The Health of Nations

By Ezra Klein, The American Prospect. Posted August 20, 2007.

Reprinted with permission from Ezra Klein, "The Health of Nations," The American Prospect, Volume 18, Number 5: May 07, 2007, The American Prospect, 2000 L Street, Suite 717, Washington, DC 20036. All rights reserved.

Medicine may be hard, but health insurance is simple. The rest of the world's industrialized nations have already figured it out, and done so without leaving 45 million of their countrymen uninsured and 16 million or so underinsured, and without letting costs spiral into the stratosphere and severely threaten their national economies.

Even better, these successes are not secret, and the mechanisms not unknown. Ask health researchers what should be done, and they will sigh and suggest something akin to what France or Germany does. Ask them what they think can be done, and their desperation to evade the opposition of the insurance industry and the pharmaceutical industry and conservatives and manufacturers and all the rest will leave them stammering out buzzwords and workarounds, regional purchasing alliances and health savings accounts. The subject's famed complexity is a function of the forces protecting the status quo, not the issue itself.

So let us, in these pages, shut out the political world for a moment, cease worrying about what Aetna, Pfizer, and Grover Norquist will say or do, and ask, simply: What should be done? To help answer that question, we will examine the best health care systems in the world: those of Canada, France, Great Britain, Germany, and the U.S. Veterans Health Administration (VHA), whose inclusion I'll justify shortly.

Putting aside the VHA, America's annual per person health expenditures are about twice what anyone else spends. That actually understates the difference, as our 45 million uninsured citizens have radically restricted access to care, and so the spending on the median insured American is actually quite a bit higher. Canada, France, Great Britain, and Germany all cover their entire populations, and they do so for far less money than we spend. Indeed, Canada, whose system is the most costly of the group, spends only 52 percent per capita what we do.

While comparing outcomes is difficult because of various lifestyle and demographic differences in the populations served, none of the systems mentioned betray any detectable disadvantage in outcomes when compared with the United States, and a strong case can be made that they in fact perform better. Here, however, I largely restrict myself to comparisons of efficiency and equity. With that said, off we go.

Oh, Canada!

As described by the American press, Canada's health-care system takes the form of one long queue. The line begins on the westernmost edge of Vancouver, stretches all the way to Ottawa, and the overflow are encouraged to wait in Port Huron, Michigan, while sneering at the boorish habits of Americans. Nobody gets to sit.

Sadly for those invested in this odd knock against the Canadian system, the wait times are largely hype. A 2003 study found that the median wait time for elective surgeries in Canada was a little more than four weeks, while diagnostic tests took about three (with no wait times to speak of for emergency surgeries). By contrast, Organisation for Economic Co-operation and Development data from 2001 found that 32 percent of American patients waited more than a month for elective surgery, and 5 percent waited more than four months. That, of course, doesn't count the millions of Americans who never seek surgery, or even the basic care necessary for a diagnosis, because they lack health coverage. If you can't see a doctor in the first place, you never have to wait for treatment.

Canada's is a single-payer, rather than a socialized, system. That means the government is the primary purchaser of services, but the providers themselves are private. (In a socialized system, the physicians, nurses, and so forth are employed by the government.) The virtue of both the single-payer and the socialized systems, as compared with a largely private system, is that the government can wield its market share to bargain down prices -- which, in all of our model systems, including the VHA, it does.

A particularly high-profile example of how this works is Canadian drug reimportation. The drugs being bought in Canada and smuggled over the border by hordes of lawbreaking American seniors are the very same pharmaceuticals, made in the very same factories, that we buy domestically. The Canadian provinces, however, bargain down the prices (Medicare is barred from doing the same) until we pay 60 percent more than they do.

Single-payer systems are also better at holding down administrative costs. A 2003 study in The New England Journal of Medicine found that the United States spends 345 percent more per capita on health administration than our neighbors up north. This is largely because the Canadian system doesn't have to employ insurance salespeople, or billing specialists in every doctor's office, or underwriters. Physicians don't have to negotiate different prices with dozens of insurance plans or fight with insurers for payment. Instead, they simply bill the government and are reimbursed.

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Ezra Klein is a Prospect staff writer.

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