October 17, 2007

My colleague Ben Zycher spoke this morning at a breakfast symposium on the release of his new report Comparing Public and Private Health Insurance: Would A Single-Payer System Save Enough to Cover the Uninsured?. I'll let the report speak for itself (and let Ben's op-ed, which we've posted as this week's Spotlight speak for him), but the highlight of the breakfast forum was listening to the exchange between Ben, and his commentator, June O'Neill, former CBO director.

During her comments Dr. O'Neill pointed out that it is very difficult to measure administrative costs in single-payer systems because of price controls, i.e. the government's response to the question "how much does this cost" is basically "it costs whatever we damn well say it costs", which produces enormous market distortions - like doctors refusing to accept Medicare or Medicaid patients, or opting out of the profession altogether.

She also pointed out that physicians in Medicare have responded to price controls by gaming the system: i.e., overprescribing certain procedures to make up for the fact that they are undercompensated for their services. In other words, they make up at the back end what they are losing at the front end.

She also took issue with the metrics that supporters of single-payer systems like to say show how poorly U.S. health care does versus, say, Canada. Higher infant mortality rates in the U.S. are a factor of more teen births, which has nothing to do with health care per se.

Dr. O'Neill also noted that lower life expectancy in the U.S. is a product of many more accidents and homicides here than in other OECD nations - also not a product of the health care system. In conclusion, "health status to a large extent is due to [individual] behavior" not to the performance of the health care system.

But doesn't the U.S. spend too much on health care compared to OECD countries? It's hard to say. Other countries set caps on total spending that only rise (as in the U.K. and Canada) when the backlash against health care rationing becomes politically unpalatable. In other words, it's very likely that those countries are spending too little on health care vs. the U.S.

This mornings exchange showed that, under a full accounting, the U.S. is probably doing much better on the health care front than many critics give it credit for.

Posted by Paul Howard at October 17, 2007 11:32 AM

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