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April 19, 2005

The Health of Nations: England

Welcome to the second installment of The Health of Nations (though it's the first one to sport a clever title).  I'm your host, Ezra, and I'll be taking you on a deadly-dull tour through England's health care system.  An uninteresting topic set in a country known for its dullness, should be a party.  And speaking of the party, you don't want to show up not knowing anybody.  So if you missed yesterday's edition on France, you might want to give it a look-see.

Da' Basics: Britain's health care system finds its roots in a document called the Beveridge report.  The report argued that the health care system Britain had in the 40's -- which covered about half the country and used political patronage as its sorting mechanism -- should be combined with the rest of the country's fragmented social programs and administered in a uniform way.  Thus the National Health Service was created.

The NHS is mostly funded through taxes -- 82% of it is, to be exact.  Of the remaining, 13% comes from employer-employee contributions (much like Social Security) and 4% is user fees.  Unlike France, Britain's health care system is entirely separate from employment, and there's no distinction between its social insurance aspects (covering those who contribute) and its public assistance aspects (covering those who need it).  The system simply takes care of everyone on British soil. 

Unlike Canada, Britain allows supplementary insurance for those wanting special treatment (shorter waits, private rooms, etc).  It's not nearly so widespread as in France (where 90% have it and the poor get it through public subsidies), but 11% have some form of SI and many jobs offer it as a perk.  To accommodate this, doctors can have both private and public practices, meaning they can treat patients under public rules complete with queues for non-pressing procedures while, at the same time, be performing the same procedures with quick turnaround for those with supplementary private insurance.  This obviously creates a certain degree of inequality in the system, and, indeed, it's a source of widespread discontent.

The NHS has a gatekeeper system in which every person who wants treatment must have a general practitioner (GP) as their primary care physician.  Patients can choose their PCP, and even switch if they don't like their choice.  The GP's get paid via a small monthly sum per patient (capitation), not adjusted for services rendered.  This is basically community rating -- GP's have long lists of patients, most don't need anything in particular during the month, so the small payment is pure profit on the majority of patients, who never come in, and thus covers the losses on the patients who do come in.  Since GP's get more money for more patients, they've an incentive to keep huge lists of people.  Since patients choose their GP, however, the GP theoretically can't cherrypick patients by looking for only the healthy ones.  But GP's can turn patients away by saying their list is full, so it seems possible that some degree of cherry-picking can go on.

Cost Control: I'm giving this it's own category because it's both what's right and what's wrong with the British system.  The NHS is a remarkably frugal operation.  Health expenditures in the UK accounted for 7.6% of GDP in 2002; in America, they were 14.6%, or almost double Britain's expenditure.  The cost differential comes from a few places.  First and foremost, single-payer systems are able limit budgets and negotiate better deals.  Further, the mode of reimbursement, capitation rather than fee-for-service, is much cheaper and carries with it a disincentive, rather than incentive, to treat.  In fee-for-service systems, the doctors get paid more if they run tests, perform surgeries, etc.  That leads to a certain profligacy, a willingness to advocate treatment when the patient may not need it.  On the other hand, capitation brings the opposite problem: an unwillingness to order treatment when the patient may need it.  As a result, the UK rate for coronary artery bypass surgery was only 20% of ours, renal dialysis is performed far less often, and there are significant worries about underprescription.  That's not to say everything is rationed, but much is.

Further, the capitation system has led to a severe shortage of doctors, with only 2 for every 1,000 people, far below the OECD average of 2.9 and the EU average of 3.3.  The lack of doctors and the paucity of funds have also led to long waiting times; 38% of patients wait more than four months for elective surgeries.  The basic issue is that, as Blair has admitted, the British health care system is severely underfunded, partially because Britain's got a low GDP per capita (though I don't think he admitted that part).

Interestingly, the NHS has become a major political football.  Check out the Labour splash page.  Every voter who heads to the Labour website is first greeted by a scare ad showing how much the Tories want them to pay for hospital procedures.  The main site prominently touts the improvements Labour's made to the speed of the system and the number of doctors, particularly specialists.  So, though cheap, the NHS is underfunded and providing relatively poor service and Britons know it. 

