The path dependence of health care institutions

Let's say you favor one of the health care plans currently under consideration.  Should you believe it would have been easier to switch to your favored plan in, say, 1972 rather than today?  I suspect the answer is yes or maybe even "very yes."  And probably you are stressing the imperative for change now rather than ten years from now.  That strikes me as an internally consistent set of views.

Yet I worry.  The implication is that the reform in the U.S. won't work nearly as well as in Europe, which made the switch to a different system much earlier on.  How much less well would a U.S. switch work?  I haven't seen useful estimates of this. 

Are there any data for the null hypothesis that past some point countries — for better or worse — simply cannot or will not change the basics of their health care institutions?

Almost everyone thinks that the French health care system is better than the British health care system.  What is the chance that the British could be persuaded to switch?  (Although I cannot imagine the rhetoric: "under the French health care system, Jean-Dominique Bauby would have been put to death.")  What does this say about health care reform more generally?

One unintended byproduct of the current U.S. debate is that the British will dally in reforming their NHS.  It is now harder for them to admit they have a relatively bad system.

Comments

There's "relatively bad" as in all OECD healthcare systems other than American, and there's "spectacularly bad" - the American healthcare system.

By the way difficulty in changing the system suggests playing it safe and mostly adopting one of the existing systems known to work from another country. All never-tried healthcare plans that are proposed here, and by Robin Hanson on overcomingbias, and by other libertarian-leaning bloggers trapped between realization of failures of the current system, and unwillingness to accept government involvement in healthcare - shouldn't they be rejected just on the basis of risk aversion because they're much more likely to fail in a spectacular way than a system like British or Canadian?

"There's "relatively bad" as in all OECD healthcare systems other than American, and there's "spectacularly bad" - the American healthcare system."

Yes, American healthcare is "spectacularly bad." In fact, it's so bad that I wonder why the government is even bothering to attempt to "reform" it, so horrid is our care and our outcomes, and doesn't instead simply pay to ship Americans off to other countries for their health care. I know that should my wife develop breast cancer I would be keenly interested in sending her to any of the other OECD nations for their superior care, despite the fact that their outcomes are inferior.

One unintended byproduct of the current U.S. debate is that the British will dally in reforming their NHS. It is now harder for them to admit they have a relatively bad system.

Doesn't seem to be stopping the Canadians, if the headlines on Drudge mean anything.

I assume that the US has a lower life-expectancy at birth than most OECD countries is part of what people are talking about in saying the US has worse outcomes given how the US spends so much more as a % of GDP on health than the rest of the OECD.

I go back to suggesting one looks at Australia: we have higher life expectancy at birth than Canada or any European country (except Andorra) and we spend slightly less on health as % of GDP than the OECD average (and much less than the US). We have essentially a base-care government funding system and one can purchase private insurance, most health care is privately provided with a mixture of public and private hospitals. The system is hardly perfect, but seems better than the NHS or what the US currently does.

Over 1 out of 4 American now get their health paid for by the government and this number keeps increasing both because we have more people over 65 and because the cost heath care is growing faster than wages. In addition 1 in 6 are not insured can not pay their own bills if they need expensive care so that cost is paid for by other people, and that number is also growing. If nothing is done to stop the trend we will end up with government health care by default.

Joan,

One of the principle reasons - if not THE principle reason - health care costs are rising so fast is that insurance is paying for most care, so the incentives to control costs are diluted or dissipated by being passed on to third parties. And Medicare costs are rising in large part because elected politicians are responsive to the demands of constituents, instead of markets. The only way to control costs is either to create a real market and rationalize the system so that providers and consumers can make tradeoffs, or, have the government control costs by using the "sledgehammer" approach.

Path dependence is the whole history of the health care system.

Otherwise it would be like it was before health insurance became tax exempt for business, and doctors would charge what the particular patient could afford to pay.

Talk about a superior system.

One thing to consider is that a country would be rational to focus its reform efforts in ways that would make it better off. Is health care reform a sensible thing for the British to be focused on? I think there is a strong case that health care reform is not what America should be focused on, but now that we are I would prefer we make incremental progress.

Ryan, most reform proponents have three criteria for success: expanding coverage, reducing costs, and improving outcomes. These aren't the same thing, but they don't always work against each other, either.

Multiple equilibria is an issue with health care systems; it's easy to get caught in a suboptimal one, and we have been, in the most suboptimal one short of Uzbekistan. Most reform proponents believe that essentially any other system would be better than what we have now, which is genuinely terrible.

It's really a pity that we're not considering Wyden-Bennett more closely. It (if Republicans are to be believed) had bipartisan support; is clearly a much better policy than our current system, by any of the three criteria; and moves us off a path that's dooming us to an ultimately very suboptimal policy (employer-based coverage). That means it's moving us forward, while allowing room for future policy initiatives that are flexible. Single-payer proponents, HSA-people, and really anyone interested in improving our health care system all would have a lot to like in a post-Wyden-Bennett climate, because it improves from the current system and allows much easier future policy innovation.

Joseph S. Hacker has an excellent paper about the role that past policy decisions play in the adoption (or non-adoption) of national health insurance schemes in Canada, Britain and the U.S. It specifically speaks to the difficulty that the U.S. will have in ever achieving universal coverage, based on its past policy choices.

Hacker, Jacob S. 1998. "The Historical Logic of National Health Insurance: Structure and Sequence in the Development of British, Canadian, and U.S. Medical Policy." Studies in American Political Development 12: 57-130.

"Are there any data for the null hypothesis that past some point countries -- for better or worse -- simply cannot or will not change the basics of their health care institutions?"

When the tumor is 18% of the body it's hard to cut it out without pain. As the tumor grows, the chance of removing it diminishes. Watching how the threatened interests are destroying the reform initiative, I would say we are well past that point of feasible reform.

Mort

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