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Market-based isn't the problem. Switzerland, Germany, and Singapore all have mostly-private competition-driven systems (more private than the American model, ev

by beat 12y ago

Market-based isn't the problem. Switzerland, Germany, and Singapore all have mostly-private competition-driven systems (more private than the American model, even), and they are inexpensive and provide high-quality care, along with universal coverage. So private insurers aren't why the American system is so uniquely incompetent and inefficient. So what is the problem? The way I see it, there are two features that really distinguish the American system structurally. First, there's the state-by-state laws and regulations, resulting in effectively 51 different legal regimes. Second, American insurance is provided primarily through employers, rather than purchased individually. In fact, non-employer insurance is prohibitively expensive and often impossible to get. I think the employer role is a much more likely cause of problems than the state laws, which are mostly consistent. Worse, tying insurance to employment traps people in jobs they hate - a distinctly un-American outcome. So anyway, I used to think a more socialist system was the right answer too, until I looked more closely at the working systems in the world. It's not that one particular model works, because there are lots of models in use in other countries and they all work fine. It's that one model doesn't work - what we have in America.

waps 12y ago
I was going to say something about how the US market is a lot bigger than the Swiss market, but I've had to reconsider. Switzerland is a country of 6 million people and is about the size of an "average" US state. Most US states are a little smaller in population (If Switzerland was a US state, it'd be the 13th largest), and a LOT larger in area. So for a "normal" state, Switzerland actually has a bigger healthcare market. California, about 5 times the size of the Swiss healthcare market, still manages to screw things up royally though. People are often blaming the US legal rules. In Switzerland, if you want to win a court case that a MD acted improperly (justifying damages), you have to get a jury of his peers (ie. MDs) to agree on that (which is not impossible, but ...). In the US, you have to get a jury of patients to agree on that. Needless to say, there are many, many more medical cases in the US, with spectacular damage payments (damage payments are also standardized in the EU. If an MD kills you through negligence or outright a mistake (not satisfying the level of a criminal act), his employer (even though they're mostly freelancers, this is an exception in the law) owes your family 300k euro (inflation adjusted since 19xx, so it's a bit more). In the US, it's not fixed, judges decide, but it seems that number runs into the tens of millions of dollars.
- jjoonathan 12y ago
  Malpractice insurance in the USA accounts for <2% of our medical expenditures [1]. If you ask any doctor they'll tell you it's responsible for our price overruns, but that's because it's a cost that is directly visible to them not because it actually accounts for a large fraction of the excessive cost of our care. Less charitably, we should also note that it's a self-serving argument, and although MDs are typically good people that mean well they aren't immune from the human tendency to base our beliefs on the "maximum convenience principle" :) [1] http://www.justice.org/cps/rde/justice/hs.xsl/8686.htm http://www.justice.org/cps/rde/justice/hs.xsl/8686.htm
  - waps 12y ago
    I didn't know that. Thanks.
jjoonathan 12y ago
> Switzerland, Germany, and Singapore all have mostly-private competition-driven systems (more private than the American model, even) I'd call them "social". They're all two-tier systems. The basic tier is heavily regulated and meets my definition of social: government dictates terms, price, profit margins, and provides funding such that everyone is guaranteed to be able to afford it. It's no more private than your typical govrnment contractor. The supplementary tier is private in name and practice. I agree that this is the best arrangement and I suspect we mean the same thing and are just defining "social" differently. http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2011/Nov/1562_Squires_Intl_Profiles_2011_11_10.pdf http://www.commonwealthfund.org/~/media/Files/Publications/F... http://en.wikipedia.org/wiki/Healthcare_in_Singapore http://en.wikipedia.org/wiki/Healthcare_in_Singapore http://en.wikipedia.org/wiki/Healthcare_in_Switzerland http://en.wikipedia.org/wiki/Healthcare_in_Switzerland http://en.wikipedia.org/wiki/Health_care_in_Germany http://en.wikipedia.org/wiki/Health_care_in_Germany > The way I see it, there are two features that really distinguish the American system structurally. First, there's the state-by-state laws and regulations, resulting in effectively 51 different legal regimes. Agreed. This is a huge problem that needs to be fixed by regulating at least the bottom tier of health care provision at the federal level. > Second, American insurance is provided primarily through employers Employer-provided insurance does have a very strong purpose in the free market that adds value vs individual insurance: it dramatically decreases the risk of the bandwagon effect (people with need X pile on to policies that favor need X and sink them). Put differently, it chops off the long tail of P(claim rate in insured population deviates significantly from that of national population). Risk=money, so employer-provided care actually does decrease the cost of providing health insurance. It also increases the effective bargaining power of employees by allowing them to act as a bloc and making it economically viable to actually analyze and compare the nuts-and-bolts of a large number of alternative plans. Of course, there are other ways to achieve the same thing, but they're all "social": the government can dictate terms for the bottom tier of care (so all insurance plans look the same to someone maximizing personal utility of an individual plan) or the government can outright provide the insurance (no choice = no bandwagon effect). I agree that the freedom-reducing effects of employer-provided care are decidedly un-American, but I contend that they occur as a direct result of allowing insurance companies the freedom to set different terms in the basic tier of their individual plans.
MaysonL 12y ago
There's also the massive success of pharma and the doctor's guilds in raising prices over the past century.