How Do We Stack Up?:  As noted above, America's health care system is much, much more expensive that Britain's, but also less generous.  But does that affect the outcomes? 

Yes, but only if compared to a functioning health care system.  When stacked up against ours, Britain's broken system still comes out on top.  American women lose 3,836 years of life per 100,000 while our men lose 6,648.  By comparison, British women lose 2,947 and their men sacrifice 4,815 (go here to see how this is calculated).  On the other hand, they have longer wait times and fewer doctors.  The disparity comes because America's system works okay for most, but not at all for many.  Britain's, by contrast, offers mediocre service but offers it to everyone in the country.  If they injected their health care system with the sort of cash we pump into ours -- which'd mean spending the equivalent of 7% more of their GDP on it, it's safe to say we'd be beaten quite handily. 

Sources: I stupidly closed some windows and so don't have as full an accounting of my sources as I did yesterday.  But I mainly used Thomas Bodenheimer's excellent Understanding Health Policy, OECD data sets, and the British government's websites. 

April 19, 2005 in Health Care, Health of Nations | Permalink

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» Health care from The Big Lowitzki
This week Ezra is going to be analyzing the healthcare systems of different nations (France, England, Germany, Australia, and Canada) around the world:There's been a lot of talk lately about the health care structures of various other countries, how th... [Read More]

Tracked on Apr 19, 2005 4:01:05 PM

» Nationalized malpractice insurance from Julie Saltman
Ezra and Matt have been talking NHS (Britain's National Health Service) today in the context of health insurance, so they didn't mention that NHS also provides what is essentially medical malpractice insurance for doctors in its employ. I've heard my... [Read More]

Tracked on Apr 20, 2005 11:09:32 PM

» Law and Medicine: United Kingdom from Electoral Math
Ezra's covered how the Brits handle medicine, but how do our friends across the pond handle the problem of negligent doctors? [Read More]

Tracked on Apr 21, 2005 12:39:21 PM

» Health care from The Big Lowitzki
This week Ezra is going to be analyzing the healthcare systems of different nations (France, England, Germany, Australia, and Canada) around the world:There's been a lot of talk lately about the health care structures of various other countries, how th... [Read More]

Tracked on Apr 22, 2005 6:55:19 PM

Comments

I want to thank you for putting together this stuff. It is fascinating.

Although I am generally conservative, I have long held the belief that we are a rich enough nation to provide at least basic medical care to all our citizens.

The trouble is keeping medical advancements, providing care, and keeping the costs managable. I am still not sold on a socialized medical system, but I am certainly ammendable to persuasion, and this infor is good to know.

I do wonder how much some of these comparisons are apples to oranges though. America is in an exception to so many general trends among western/industrialized nations, from our degree of religiousity to our birth rates to our economic numbers.

Posted by: Dave Justus | Apr 19, 2005 3:54:45 PM

More great stuff, Ezra, but I'm going to beat the drum that you need to cover how medical malpractice/errors are handled in each country.

Posted by: Electoral Math | Apr 19, 2005 3:55:31 PM

Make you a deal -- you cover Medical Malpractice stuff in all the countries and I'll link to it. These things are a lot of work and I'm just not convinced that Medical Malpractice is important when discussing health care structures.

Posted by: Ezra | Apr 19, 2005 4:00:44 PM

Sold.

Posted by: Electoral Math | Apr 19, 2005 4:26:45 PM

A few posters have commented that they are concerned that a "socialized" health care program would severely limit the pace of medical research and development that they perceive to be happening in the US. This is a common concern, but only if you tend to disregard the many very notable advancements that have been made in non-US countries over the past several years. The fact is, although a tremendous amount of medical r&d is happening here, much of it is very profit oriented and not necessarily conducive to finding real world health care solutions. Pharmcos spend many millions of dollars to develop and market chemicals and gadgets to make us look better and feel more comfortable, or to allow a doctor to show off some high tech pizzazz in the exam room - but meanwhile medical teams in Cuba and England and Norway develop innovative vaccines and antibiotic treatments for serious illnesses that get scant attention in US labs. Often times, medical research in the US has to be given a hard push to go in that direction. Years of telethons and donation drives in some cases.

