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Health Care: The Big Picture

posted by Frank Pasquale

Paul Krugman and Robin Wells have a long review piece in the NYRB correcting some common misperceptions of the U.S. health care system. They provide good empirical evidence that we both spend more than comparable countries and get worse results overall. Our system is “is unique in denying necessary care to people who lack insurance and can’t pay cash.”

When I talk about such chronic underperformance, I’m often “reminded” that while the U.S. may have an infant mortality rate that’s higher than Cuba’s, it’s still the best place for someone with insurance to get sick. Krugman and Wells chip away at this notion as well, pointing out that:

The frequent claim that the United States pays high medical prices to avoid long waiting lists for care also fails to hold up in the face of the evidence: there are long waiting lists for elective surgery in some non-US systems, but not all, and the procedures for which these waiting lists exist account for only 3 percent of US health care spending

Also, anyone who’s visited an ER lately has experienced the “spillover effects” of 41 million uninsured: endless waits as bad coughs and chronic pain that should have been treated in a doctor’s office get routed to providers of last resort. Sadly, policymakers who might be exposed to this demoralizing spectacle tend to circumvent the normal triage procedures. Economic apartheid distorts their perception of reality.

So what to do? Krugman and Wells recommend Democrats “go for broke” and propose a “single payer” plan, but there are some problems with that…


First, precisely because of the enormous administrative costs they point out, there are powerful constituencies behind the status quo. We can all remember “Harry and Louise,” but the problem goes deeper than that. For example, there are over 50,000 medical coders in the United States, whose main job is to translate the morass of codes for various medical procedures for computer systems that accept or deny payment. Multiply that number times the endless steps toward approaching, applying for, deciding on, getting, and getting reimbursement for health care, and you’ve got a sense of the extraordinary political opposition any “streamlining” measures are going to encounter.

Second, while Krugman and Wells skirt the “rationing” issue in their piece, this is a fundamental obstacle to government driven reform. Any entity that “runs” a health care system is going to have to make very difficulty, politically unpopular decisions at times. The better a planner can diffuse responsibility for those decisions, the more likely the plan is to succeed.

Admittedly, in the face of serious economic reversals in the U.S., political opposition to single payer may evaporate as the majority starts identifying more with the plight of the poor than the endless opportunities of the wealthy characters who dominate national life. But in the meantime, both Jacob Hacker and my colleague John Jacobi have suggested better solutions than “go for broke” single payer: namely, more incrementalist efforts to add coverage categories to existing public programs. Both Democrats and Republicans (like Mitt Romney) are starting to recognize the power of this approach to tame the manifold inefficiencies and injustices of the current system.


 March 6, 2006 at 7:11 am   Posted in: Economic Analysis of Law   Print This Post Print This Post

Responses (6)

  1. Pladapladaplada - March 6, 2006 at 12:23 pm

    I hate being forced to choose between the new Dior saddlebag or a brow job. Why can’t we have it all????!!! Oh wait I thought this was Blogdorf…

  2. Scott Noveck - March 6, 2006 at 5:52 pm

    Perhaps it’s only tangential to your point here, but the “fact” that America’s infant mortality rate is higher than Cuba’s (and many other countries’) is rather misleading. For a good discussion, see Nicholas Eberstadt, “America’s Infant-Mortality Puzzle,” The Public Interest, No. 105, Fall 1991, pp. 30-47.

    Eberstat points to two problems with simply comparing infant mortality rates for America with other countries:

    (1) The U.S. uses a much wider measure of infant deaths than other countries, which generally don’t count infants with extraordinarily low birth rates and had little chance of survival after birth. In Switzerland, an infant that is less than 30 cm long (which includes virtually all infants weighing less than 1 kg) at birth isn’t counted as “living,” so its “death” is not recorded in the infant mortality numbers. Italy has similar reporting procedures, and data from France, Sweden, Japan, and Hong Kong suggest they have a similar practice (though unofficially). Compare this to the rigorous reporting procedures in the U.S. and their impact on the numbers: “In 1988, for example, U.S. vital statistics registered almost 24,000 infants weighing less than one kilogram (about 2.2 pounds). Survival rates for this high-risk cohort are extremely low. Though the group accounted for just over one-half of one percent of that year’s registered births, it accounted for over a third of registered infant deaths in 1986.”

