Assurance Universelle de Santé Posted by: Dale Franks
on Thursday, April 27, 2006
OK, let's take another look at Universal Health Coverage.
In reference to yesterday's post on France and Germany: Some people, evidently thought the point of yesterday's post was to criticize the French system. Some people are way too sensitive. I explained how the French system worked. Along the way, I pointed out some things that the French themselves are concerned about. This constitutes some sort of weird screed, apparently.
What I was supposed to do was to rave about how wonderful the French system is, and proclaim an undying preference for the medical coverage system in France over the system in the US.
That's not gonna happen.
And it's not because I have sworn eternal enmity against any scheme of universal health care coverage. In fact, not only have I not done that, I've done quite the opposite. Nor is it because I like the current US system, which sucks.
What is troubling about the French system is the cost. Health care insurance premiums alone, through the contributions to the Union de Récouvrement des cotisations de Sécurité Sociale et d’Allocations Familiales and the newly earmarked Contribution Sociale Généralisée make up 18.7% of payroll costs. The Employer pays 12.8% of payroll for URSSAF. The employee pays 0.8% of payroll to URSSAF, and 5.1% to the CSG. Sure, you can go to a doctor's office for €7 or so, but that isn't the cost you're paying. Think about it: Out of whose pocket is that 12.8% employer "contribution" coming from? Hint: It isn't the employer's.
By contrast, in the US, life, health, and disability insurance combined was 7.7% of payroll for US employers, and about 3.1% for employees.
Now, let's do the math on this. About 16% of Americans are medically uninsured. (Oh, and keep in mind that this doesn't mean that the 16% doesn't have access to medical care. You can walk into any emergency room in any hospital in the country, and you will receive medical care, irrespective of your ability to pay.) So, let's assume that we can implement the French plan, as is. To cover the remaining 15% of the population, payroll "contributions" for health insurance would have to increase by 73%. That's a pretty steep increase relative to the increased health insurance coverage we'd be buying.
And I'm not sure even that increase would be enough, for a couple of reasons. As it is, the French system still spends more than it takes in in revenues. I'm not sure an American implementation wouldn't be even worse. What the advocates of the French syste, like Ezra Klein, implicitly assume, is that the French system would work here the same way it works in France. There's no evidence whatsoever that such an assumption would be true.
First, cross cultural comparisons of medical care are just faulty. I mean, the Japanese smoke like chimneys, but they have a life expectancy of over 80 years. Why don't their hearts explode as their lungs blacken and shrivel by the time they're 40? Most likely, its because their national diet is significantly different, and apparently more healthy, than ours is. Juts because the French system provides better outcomes at a lower cost per GDP than the US system does, doesn't mean that it will work the same over here. Americans get sick at different rates, and with different maladies, than the French do.
Second, the cultural climate is different. For instance, the French malpractice system has far lower rates of malpractice lawsuits, and this was true before 2002, when the French system was, on paper, quite similar to the US system. But, even then, filing a lawsuit in France is way more difficult than in the US. Like the wheels of the gods, the wheels of French justice grind slowly. And not only is it harder, and more time consuming to file a lawsuit in France, jury trials aren't available in the civil justice system. Instead, decisions are rendered by a judge, or a tribunal of judges. There are no runaway juries in French Tort law.
Now, this isn't to say that malpractice torts are a huge component of US health costs, at least, not directly (although they aren't insignificant). But they contribute significantly to them indirectly. For instance, as even the French Consulate in New York points out to potential French travelers to the US:
In the event of hospitalization, doctors will recommend the hospital with which they are affiliated. They may sometimes be very (even overly) meticulous, sending you for lab tests or x-rays on even the slightest suspicion though these might not be necessary (the medical profession fears malpractice suits which are very common in the United States).
The higher level of malpractice suits are responsible for inflating medical costs through doctors practicing defensive medicine. In addition, malpractice insurance rates, often in excess of $100,000 per year, means that physician costs in the US are on the order of four times the cost in Europe. Moreover, in France, patients buy medical malpractice insurance for about €10 per person. French medical malpractice standards are also quite different.
The French medical system isn't a bad one by most standards. The French seem to like it. And the French system is a reimbursement system. That means that you have to pay the doctor at the point of service. Under the CMU, if you go to a CMU physician, you present your health card at the time of payment, and the government will re-imburse the money directly to your bank account, less the co-pay. And, if you go to a non-CMU doctor, you still have to fill out and mail in all the paperwork. But, in both cases, you have to pay the money up front, which tends to cause patients to ration their healthcare.
