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March 06, 2007

Better Living Through Better Googling

Tyler Cowen quotes one of his readers saying:

[Americans] can get “cheap” European care if they like, just create extremely bad American HMO insurance, or don’t buy health care at all and go to Public hospitals. The reason the European systems are cheaper is not that they magically have less costs, it is that they give the consumer much less health care.

"These claims hold up under the scrutiny of Google," he claims. He should Google better. In their (damn good) paper on the variance between US health spending and costs in other countries, Uwe Reinhardt, Peter Hussey, and Gerard Anderson explain:

in 2000 the United States had fewer physicians per 1,000 population, physician visits per capita, acute care beds per capita, hospital admissions per 1,000 population, and acute care days per capita than the median OECD country. These simple comparisons suggest that Americans are receiving fewer real resources than are people in the median OECD country. There are, however, other explanations. A more comprehensive approach would be to compare the actual progression of treatment for a set of tracer conditions in various countries.
A study by the McKinsey Global Institute followed that more in-depth approach. The research team, which was advised by a number of prominent health economists, based its analysis on four tracer diseases: diabetes, cholelithiasis (gall stones), breast cancer, and lung cancer. Using PPP-adjusted U.S. dollars as the common yardstick, the McKinsey researchers found that in the study year of 1990 Americans spent about $1,000 (66 percent) more per capita on health care than Germans did. The researchers estimated that Americans paid 40 percent more per capita than Germans did but received 15 percent fewer real health care resources. A similar comparison revealed that the U.S. system used about 30 percent more inputs per capita than was used in the British system and spent about 75 percent more per capita on higher prices.

That study also found that if the Germans had paid American prices, they would have spent $390 more per person than we did. The claim that our system is more costly because we use more health care simply doesn't hold up. Our system is more costly because using it costs more. And while I'm sure the median American uses significantly more health resources than does the median resident of X, it's worth remembering that we have a system in which doctors, hospitals, and even patients are all economically encouraged to prescribe and except the maximum level of care. In other countries, the incentives are not there to overprescribe, to deploy ever more costly knock-off pharmaceuticals because the old version can now be purchased as a cheap generic, to be quick with the surgical referral. As the Dartmouth Atlas program has found, this excess of care does nothing for our health. It's a bug, not a feature. Sure costs a lot, though.

But, at base, we spend so much more on health care because individual units cost so much more for us than they do for other countries. As an American, the only way to approximate European care is to go to Europe. But as a European, you could approximate American care by demanding to pay 60%-80% more for all pharmaceuticals, or by sending your local hospital an extra check for $1,645 every year.

More evidence along these lines here.

March 6, 2007 in Health Care | Permalink

Comments

But on the bright side, I believe Cowen could start a trend in usage of appending the phrase "These claims hold up under the scrutiny of Google," to any absurd assertion, either verbally or in print.

Posted by: Petey | Mar 6, 2007 9:03:44 AM

as a European, you could approximate American care by demanding to pay 60%-80% more for all pharmaceuticals, or by sending your local hospital an extra check for $1,645 every year.

That's not really doing it properly. How about:

1. By choosing not to go to a doctor when you've got a problem, in the hope that it clears up.

2. By insisting upon an MRI when you see your primary care physician for a sore knee, and paying a good chunk of the cost.

3. By deleting the patient databases of every practitioner you use, so that they have to take all your information from scratch, ideally on paper. You'll probably need to take your own clipboard for best effect.

4. By deeming all practitioners whose telephone numbers end in '3' or '6' to be 'out of network'. (Adjust for simulated level of coverage.)

Posted by: pseudonymous in nc | Mar 6, 2007 9:12:51 AM

Sorry, but is that "except" supposed to be "expect" or "accept"? It's clearly one or the other. I'm not sure it makes any difference to the substance of the sentence, but it's going to bug me.

Posted by: jhupp | Mar 6, 2007 9:24:53 AM

I know anecdotal evidence it considered almost useless, but having first-hand experience with both the American healthcare system (as a payroll employee and as a self-employed individual) and now the German healthcare system, I can say without reservation that the latter is both more comprehensive and less costly.

Posted by: josephdietrich | Mar 6, 2007 9:36:41 AM

The reason the European systems are cheaper is not that they magically have less costs, it is that they give the consumer much less health care.

We need a name for the increased costs in the US that are a direct result of the higher privatization of our system. Suggestions:

"privatization tax"
"privatization premium"
"market fee"

Just some ideas. But we need to be able to say that healthcare is like drinking water, or fire protection--it costs more and is less available when it's delivered privately in a for-profit model than when it's guaranteed publicly.

Posted by: anonymous | Mar 6, 2007 9:39:12 AM

I split my time about evenly between France and Lebanon these days, and I've lived in Paris since 1999. And while I haven't read any detailed comparisons between American and French health care, I can say that in my personal experience, I get much more coverage for a lot less money in France.

