Health Care Mortality Rates

The  Weekly Bystander is taking a break for the rest of August. For the rest of the month I will repeat some of the most popular posts since the blog began back in December, 2011.  Below here is one from 2013 that compared the U.S. Health Care system with that of the rest of the world by examining mortality rates, a standard measuring tool. The figures and the WHO chart might be a little dated but even after four more years of Obamacare, I think the conclusions in the post are still valid. Even before Obamacare, the U.S. Health Care system was working remarkably well. Click on the chart to enlarge.

Despite the fact that the United States spends more money per capita on health care than any other country in the world, many critics argue that health care in this country is inferior to what can be found in many other developed countries, especially those with National health systems. These critics are also proponents of a sweeping conversion of health care in this country to a single-payer or national system. 

Critics of the U.S. health care system point to statistics compiled by the World Health Organization (WHO) that rank the United States thirtieth in the world in life expectancy. The accompanying chart shows that in 2007 the average life expectancy in the United States was 78.06 years. Actually, that was not too far behind #1 France with an average life expectancy of 80.59. (click on the chart to enlarge)

I recently came across an excellent article* that attempted to put this statistic in perspective. The article was based on a book by Scott W. Atlas, entitled “In Excellent Health, Setting the Record Straight on America’s Health Care”, that argued that the U.S. health care system before Obamacare was “ the best system in the world.”

How could this be given the mortality statistics? Atlas argued that the WHO statistics were skewed by a number of factors, and that they should be taken with the proverbial grain of salt. The most important element in the low ranking of the U.S. mortality rate would appear to have no connection with health care at all. It is the extraordinarily high rate of murder and automobile accidents in the U. S.

“Murder and accidents account for the majority of deaths among young adults in the United States, and deaths at young ages substantially impact life expectancies.”

If murders and auto fatalities alone were factored out of the statistics, the U.S. would have the highest life expectancy in the world. Murders and automobile fatalities are serious but they are not a health care problem.

Other factors are almost as important in lowering life expectancy. The United States has a much higher rate of obesity than other developed countries and obesity reduces life spans by up to eight or ten years. Also, while smoking has dramatically decreased in the U. S., the residual effects of a long history of smoking in this country will continue to impact mortality statistics for years to come.

Finally, differences in record keeping also impact mortality statistics. Scott Atlas noted the more stringent reporting requirements in the U.S. compared to Europe in the matter of infant mortality figures.

“considering that roughly half of all U.S. infant mortality occurs in the first twenty four hours, the single criterion of omitting deaths within the first twenty four hours by many European nations generates their falsely superior infant mortality rates.”

Rather than blaming the U.S. for higher infant mortality rates, Atlas argued that, 

“The United States health care system should be applauded for its efforts to save premature babies rather than write them off as stillborn, as many other countries do.”

A proper evaluation of the health care system in the U.S. should be based not on flawed mortality statistics but on actual medical care, especially the diagnosis and treatment of important diseases. Here are some facts that Atlas unearthed.

1. Prolonged wait times are commonly found in health systems with government controlled nationalized health insurance. Numerous countries with single payer systems had to create policies to address prolonged wait times, including Canada, England, Italy, Sweden, and Spain.

[I saw this myself  when I visited my cousins in Italy a few years ago. They had purchased individual insurance policies to pay for things or procedures not covered by the national system. For example, government doctors would routinely say that you could wait four months for a procedure, or visit them in their private office for the procedure in the next day or two if they would pay on their own, The above chart indicates that over 90% of people in Italy have purchased private insurance policies.]

2. In the United States, referring doctors book CT and MRI appointments within days. In other countries people wait. In 2010, the average wait time for a CT scan was 4 weeks and for an MRI 10 weeks. A 2011 study in the United Kingdom indicated thousands of people waited over six weeks for an MRI scan. With respect to breast cancer biopsies, another survey indicated that only 1% of U.S. patients waited three weeks or more while 44% of Canadian and 20% of U.K. patients waited that long.

3. No elective cardiac bypass patients in the United States were known to have waited more than three months, while 47% in Canada and 89% in the United Kingdom waited that long.