by beat 12y ago

waps 12y ago

I was going to say something about how the US market is a lot bigger than the Swiss market, but I've had to reconsider. Switzerland is a country of 6 million people and is about the size of an "average" US state. Most US states are a little smaller in population (If Switzerland was a US state, it'd be the 13th largest), and a LOT larger in area. So for a "normal" state, Switzerland actually has a bigger healthcare market. California, about 5 times the size of the Swiss healthcare market, still manages to screw things up royally though. People are often blaming the US legal rules. In Switzerland, if you want to win a court case that a MD acted improperly (justifying damages), you have to get a jury of his peers (ie. MDs) to agree on that (which is not impossible, but ...). In the US, you have to get a jury of patients to agree on that. Needless to say, there are many, many more medical cases in the US, with spectacular damage payments (damage payments are also standardized in the EU. If an MD kills you through negligence or outright a mistake (not satisfying the level of a criminal act), his employer (even though they're mostly freelancers, this is an exception in the law) owes your family 300k euro (inflation adjusted since 19xx, so it's a bit more). In the US, it's not fixed, judges decide, but it seems that number runs into the tens of millions of dollars.

jjoonathan 12y ago
Malpractice insurance in the USA accounts for <2% of our medical expenditures [1]. If you ask any doctor they'll tell you it's responsible for our price overruns, but that's because it's a cost that is directly visible to them not because it actually accounts for a large fraction of the excessive cost of our care. Less charitably, we should also note that it's a self-serving argument, and although MDs are typically good people that mean well they aren't immune from the human tendency to base our beliefs on the "maximum convenience principle" :) [1] http://www.justice.org/cps/rde/justice/hs.xsl/8686.htm http://www.justice.org/cps/rde/justice/hs.xsl/8686.htm
- waps 12y ago
  I didn't know that. Thanks.

jjoonathan 12y ago

> Switzerland, Germany, and Singapore all have mostly-private competition-driven systems (more private than the American model, even) I'd call them "social". They're all two-tier systems. The basic tier is heavily regulated and meets my definition of social: government dictates terms, price, profit margins, and provides funding such that everyone is guaranteed to be able to afford it. It's no more private than your typical govrnment contractor. The supplementary tier is private in name and practice. I agree that this is the best arrangement and I suspect we mean the same thing and are just defining "social" differently. http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2011/Nov/1562_Squires_Intl_Profiles_2011_11_10.pdf http://www.commonwealthfund.org/~/media/Files/Publications/F... http://en.wikipedia.org/wiki/Healthcare_in_Singapore http://en.wikipedia.org/wiki/Healthcare_in_Singapore http://en.wikipedia.org/wiki/Healthcare_in_Switzerland http://en.wikipedia.org/wiki/Healthcare_in_Switzerland http://en.wikipedia.org/wiki/Health_care_in_Germany http://en.wikipedia.org/wiki/Health_care_in_Germany > The way I see it, there are two features that really distinguish the American system structurally. First, there's the state-by-state laws and regulations, resulting in effectively 51 different legal regimes. Agreed. This is a huge problem that needs to be fixed by regulating at least the bottom tier of health care provision at the federal level. > Second, American insurance is provided primarily through employers Employer-provided insurance does have a very strong purpose in the free market that adds value vs individual insurance: it dramatically decreases the risk of the bandwagon effect (people with need X pile on to policies that favor need X and sink them). Put differently, it chops off the long tail of P(claim rate in insured population deviates significantly from that of national population). Risk=money, so employer-provided care actually does decrease the cost of providing health insurance. It also increases the effective bargaining power of employees by allowing them to act as a bloc and making it economically viable to actually analyze and compare the nuts-and-bolts of a large number of alternative plans. Of course, there are other ways to achieve the same thing, but they're all "social": the government can dictate terms for the bottom tier of care (so all insurance plans look the same to someone maximizing personal utility of an individual plan) or the government can outright provide the insurance (no choice = no bandwagon effect). I agree that the freedom-reducing effects of employer-provided care are decidedly un-American, but I contend that they occur as a direct result of allowing insurance companies the freedom to set different terms in the basic tier of their individual plans.

MaysonL 12y ago

There's also the massive success of pharma and the doctor's guilds in raising prices over the past century.