    (2) Even when we exclude infants with extraordinarily low birth rates, the distribution of birth weights in the U.S. is far, far lower than in other countries, and birth weight is perhaps the most important factor for infant viability. If you group the infants by birth weight and then compare mortality rates within those group, you find that infant mortality rates in the U.S. are actually far better than in many other counties: “If Japanese babies had enjoyed U.S. birth-weight-specific survival odds, their perinatal-mortality rate would have been cut by over a third. This fact is all the more striking because Japan already reports virtually the lowest perinatal-mortality rates in the world.” It’s not clear why birth rates in the U.S. tend to be so low. One possibility is that pregnant women are doing a poor job of caring for their well-being, result in unhealthy infants: the U.S. has a very high rate of unwanted children, of pregnancies in poverty, and of pregnant women who smoke. Another possibility is that the high infant mortality numbers may ironically come from superior pre-natal care, allowing low-birth-weight infants to come to term when they might not have survived to birth elsewhere.

    I’m not trying to express support for the status quo, which has all kinds of problems. But health care economics is a remarkably complicated field (especially in the U.S., thanks to some political and historical quirks), and you have to be very careful when looking at these numbers to be sure that you’re actually measuring what you want to be measuring.

  3. Frank - March 6, 2006 at 6:06 pm

    Thanks for that clarification. I agree, one has to be careful here. But what do you make of the fact that we spend nearly twice as much as France, but get aggregate outcomes that are about the same, if not worse?

    I imagine that, along the lines of your comment, you might join the public health crowd and point out that there are many, many more determinants of health than health care expenditures. Inequality of income, for example, is key, as Wilkerson and the Whitehall studies have shown.

    But it’s a bit ironic to use that body of data to cloud our assessment of the current crisis. I’ll close this reply with an account of epidemiologist Nancy Krieger’s work (URL source below). In 1994, Krieger wrote “Epidemiology and the Web of Causation: Has Anyone Seen the Spider?”, and a reporter offers this summary:

    “Drawing deeply on history and philosophy, the article in Social Science and Medicine dismantles the central tenet of modern epidemiology: the belief that population patterns of health and disease spring from a complex (and rather gauzy) “web” of risk and protective factors. Krieger suggests the web approach is both short-sighted and cowardly because it focuses on individuals and ignores how and why diseases vary and shift across populations and over time. It looks at lots of narrow mechanisms and not at the overarching forces that set those mechanisms into play.

    Instead, she asks, “Who or what is the ‘spider?’” What societal forces create the risk factors that eventually sift down to the organs and cells and DNA in our bodies? And how are those forces sowing disease across populations?”

    from:

    http://www.harvardmagazine.com/on-line/030636.html

  4. Maryland Conservatarian - March 7, 2006 at 4:59 pm

    So Paul Krugman took some time off from issuing corrections to his NYT’s columns to help write a review.

    And a predictable review it is; endless pontifications interspersed with the occasional mention of the books they are supposed to be reviewing. The reference to any dollar not subject to a tax as “subsidized” is our assurance that, indeed, Paul Krugman was here. Anyway, this quote is a classic Krugman:

    “Yet another problem with consumer-directed care is that the evidence says that people don’t, in fact, make wise decisions when paying for medical care out of pocket. A classic study by the Rand Corporation found that when people pay medical expenses themselves rather than relying on insurance, they do cut back on their consumption of health care—but that they cut back on valuable as well as questionable medical procedures, showing no ability to set sensible priorities.”

    In one fell swoop, we learn that we are too stupid to manage our money or our health. One suspects Mr. Krugman feels this way because we were too stupid to follow his advice the last two presidential elections. The two back up this we’re-too-stupid assertion with a reference to a “classic study by the Rand Corporation”. Unless thee is another classic out there, I believe he is referring to a 1992 report which was based on a study undertaken in response to a Nixon administration request. The study encompassed some 5,800 people and was concluded by 1981. The better health care results from “free” care was limited to blood pressure control, corrected vision and oral health. But interestingly, it also found that certain helth habits – including diet, exercise and smoking – were worse among those provided with free health care.

    So the duo of Krugman & Wells advise: “it would be politically smarter as well as economically superior to go for broke: to propose a straightforward single-payer system, and try to sell voters on the huge advantages such a system would bring.”

    You would think that even more recent empirical evidence (Hillary’s Health Plan) might counter the “politically smarter” conclusion but maybe they think the “huge” advantages outweigh all the negatives – you know, the efficiencies that other federal agencies bring to the programs they manage – places like HUD and the Department of Education.