Even if I'm not French, the fact that I pay into social security as an employee (albeit freelance) guarantees me access to affordable health care, whereas if I were to have a comparable freelance job in the US, I'd have no coverage at all, unless I could afford a private insurance (which I can't).

Furthermore, the canard that Europeans get much less health care certainly doesn't take into consideration that the French are, per capita, the most medicated population in the world -- even more than prozac-popping Americans.

So not only does your average employee get more health care in France than in the US, to my mind more importantly (particularly in an industrialized country), the lower class in France gets much more medical care than in the US. Students and the unemployed, for example, are also covered by social security, and all medical practitioners are required by law to accept social security (but that's what everyone uses, since it's a universal health care system), so there's not any question of only being able to go to certain doctors who may or may not take your insurance or medical plan.

Posted by: sean | Mar 6, 2007 9:50:23 AM

The paper may be "damn good," but it doesn't seem to be giving the full picture of what the McKinsey study actually found. Oddly enough, if you read the book by the guy from McKinsey, here's what he actually concludes:

In an attempt to test the limits of knowledge here, we studied the treatment of four diseases -- diabetes, cholelithiasis (gallstones), breast cancer, and lung cancer -- in three countries: Germany, the United Kingdom, and the United States. These three countries were the only countries for which comparable data existed for these diseases, either nationwide or for large regions. Even then we could not get data for diabetes in Germany. For the cancer cases we used an output measure of life expectancy after treatment. For diabetes and cholelithiasis, which have low mortality rates, we used a complex index developed by others to measure the quality of life after treatment. None of these measures of the products and services of health care are very good. However, they are a lot better than nothing, and good enough to tell us whether the United States is much less productive in these diseases than other countries. For the resources used in health care, we counted the "real" operational resources devoted to disease treatment. We counted such things as doctor and nurse hours, pharmaceutical consumption, hospital capital costs, etc.

The results were counterintuitive. The United States is more productive in all these diseases except for diabetes in the United Kingdom. The reasons for this result can be traced directly to the huge differences in the way the health care sector is organized and governed across these three countries. The UK health care system is almost entirely government owned and run. The government has maintained very tight budget control of the system, and doctors are mostly government employees on the salaries. The result has been that the United Kingdom has not invested as quickly in technologies that have dramatically improved the diagnostic capabilities of medicine and significantly reduced recovery time. For instance, the United Kingdom was slower than the United States in adopting laparoscopic surgery. (Laparoscopic surgery is done with tiny surgical instruments and a tiny flexible scope with a light, all inserted through a small incision to minimize tissue damage.) As a result, the United Kingdom had to keep cholelithiasis patients in the hospital considerably longer than the United States. The United Kingdom did not invest as much in CT scanning of lung cancer patients.

Posted by: Stuart Buck | Mar 6, 2007 10:05:44 AM

And that is why I love my (German) GP to bits.

Posted by: Fnor | Mar 6, 2007 10:18:10 AM

People like John Edwards is a big reason why our healthcare system is so expensive. The billions spent on torts, medical malpractice insurance and the unnecessary procedures that result from those torts(so doctors can cover their asses) is a cost socialized medicine doesn't have to deal with. Kind of like foreign car companys and unions.

Socialized medicine does not give equal access to all. In socialized medicine, indigenous populations and the elderly are often passed over for medical procedures in favor of younger, whiter candidates. Even those younger, whiter candidates have less access to advanced medical procedures and longer wait times than in the US. Of the women diagnosed with breast cancer in the US, one-fifth die compared to one-third in France and Germany and almost half in Britain and New Zealand. Of men diagnosed with prostate cancer, less than one-fifth die in the US compared to one-fourth in Canada, almost half in France and over half in Britain. Do you think a rich Brit is going to stay in England for his prostate surgery, or do you think he'll head over here?

As far as life expectancy, the life expectancy of a black American man is 68 years old. The life expectancy for an Asian American man is 81 years old. I believe white men are somwhere around 78 years old. All three of these men live in the same country. Our black population is about 14%, so I imagine that may drag down the average life expectancy in the US. As far as infant mortality rates, countries with socialized medicine don't try to save nearly the amount of underweight babies that US healthcare tries to save. A baby that is too premature is not given medical attention and simply left to die. And of course they don't count these premature babies they killed in their infant mortality stats. Tell me ladies, would you rather have a premie here, or in Europe somewhere?

Posted by: Captain Toke | Mar 6, 2007 10:21:20 AM

Captain Toke, citations please. Especially about the premature baby stats, since the "socialized medicine kills premies" line sounds an awful lot like bulljive.

Posted by: josephdietrich | Mar 6, 2007 10:54:29 AM

But on the bright side, I believe Cowen could start a trend in usage of appending the phrase "These claims hold up under the scrutiny of Google," to any absurd assertion, either verbally or in print.

