David Goldhill: What the world can’t tell us about health care

06/21/2013 5:36 PM

06/21/2013 5:36 PM

It’s a simple truism, often repeated, that other developed nations achieve better health outcomes than the United States does despite spending less money on care.

A June 16 column in the New York Times was typical: “What Sweden Can Tell Us About Obamacare.” Sweden spends less than half of what the U.S. spends on health care per capita, the author, Cornell University economist Robert Frank, points out, but achieves better outcomes by responding “efficiently” to treating illness, utilizing economies of scale for expensive procedures, and funding only treatments shown to be effective. To accomplish these objectives, he says, the Swedish model relies heavily on government authority and nonprofit institutions – certainly far more than the Affordable Care Act does.

It’s all so obvious, simple, widely agreed upon among health care experts – and completely irrelevant. Frank’s comparison reflects a common misunderstanding of the real relationships between health, health care and government policy in the U.S.

Yes, other nations do achieve better health outcomes, but this is almost entirely a matter of lifestyle (not “partly from lifestyle,” as Frank and so many others believe). Throughout the developed world, improvements in big things such as infant mortality, life span, even morbidity are almost completely attributable to diet; exercise; smoking, alcohol and drug usage; education; employment and income; family structure; environment; and community safety.

Next to these determinants, the additional contribution of more health care – along with its policy cousin, “access” to health care – is almost insignificant. It may be more accurate to say that other developed countries achieve better health results not in spite of spending less on care, but because they spend less on care. In doing so, they free up resources – especially public resources – for the things that really matter: education, day care, recreation, even roads and bridges. In the United States, our bloated health economy deprives other social needs of the resources required to genuinely improve and extend lives.

Of course, none of us personally finds health care or access to it insignificant. To us, any recommended treatment – even a “preventive” test – seems essential. Much of health care is useful, some of it even lifesaving, but few of us are aware of how many people need to have the latest screenings, pills and treatments for even one person to reap a benefit. (The website thennt.com shows these numbers for common treatments.) Health care is personal, which is why it’s so powerful politically.

Which brings us to the second fallacy in the conventional wisdom: that foreign health care is more efficient or better-regulated than American care. It often is, but the real difference is that in every other developed country’s system, someone actually has the authority and incentive to say “no.” While these systems vary (even including one, Singapore, that relies heavily on consumer choice to control demand), in each there is an actual health care budget somewhere that can’t be exceeded. It’s this effective limit on demand that allows, even causes, the other factors that health analysts credit with controlling cost: volume of care, prices, waste and overinvestment.

In contrast, the essential philosophy of U.S. policy is that no one should ever be denied any “needed” test, procedure or treatment. Obviously, this philosophy is imperfectly implemented: Many Americans remain outside the system and are harmed by the high prices that are the inevitable result of our unwillingness to control demand. Indeed, a desire to bring these people into the system underpins efforts to shift even more resources into health care.

What makes the U.S. unique is our refusal to empower anybody – the government, insurers or consumers – to say “no.” We don’t understand that there is no objective limitation on the need for health care; that unchecked, it will expand relentlessly no matter how healthy we get. In debating everything from Medicaid to mortality, our health care experts and policymakers ignore the data showing that most of our flood of care does little measurable good.

Medicare and Medicaid are essentially alone in the developed world as unbudgeted entitlements. Our tax subsidy for employer-provided health insurance has been essentially limitless. Strong new restrictions in the Affordable Care Act on private insurers’ ability to deny or cap claims extend this policy. And hospitals’ obligation to treat indigent walk-ins is almost unlimited – the government compensates for this “uncompensated” care.

Political debates over public roles versus private ones in care are a smoke screen; both Republicans and Democrats have pursued policies leading to what New York Times columnist David Brooks has called the federal government’s future as the “health care state.” Senior-advocacy groups are surely aware of the overwhelming data on excess and the danger of unnecessary surgeries and prescription drugs, yet that hasn’t weakened their support for the Part D prescription-drug entitlement nor their opposition to any Medicare spending controls. For all the talk of the uninsured, it was the hospital and drug industries that paid for much of the campaign to pass the Affordable Care Act. And it’s the hospitals that are now lobbying for holdout governors to expand Medicaid, reminding politicians that hospitals are among their states’ largest employers.

The American health care monster rests on a powerful political coalition of seniors groups, ideological liberals and what is by far the country’s largest industry. That influence is felt at every stage of policymaking and administration, impeding the government’s existing ample authority to drive quality, value and even safety. Their shared opposition to any attempt to control demand through government, or even private, action leaves us stuck with industrial policy posing as a public safety net – and not a very strong one.

Giving the U.S. government the same power over the health system that the Swedish government has wouldn’t make American health care like Sweden’s. It would only make our system more American – by transferring even more of our society’s resources to limitless, low-value care. Unless we find the political will to ever say “no” (or at least assign that capacity to insurers or consumers), we have little to learn from the health systems of Sweden – or Canada, Britain or any other developed country where care seems more efficient. Our mess is uniquely American; difficult though it may be, we need to find a uniquely American solution.

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