Monday, October 26, 2009

Changing My Mind on Health Care

Before reading "The Healing of America" by T.R. Reid I had come to the reluctant conclusion that single-payer health care was the only way to go. Employer-based health care seemed absurd since if you really get sick, you can't work and lose your job -- and your health care.

Reid's book convinced me that employer-based health care can work, and can work very well. This is the case because it works very well in Germany, Switzerland, France and Japan. Everybody is covered, no one is denied treatment, it costs much less than in the U.S., the outcomes are very good, and people don't go bankrupt over medical bills.

Reid has a bad shoulder. He went to England, Germany, France, Switzerland, Japan, Canada and India to treat his shoulder and compare the local health care systems (he also went to an American doctor). All these countries (except India) spend less than America, have better outcomes, and cover everyone. However, their systems are quite different. In England the government owns everything and nobody pays a dime, like our Veterans Administration. In Canada the government pays for everything, but the private sector performs the service like our Medicare and Medicaid. India is an out-of-pocket place, like Americans without insurance. Germany, France, Switzerland, and Japan have employer-based systems like most Americans. While the foreign employer-based systems have significant differences, they are all much different from ours in that:

  • Basic insurance is a non-profit business. In some systems insurance companies can offer supplementary coverage for a profit, but the purpose of the basic insurance business is to pay for health care, not make a profit.
  • The industry is heavily regulated. The price of most or all procedures is usually fixed in negotiations with the government each year. Insurance companies cannot deny coverage or refuse payment for procedures.
  • Costs are transparent. For example, on the wall of every French medical facility there is a list of the procedures they perform, the cost, and how much the government will reimburse. In Germany, every doctor has access to a single database with all the procedures and their prices.
  • If you lose your job, the government usually picks up the employer part of the premiums.
  • Insurance coverage is mandatory for everyone.
  • Administration is simple. In France, everyone has a smart card that all providers have equipment to read. In Germany there is a single database with all patient records.

    There were some interesting parts to the systems. For example,

  • In France, you pay for medical procedures in full at the time of the service. Your insurance company must reimburse you by the end of the month.
  • In Germany, the insurance premium is 15% of salary, paid in part by your employer (or the government).
  • In Germany the wealthiest citizens are not required to have medical insurance. The reasoning is that they can afford whatever it costs regardless.
  • In Germany, everyone can choose from over 200 different insurance companies.
  • Switzerland had a U.S.-like system until the early 90's, when America rejected health care reform. Switzerland had the same problems we have now: many without coverage, skyrocketing costs, companies denying coverage, etc. Unlike America, Switzerland introduced compulsory coverage and forced the insurance companies to offer basic, well-defined coverage without profit. It works very well.

    With Reid's book in mind the current health care reform movement in America has a glaring flaw: all the other employer-based systems require non-profit basic health insurance, heavily regulate prices and procedures covered, transparency and simple administration. Maybe what's coming out of Congress will work, I certainly hope so. However, experience overseas suggests that we are leaving out key components of what is known to work well.

    Oh, Reid tells us one other thing. The American health care system is the laughing stock of the world. Whenever anyone criticizes the German, English, Canadian, or other system, the standard response is: our system has problems, but it's not nearly as bad as in America.

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