4. The United States tends to have the highest percentage of screenings for breast, cervical, prostate and colon cancer.

In conclusion, the availability of state of the art medical technology, timely access to specialists, the most effective screening, the shortest wait times for life changing surgeries, the newest, most effective drugs for more accurate, safer diagnosis and for the most advanced treatment are all superior in the United States.

In 2008 one study showed that up to 85000 patients sought in-patient treatment outside their home country, and 87% of them traveled to the United States. 

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*The article was written by Charles P. McQuaid, President and Chief Executive Officer of Columbia Wanger Asset Management. and appeared in the 2013 semiannual report of the Wanger International Fund. It was based on the book by Scott Adams mentioned above, as well as a book by Robert Ohsfeldt and John Schneider, "The Business of Health."

Health Care and Tort Reform

Dr. Tom Price

  

One of the signature issues of Donald Trump’s campaign was the repeal of the Affordable Care Act or Obamacare. However, I noted in an earlier post that Obamacare was actually repealing itself. Premiums are increasing at double digit rates and already high deductibles are getting even higher. Also, the number of insurance companies participating is getting smaller and smaller.

Just this past week Connecticut announced that HealthyCT, one of its most promising non-profit health insurance coops, would go out of business on December 31. In the past couple of years the enrollment numbers had not met expectations despite lower than average premiums, and claims had skyrocketed. At the same time, the Federal funding that was designed to help these coops get off the ground has now run out. The State announced that existing claims would be paid out of an insurance industry fund designed to rescue insolvent companies. HealthyCt’s remaining customers will have to find new coverage.

I suspect that the fate of HealthyCT is being replicated all over the country. Premiums are increasing all over and claims continue to rise. Apparently, some states are now down to only one health insurance provider. A recent article in the Wall St. Journal suggested that about 40 different proposals to replace or change Obamacare have been proposed by Republicans in Congress in the past four years but not one has been able to get past President’s threat of a veto.

This week President-elect Donald Trump announced his nomination of Representative Tom Price of Georgia to become head of the massive Department of Health and Human Services (HHS). As a Congressmen, Price has championed a replacement for Obamacare based on 20 years of experience as an orthopedic surgeon and on his belief that the less government interferes in healthcare the better.

What can the new administration do to rein in rising health care costs? I’m sure that the will be many different suggestions and plans but I would just like to mention one. If the government or Medicare can regulate what hospitals, physicians, and drug companies receive for their services, I don’t see why it can’t pass significant tort reform and limit the size and extent of medical malpractice awards to attorneys who typically get 33% of the claimant’s award. I also don’t see why enormous punitive damages that do not benefit the actual claimant should be permitted.

Medical malpractice insurance makes up a huge part of the expenses that hospitals and physicians must pass on to their patients. Why should this be a political issue? Why have liberals and Democrats always opposed tort reform? The doctors and hospitals that actually provide the medical care must accept what Medicare and Medicaid allow but there is practically no limit on what lawyers, who add nothing to medical care, can charge.

Just recently I read that a commuter train conductor who crashed his train into the landing platform in New York’s Grand Central station was suing the rail line for $10 Million. He had fallen asleep on the job and his train crashed after hurtling through the Grand Central tunnel at over 80 miles per hour. Nevertheless, his attorney claimed that the rail company should have installed fool-proof braking devices in all trains to protect against conductors like his client.

I am not saying that all medical malpractice claims are like this one but even if they are not, what reasonable person would think a lawyer should get over $3 Million for one case? Anyone on Medicare who looks at the monthly claims report knows that the medical insurance company, following Medicare guidelines, typically reduces the hospital or doctor bill substantially. When I had radiation treatment for prostate cancer, the hospital billed my insurance company over $120000. I have no idea how the hospital arrived at that figure but it accepted the insurance company allowance of about $14000 of which I had to pay 20%.

It will not surprise me to see tort reform in the medical proposals emanating from the new Congress. The lawyers have a powerful lobby and taking it on will be a test of the dedication of Donald Trump and the Republicans to reforming health care.

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President Obama's Promise

    

In a recent op-ed in the Wall St. Journal Alan Blinder supported the President’s attempt to weasel out of his health care promise by calling the health plans that millions of Americans are losing “sub-par”. I believe the President calls these plans sub-standard. But in his long op-ed defending the Affordable Care Act Mr. Blinder, like the President, never bothered to detail just what was so sub-par about those plans.

