Thursday, 19 May 2005

Socialized Medicine

Every so often I hear Americans who believe that their health-care system is the best on the grounds that certain treatments available in the USA are not available, or less common, in other countries. I also hear some New Zealanders saying the same thing. It enrages me. For example, an American friend once said, without arrogance, "my relative lived in New Zealand and got cancer and of course had to come back to the USA for treatment, because, you know, socialized medicine". It wasn't a put-down, it was just a simple statement of what was obvious to her.

In fact, I believe that the US health system is very poorly designed and implemented. Whatever advantages it has are mostly due to the fact that more money goes into it than in any other country (in most cases, very much more). And who accounts for the time and frustration invested by the health consumer? Here's what's been happening to us:

We've been getting bills from our paediatrician (actually their outsourced billing service) for services that should have been covered by our insurance company (Aetna) --- regular checkups and immunisations. Aetna's online accounts show that the billing people submitted charges twice for the same services; they show that Aetna paid once and refused to pay the other. So we called our paediatrician's clinic a few times --- took a while to get someone, timezone issues, and no-one wants to call us back (maybe they don't know we have phones here). They told us we have to talk to billing. Call billing a few times, get a machine, leave messages, not returned. Forget about it for a while. More bills. Tempted to ignore them, but don't want to provoke international diplomatic crisis. Call billing again, get a human being, who says that Aetna never paid them, Aetna had sent them a form saying they didn't know who the charges are for (despite the fact that they paid bills for the same kids, same place, many times before), so billing just resubmitted the charges again hoping they'd go through. Billing promises to sort it out with Aetna, now that we've provided "more information" (that they already knew).

Conclusion:

  • Someone is lying about whether Aetna paid out.
  • Billing is incompetent. (Why keep sending us a bill while you know there's a problem between billing and Aetna? Why do I have to call before you try to resolve it?)
  • Everyone has lousy customer service.
  • Whoever idolizes a system which requires us to wrangle three parties who blame each other while we try to avoid the debt collectors should be thrown in a river.
  • The most compelling feature of this system is that the insurance companies and billing agencies can reap free money when the customer pays out due to ignorance or exhaustion.

This is not an isolated case. This kind of thing only happened once to us in the ~4 years that we consumed US health services (OK there were a couple of other billing mistakes that created surprise charges for us, but they were easily sorted out), but it's happened to several people I know, some of them more than once.

Here's how the system here has worked for the regular checkups and immunisations we've had so far. We go to the nearest clinic (either the Plunket nurse's clinic or one with a doctor). The first time at the doctor's clinic, we filled out a form identifying it as our local clinic. The staff take our names and addresses. We pay a copay ($10 or so). That's it. No bills, no insurance companies, no billing agency, no hassle.

So maybe the USA gets great outcomes from vast amounts of money. Good for them. But if you want to emulate them, I suggest emulating their expenditures before emulating their structures.

BTW, you can get private health insurance here if you want it.


13 comments:

  1. What you dont understand dude is that this current system puts money into many powerful people's hand which a normal developed system("socialized medicine") would'nt. Now the powerful people include people like Pharma industry, insurance industry(the billing companies are part of this), and to a little extent hospitals themselves. These are the obvious ones, if there are more then it is not obvious to the public (atleast to me).

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  2. Robert O'Callahan20 May 2005 01:30

    It is obvious to me, I just didn't want to belabour the point :-)

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  3. So what happens when you get sick and just need something like ammoxiccilan (sp)? Is that at the clinic or what do you do?
    (Not trying to poke fun.... I really don't know. I'm just a High School student wondering.)

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  4. Robert O'Callahan20 May 2005 02:55

    It's very similar to the USA. There are prescription drugs that must be prescribed by a doctor, and non-prescription drugs you can buy over the counter at a pharmacy. In the USA your insurance company has a list of the drugs they're willing to subsidize and how much for each drug. Here that role is played by Pharmac, a Government department.

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  5. Robert O'Callahan20 May 2005 03:01

    The drug companies hate Pharmac... Obviously whether or not Pharmac agrees to subsidise a drug has a big impact on whether the drug will sell well in New Zealand. Pharmac uses that power to negotiate big discounts with the drug companies.

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  6. clearly the system we have in the USA is really screwed up. If it were ok then:
    1. we wouldn't have people developing software to help explain it.
    2. money wouldn't be spent on advertising new drugs instead it would be spent on researching new drugs.
    3. it wouldn't matter what insurance plan you have, If you're sick - you get treated as best as is humanly possible...
    4. there would be no question in the patients mind about how much insurance covers and how much he/she must pay.

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  7. I totally agree. I moved to America from England three years ago, and have been getting used to the whole insurance "thing" ever since.
    I'm generally quite healthy, so I haven't needed to worry about it so much myself, but my wife has had back and knee problems and it's been a nightmare getting the insurance company to pay. Going to a clinic, paying your $15 copay, then getting a bill for $400 a month later and having to spend a lot of time on the phone with the doctor's office and the insurance company to realise that it's because the doctor's office filled out some paperwork suboptimally seems to be the wrong way to go about things.
    I also live in terror of the bankrupcy which will result if I ever have to be hospitalised. My company's insurance rep explained how the billing process works, and it scares me. The insurance will pay nothing for the first $500, then it'll pay some bills in full, others in part up to a certain total amount per-hospital-stay, at which point it'll stop paying future bills from that provider.
    Makes it hard to budget for any possible hospital treatment.

