Wednesday, October 3, 2012

International health care comparisons



There is only one proven way for health care costs to be controlled and that is for the government to control them by setting prices. Every other method has mixed results at best and terrible results at worst.

In the 1960s, there were not huge discrepancies in costs of care between countries. Since then, medical technology has improved significantly but so has the cost of the care across the board. Some have just grown faster than others. Japan, Spain, and Britain all have a heavy handed approach to health care administration and their costs have stayed roughly in line with each other; growing from 4% of GDP in 1960 to 8% in 2010. Switzerland, which has a government regulated free-market approach, has experienced faster cost growth than other European nations. The United States and their relatively unregulated free market approach has had health care costs spiral out of control.

In Britain, all health care workers are employees of the Crown with all costs and wages set and approved by such authority. All costs are paid by taxes. This is true socialized medicine. Britain, despite spending less than half of what the United States does, has higher life expectancy, lower infant death rates, and significantly less medical mistakes.

Spain uses a single-payer system where all health insurance is provided by the government with little to no out of pocket costs. Reimbursement rates are set by the government. This is similar to America;s neighbor to the north, Canada. Both have achieved world class results of keeping costs low while providing universal access.

Japan uses a system of mixed employer-based and government provided health insurance, but the central government has a vice like grip on prices that doctors and hospitals can charge. Despite the Japanese visiting the doctor 4 times more on average than their American counterparts, they still spend only half as much while receiving higher quality of care. 

In all of these countries though, there are complaints of rude service, long waits times, and difficulty finding specialized care. If you have a rare, life-threatening disease that will kill you in quick order, then you are out of luck. These are system meant for the common cold as opposed to brain surgery.

Switzerland allows the free market to determine how much private insurers can charge individuals up to a point set by the government. The government provides subsidies to those who can not afford it. Access is nearly universal. They try to achieve a balance between costs, speed, and providing specialized care. One way of doing that is cost sharing between the government, insurer, and the patient, so that everyone has an incentive to keep costs down and avoid unnecessary care.

The United States can learn a lesson or two from Switzerland. The new health care law in the US regulates the free market instead of moving to a more socialized system, where cost-sharing is done by a myriad of organizations that have tried to maximize profit instead of holding down costs. The only time that the US was able to control its costs was during the 1990s using HMOs, which the Affordable Care Act brings back with a new name - Coordinated Care Organizations. The true disease of the American system is cost disease. By following the Swiss example, perhaps we can get that down by providing less care...

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