Thursday, September 21, 2006

U.S. health care gets a 'D'

Despite paying half again as much for health care as our nearest competitor (Switzerland), a study released this week gives the United States a 66 percent score in health care outcomes, quality, access and efficiency compared to other industrialized nations.

How seriously should we take this? Well, it depends.

The U.S. ranks 15th out of 19 countries in terms of the number of deaths that could have been prevented. The study estimates that each year 115 out of 100,000 U.S. deaths could have been avoided with timely and appropriate medical attention. Only Ireland, Britain, and Portugal scored worse in this category, while France scored the best, with 75 preventable deaths per 100,000.

Here's an example. We rank 15th... but we still only have 115 preventable deaths per 100,000. That's an error rate of about 0.1%. We could do better, but we're still doing pretty darn well.

The U.S. ranks at the bottom among industrialized countries for life expectancy both at birth and at age 60. It is also last on infant mortality, with 7 deaths per 1,000 live births, compared with 2.7 in the top three countries. There are dramatic gaps within the U.S. as well, according to the study. The average disability rate for all Americans is 25% worse than the rate for the best five states alone, as is the rate of children missing 11 or more days of school.

These are more serious numbers, because life expectancy and infant mortality are basic measures of a society's health. But again, though we lag the competition, we're better off than much of the world; an infant mortality rate of only 0.7 percent isn't too shabby.

What those overall numbers, miss, though, is the unevenness of health care quality in the country. The report notes major gaps in quality and access across the country, with poorer areas, unsuprisingly, having worse outcomes.

So the problem isn't that our health care stinks overall; it's that access to it is uneven, and that we're paying far too much for the results we get.

Further, more and more of that cost is being shifted to workers. Salaries that were negotiated when employers picked up much of the health-insurance premium are now having to absorb a larger share of that premium. The result is that workers are spending a growing share of their income on health care.

Since benefits are part of worker compensation, it's not a particularly big deal if the budget line that pays for health care changes from the benefits side to the salary side -- as long as overall compensation remains stable. But what's happening is that employers are shifting the costs to workers without raising their pay to compensate, meaning a net loss of income to workers. It's a stealth pay cut.

It makes lots of sense to make people pay for their health care directly. Our current system arranges things so that people pay the same for health care whether they use it a lot or a little. This is good because it spreads the financial risk, a prime purpose of insurance. But it also raises some big moral hazards, because consumers have no incentive to limit their use of health-care resources. Giving them incentives to spend their money wisely will encourage more efficient use of those resources and keep overall costs down while possibly improving care -- because people are only going to pay for the care they want, from doctors who provide it efficiently and courteously.

But if workers are expected to pay their own health care costs, their salaries should be bumped up in the interim to compensate and then allowed to adjust to the market from that new base. Anything else is a betrayal of the social contract that has underpinned our health-care system for decades.

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