Posted by: sprocket | Apr 19, 2005 5:05:34 PM

On medical malpractice. I don't know the details, but for a lot of things it seems like the NHS is responsible for paying.

There are doctors in pure private practice too. This is popular for psychiatrists who also want to do psycotherapy.

Also there's BUPA, which is an insurance HMO system that runs its own hospitals. Many believers in the NHS will tell you that the NHS is better, and it's probably true in a lot of places. The Radcliffe Infirmary probably is the best hospital in Oxford.

Posted by: Abby | Apr 19, 2005 5:46:06 PM

It's been a while since I was in England but had a medical situation that required care. I not only wasn't charged but was told they had no system for collecting from visitors. I was impressed.

Posted by: Nora L. Ingram | Apr 19, 2005 6:01:13 PM

I'm not convinced by all that money spent on research argument. From at what I gather it is at single percents, the OECD report on economics of US helth care system (http://www.olis.oecd.org/olis/2003doc.nsf/linkto/eco-wkp(2003 and a very good read on the subject)4) puts research as 2% of total health care spending (Table 3, page 16). I am not entirely sure if that includes 13 billion or so pharmaceuticals spend on drugs research, but 13 billion is less than one percent of total US health spending anyway...

Posted by: Teme | Apr 19, 2005 6:49:18 PM

Here's the Beveridge Report, for those interested. Beveridge worked for Lloyd George on the introduction of National Insurance, and his report -- composed in the midst of WW2 -- remains a touchstone of British social policy, and a foundation in many respects for the post-war Labour Government's policies.

An anecdotal note: GPs in the UK are highly-respected, as they're the front-line of medical care. From my own experience, 'family doctors' and those in similar general practice in the US are looked down upon, as if they had failed to become specialists.

The Radcliffe Infirmary probably is the best hospital in Oxford.

It is, after all, the teaching hospital for Oxford's clinical medical course.

Since this was part of the thread on France: medical students are more or less funded throughout their six-year course: the average post-graduation debt, after paying the flat-rate c. $2,000/year tuition fee, is c. $30,000, usually through low-rate student loans. Medical students also start their medical training at the age of 18 (or at least, straight out of school) rather than after a undergraduate degree; the course divides roughly into three pre-clinical years, three clinical years.

Finally, George Walden, a moderate Tory, argued that the main problem with Tory handling of healthcare (like education) was that most government ministers didn't actually use the public system. Tony Blair (and his family) use NHS hospitals; Margaret Thatcher went private. One of Labour's most useful funding innovations was to make it worthwhile for consultants to devote their hours to the NHS, rather than dividing them between NHS and private practice: a reminder that Aneurin Bevan, the architect of the NHS, had to placate the consultants in the late 1940s by 'stuffing their mouths with gold'.

Posted by: nick | Apr 19, 2005 8:18:03 PM

Britain vs. England:
Which is it? I assume the NHS covers the whole UK, and not just England?

Posted by: forumposter | Apr 19, 2005 10:25:06 PM

Just curious where this fits in.

One thing about our healthcare system is the difference between how much something costs and how much is paid. Physicians charge high, because HMO's negotiate down, or flat out refuse to pay more than a certain percentage, specific case being Tricare.

A doctor never gets the amount of money he/she wants for the procedure. Yet, it seems, that so much is made of healthcare costs. So is that cost in total charged or cost in total paid?

Posted by: Cassidy | Apr 20, 2005 5:46:14 AM

As I understand it, "the NHS" covers all of Britain, but policy and funding in Scotland and Wales is devolved.

Re: private v public in the UK. Obviously individual experiences are all different, but the general opinion seems to be that private hospitals are better for simple, elective surgery, while the NHS is much better at more complicated procedures and of course emergencies.

