Or actually visitors who cite Galt. Jane Galt responds to calls for adopting a French-like system:
In the United States, government at its various levels now accounts for roughly 45% of health care spending. (And by "now", I mean 2004, the latest year for which OECD data are available. In 2004, of course, the government provided little prescription drug coverage. Remember that fact; it will become important later.) The United States spends about 15.3% of total GDP on healthcare. That means, for those following along at home, that government spending on health care consumes about 7.7% of GDP.Canada spends 9.9% of GDP on healthcare. France spends 10.5% of GDP. What is the magic route by which we are going to cover all the people not currently covered by government insurance for 2.2-2.8% of GDP?
There are two problems with her argument: the numbers do add up, and she's shifting the goalposts. Before I get to those problems, I would point out that 45% of 15.3% is about 6.9% GDP, not 7.7%. While that might seem like a picky detail, to paraphrase Senator Everett Dirksen, a point of GDP here, and a point of GDP there, and it starts to add up to real money. (And as I'll point out, it does matter). Fortunately, one of her commentors responded:
"What is the magic route by which we are going to cover all the people not currently covered by government insurance for 2.2-2.8% of GDP?"
No magic is needed. The 7.7% the government spends is almost all on the elderly. The rest of the population is very cheap to care for.
Medicare and the portion of medicaid spent on the elderly come out to about 5.8% of GDP. The rest of medicaid costs about $1800/yr for each person. For 200 million people not currently covered by the government, that's about 3.0% of GDP. That brings us to 10.7% of GDP for the whole country. (5.8% for seniors, 1.9% current non-senior medicaid, 3.0% the rest). Administrative savings for the bulk of providers who no longer need to retain any capacity for dealing with private insurers, who could be pressured to pass those savings on to the government, might even get it down to 10.5%.
Regarding the economics of infectious disease (something I track professionally), this sounds about right. Two-thirds of infectious disease expenditures occur through the Medicare system, and Medicare also picks up some costs for sick middle-aged patients (as noted below, Medicare also supports those who qualify for Social Security due to debilitating illness). But Galt doesn't buy it:
Mmmmm . . . try again. The rest of Medicaid is spent on an unusually healthy population: young women and small children. It isn't treating any of the expensive ailments of middle age, from diabetes to cancer.
The commenter responds:
You don't know much about medicaid.
It covers natural parents, but also foster parents and many adoptive parents who are not so young. It covers any household with less than $2000 in assets (though those have restricted benefits). It also covers 9 million people eligible for SSI who have life-long chronic, dibilitating conditions, which alone skews the covered population to "less healthy" than the rest of the non-senior population. It isn't just young mothers and children.
"Then there are the 40 million uninsured you've promised to care for . . . "
They are included in my calculation. They also include some of the cheapest elements in society to insure. Many are uninsured by choice. Those are healthy, young people with no prospects of pregnancy. While they may like insurance, they opt out by choice, not need.
BTW, the government does pay almost 1% of GDP for prescription medicine.
Then there's the shifting the goalposts ploy. Galt implies that healthcare reform would be a failure if the non-elderly component is greater than 2.8% GDP. That is a ludicrous way to define the problem. I would argue that any healthcare system that provided decent universal coverage at or less than the 15.3% GDP we currently spend would be a vast improvement. Why?
Because the primary goal is to provide everyone with decent healthcare.
Conservatives seem to forget that--or, in fact, don't think that's a good thing.
Any additional savings (and as discussed above, I think there would be considerable savings) are a bonus. If we 'only' decreased spending by 2% GDP to 13% GDP, instead of spending 15.3% GDP, and provided healthcare to every American, how is that a bad thing?
Related post: Kevin Drum says something similar.
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What I want to know is, shouldn't the percentage of GDP devoted to a problem reflect, to some extent, the priority we deem the problem to have? Is our health not worth 15% of our GDP? What would happen if we did not invest that 15%??? The world economy would fall apart, that's what would happen.
There is also the oft overlooked detail that a healthier population (i.e. one that gets health care in time)is a more productive society and as such the GDP goes up thereby reducing the percentage of it the government pays for health care. Also with the government paying full cost there is an added incentive for a shift towards preventative medicine which, over the long term, further reduces costs and thus the percentage of the GDP. That's what's happening here in Canada.
"Because the primary goal is to provide everyone with decent healthcare.
Conservatives seem to forget that--or, in fact, don't think that's a good thing."