Generic anarcho-libertarian commenters have already beaten him to it.

Oh, and guys? A particular person whose smoking and drug-using habits are increasing my health-care costs has already been exposed to the refutation of the "tort reform" argument. Repeatedly. The fact that it's shown up yet again is just part of the profile: dragging a baited line from a boat with a low-powered motor.

On the other hand, feel free to have at the latest iteration of the Europe == UK fallacy in comparing health care systems. :-)

Posted by: mds | Mar 6, 2007 10:59:42 AM

In addition: The charts in the "additional details" from this report also point to a variable as to why healthcare in America is so expensive.

Posted by: josephdietrich | Mar 6, 2007 11:05:57 AM

Captain Toke: consider the possibility that having "less access to advanced medical procedures" might be a good thing for the cost of health care, and even patients' health. Many of them, for which Medicare reimburses lavishly, have not been demonstrated to be superior to the previous generation's way of doing things. Note recent data on back surgery vs. watchful waiting for sciatica, Wennberg's work on regional variations in angioplasty, cardiac stents. Plenty of other examples out there. See chapter 5 of Maggie Mahar's book, Money-Driven Medicine.

Posted by: Emily | Mar 6, 2007 11:27:55 AM

"Captain Toke, citations please. Especially about the premature baby stats, since the "socialized medicine kills premies" line sounds an awful lot like bulljive."

Wikipedia-is that liberal enough for you?

"Also, infant mortality rates remain higher in the United States as well, despite declines in recent decades, and are in fact higher than the average of the European Union; however, this fails to take into effect, that premature biths are not counted as live births in most EU nations, potentially resulting in this dispairity."

Source

Posted by: Captain Toke | Mar 6, 2007 11:30:50 AM

"especially about the premature baby stats, since the "socialized medicine kills premies" line sounds an awful lot like bulljive."


There are a few studies out there on this. The US successfully delivers more live births at an earlier time of pregnancy than any other country in the world. I remember that Philadelphia for example attempted more deliveries at under 24 weeks than many other countries combined. These deliveries are considered premature infant deaths.

The infant mortality number touted by many people is crap, because it's comparing apples to oranges. The US has much, much, much better preemie care and is a leader at saving babies in the 2nd trimester.

That said, there are other questions that remain: 1) there does appear to be a significant difference in survival rates based on race 2) Does America have significantly more troublesome pregnancies and problem with deliveries in the 2nd trimester?

Posted by: hederman | Mar 6, 2007 11:57:04 AM

Toke, your "citation" does not point to any actual research beyond the CIA World Factbook or list the countries where premature infants are not counted as live births. To answer your question, were I anything but a rich American, I'd want to have a premature baby in Europe, specifically France.

Sean makes a good point: there is huge variability within Europe. The UK is probably undermedicated, but French doctors prescribe four times as much medicine. Germans prescribe twice as much, I believe.
To throw in another anecdote, in France the ubiquity of pharmacies is parallel to the ubiquity of pubs or newsagents in the UK.

Posted by: Ginger Yellow | Mar 6, 2007 12:29:12 PM

The US has far, far more babies born prematurely than other countries. Bragging that we then spend huge amounts of money keeping premies alive rather than spending far, far less getting their pregnant moms prenatal care is the definition of stupidity.

Posted by: SteveH | Mar 6, 2007 12:44:02 PM

Ginger,

I guess you missed the story about the 22 week gestation premie that was saved and sent home here in the US. I think the US has the best medicine as far as premature babies. Probably because we try to save premature babies here where they just throw em in the trash and act like they never existed in Europe and other socialized medicine countries.

Good luck to your premie in France.

"Bragging that we then spend huge amounts of money keeping premies alive rather than spending far, far less getting their pregnant moms prenatal care is the definition of stupidity."

Can you back up your assertion that we have a higher percentage of premies here compared to Europe?

Probably not since countries with socialized medicine don't keep stats on the premies that they allow to die.

Posted by: Captain Toke | Mar 6, 2007 1:42:51 PM

To answer your question, were I anything but a rich American, I'd want to have a premature baby in Europe, specifically France.

That would probably be a mistake, unless you're more concerned about cost than outcome.

Toke, in Europe deaths of premature babies are counted, just not as infant deaths. They're typically counted as perinatal mortality, i.e. stillbirths and deaths within the first few days of birth. If you compare estimates of perinatal mortality plus infant mortality, the US looks very good compared to Europe, consistent with what you said earlier. Part of that would be due to better resources, some to just trying.