Recently, other op-eds as well as letters in the Journal have shown that some of these below standard plans have actually paid substantial benefits to claimants, as well as providing good service to policyholders. One woman even received over 1.2 million in benefits and obviously loved her plan.

So what is so sub-par about these plans? As far as I can tell, they lack a provision for free health club membership. They also fail to provide free contraceptives. I also suspect that they fail to include dental and vision care. I’m sure that in the minds of the President and Mr. Blinder there are other deficiencies but I’m also sure that most people chose coverage that met their needs, especially for large ticket items. Most health care consumers liked their plans because they had chosen the deductible and co-insurance provisions that suited their needs.

Now, despite the President’s promise, millions will lose their coverage and be forced into one size fits all plans that will contain benefits that they neither want nor need.

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Health Care in the U.K.

A good friend in England provided a balanced and well thought out response to my recent post (10/22/13) on American health care. Below he describes the system in Great Britain as a mixture of public and private options.

" I’ve been meaning to comment on your blog item on healthcare – not necessarily to contradict, but perhaps offer a different (U.K.) perspective. I was chewing this over with a retired health worker on holiday recently, then I read your blog.

  You’ll remember the rather crazy opening ceremony to the Olympics with the paean of praise to the National Health Service. Well, that was silly and over the top, and the NHS isn’t always wonderful by any means – we’ve had a series of scandals relating to appallingly poor care of the elderly recently. But that’s certainly balanced by some wonderful care over the years shown to my family and friends.

 Last year my youngest son suddenly had two detached retinas – he came very close to losing his sight. The very speedy care he received at our local eye hospital was wonderful – he’s now had a series of operations, and treatment will continue until they are satisfied that everything is as good as possible.

  Some years ago my grandson was born prematurely – it had been a difficult pregnancy. He needed to remain in the maternity unit for a week – a small apartment was provided so both of his parents could be with him for those first few days – at no cost.

  A few years ago my wife found a lump in one of those places that women fear most. Within a week she was at the hospital having a biopsy, and all, thankfully, turned out benign. The following week it was removed.

A good friend foolishly ignored symptoms he shouldn’t have done. One day he collapsed and was rushed into hospital with advanced bowel cancer. There followed two months in hospital, and two major operations. It may not be the end of it yet – but the treatment couldn’t have been better.

  What’s good is that, even for the poorest, visiting a GP or getting children vaccinated is free, and all necessary treatment is covered. My GP is good – not as good, though, as my last one, now retired, who told me once that my liver function was far too good for a man of my age and I clearly wasn’t drinking enough alcohol! (He was an Irishman with a great sense of humour.)

  It’s often assumed that there is an either/or situation in medicine – either state funded, or private medical insurance. This isn’t so in the UK. As it happened, my son was covered by private medical insurance provided by his employer. When he weighed it up, it made more sense not to claim – there was a (relatively small) excess to pay if he did so, and the free care was excellent anyway. A while back I took a different route – I needed eye surgery to correct a squint (strabismus) that has always bugged me, and for which I’d been operated on by the NHS previously. It had got worse again. It wasn’t urgent, and, yes, there would have been a waiting list, so I simply paid for it at the local private hospital so I could have it done when it suited me.

  You may quite reasonably say that taking out private medical insurance in the UK means you are paying twice. Well, yes, you are – the National Insurance Contribution (which I’m not now paying as I’m over 65!) and the insurance premium. But comparing costs, the total of both these is quite a bit less than Medical Insurance costs in the US. So you can opt out of the NHS and it’s still cheaper. Even if it wasn’t, I think paying a little extra to help out others who cannot afford treatment is an ethical thing to do.

    I’m aware that compulsory enrolment in a healthcare scheme goes against the grain in the U.S. – the advantage of it, though, is its simplicity and efficiency. The Brits like it – which demonstrates, I suppose, one of those cultural differences between the U.S. and Europe.