OK, OK, I know I made a snarky comment about the "unofficial waiting list", but that was meant to be humorous, not a serious criticism. In actuality, allowing people to ration their own medical care is good thing. But, my point was that despite claims of a no waiting list in France, there is, in fact, an unofficial waiting list, because patients ration their own health care demand.
On the whole, it seems to work well—with the exception of cost issues—in France. America is very much unlike France, and assuming the French system could be more or less transplanted here is an assumption based on faith.
And yet, the proponents of that system—yes, Ezra, I'm talking about you—have the temerity to say things like, "Sometimes I wonder if the free market isn't faith-based." Yeah. You're a real member of the "reality-based community". But I think you have to explain on one hand how you can complain that a government-run health care program like "Medicare alone has a $65 trillion unfunded liability", while asserting that essentially expanding Medicare to the whole population will magically solve the problem with the cost of medical care. I mean, talk about your act of faith. The government already spends 45¢ of every health dollar spent in America, and the system is heading straight for the rocks. But if only the government paid 100%, then things would be all better. We can't even administer medicare and medicaid properly, but if we only extended it to everyone, our problems would be solved.
Go on. Pull the other one.
Moreover, the US system isn't a free-market system. Individuals, by and large, don't buy health care policies. Health insurance is employer provided. In effect, however, this is underwritten by the US government by making health care premiums deductible for businesses, which results in billions of dollars in lost revenues for the Federal government. And then, of course, you have to throw in the $850 billion or so that the state and federal governments spend outright to provide health care.
And, of course, once you hit 65, you're on the health care gravy train, because you've got your Medicare, which the government does pay for. And now, it pays for prescription drugs, too.
Why do we spend too much for health care in the US? The Heartland Institute has listed several reasons:
1) Government subsidies to health care increases demand by artificially lowering costs.
2) Favorable tax treatment of employer-provided health care has the same effect.
3) Lower-income people without health care must rely on emergency room health care delivery at substantially higher cost.
4) Health care buyers and sellers meet in a "market" that is heavily regulated by the government.
5) State governments increase health care costs by mandating benefit coverage.
6) State governments artificially reduce the supply of health care by requiring Certificates of Need before health care providers can expand services.
7) States interfere with the creation and operation of PPOs by fixing prices or the range of services they can offer.
So, really, we have what is, in many ways, the worst of both worlds. We have a market-based system, but one in which market incentives are minimized through regulation and subsidies. In effect, government policy bids up health care prices by distoring market forces.
It's no wonder that more and more people are looking at single-payer, government-provided health care as an alternative to what we already have. At the very least, a single payer system would end the inefficient and fragmented ways by which health care is currently purchased.
The US Health care system costs too much, and provides far worse outcomes than it should at the cost. And the reasons above aren't the only ones. We have a system where the people who consume health care are not the people who pay for it. General Motors isn't being bankrupted because there's a free market in health care. They're being bankrupted because there isn't. GM is picking up the tab for health care, while their employees get to use more or less as much of it as they want.
But, health insurance in the US isn't insurance. The purpose of insurance is to indemnify you against loss. Just as car insurance doesn't pay for oil changes and tire rotations, basic medical coverage shouldn't cover every doctor's visit for the sniffles. But that's exactly what "health insurance" in the US primarily does. And that's also why it costs so much. Oh, and because this system encourages consumers to over-consume health care, it forces third parties to control costs in ways that interfere with patient choice, and even in the medical decisions made by doctors.
If auto insurance covered oil changes with a $2 co-pay, 80% of the cost of new tires, and free 12,000 mile service, then auto insurance would be pretty darn expensive, too. Especially if your car dealer had to pay for it, instead of you. The US health care system is failing, but not because of the free market. For the free market to get the blame, there'd actually have to be one.
Now, obviously, the two situations aren't perfectly congruent. Some personal maintenance for your body, like breast exams for the ladies, or those hot, sexy, anal probes for men, should be covered as preventative care, since failure to do them can lead to huge costs later on.
In a past issue (PDF) of The New Libertarian, we discussed health care reform in some detail. So there's no need to cover all that ground. In brief though, the system should incorporate the following reforms, which are, really, a wholesale overhaul of the US health system.
