Monday, 25 June 2012

As US awaits "Obamacare" court ruling, some US-EU comparisons

This week the US Supreme Court will issue a landmark ruling on the constitutionality of “Obamacare”. It is still a mystery what the conservative-dominated court will decide.

There is speculation that the court may rule that just parts of the legislation are unconstitutional. The main provision everyone is watching is the requirement for all people to get health insurance or face fines. Republicans are arguing that it is illegal to force people to buy health insurance. But Democrats say that throwing out even just this one piece of the legislation will make the whole thing fall apart.

The healthcare reform changed the law to make it illegal for insurance companies to deny someone coverage because they are sick. Experience has shown that such a requirement has to be coupled with a requirement for everyone to have health insurance – otherwise healthy people would wait until they get sick to buy coverage. Eliminating the requirement to purchase insurance could send the whole system into the so-called “insurance death spiral” – where sick people suddenly flood the insurance market and send costs soaring.

During the healthcare debate in 2010 I wrote a lot about the complete lack of discussion of relevant examples from other countries (particularly European countries) in the public debate on healthcare reform in the US. To the extent that other countries were discussed at all, the countries brought up were usually the UK and Canada. These examples weren’t exactly germane considering that those are single-payer systems, and converting the US to such a system was never on the table.

Instead, “Obamacare” reforms the US system to make it semi-private instead of completely private. It mirrors semi-private health insurance systems like the ones that exist in Germany, Switzerland and the Netherlands (just to name a few).

The argument frequently used in the US is that the country can’t afford to cover all people for health insurance. But this belies the facts, because the current system is costing far more than would a system in which everyone is covered. Uninsured people wait until they are seriously ill to go to the hospital. Because emergency rooms can’t turn people away, they treat these uninsured people who then can’t pay their hospital bills. The insured community then ends up paying for it.

And of course what is also frequently ignored in the debate is that the US does have a single-payer system for a large segment of its population – everyone over 65. But the deficiencies in the private health insurance market for people under 65 has sent costs for this program – Medicare – soaring. Medicare today is one of the most expensive social welfare systems in the world and before the health reform was passed the costs were projected to grow astronomically. The reform will significantly slow this growth in costs, saving the US government billion.

Europe has a mixture of single payer systems (where the government owns hospitals and doctors are employees of the state) and semi-private systems (where hospitals and insurance companies are private entities but are heavily regulated, and everyone must purchase insurance). Because everyone is covered, costs are drastically reduce.

So on the occasion of the Supreme Court decision, I thought I would lay out a few basic facts comparing healthcare in Europe to healthcare in the US.
  • The United States spends more on healthcare per capita ($7,146) than any other country in the world.
  • Europe spends 8.3% of GDP on healthcare. The US spends twice as much, 15.2% of GDP.
  • The US government spends more public money on healthcare per capita than all other countries in the world except three - Monaco, Luxembourg and Norway.
  • Medical costs account for half of all personal bankruptcies in America.
  • Out-of-pocket co-pays and premiums for insured people in the US are among the highest in the world.
Yet despite all of this public and private spending, . Before the passage of "Obamacare", the US was one of only three countries that does not insure all citizens, the others being Turkey and Mexico. The US has a higher infant mortality rate than anoy other industrialised nation. It ranks 42nd for life expectancy. Studies have shown that the US healthcare system is the most inefficient in the world in terms of use of funds.

Americans aren't exactly getting great bang for their buck here. "Obamacare" doesn't solve all the problems of the for-profit insurance industry, but it does solve the most egregious ones. Depending on this week's verdict, that could all go away. The most immediate effect will be that millions of people will suddenly lose coverage. My brother, for instance, is benefitting from Obamacare's provision entitling young adults to be on their parents insurance plans until they are 26. My brother is 22. If the Supreme Court strikes down "Obamacare" he will immediately lose coverage.

He may soon have to revert back to its America's original healthcare plan - don't get sick.

1 comment:

Peter Mayers said...

A good piece! I would just add that it's useful to distinguish between the PROVISION of a health-care service and the PAYMENT for it. Here in Sweden, for example, this distinction has become quite important in recent years. Payment remains overwhelmingly public, but provision has been privatized to a fair extent. It's still the case that the public sector (in the form of the "landsting") provides the bulk of health-care services in this country; however, the private component in the mix has become much bigger (where provision is concerned). Yet, as mentioned, public payment remains overwhelmingly dominant, with only a small role being played by private insurance schemes or by direct out-of-pocket private payment. In other words, it has become fairly common to use the services of a private clinic, but the public sector still picks up the tab (leaving aside a small user fee).

At one point in your piece, for instance, you mention "single payer systems (where the government owns hospitals and doctors are employees of the state"). However, the words between parentheses describe not just a single-payer system, but a single-provider one as well.

But this is a minor quibble. Good article!