   Folk from the U.S. we have spoken to of our age (mainly my wife's chums on Facebook!) have told us how difficult it is to get insurance once you are over 60,  and how there are limits on what can be claimed per treatment – a problem for those with chronic conditions. The treatment itself, though, is first rate - my (insured) mother had a stroke when in Florida and the treatment was superb - it saved her life.  Of course, not all is wonderful with the system here. In particular, problems are looming because of the aging population - those free blood pressure pills are keeping us all alive long after we should have been conveniently buried! I guess this problem exists everywhere. When my wife's mother had a stroke (at a similar age to my mother) our feeling was that, although the treatment was O.K., we felt the attitude was 'she's too old to make it worthwhile', the opposite of my mother in the U.S. who was told she was too young to give up.

I do agree with your remarks on life expectancy. That’s mainly to do with lifestyle. Traditionally, the Mediterranean diet is the one to go for, though even there there are problems – the traditional diet, high in olive oil, was fine when most people did hard manual work. Now people sit at computers but still eat the same diet, which is why heart problems have increased hugely around the Mediterranean!

   From what I’ve read of the Obamacare proposals I tend to agree with you that it all looks expensive and inefficient. All I’d say is – there are better ways of doing it."

The mixture of public and private options in the U.K. that he describes above would appear to be the norm throughout Europe. Sadly, I do not believe it will be possible in the U.S. under the Affordable Care Act (Obamacare). Each day in the U.S. it becomes increasingly clear that individuals will lose their individual and even group insurance plans and be forced into the one-size fits all government sponsored plan. President Obama's assertion, "If you like your insurance plan, you can keep it," has turned out to be one of the biggest  deceptions in the annals of the U.S. Presidency. It will go down in history along with "Read my lips...no new taxes;" and "I did not have sex with that woman."

I turns out that President Obama really meant was that "you could keep your policy if he liked it." He insists on calling these policies substandard even when most of them were doing a really good job. He doesn't define what he means by substandard, but it would seem that they lacked low cost benefits like health club memberships and contraceptives. For hospital bills and high cost procedures it would seem that they were doing a more than standard job.

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U.S. Health Care System

                                             

Despite the fact that the United States spends more money per capita on health care than any other country in the world, many critics argue that health care in this country is inferior to what can be found in many other developed countries, especially those with National health systems. These critics are also proponents of a sweeping conversion of health care in this country to a single-payer or national system.

Critics of the U.S. health care system point to statistics compiled by the World Health Organization (WHO) that rank the United States thirtieth in the world in life expectancy. The accompanying chart shows that in 2007 the average life expectancy in the United States was 78.06 years. Actually, that was not too far behind #1 France with an average life expectancy of 80.59. (click on the chart to enlarge)

I recently came across an excellent article* that attempted to put this statistic in perspective. The article was based on a book by Scott W. Atlas, entitled “In Excellent Health, Setting the Record Straight on America’s Health Care”, that argued that the U.S. health care system before Obamacare was “ the best system in the world.”

How could this be given the mortality statistics? Atlas argued that the WHO statistics were skewed by a number of factors, and that they should be taken with the proverbial grain of salt. The most important element in the low ranking of the U.S. mortality rate would appear to have no connection with health care at all. It is the extraordinarily high rate of murder and automobile accidents in the U. S.

“Murder and accidents account for the majority of deaths among young adults in the United States, and deaths at young ages substantially impact life expectancies.”

If murders and auto fatalities alone were factored out of the statistics, the U.S. would have the highest life expectancy in the world. Murders and automobile fatalities are serious but they are not a health care problem.

Other factors are almost as important in lowering life expectancy. The United States has a much higher rate of obesity than other developed countries and obesity reduces life spans by up to eight or ten years. Also, while smoking has dramatically decreased in the U. S., the residual effects of a long history of smoking in this country will continue to impact mortality statistics for years to come.

Finally, differences in record keeping also impact mortality statistics. Scott Atlas noted the more stringent reporting requirements in the U.S. compared to Europe in the matter of infant mortality figures.

“considering that roughly half of all U.S. infant mortality occurs in the first twenty four hours, the single criterion of omitting deaths within the first twenty four hours by many European nations generates their falsely superior infant mortality rates.”