Ezra's round-up doesn't take into account the huge changes that have taken place in the NHS since the early 90s. Focus has increasingly shifted, thanks mainly to Blair, from the idea of NHS as a monolithic payer/provider and towards the idea of the NHS as an amorphous set of public sector health values, the key of which is "free at the point of use". These days many simple procedures like cataract surgery are contracted out to the private sector (often in "mobile clinics") with the NHS stumping up the cost. Similarly, most new hospitals are actually built, maintained and serviced by private sector concessionaires, with the government paying a supposedly performance related service charge over 30 years instead of upfront capital. Former NHS staff, particularly cleaners, are transferred to the concessionaires and become private sector employees. There's a lot of debate about the merits of such moves, but the point is that the picture is much more complicated than it might at first appear.

Finally, you do not want Britain's system. It's better than the US one, but that's not saying a lot.

Posted by: Ginger Yellow | Apr 20, 2005 7:47:23 AM

I realize it's probably the best figure available, but I wonder about the years of lost life metric's suitability for cross-country (or maybe just cross-continent) comparisons. Obviously the quality of trauma care is a factor in evaluating health systems, but the US does have a significantly higher violent death rate, and somewhat more fatal automobile accidents. I imagine there are other similar causes of death, too, that are hard to consider as failings of the health system and aren't represented equally across countries. And these causes of death factor in disproportionately since they're most likely to happen to younger people, who are not only more heavily weighted in the calculation due to the proportion of the population they represent, but also, under the formula, lose more years of life when they die, driving their contribution to the total tally up.

Posted by: tom | Apr 20, 2005 10:42:00 AM

A bit more info on the "underfunded" bit: basically Labour set up the NHS, a looong time ago. The conservatives cried in shock at the horrible socialist program, that cost so much in evil taxes, and when they accessed power they tried to starve it (in order to quietly kill it later of course), most prominently during the dark Tatcher years. So, no investement was made on the antique infrastructure and the NHS became more and more anemic. Then Labour regain power, and first refuse to pump money in the NHS to prove that they were not evil "tax-and-spend"ers. Meanwhile, the population got used to nice free care, but moan at the horrendous deterioration and bad service... but of course do not want to have the taxes raised to pay for a better service!
So result: today it's not fashionable to starve the NHS to death, and both parties are trying to get out of this situation through various dubious part-privatisation schemes (IMHO).
Meanwhile I have to wait 5 days if I want to see my GP...

Posted by: Matthew in the UK | Apr 20, 2005 11:29:02 AM

What Tom said, unless we're misjudging how the PYLL is caluclated and it actually excludes deaths by violence and auto accident. If it doesn't, presumably it could be recalculated.

Posted by: rd | Apr 20, 2005 11:53:39 AM

Two quick points. Firstly we have to be careful not to conflate total spending with health "output". In fact since 2000 the UK has been committed to matching average EU health spend - yet much of this investment has been lost in the system via cost inflation, producer rents, pay etc. While this has certainly lubricated the wheels of reform, focus is only now being directed towards the system's output and effectiveness. Important also to remember here is that there is no optimal health spend however the system is organised... in the UK's case costs are controlled at the micro level through gatekeeping and taps at the macro level controlled through annual expenditure plans going through Parliament i.e. collective expression of health demand. All the same the NHS performs (perhaps surprisingly) well on international comparisons e.g. for primary care effectiveness ranks 2nd in OECD.

Secondly, for those who haven't been following the economies of Europe over the last few years, the UK no longer has a "low GDP per captia" - in fact it now has the highest out of all the major European countries (France, Germany, Italy, Spain included). Steady growth over the last 10 years has allowed for almost a doubling of real investment in health without a corresponding large rise in taxes.

Posted by: Anuran | Apr 20, 2005 12:15:23 PM

Five days to see a GP. Good lord, you are primitive over there.

I think the whole GP thing is part of the problem. What we really need is nurses. Nurses super well trained to handle the 90% of problems like ear infection and sprains and stitches and also be able to recognize when they need to pass off to a doctor. Right now we have the equivenlent of nuclear physisists changing the oil in our car. We need to have a system that correctly diagnoses the problem and then applies the correct amount of expertise. Something that is much more possible with the technology and population patterns we have today. The GP was something that evolved when there was very little medical infarastructure and one guy had to do it all.