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  8. Funny ... in my country (Belgium), we consider New Zealand as our best example. Every politician is suddenly talking about 'adopting the New Zealand model', even though many foreigners consider the Belgian system among the top in the world (but it's also very expensive for the government, so they're trying to change a few details).
    Note that everyone (even the pharmaceutical industry !) is using both the USA and the UK as the worst examples of something we absolutely shouldn't do :-)
    They're talking about the negotion tactics of Pharmac, where only the cheapest supplier is allowed to be subsidized. In some cases, this results in a medicine that is more than a hundred times cheaper in NZ than in Belgium (Zantac for instance).

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  9. I can't imagine people seriously think the American health care system works well! It's incomparably more expensive than that of many comparable countries which are healthier on the whole, and the explicit costs are merely the tip of the iceberg; it also costs far to many man-hours to actually use (time spent choosing insurance companies, following constant modifications in what's covered and what is not and then hassling them to pay isn't free). The unreliability also has real costs; it's ridiculously inefficient to avoid treatment of poor people until it's really an emergency and really expensive, it's also anti-social...
    It's simply insane to demand the "best treatment humanly possible" anyhow: If you're spending 90% of your resources for the last 10% of effect (and I�d not be surprised if it's much worse than that) you�d better be considering consciously denying such treatment and spending those resources in for instance
    - public information campaigns that underline the importance of healthy living:
    - lobbying for taxes on unhealthy activities (seeing as these increase the likelihood of spending far too many $$$ in sky-high medical bills, that's only fair anyhow)
    - prevention
    - redistribution: I seriously doubt that a 1 million dollar cancer treatment which extends life possibly a year really can't be spent helping far more people to far more life...
    There are also other consequences of all this financial focus on expensive treatments: the spending pattern on health is probably a factor which directs the spending pattern on research towards those drugs and treatments which garner all those dollars. But that makes this relatively worse: instead of improving the efficient treatments, you're looking for less efficient treatments...
    If people really want "the best of the best of the best", then I really don't think it's society's - or in a more decentralized insurance system like in the US, the company's - responsibility to provide it. We don't have unlimited resources; so to focus only on the benefits, and disregard the costs, is foolish and wasteful.

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  10. Roc, have you ever seen this article (http://www.washingtonmonthly.com/features/2005/0501.longman.html) about "socialized medicine"? (in the states)

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  11. Robert O'Callahan3 June 2005 07:57

    Masklinn: no, that's interesting. Thanks!
    Daniel: if you take the position that taxation is immoral, then indeed subjective factors come into play. Personally I care mostly about outcomes per dollar input, and I've seen several studies showing that the US system is less efficient than that of many other countries according to that metric.
    Brendan: you mention "the elites of politics and industry have private clinics and packages only they can afford" ... I don't see how this can be avoided unless you make it illegal to spend your own money on health care, which seems unjustifiable and I don't know of any system doing that. It may be that a freer-market system than the USA's could be designed that would work better than anything that currently exists, but I doubt it. It would certainly require heavy government regulation to keep it free from monopolization or cartelization.
    Basically I'm an engineering kind of guy. Free markets are a simple and efficient solution to many problems of resource allocation and motivation. But often they need to be carefully designed, regulated, tweaked or in rare cases discarded to achieve optimal performance.

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  12. Roc: government regulation is the number one cause of monopolization and enforcer of cartel rules. Are you familiar with the history in the U.S. of the AMA and its war on "alternative medicine", ultimately won by licensure (state boards), outright prohibitions and criminalizations of alternative practices, and vicious supply control (medical school admission limits) as a means of ensuring high price (high pay)?
    There's very little that's "free" as in "free market" in the current U.S. "healthcare" system, so it would not be hard to "design" a freer system, or simply refrain from coercing a less free system, such as the mess we have now.
    Libeling freedom by associating it with its opposite is an old statist trick. Note that I'm no pure capital-L libertarian or "libertopian": left without some kind of rule of law, too often the strong *do* prey on the weak. But the current mess of laws in the U.S. is mostly used to the advantage of the strong, and of the do-gooder Mandarin classes who pretend they're for the weak.
    Beneficial rule of law is akin to an umpire in a fair game, enforcing the rules consistently. All I want is the same power to pool risk that big companies have by law (the umpire favoring them with ERISA, etc.). All I want is the ability to shop outside of the "company store" without taking a 30-50% hit due to pre- vs. post-tax income.
    /be

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  13. Robert O'Callahan24 June 2005 22:46

    I know a little bit about how the AMA works the system and of course I don't like it.
    I agree with the details of what you're saying, but I'm not sure I agree that "government regulation is the number one cause of monopolization and enforcer of cartel rules". Maybe at this point in time some interpretation of that statement is true. But there are lots of forces driving monopolies and cartels --- I don't have to point out to you all the network effects that reinforce Microsoft's domination, for example! I think in many spheres "enforcing the rules consistently" has not been enough to prevent monoplization.

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