Yeah, ain't that great? Because if everybody had health coverage, a lot of the little people wouldn't put up with ridiculous management because the costs of leaving their jobs are suddenly less catastrophic.
Can i translate this and insert on my site in Poland? Thanks
A lot of people seem to forget that important point. Sure, you may argue that it looks "bad" when looking at the change in public spending--unless you fail to count the reduction in private spending. No matter how you slice it, we still end up spending less of our GDP (which includes both government spending AND private consumption) on health care.
For example, let's say I pay $100 a month for my health care thanks to my company benefits. Let's say that universal health care costs me an extra $1800 in taxes. Am I out $600? Not necessarily, given that we just lifted another $700 a month off the shoulders of my employer, and it's not unreasonable to assume that I get a piece of that. Expand it out to the whole economy, and that's more money that can be paid out in wages, not to mention the added flexibility and bargaining power Michael Schmidt pointed out. The result should be a net increase in wages that outstrips the hypothetical increase in taxes.
It still boggles my mind that people would rather pay to make insurance executives rich than have the government in charge. With HMO's, we have back room choices being made to maximize the insurance companies' profits. When people say they don't want the government to decide what is and isn't covered, they are overlooking that it is the insurance companies, not doctors or patients, that decide what is covered. I would trust a government appointed committee far more than insurance company executives. In Jane Galt's funny numbers, the point is that if universal health care cost 10.5% of GDP, we would all SAVE 4.8% vs. the 15.3% of GDP spent now. No magic needed, but some people in the insurance industry might wind up taking lower paying jobs with the government. That 4.8% of the GDP going into the insurance companies' pockets now buys a lot of lobbying, however.
I'm sure she was simply rounding off the top of her head to 50%, but fair enough.
No, I'm afraid Galt was responding specifically to a claim made by Moore and repeated by Yglesias. If liberals want to argue that we can do as well as France or Canada and then turn around and admit they maybe we can't, then they are actually the ones guilty of shifting the goalposts.
I recommend following all the comments on the thread to get a grasp of what people are arguing about. Unfortunately, this is a case where we could use some hard data on Medicare to resolve the dispute.
In any event, France reportedly achieves its cost savings in large part by simply paying doctors a lot less. (On the up side for French doctors, they do get their medical education for free.) Whether this will work or not in the States, I don't know. British doctors aren't as heavily compensated either, I suspect, as Britain has become very dependent on foreign doctors.
It's not, but you're assuming we will see a savings (as opposed to a big tax increase). I'm not prepared to assume that.
News flash, Mike C.: The health care system in the good old USA is very dependent on foreign doctors, and has been for many years. I work at a top notch research hospital, and the majority of the doctors and researchers are foreign born here (it's on the order of a 60%/40% split in most areas). I've seen reports that, in some regions of the US, 90% of the residents are foreign born.
I have no idea how much French doctors get paid (although being French, the chances are that they are going to live well), but here in the UK, our consultants have just had a pay rise which means each is earning about £110,000 http://news.bbc.co.uk/1/hi/health/6290808.stm (which is over $200,000).
Our GP's agreed a new contract a year or two ago which seriously boosted their earnings as well. Indeed, they got paid so much extra, that some have admitted to being embarressed by it.
It turns out that our Department of Health is totally useless (and madly keen on copying US style healthcare!), but its still better than dealing with insurance companies.
As for foreign doctors - yep, we rely on them too - every western healthcare system does, in the same way we all suck up nursing staff from around the globe, because we need them, and we pay well. But remember that although there might be the occasional (and seemingly not very clever) terrorist, there are a hell of a lot of dedicated doctors out there (many from Iraq). Of course, if the DoH had got the number of doctors it wanted trained about 15 years ago right, things might be a bit easier!
MikeC. - Please dont believe Mark Steyn, and his unpleasent piece. The NHS is not about to collapse, and foriegn staff are hardly anything new in the NHS, indeed they have been very valuable to it. I note a couple of UK citizens actually corrected him after another rubbish piece on the NHS.
Steyn's own website shows him to be a man with an agenda, which should be easy to work out when you consider he writes for the National Review and the Washington Times.
I simply have to wonder, Why does it matter what we're paying doctors as long as the equilibrium wage doesn't result in a shortage? Everybody moans, "Oh! The doctors will get paid less!" Nobody ever makes statements like, "Oh no! It will cost less to do your taxes if you pass that law! What will the accountants do?" What's up with that?