Posted by: cw | Apr 20, 2005 12:20:35 PM

For a really embaressing comparison you should look at the Costa Rican health care system. This small "developing" Central American country beats the U.S. on may of the standard health statistics by using a combination of public and private health care similar to England's.

Posted by: doug blum | Apr 20, 2005 12:24:13 PM

5 days to see your GP? Last time I tried to make a routine appointment to see my internist at Kaiser Permanente here in Oakland I had to wait more than a month. Even seeing my doctor at an independent practice in San Francisco when I was on Blue Cross would take weeks.

I don't have any major medical problems, but I would take the NHS over American private medical care any day (22 years on the NHS, 6 on various plans here in the US).

Posted by: Jacob Davies | Apr 20, 2005 12:46:48 PM

cw: They did something similar to that a few years ago, when they launched NHS Direct, which is basically an enormous diagnostic call centre staffed by nurses (or at least medically trained types, I'm not sure what their exact qualifications are). It's supposed to take some of the diagnostic strain off GPs and lower the number of unnecessary trips to the doctor (what with it being free, people often go to the doctor for the most trivial of complaints). It's too early to tell what the impact will be, but it has to be said most people viewed it as a money saving thing, not a positive reform.

Posted by: Ginger Yellow | Apr 20, 2005 1:06:48 PM

Ginger:

I think that service is avilable pretty widely in the US. It is in Madison and Seattle. Different hospitals offer it and it's available 24 hours a day and it's free. It's a good thing, but not exactly what I was talking about. I'm talking about what they call a nurse-practitioner: a nurse trained to diagnose and treat the most common illnesses and injuries. They have it here in a few places but it's not widely used.

I think we really need to review the way we deliver treatment. All the assumptions that have evolved over the past two or three hundred years. How medical people are trained, who should do what, how should they do it. I'm no expert, but from my experience the whole medical system operates like some kind of mideval guild. It's ultra hierarchical, intentionally invested with mystery, requires an increadibly arduous and tradition-directed training process, which probably is not appropriate to current needs. It's like a priesthood with all it's rituals and mysteries and requirements.

Think about it. When you go see your GP, what do they really do and how much time do they really spend? 90% of the time it takes 2 minutes. Do you really see any of their expertise in action? Do they do anything that a well trained lay-person couldn't do?

Posted by: cw | Apr 20, 2005 1:41:12 PM

Ezra, you’re doing us an excellent service with these summaries. The UK one seemed very accurate to me (most of my life in UK, now in USA), although it was a surprise to read that even 4% of NHS income comes from user fees – I would have guessed less. I assume this must be the prescription charge – a flat rate (about $12) per item to working adults, free to everyone else. As far as I know, everything else in the system is free at point of delivery to anyone, be it 5 minutes of a doctor’s time, brain surgery, or anything in between. Your point about underfunding being the system’s problem is well made. I have long thought what an amazing system the UK could have if the amount spent on health in the US was poured into the NHS setup.

You make the excellent point that the US fee for service system encourages over-investigation, overspending generally. And it’s not just the payment structure that does this. American doctors are trained to practice highly defensive medicine. Test for everything, exclude everything, as a first-line strategy. Of course the ever-present possibility of malpractice suits only encourages this approach. So even if the US flipped its funding system to something a little more equitable, it would probably still be a lot costlier per patient to achieve the same outcomes than it is in, say, the UK.

Research costs as an argument for the current US system are pretty much a red herring I think. Breakthrough stuff is done across the world at, mainly, academic institutions. Drug firms might fund some of this, but mostly they don’t – they simply buy the breakthroughs once they’ve happened, and market them. Marcia Angell’s stunning, must-read “The Truth About The Drug Companies” covers this brilliantly. (She was the Editor in Chief of the New England Journal of Medicine, and knows her stuff.)

Seems to me that at the end of the day, the US has to decide whether it is acceptable, in the world’s richest country, for millions of people to fear the cost of being sick – with this number growing every day. It’s a moral/political choice in the end, rather than a purely economic one.


