Tuesday, February 13, 2007

Govrnment vs. market reforms - National Health Statistics: A Function of Universal Coverage or Cultures of Different Societies?

“Come now, let us reason together.”

Lyndon Baines Johnson, 1908-1973

All government –indeed, every human benefit and enjoyment, every virtue and every prudent act – is founded on compromise and barter.”

Edmund Burke, 1729-1797

I/m not an expert on health reform matters. I get lost in the fog and flack of proposals and counter-proposals. The issue comes down to a battle of mindsets, a need for compromise to cover the uninsured. The question is: how?

Incompatible Mindsets

• If your mindset is that government’s moral duty is to redistribute resources to protect the health of all, and that health is directly related to the extent of health system coverage, you think and receive information in a certain way. You generally attribute superior health statistics of other nations to universal coverage, even if these other nations have more homogeneous, smaller populations, and different cultures.

• If your mindset is that private markets provide the best care for most of the people most of the time, provide better access to high technologies, give more health care choices to citizens, distribute resources more efficiently and that the health of the people is more related to cultural behaviors and a nation’s heterogeneous population, you receive information in completely different way.

The Unending Argument

The power and efficiency of government vis-à-vis the power and efficiency of markets is a never-ending argument – an argument unlikely to change mindsets. To progressives, it’s a moral argument: to conservatives, it’s an exercise in reality. You can marshal persuasive arguments on both sides, without convincing either side who is right.

Health Systems and Health of Societies

In a closely reasoned 1987 book, The Health of Nations: True Causes of Sickness and Well-Being (Basic Books), Dr. Leonard Sagan, a Stanford-based epidemiologist, observed health care systems have little to do with reducing death rates or extending average life expectancy. Sagan says social, family, and personal factors loom larger than health coverage. “Technical fixes,” he says, only marginally effect longevity.

Medical care accounts for about 15 percent of the health status of any given population, life style for 20 percent to 30 percent, and other factors – poverty, inferior education, income differences, and lack of social cohesion – for the other 55 percent (David Satcher, MD, et al, Multicultural Medicine and Health Differences, MvGraw-Hill, 2006).

It’s the Morality, Stupid!

Sowhat, progressives argue. Universal coverage is more about a civilized nation’s morality than health improvement. It’s about social equity and fairness. It’s about protecting the sick, the old, the young, and the disenfranchised from medical bankruptcies market vagaries, and exploitation by business. Coverage for all is a social obligation, not a choice. It’s about social consciousness, not allegiance to the almighty dollar, even if a rising economy lifts the material well-being for most citizens.

Innovation and Economic Growth

The entrepreneurial and innovative U,S. economy has outperformed the European economy for the last thirty years – with roughly twice the growth rate, half the unemployment, and a 20% higher standards of living. This superior economic performance is partly because the U.S,’s entrepreneurial and innovative society, partly because of our lighter overall tax burden (less than 30% vs. 45% for Europe), and partly because of heavy European social welfare burdens.

Edmund Phillips, a 2006 Nobel Laureate from Columbia University in a February 12, 2006 Wall Street Journal piece, “Entrepreneurial Culture,” says European economic sluggishness is not solely based on its social model. Phillips believes Europe’s lack of economic performance stems from “a dearth of economic dynamism – loosely the rate of commercially successful innovation.” Europeans, he notes, have an anti-business and anti-entrepreneurial culture. But Phillips adds, “It is hard to see how scaling down entitlements would be transformative for economic performance.” Europeans believe “social wealth” as just as important as “economic wealth,” and refuse to sacrifice one for the other.

Mutually Assured Decline?

Yet, in spite of this economic gap and increasing globally non competiveness, Europeans will not give up their six week vacations, year long pregnancy leaves, rich retirement benefits, and other cradle to welfare entitlements for the health of the economy. Europeans endeors top-down government.

America, on the other hand, is an overwhelming bottom-up society built of compromise between government and business. Our health care system depends partly on the market (68% of coverage), partly on government (27% of coverage), and in the future it will rely on public-partnerships and on Americans taking more responsibility for their health and investing in wellness. Ours is a system of compromise, and Constitutionally guaranteed checks and balances and individual freedoms.

Europe has problems reconciling its economic and social welfare ambitions. Here is how John Naisbitt, who has lived in Vienna for the last six years, who is married to a European, and who understands European culture, explains Europe’s dilemma in Mind Sets! (Collins, 2007).

“The ‘Statue of Europe’ has two hearts and 25 mindsets. The 25 country mindsets are stirring a mixture with ingredients that do not blend: tradition, ambition, welfare, and economic leadership. Here two hearts beat in different rhythms, one for economic supremacy and one for social welfare. Proud and ambitious, each one wants to be right. But to reach either goal, they have to compromise, and neither side is willing to do so. My experience makes me believe that Europe is much more likely to become a history theme park for well-off Americans and Asians. Europe is on the path of Mutually Assured Decline.”

Diverse U.S Culture Influences Health Statistics

The U.S. has a far larger population and is more culturally diverse than any single nation with universal coverage. We receive 67% of the world’s immigrants, and 85% of these new Americans come from cultures of developing nations, particularly Mexico and South America. We’re a vast continental nation with a larger population than nations with government-based systems – 300 million vs Japan 126 million, Germany 82 million, Iceland 300,000, Spain 40 million, Australia 20 million, Canada, 33 million, France 60 million,, U.K 65 million, and combined populations of Norway, Sweden, Finland, and Denmark, 24 million.

