Health wrongs

As President Barack Obama struggles to build consensus on an overhaul of the American health care system, he could be forgiven for wishing he was working under South Africa’s constitution rather than his own. The system is desperately broken.  The SA constitution, by enshrining  justiciable rights to health care and other basic needs , would give Obama badly needed leverage to get it fixed. The US constitution, admirable though it is in most respects, is rooted in distrust of government and makes the task devilishly tricky by design.

Fixing the system has eluded multiple presidents, not least Bill Clinton whose administration never recovered political momentum after his ambitious reform programme foundered in 1994.  High then, today the stakes are much higher.  The status quo not only inflicts great cruelty on countless Americans,  unchanged it will continue to erode the competitiveness of American business (the US motor industry can already be counted as a casualty) and will render the American government insolvent.

The US spends a far larger proportion of its GDP to health care – over 15 per cent and rising — than any other OECD country, but not to commensurate effect, performing relatively poorly in terms of health outcomes.  The next biggest spender is Switzerland, at 11.3 per cent and France at 11 per cent.  The UK spends 8.4 per cent, which is roughly the proportion of GDP that the US private sector alone spends on health.  The US public sector – essentially Medicare for retirees and Medicaid for the truly indigent —  spends 7 per cent of GDP, only slightly less than the 7.3 per cent share consumed by UK’s National Health Service.

Think about that. For the same share of GDP, the UK provides comprehensive health care for all its citizens while the US can only cover the poor and, partially, the old. Meanwhile, everyone else has to fend for themselves, generally through employer-paid or -subsidized plans, or through buying their own insurance individually.

47 million Americans have no coverage at all, some because they are young and feel invulnerable, others because neither they nor their employer – if they have one – can afford it. If they get seriously ill, they can lose everything. Medical expenses are a factor in half of all US bankruptcies, according to a Harvard study.  To the extent they can’t pay, the costs are passed onto those who can, translating into higher premiums for the insured. The absence of the young and fit from the risk pool doesn’t help keep a lid on premiums, either.

Getting everyone covered by some kind of affordable plan, public,  publicly-subsidised or private, is a major goal of the reforms Obama is working to achieve with his Democratic majorities in the House and Senate. That is difficult enough with the private insurance industry – which is currently doing very nicely — determined the block the creation of a serious publicly-sponsored competitor that might suck away its customers.

The real problem, though, is medical costs. If they can’t be brought under control, and absent politically next-to-impossible tax increases, universal coverage will put an even greater strain on the fiscus than the fiscally unsustainable default scenario of doing nothing.

The cost issue has many facets. American consumers pay more for drugs than anyone else because the pharmaceutical industry has used its financial muscle to lobby successfully against any scheme that would make government a dominant market player with the power to bid down prices.

But perhaps the biggest villain is the “fee for service” system and its abuse,  as brilliantly documented by  writer-surgeon Atul Gawande in the June 1 New Yorker.  Gawande identified two communities in Texas, McAllen and El Paso, demographically nearly identical with very similar health profiles and outcomes, and asked why, in 2006, Medicare shelled out $15 000 per beneficiary in the latter and $7 500 in the former. The difference, he found, was in the way doctors conducted their business in each community.

The McAllen medical fraternity tended to be much more “entrepreneurial”  and profit-maximizing  than their colleagues in El Paso. They were much quicker to prescribe expensive tests and procedures, for each of which they got paid. They were often investors in the facilities to which they sent patients. Fear of malpractice suits, often cited as a reason for excessive testing, was not a factor. Texas has placed a cap on awards in such suits and, in any event, there is no evidence of greater litigiousness in one place or the other.

Obama wants to change the culture of the medicine in the US based on successful models like the Mayo Clinic, where doctors receive salaries and work on cases collectively, combining their knowledge and experience to diagnose and treat patients more effectively and with less waste of resources. It will be a long and uphill fight – one in which our right to decent health care might be a useful weapon.

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