1) Eliminate the tax breaks for employer-provided health care. This would force employers out of the health coverage business. Since employee salaries would still be covered under corporate tax law, employers could transfer that money into direct compensation. 2) Change private health insurance purchases to pre-tax expenses for individuals, so that the whole cost of health insurance can be written off. Voluntary contributions for covering the medical care of the poor and indigent can be written off at triple the amount contributed. Insurers who contribute to medical coverage for the poor and indigent may be written off at the same rate. 3) Allow states to mandate a catastrophic care/hospitalization/preventative care minimum policy, which all insurers must offer to every inhabitant of the state. The price for all persons must be the same, and no one can be denied coverage. Allow anyone on the country to purchase health insurance regulated by the state of their choice. 4) Reform malpractice lawsuits, at the very least, by requiring an affidavit from a medical professional that actual malpractice has occurred, and by allowing insurers and customers to enter voluntary arbitration agreements. 5) Suspend the medical licenses of negligent physicians on the first offense. This should not, by the way, be an AMA responsibility. We want this decision to be made by some body independent of the AMA, whose primary goal, of course, is to protect doctors.
Let's make health care more free market, not less. Let's give individuals responsibility for their own coverage, so that they can make medical decisions based on their personal cost-benefit calculations, and ration their own care as they see fit. This goes back to my "unofficial waiting list" comment. Medical care is a scarce, limited resource. No matter what system we have, health care will be rationed. Right now, the rationing is done by price alone, since demand isn't restrained due to third-party payments. In Canada, and Britain, the rationing is explicit, in terms of long wait times for surgical and other serious treatments.
Rationing is a fact of life. It cannot be wished away. I propose that consumers ration their own demand. Others, apparently, desire the rationing to be done through some form of government fiat.
Finally—and this is the last bit—Ezra Klein, and others posit that health care is a "right" because we have all agreed that it is. This is, perhaps, the most outstandingly foolish argument I can imagine. By that reasoning, if we all decide that you don't have freedom of speech, then it isn’t a right any longer. And, frankly, if I was one of the "Bush is Hitler leading us to fascism" crowd, then arguing that whatever the cousin-marrying, Jesus-freak, red-state voters decide my rights are, is what I gotta live by, then that line about "rights being what we decide they are" is the last frickin' argument I'd advance under any circumstances.
Once we get into the business of defining rights as "whatever we all agree you should have", then there aren't any rights at all. There are only privileges exercised at the sufferance of society. I think the Founders of the Republic would have a problem with that. I know I do.
We may all agree that we should provide universal health coverage, because we're such hoopy froods, and we have the money to burn, and it would be a nice thing to do. That doesn't make it a right.
Err so the french pay 19% of payroll into insurance, and then don’t have to worry about deductables or anything else, cover all citizens, and have better health outcomes.
We pay 10%, fail to cover a bunch of people, and are forced to pay up the wazoo for emergency room visits for those folks. We also have deductables and nasty cost increases each year.
I think I prefer their system.
The "well they have a different culture" thing doesn’t work, since EVERY industrialized country has better coverage for lower costs with better results. I mean, it can’t be that every single industrialized country has a healthier country then us, can it? I can see the French, with their obsession with good food. Or the Japanese, with a lot of rice and fish. But Germany? England?
WE fail to cover a bunch of people, or a bunch of people FAIL to take care of their own coverage? Why is the collective responsible for everyone’s coverage?! Do you know how many of the unisured in the US choose not to be insured? There are more than a couple.
And how much of a bunch of people’s inability to get their own coverage is because of government intervention (take NJ for example) that prevents the consumer from buying low cost, high-deductible insurance? It’s more than a few.
One other feature is transparency. Rating systems both based on objective measures and patient opinions for various doctors and institutions should be put in place and made public. This allows patients to make choices and if we had an insurance system were sert fees were given for basic procedures then providers could compete with patients paying or keeping the difference. It could get complex, but so is a system that monitors and charges for every aspirin. Shifting the 30 + % administrative bookkeeping and administrative is a first step.
Also there is increasing evidence that reporting mistakes to patients and correcting them significantly cuts malpractice claims (which are exceedingly inefficient with the majority of victims not seeking redress and a huge number of claimants engaged in frivilous suits) while allowing the system to reform itself.
We have held ourselves hostage at the cost of hundreds of billions because doctors don’t want to admit they’re not perfect. It’s time we stopped letting them shape the system.
Certainly they still have a role, but counseling and education of patients (and this is part of a true market where consumers have information including evaluation of choices) falls and must fall more on nurse, nurse practioners, doctor’s assistants and therapists who can economically be deployed long enough to provide real medicine rather than doctors who tend to prefer 5 minute slots in which they set the agenda.