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.