Two Questions

I am refining my syllabus for my spring class at Duke, Comparative Health Care Systems and think this article by Henry Aaron and Paul Ginsburg sets the essence of the challenge facing the U.S. health system and provides a useful lens through which to compare the US to other nations (exhibit 1 in the paper is especially useful). The article poses two basic questions.

Is health spending excessive? If so, what can we do about it?

You can only answer these questions meaningfully by thinking about the benefits and the costs of health care spending at the same time. Most people focus on one or the other while essentially assuming the other doesn't exist.

I think the answer to the first question is a slam dunk yes. We spend two dollars per capita each time most nations we view as our trading partners and allies spend one, and our outcomes are about the same, sometimes a bit worse. But, certainly not twice as good. Or even 10 % better.

The second question (what can we do about it) is hard to answer well, and learning to do so is the hard work we will have to do if we are to restore any sort of fiscal sanity to our health care system. As they note, the key is to cut spending increases while not harming welfare. This should be possible, in part, because so much we now spend money on does not improve health. But, it won't be easy. Eventually you push up against the point where more cuts hurt welfare as they call it (or health). In different areas we may be very close to this point...in others very far. We need to figure out how close we are to this point on a systematic basis.

The bill that is likely to emerge from a conference and become law is a step toward being able to undertake the hard work of addressing this question, and aligning incentives with the answer. But, it is not the last step.

Importantly, there is a broad change in our culture needed if we are going to address how much we spend on health care, and the fact that it has been rising so much faster than other things. Other nations seem to be able to ask these questions in a more reasoned manner than we do. Our inability to do so is a cultural puzzle. If you demonstrate that we spend $2 each time most nations spend $1 on a per capita basis, and then show that our outcomes are about the same, or a bit worse I would next expect such a consumerist society as ours to be outraged and want to know where the money went? Why aren't we getting our monies worth?

Instead, the gut reaction of many Americans is to say 'but our system is the greatest in the world' as an article of faith and all the other nations (that produce similar outcomes for half the spending per capita!) are far worse. And you by asking the question do we spend too much clearly want to kill your fellow Americans via rationing, etc. I find this to be a bizarre reaction.

We need to grow up.

And just to be clear, I am not saying we should copy another nation's health system. In fact, in my comparative health systems class, I hammer home to my students that you can't copy another system. All of them are birthed and exist in a particular history and context. It is useful to compare, especially with respect to spending per capita and outcomes to see if it is possible you could do better and still spend less. But, in the end, each nation has to figure out what works for them, at that time.

The two questions posed by the Aaron and Ginsburg need to be front and center as we try and figure it out in the U.S.