used to gather them, we're at something of an impasse.

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  14. Also, I'd be inclined to use the measure that the National Audit Office chooses to make international comparisons. They are, after all, the experts in auditing...

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  15. Indeed there are, but if you held some kind of insurance against every possible low impact, high severity event, you'd go broke pretty quickly.

    No. Because insurance for improbable things is cheap. It's quite possible for the sum of the expected cost of all possible health problems which might befall me to be finite and, indeed, small. You seem from your blog to have a great love of Greek letters; I can only assume that this is due to a classical (rather than mathematical) education.

    Why, incidentally, do you object to my anonymity? Just because you are proud to trumpet your Onanism from the rooftops, does not seem to imply that I should be.

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  16. Andrew, even if we say that my figures are completely wrong and yours are completely right (and I don't think that is the case), then don't you think that a country that spends over twice what we do on health should be doing far better than just slightly better average cancer results?

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  17. Andrew, even if we say that my figures are completely wrong and yours are completely right (and I don't think that is the case), then don't you think that a country that spends over twice what we do on health should be doing far better than just slightly better average cancer results?

    I quite agree. There are of course more subtle costs associated with private healthcare provision, to which anyone who has been exposed to the American system (as I and some of my friends have) will attest.

    As an example, I have a friend in Massachusetts who has several part time jobs, mostly laudable ones such as ambulance technician, firefigher and so forth. She expends a truly incredible amount of effort getting healthcare coverage, as none of the individual employers sees it as their responsibility to cover her.

    For me, being able to get on with my life without ever having to think about healthcare is worth the cost of the NHS twice over.

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  18. don't you think that a country that spends over twice what we do on health should be doing far better than just slightly better average cancer results?

    Absolutely, which is why I'm not advocating the US model for over here. What we should do is to look at the US and see why their results are better, borrow the good stuff, and ignore the bad stuff, rather than writing off the whole system in some kneejerk, half-baked, anti-American rant.

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  19. Shouldn't we also look at the French system (in which waiting is basically unheard of)?

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  20. Andrew, the US system is terrible. That's what we should learn from it.

    They spend enormous ammounts of money for results that are questionably slightly better than ours. If we put the same amount of money into the NHS, there would be dramatic improvements in health.

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  21. Andrew, the US system is terrible. That's what we should learn from it.

    Don't hold back now, say what you really think :)

    They spend enormous ammounts of money for results that are questionably slightly better than ours. If we put the same amount of money into the NHS, there would be dramatic improvements in health.

    With some caveats, I think that sounds about right. Healthcare is one of the few areas in which Britain has found a demonstrably world-class solution to a difficult problem. If you're poor, you get a reasonable level of care, and if you're rich you can always go private (with the proviso that for the really tough stuff like heart operations you may well be better off using the NHS anyway).

    Everyone wins under this system. The only people who are unhappy are those who are poor, and object to the rich being able to buy a better (in this case quicker, plusher) experience, and those who are rich, and object to paying for a service they don't use. The former are entitled to their view, although I disagree. The latter are beneath contempt as human beings.

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