US Health Care: Why Privatization Is Inefficient

Arguments Against Universality

It is often argued that socialized medicine in the US would introduce a wealth of problems, worse than those currently faced. Government is often regarded as wasteful, rigid and out of touch with the real needs of its citizens. In comparison, private management of health care is often portrayed as offering increased flexibility, allowing consumer freedom of choice, sensitivity to client needs, innovative service delivery, and allowing free-market competition to dictate which private providers will succeed and which will fail.

This free-market argument is predicated on the assumption that same forces that shift consumers from economy cars to SUVs and back again can be applied realistically to brain surgeons and cardiologists. In reality, any profit-driven business model needs to cut costs wherever possible by minimizing low-profit services, maximizing high-profit services, and increasing throughput in order to pull ahead of the competition.

As Baicker and Chandra (2004) observed, the concentration of medical care, and particularly the concentration of specialists seems to occur in areas where the most money exists to be made; logical, for a profit-driven model. But is it reasonable to expect equality for all patients in a system where the most gifted and talented physicians are drawn towards the best paying specializations, providing services that are the most financially lucrative, and working in the most affluent geographical areas? More importantly, who does that leave to fill the lower echelon positions, providing the necessary but less profitable services to the middle and working classes, and what quality of services will they receive? While socialized medicine does have its problems, for-profit medicine can skew service availability and quality in way that is even more threatening.

The American media has given wide press coverage to the wait times associated with Canada's universal health system. Ignoring its relatively low cost for high access, the U.S. has been able to portray the latency of a free system as indicative of overburdening and inflexibility. The contention is that by not being able to see patients in a timely manner, a public system wastes time, increases suffering and risks lives. As a fear-inducing argument this is very convincing, however, the fact that long waiting times lead to unmet health needs for only 3.5% of Canadians will probably reach few ears, and influence substantially fewer minds (Lasser et al., 2006).

Arguments for Change

Under a universal system with low overhead costs, Canadians are living longer, healthier lives than Americans. As of 2004, the average life expectancy in Canada was 78 for males and 83 for females, each 3 years longer than for the men and women living in the United States (WHO, 2006). Additionally, Canada has significantly better figures for adult mortality, maternal mortality, and HIV-related mortality (10.7% of the U.S. rate per 100,000) despite having a lower physician and nurse density (WHO, 2006).

In fact, an American study including data from over 26,000 U.S. hospitals and 38 million patients concluded that about 2,000 additional deaths would occur in Canada each year if Canada adopted privatized, for-profit health care (Devereaux et al., 2002).

Conclusion

The gulf between American and Canadian health care administration expenditures has grown to $752 per capita (Woolhandler et al, 2003). In the introduction to this blog series, I quoted Richard Nixon's plea for a better health care system. It makes me wonder: What might have happened in the United States had Watergate never occurred? While instituting a national health insurance program would have been difficult in 1974, it pales in comparison to the vertical climb required to scale such an obstacle over 30 years later. Three decades of lobbying, growth, and amalgamation have wrought immensely powerful corporations, fortified by deep pockets and deeper political connections. Deepest of all may be the social change that that these factors have created — the perception that resides within average American citizens that they already possess the best health care system in the world (Krugman, 2005).

In the final analysis, a single payer national health insurance system could reap the necessary administrative savings to allow universal coverage for all Americans without an increase in total health spending, but this is unlikely to occur (Himmelstein et al., 2004). In the very least, achieving effective reform will necessitate a complete paradigm shift at the individual level. People will need to acknowledge that change is necessary and desirable and will “need to shed some preconceptions - in particular, the ideologically driven belief that government is always the problem and market competition is always the solution” (Krugman, 2005).

The current developments in the US are exciting, and I'm continuing to watch the news with great interest. Just this Saturday, the US Senate voted 60-39 to debate the public health care option bill. While it's still too early to tell what might happen, Obama has already eclipsed the progress of Nixon in the 70s and Clinton in the 90s. It's promising.

Part 1 | Part 2 | Part 3 | Part 4

References

Baicker, K. & Chandra, A. (2004). Medicare spending, the physician workforce, and beneficiaries' quality of care. Health Affairs, W4, 184-197.
Devereaux P. J., Choi P. T. L., Lacchetti C., Weaver B., Schünemann H. J., Haines T., Lavis J. N., Grant B. J. B., Haslam D. R. S., Bhandari M., Sullivan T., Cook D. J., Walter, S. D., Meade M., Khan H., Bhatnagar N., & Guyatt H. (2002). A systematic review and meta-analysis of studies comparing mortality rates of private for-profit and private not-for-profit hospitals. Canadian Medical Association Journal, 166(11), 1399–1406.
Himmelstein D. U., Woolhandler S., & Wolfe S. M. (2004). Administrative waste in the U.S. health care system in 2003: The cost to the nation, the states, and the District of Columbia, with state-specific estimates of potential savings. International Journal of Health Services, 34(1), 79–86.
Krugman, P. (2005, April 11). Ailing Health Care. The New York Times
Lasser, K. E., Himmelstein, D. U. & Woolhandler, S. (2006). Access to care, health status, and health disparities in the United States and Canada: Results of a cross-national population-based survey. American Journal of Public Health, 96(7), 1-7.
Woolhandler, S., Campbell, T. & Himmelstein, D. U. (2003). Costs of health care administration in the United States and Canada. The New England Journal of Medicine, 349(8), 768-775.
World Health Organization. (2006, September 30). Core Health Indicators.