Don't Doc American Health Care

By Steve Forbes May 19, 2009

The U.S. medical system is hugely expensive and is not providing as good care to its citizens as socialized systems are in Canada and Europe--that will be a chief argument the Obama Administration employs to justify its new government health insurance plan for the 46 million Americans who are uninsured. The White House will further argue that competition from a public (i.e., government) company will force private insurers to cease underwriting the currently wasteful system. The Administration will also emphasize the alleged horrors of the status quo, claiming, for instance, that most personal bankruptcies in this country are caused by health care debts and that every year nearly 20,000 people die in the U.S. because they are uninsured.

Before swallowing these arguments, you should read a paper recently issued by the NationalCenter for Policy Analysis: "Health Care Reform: Do Other Countries Have the Answers?''. This paper gives a quick rebuttal to the notion that the U.S. health care system fails because of rising costs, inadequate quality of care and incomplete access. For those who want more information, the paper's footnotes will provide plenty of sources with which to find it.

Does the U.S. spend too much on health care? When comparing apples with apples and stethoscopes with stethoscopes, the reality is that in most areas--other than diagnostic equipment and research on new medicines--the U.S. actually does not devote more resources per capita than do socialized nations. But "the U.S. compares favorably when real resources are measured rather than monetary accounts. ... Countries account for long-term care and out-of-pocket spending differently. The accounting treatment of overhead and capital costs also varies." Moreover, "the U.S. has been neither worse nor better than the rest of the developed world at controlling expenditure growth." Our outlays grow at the same pace as everyone else's.

In certain areas, such as medical diagnostic equipment, we do have greater spending. Britain has only a fraction of the number of CT and MRI scanners per patient population that the U.S. has.

Moreover, the way in which other countries save money is by cheating their patients of care: "International spending comparisons typically ignore costs generated by limits on supply." Dialysis patients in 2002--04, for instance, had to wait 62 days for access in Canada versus 16 days in the U.S. Waiting lists for elective surgery, such as hip replacement, are notoriously long in other countries. These delays don't show up in spending for health care, but "waiting for care has economic costs in terms of sick pay and lost productivity, as well as negative health consequences."

One big rap against the U.S. is its infant mortality rates. At first glance we look like a laggard: Our rates are notoriously higher than those of other major industrial countries. Amazingly, however, it turns out that the gap exists partly because of the way in which live births are defined. In some countries an infant who dies soon after birth is, incredibly, not considered a live birth for statistical purposes! Social scientist Nicholas Eberstadt "finds that U.S. infants, stratified by birth weight, have a high[er] likelihood of survival."

Life expectancy? The differences are not related to medical care but "to such lifestyle choices as diet, exercise and smoking." Longevity in a state such as Minnesota or Utah is more than a match for those in, say, Norway or Britain. When you figure in all of Europe--the prosperous and the poorer areas--and compare groups by income and ethnicity, life expectancy in the U.S. suddenly looks good.

Now consider effective treatment of major afflictions: The U.S. beats others hands down. Americans with diseases such as cancer, diabetes and hypertension all have better health care outcomes than do their counterparts in Europe. "U.S. women have a 63% chance of living at least five years after a cancer diagnosis, compared with 56% for European women. Men in the U.S. have a five-year survival rate of 66%, compared with 47% for European men."

Are medical bills causing bankruptcies? Only in a minority of cases: 17% versus the popularized number of 50%. If people were allowed to buy true catastrophic health insurance--with limits on out-of-pocket expenses--the policy would be very affordable and would take care of most of those folks who are now being hit with bankruptcy-causing bills. As for the myth that socialized medicine is free, patients in most other developed countries pay more out-of-pocket health care costs than do patients in the U.S.!

When it comes to health care for low-income families versus that of their better-off peers, the poor in the U.S. suffer no more than their counterparts do in Canada and Europe.

The problem with health care is that patients don't control the resources--third parties do. Thus, there is no marketplace pressure for productivity or innovative ways of improving delivery. In those areas in which patients write the checks for medical care, productivity proliferates. Cosmetic surgery is a prime example. Unless the need for a procedure is a result of a disease or an accident, such procedures are paid for by the patient, not an insurer. "The real price of cosmetic surgery has declined over the past 15 years, despite substantial technological progress and a sixfold increase in demand."

Health Savings Accounts, properly implemented, would go a long way toward bringing about an entrepreneurial revolution in health care, one in which Americans would get more and better medicines and treatments for less.

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