  5. Scott Noveck - March 7, 2006 at 10:42 pm

    Frank,

    Let me first reiterate that I’m not interested in defending the United States’ current private health care system per se. Ideally, I think we should like to put aside any idealogical predispositions and let the empirical evidence guide us. The problem, of course, is that the empirical findings are far from clear.

    While I don’t know the numbers myself, I’ll take your word that the U.S. spends twice much as France on healthcare but has comparable outcomes. Unfortunately, we can’t draw the conclusions we’d like to draw from that, either. Take, for example, an interesting paper I saw a while back: Bo E. Honore and Adriana Lleras-Muney, “Bounds on Competing Risk Models and the War on Cancer” <http://www.princeton.edu/~honore/papers/comp_risk.pdf. The paper notes a similarly simplistic argument alleging that cancer research has been ineffective: Nixon declared the “War on Cancer” 35 years ago, and since then we’ve invested incredibly sums in cancer treatment and research, yet the mortality rate from cancer now is largely the same as it was in 1970. The paper argues that what really happened is that we became much more successful at treating cardiovascular disease, and as a result many of the people who previously would have died of cardiovascular disease now die from cancer instead. It alleges that we have gotten significantly better at fighting cancer, but this effect is being obscured in the data by an increase in sickly people dying of cancer rather than cadiovascular disease. The paper then goes on to try and demonstrate this empirically with some rather fancy econometrics that I’ll admit are over my head, but I’ll trust the authors, who are talented econometricians.

    I suppose that the conclusion to reach from this example is the same as one from my previous comment: we can’t use outcomes to compare the relative efficiency of different health care systems unless we know that the prior health profile of their respective populations are roughly similar. Recall that high infant mortality rates in the U.S. might be due to its higher incidence of low-birth-weight infants, rather than – or perhaps in spite of – any differences in quality of care. Because we wouldn’t seem to be justified in assuming that the French and American populations are equally healthy to begin with, I’m doubtful that we can draw any conclusions from the comparison here.

    I hope this doesn’t lead us to a sort of empirical nihilism, but at the moment I’m afraid that there is precious little empirical data to go on.

  6. Scott Noveck - March 7, 2006 at 10:43 pm

    Frank,

    Let me first reiterate that I’m not interested in defending the United States’ current private health care system per se. Ideally, I think we should like to put aside any idealogical predispositions and let the empirical evidence guide us. The problem, of course, is that the empirical findings are far from clear.

    While I don’t know the numbers myself, I’ll take your word that the U.S. spends twice much as France on healthcare but has comparable outcomes. Unfortunately, we can’t draw the conclusions we’d like to draw from that, either. Take, for example, an interesting paper I saw a while back: Bo E. Honore and Adriana Lleras-Muney, “Bounds on Competing Risk Models and the War on Cancer” <http://www.princeton.edu/~honore/papers/comp_risk.pdf. The paper notes a similarly simplistic argument alleging that cancer research has been ineffective: Nixon declared the “War on Cancer” 35 years ago, and since then we’ve invested incredibly sums in cancer treatment and research, yet the mortality rate from cancer now is largely the same as it was in 1970. The paper argues that what really happened is that we became much more successful at treating cardiovascular disease, and as a result many of the people who previously would have died of cardiovascular disease now die from cancer instead. It alleges that we have gotten significantly better at fighting cancer, but this effect is being obscured in the data by an increase in sickly people dying of cancer rather than cadiovascular disease. The paper then goes on to try and demonstrate this empirically with some rather fancy econometrics that I’ll admit are over my head, but I’ll trust the authors, who are talented econometricians.

    I suppose that the conclusion to reach from this example is the same as one from my previous comment: we can’t use outcomes to compare the relative efficiency of different health care systems unless we know that the prior health profile of their respective populations are roughly similar. Recall that high infant mortality rates in the U.S. might be due to its higher incidence of low-birth-weight infants, rather than – or perhaps in spite of – any differences in quality of care. Because we wouldn’t seem to be justified in assuming that the French and American populations are equally healthy to begin with, I’m doubtful that we can draw any conclusions from the comparison here.

    I hope this doesn’t lead us to a sort of empirical nihilism, but at the moment I’m afraid that there is precious little empirical data to go on.

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