Posted by: Sanpete | Mar 6, 2007 2:17:22 PM

Captain Toke,

If the US system is that great, why are surveys rating them not that high?
For example:
2005 Commonwealth Fund International Health Policy Survey of Sicker Adults

A new international survey supported by The Commonwealth Fund finds that one-third of U.S. patients with health problems reported experiencing medical mistakes, medication errors, or inaccurate or delayed lab results—the highest rate of any of the six nations surveyed. While sicker patients in all countries reported safety risks, poor care coordination, and inadequate chronic care treatment, with no country deemed best or worst overall, the United States stood out for high error rates, inefficient coordination of care, and high out-of-pocket costs resulting in forgone care.

2006 International Health Policy Survey of Primary Care Doctors

Primary care doctors in the U.S. are less likely than those in several other countries to be able to offer patients access to care outside regular office hours or to have systems that alert doctors to potentially harmful drug interactions. U.S. primary care physicians are also less likely to receive financial incentives for improving patient care, according to the Commonwealth Fund 2006 International Health Policy Survey published today on the Web site of the journal Health Affairs.


Posted by: Detlef | Mar 6, 2007 2:25:20 PM

To answer your question, were I anything but a rich American, I'd want to have a premature baby in Europe, specifically France.

Why?

Posted by: Dan | Mar 6, 2007 2:41:03 PM

The researchers estimated that Americans paid 40 percent more per capita than Germans did but received 15 percent fewer real health care resources.

The blurb at the link this comes from:

Higher health spending but lower use of health services adds up to much higher prices in the United States than in any other OECD country.

Ezra, this appears inconsistent with the trope that we use more medical care, which you repeat in your post. That and the quotes posted by Stuart Buck above make me wonder what's going on here.

Posted by: Sanpete | Mar 6, 2007 3:13:10 PM

Sanpete,

Toke, in Europe deaths of premature babies are counted, just not as infant deaths. They're typically counted as perinatal mortality, i.e. stillbirths and deaths within the first few days of birth. If you compare estimates of perinatal mortality plus infant mortality, the US looks very good compared to Europe, consistent with what you said earlier.

The WHO-Neonatal and Perinatal Mortality 2006 (pdf-file) seems to disagree?

Germany:----6----4----2----3
USA:--------7----4----4----5

(1. number: Perinatal mortality Rate, 2. number: Stillbirth Rate, 3. number: Early Neonatal Mortality Rate, 4. number: Neonatal Mortality Rate)

So if I follow your method of adding up "perinatal mortality plus infant mortality", I get:
6+4= 10 for Germany and
7+6= 13 for the USA?

Or we could agree that "Neonatal and Perinatal Mortality" in Germany and the USA aren´t that far away and simply look at the Under age 5 mortality rates 2004 (WHO) (pdf-file again).

Germany:----5
USA:--------8

And if my search results are to be believed, Germany does follow the WHO definitions.
a) "Live birth is the complete expulsion or extraction from its mother of a product of conception,
irrespective of the duration of the pregnancy, which, after such separation, breathes or shows any
other evidence of life, such as beating of the heart, pulsation of the umbilical cord, or definite
movement of voluntary muscles, whether or not the umbilical cord has been cut or the placenta is
attached; each product of such a birth is considered liveborn."
(In Germany any baby showing one of these signs is considered liveborn.)
b) "The legal requirements for registration of fetal deaths and live births vary between and even
within countries. WHO recommends that, if possible, all fetuses and infants weighing at least
500 g at birth, whether alive or dead, should be included in the statistics."
(Stillborn babies weighting at least 500 g at birth are included in German statistics.)

So I don´t see huge differences between German and American statistics. All the while admitting that I´m not an expert. :)

Posted by: Detlef | Mar 6, 2007 3:36:52 PM

"So I don´t see huge differences between German and American statistics. All the while admitting that I´m not an expert. :)"

Did you control for the differences in the mothers? The United States, and other ango-saxon countries, have a larger problem with teen pregnancies than nordic/german countries. Teen mothers are much more at risk for low-weight/preemie children.

If you're going to compare, you should account for the differences in mothers between the US and the comparison country.

I could argue that part of the problem of the US IMR rate isn't medicine, but the immorality rampant in our teenagers*. I'd have as much leg to stand on as those simply pointing to the US IMR rates as reason for health care failures.

*: I don't believe this to be true, but you can easily use the data and statistics to advocate a position that one holds to be true.

Posted by: hederman | Mar 6, 2007 4:54:47 PM

Detlef, you're right that the German numbers compare quite favorably to the US ones. My claim was about the US versus Europe. According to the source you draw from, the perinatal mortality rate for Europe is 13, the neonatal mortality rate 5, giving a total of 18, versus the US total of 12.

However, Europe includes Eastern Europe, which drives the numbers up. If you just take Northern Europe and Southern Europe, the total for each is 12, same as the US, and for Western Europe, 9, quite a bit better than the US.

So I take your point as it relates to the countries that have the more advanced health care systems, which are the relevant ones.

Posted by: Sanpete | Mar 6, 2007 4:55:06 PM

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