Posted by: Michael Rosen | Apr 20, 2005 2:25:56 PM

Ezra, you’re doing us an excellent service with these summaries. The UK one seemed very accurate to me (most of my life in UK, now in USA), although it was a surprise to read that even 4% of NHS income comes from user fees – I would have guessed less. I assume this must be the prescription charge – a flat rate (about $12) per item to working adults, free to everyone else. As far as I know, everything else in the system is free at point of delivery to anyone, be it 5 minutes of a doctor’s time, brain surgery, or anything in between. Your point about underfunding being the system’s problem is well made. I have long thought what an amazing system the UK could have if the amount spent on health in the US was poured into the NHS setup.

You make the excellent point that the US fee for service system encourages over-investigation, overspending generally. And it’s not just the payment structure that does this. American doctors are trained to practice highly defensive medicine. Test for everything, exclude everything, as a first-line strategy. Of course the ever-present possibility of malpractice suits only encourages this approach. So even if the US flipped its funding system to something a little more equitable, it would probably still be a lot costlier per patient to achieve the same outcomes than it is in, say, the UK.

Research costs as an argument for the current US system are pretty much a red herring I think. Breakthrough stuff is done across the world at, mainly, academic institutions. Drug firms might fund some of this, but mostly they don’t – they simply buy the breakthroughs once they’ve happened, and market them. Marcia Angell’s stunning, must-read “The Truth About The Drug Companies” covers this brilliantly. (She was the Editor in Chief of the New England Journal of Medicine, and knows her stuff.)

Seems to me that at the end of the day, the US has to decide whether it is acceptable, in the world’s richest country, for millions of people to fear the cost of being sick – with this number growing every day. It’s a moral/political choice in the end, rather than a purely economic one.


Posted by: Michael Rosen | Apr 20, 2005 2:39:55 PM

Jacob Davies,

It's interesting that you negatively compared Kaiser Permanente to NHS, the British Medical Journal published a study a couple of years ago that pointed to Kaiser as the model for the future of NHS (I think Blair's Health Minister endorsed the study-- but I don't know what came of it).
http://bmj.bmjjournals.com/cgi/content/abstract/327/7426/1257

Posted by: beowulf | Apr 20, 2005 2:53:52 PM

Ezra, you’re doing us an excellent service with these summaries. The UK one seemed very accurate to me (most of my life in UK, now in USA), although it was a surprise to read that even 4% of NHS income comes from user fees – I would have guessed less. I assume this must be the prescription charge – a flat rate (about $12) per item to working adults, free to everyone else. As far as I know, everything else in the system is free at point of delivery to anyone, be it 5 minutes of a doctor’s time, brain surgery, or anything in between. Your point about underfunding being the system’s problem is well made. I have long thought what an amazing system the UK could have if the amount spent on health in the US was poured into the NHS setup.

You make the excellent point that the US fee for service system encourages over-investigation, overspending generally. And it’s not just the payment structure that does this. American doctors are trained to practice highly defensive medicine. Test for everything, exclude everything, as a first-line strategy. Of course the ever-present possibility of malpractice suits only encourages this approach. So even if the US flipped its funding system to something a little more equitable, it would probably still be a lot costlier per patient to achieve the same outcomes than it is in, say, the UK.

Research costs as an argument for the current US system are pretty much a red herring I think. Breakthrough stuff is done across the world at, mainly, academic institutions. Drug firms might fund some of this, but mostly they don’t – they simply buy the breakthroughs once they’ve happened, and market them. Marcia Angell’s stunning, must-read “The Truth About The Drug Companies” covers this brilliantly. (She was the Editor in Chief of the New England Journal of Medicine, and knows her stuff.)

Seems to me that at the end of the day, the US has to decide whether it is acceptable, in the world’s richest country, for millions of people to fear the cost of being sick – with this number growing every day. It’s a moral/political choice in the end, rather than a purely economic one.


Posted by: Michael Rosen | Apr 20, 2005 3:14:24 PM

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