By and large, we’re more diverse than these nations. We’re 68% white, 13% Hispanic, 12% black, and 4% Asian, with others making up the difference. Japan and Scandanavia, to take to two obvious, are 95% “pure” in the cultural makeup of their citizenry. Many U.S. immigrants come from cultures where health care is primitive. U.S. immigrants have different health customs and expectations. Unfortunately, we’re a more violent society which contributes to premature deaths of young people. This violence is largely beyond the reach of our health system. We are, in short, a complicated, diversified society with complex problems, one of which is a sedentary, affluent, sometime over-indulgent culture which does not always lend itself to good health statistics

Evolving Compromises

Whatever happens with health reform, we must compromise between our economic and our universal coverage ambitions. That’s why most proposals so far feature a “play or pay” feature, in other words, all businesses must cover employees or pay the federal Piper. And, in some cases, hospitals, doctors, and health plans must pay a tax for providing care. We’re learning we can’t afford to superimpose or replace our existing private bureaucracy with a federal bureaucracy in one dramatic, costly step.

Media and policy makers routinely proclaim the U.S. has a “health care crisis” and is a “broken system.” This is partly because of our infant mortality and longevity statistics, which are worse than many Western nations. We rank 56th in birth of tiny premature infants (less than 14 oz.) and 22nd in longevity.

These worrisome comparisons are fodder for the media. Bad news sells better than good news, talk of big government covering the uninsured sells better than small private innovations for the insured, and political rhetoric about improving health through universal coverage sells better than news about remarkable, but incremental, gains in our medical technologies and their role in improving the health and quality of life of our senior citizens. If we are truly the exceptional nation we claim to be, say those from on high, we ought to do better.

An Analytical Look at Political Proposals

Let’s look analytically at reforms politicians propose. The February 6 issue of the Wall Street Journal contains three useful tables which help put the state of U.S. health care in perspective.

Table 1 – The Coverage Gap

Coverage 1995 2005

Private 70% 68%

Government 26% 27%

Uninsured 15% 16%

Comment: Health coverage has grown marginally worse over the last ten years, perhaps not bad or fast enough to justify political hysteria, but worse. What’s not reflected in this table is the doubling of health premium costs, American industry’s mounting complaints about health costs hurting global competitiveness, and relentless shifting of costs and responsibilities to patients. Also not mentioned is the improving health of U.S. citizens.

Table 2 - Covering the Uninsured Proposals

In OrdeBacker, The Big Idea, Why It Might Work, Why It Might Fail, Who Would Pay

1) President Bush; Give all Americans a tax break for buying insurance; Makes it cheap to buy insurance on the open market, Hurts workers with generous coverage; only modestly reduces uninsured; Cost neutral

2) Sen. Ron Wyden (D. Oregon): Cuts link between employment and insurance, Covers all Americans. Gives people more choice. Subsidizes poor: Radical.Requires people to choose: insurance: Builds on current system without disrupting employer-based coverage: Cost is $60 billion over next five years; Costs not specified.

3) States(includes Massachusetts, California and Pennsylvania: Requires employers to provide coverage or pay a tax: Requires all citizens to have insurance, with low-income subsidies and state pools: Contains ideas that are attractive to liberals and conservatives: Creating affordable plans with desired benefits is hard: New taxes are substantial, e.g. a 4% payroll tax for companies that don’t offer insurance: Combinations of employer’s takes and redirecting federal grants.

4) Former Se. John Edwards : Requires employers to play or pay. Offers individual tax credits and public pools Requires individuals to be insured. Requires insurers to cover everybody: Combines many ideas, builds on work of states Requires large tax on employers who don’t provide coverage, equal to 6% of payroll.Employer tax, rolls back tax cuts for those earning over $200,000
Comment: These proposals are multi-payer, not single payer, solutions. The proposals appeared before Senator Hillary Clinton, said to lean towards a government-run single-payer approach, has offered any specifics, and before Senator Barack Abama has set forth his proposal And they come before Walmart, labor unions , labor unions, AT&T, and several policy groups announced four principles to create "a new American health care system by 2012." The Walmart proposal calsl for universal coverage and say that "businesses, government, and individuals all should contribute.” Whatever side one is on, the nation is at a health policy crossroads, and gauzy talk about a sweeping centralized government-run system is not a prominent part of policy proposals to date, if you disregard Senator Edward Kennedy’s perpetual Medicare-for-all advocacy, multi-payer rather than single payer coverage is a form of political compromise.
Table 3 -- Bush Proposal, Pain for Hospitals, Doctors, and High Income Individuals

1. Cuts Medicare spending by $65.6 billion over 5 years starting in 2008, including $30 billion for hospitals, by slowing growth rate to 5.6% from 6.5%
2. Cuts doctor payments by 10% starting in 2008.
3. Cuts Medicaid spending by $13 billion and through $12.7 billion in administrative cost-savings by slowing growth rate from 7.3% to 7.1%.
4. Increases premiums for Medicare singles making over $80,000and for couples earning over $160,000.

Comment: When you consider that these “cuts” are cuts in rate of growth, not absolute cuts, the cuts are not Draconian. In fact, these “cuts” represent growth rates about twice those of the general economy. Given that reality, and cutting remarks aside, the Bush proposal might by considered generous. Keep in mind that no tree grows to the sky, and that includes Medicare.

Still Democrats, the party of federal entitlements, have already declared Bush’s plan DOA (Dead on Arrival). AARP, the powerful over 50 senior’s group, says the plan represents “piecemeal cuts that threaten to damage critical programs without addressing the fundamental problems that exist in our entire health care system.” In a Congress in which Democrats have narrow majorities, and a President who is Republican, gridlock is likely to persist until after the 2008 elections.