I have been asked several times on why I comment on healthcare reform and financing issues in the U.S. Well, Asian countries such as China are embarking on massive investment in healthcare systems and the choices they make and the resulting system will determine the economic burden that Asia determines is acceptable to bear, the priorities of alleviating poverty, illiteracy, and unemployment notwithstanding. Ironically these latter priorities are becoming more substantial in the U.S. as well. In reading between the lines, I’m sensing that the primary reason to choose national healthcare systems is the ability to control the allocation and distribution of resources (ration and price fix the services provided). It appears that healthcare as an industry is becoming a government controlled utility. This may not lead to the best of the best but it certainly provides a standard of care that usually is acceptable to the majority of the public. You may find the occasional disgruntled Canadian, Australian, or European but I believe overall they are satisfied with their healthcare systems (though pretty dissatisfied with the taxes they pay!) . I would presume 40 million Americans and climbing are at the very least uncertain about the viability and efficiency of the U.S. healthcare system and the ability to continue to finance it in its current form. But the idea that economies do better or thrive because of national healthcare systems is laughable. Europe/Canada has typically lagged the U.S. in GDP growth rates and innovation primarily because of its preoccupations with social safety nets and the high tax rates required to finance them. Economies which thrive are those with the lowest possible taxation rates which support optimal productivity of a population such as Hong Kong, Singapore, and Dubai. Yes, Americans may spend more for more variable outcomes but that is a consequence of capitalism. Some people have Bentleys and others have (or used to have) Chryslers. Should we eliminate this variability and force everyone to drive a Honda?
Also the throwing around of supportive statistics such as…
America spends as much as 15.3 percent of its GDP on health care, Switzerland 11.3 percent, France 11.1 percent, Germany 10.4 percent, Canada 10 percent, Portugal 10 percent, Denmark 9.5 percent, New Zealand 9.4 percent, the Netherlands 9.3 percent, Italy 9 percent, Sweden 8.9 percent, Norway 8.7 percent, Australia 8.7 percent, Britain 8.4 percent, Spain 8.1 percent, Japan 7.9 percent, Israel 7.8 percent, Ireland 7.5 percent, South Korea 6.5 percent.
Well…so what? How much do Americans spend vis a vis the rest of the world on hamburgers as a percentage of GDP? How much on booze and cigarettes? How much on structured financial products and mortgage backed securities? How much on investment bankers bonuses and bailouts? How much on laser guided missiles? Pull a statistic out of your hat to support any idea you wish to promote.
Check out…
MIT Sloan Professor Finds Higher Healthcare Spending Results In Better Outcomes
..and from the respected Forbes Magazine. Please note first sentence of second paragraph quoted here…
National health care expenditures in the U.S. are large and rising. Health care costs currently comprise over 16% of U.S. gross domestic product and are forecast to reach more than 20% of GDP by 2018, according to the Centers for Medicare and Medicaid Services (CMS).
Expressed in terms of GDP, this is much higher than in countries with systems that deliver better overall health care outcomes–such as France.
Is this the same France that basically takes all of the month of August off for holidays (healthcare system included)?
and I quote….
France heat wave death toll set at 14,802
The new estimate comes a day after the French Parliament released a harshly worded report blaming the deaths on a complex health system, widespread failure among agencies and health services to coordinate efforts, and chronically insufficient care for the elderly.
The heat wave swept across much of Europe, but the death toll was far higher in France than in any other country.
Health Minister Jean-Francois Mattei has ordered a separate special study this month to look into a possible link with vacation schedules after doctors strongly denied allegations their absence put the elderly in danger. The heat wave hit during the August vacation period, when doctors, hospital staff and many others take leave. The results of that study are expected in November.
Vive le France!
If any industry requires reform maybe it’s investigative journalism; biased agendas, dubious manipulation and quotation of stats, and general misinformation.
The argument that Chinese will save less and stimulate consumer spending if they have a “safety net” is a pretty simplistic analysis. On an aggregate basis someone will do the spending. Just because you shift it from personal responsibility to government doesn’t change anything on an aggregate basis. At least with personal responsibility you avoid……yes…..wait for it… here it comes….. .those ugly words I keep harping on…MORAL HAZARD.
And everyone talks about savings as if it a bad thing. I give you Exhibit A: America’s precarious financial position as evidence that maybe savings is not so bad. And of course the economic principle that savings = investment for a nation. America is reforming its healthcare system NOT because it feels an ethical duty to provide care to all deserving…that’s just the sales pitch; it is reforming the system because it is BANKRUPT and has no choice. Medicare and Social Security (America’s safety nets) are flashing red and no one wants the higher taxes to pay for it. It is neither politically nor economically feasible to increase taxes in the midst of a severe protracted recession (just ask the Terminator in California). This is a recipe for depression. And anyway, why should they when presently Asians have proven perfectly willing to finance Uncle Sam’s spending sprees (you should know by now that Sam is NOT your real Uncle!!)?
Anyway, we can move the pieces around, shift the payors a bit, and take collective communal responsibility for healthcare funding. Innovation be damned but ultimately there will have to be tradeoffs.
And now back to Asia…(to be continued)
Tej Deol, M.D.