Rather than blaming the U.S. for higher infant mortality rates, Atlas argued that,

“The United States health care system should be applauded for its efforts to save premature babies rather than write them off as stillborn, as many other countries do.”

A proper evaluation of the health care system in the U.S. should be based not on flawed mortality statistics but on actual medical care, especially the diagnosis and treatment of important diseases. Here are some facts that Atlas unearthed.

1. Prolonged wait times are commonly found in health systems with government controlled nationalized health insurance. Numerous countries with single payer systems had to create policies to address prolonged wait times, including Canada, England, Italy, Sweden, and Spain.

[I saw this myself  when I visited my cousins in Italy a few years ago. They had purchased individual insurance policies to pay for things or procedures not covered by the national system. For example, government doctors would routinely say that you could wait four months for a procedure, or visit them in their private office for the procedure in the next day or two if they would pay on their own, The above chart indicates that over 90% of people in Italy have purchased private insurance policies.]

2. In the United States, referring doctors book CT and MRI appointments within days. In other countries people wait. In 2010, the average wait time for a CT scan was 4 weeks and for an MRI 10 weeks. A 2011 study in the United Kingdom indicated thousands of people waited over six weeks for an MRI scan. With respect to breast cancer biopsies, another survey indicated that only 1% of U.S. patients waited three weeks or more while 44% of Canadian and 20% of U.K. patients waited that long.

3. No elective cardiac bypass patients in the United States were known to have waited more than three months, while 47% in Canada and 89% in the United Kingdom waited that long.

4. The United States tends to have the highest percentage of screenings for breast, cervical, prostate and colon cancer.

In conclusion, the availability of state of the art medical technology, timely access to specialists, the most effective screening, the shortest wait times for life changing surgeries, the newest, most effective drugs for more accurate, safer diagnosis and for the most advanced treatment are all superior in the United States.

In 2008 one study showed that up to 85000 patients sought in-patient treatment outside their home country, and 87% of them traveled to the United States.

###

*The article was written by Charles P. McQuaid, President and Chief Executive Officer of Columbia Wanger Asset Management. and appeared in the 2013 semiannual report of the Wanger International Fund. It was based on the book by Scott Adams mentioned above, as well as a book by Robert Ohsfeldt and John Schneider, "The Business of Health."

Affordable Care Act

One of the first things I learned when I went into the insurance business almost 40 years ago was that insurance was simply the prepayment of claims. It is paying in advance to cover some future bill or expense. It does not matter if it is life insurance, automobile insurance, or medical insurance. The same basic principle must apply. A policyholder pays monthly or annual premiums and these premiums are pooled with others to pay eventual claims. 

Medical insurance is no different. It only had its origins in the 1930s during the Great Depression. At that time hospitals and physicians were finding it increasingly difficult to collect from their patients, many of whom were out of work. As a result we had the birth of the “Blues.” Both Blue Cross and Blue Shield were products of the Depression. In short, people would enroll in these plans and pay a monthly or quarterly premium that over time would build up enough of a reserve to cover their future claims. This idea seemed to benefit everyone. Doctors and other health care providers would no longer have to go after their patients like collection agencies; and the patients would not have to come up with a large amount of cash to handle large, unexpected medical bills.

However, to avoid excessive or frivolous claims that raise the cost for everyone, most medical insurance policies included deductibles or co-insurance to reduce or eliminate small claims. This was right out of Insurance 101 since actuaries were well aware that the most cost effective strategy was to make the patient bear part of the cost out of pocket.

However, the use of medical insurance to cover future health care costs only took off after World War II. The war had finally taken the country out of the Depression and the economy was booming. In a major change the Federal Government allowed corporations to purchase group medical insurance plans for their employees. Employers were not required to provide health insurance but the government altered the tax code to provide a great incentive.

Unlike other forms of compensation the cost of the medical insurance would not be considered taxable income to the employee. This was important especially to high salaried employees at a time when the highest tax rate was 70%. In other words, employees covered under such a group insurance plan could now have most of their medical expenses paid with tax-free income. It was a no-brainer. Instead of giving all employees a $1000 taxable salary increase, the employer could give them a $1000 tax-free benefit that would cover future health related costs.

The employer sponsored plans were incredibly attractive to all concerned and sparked a veritable revolution in health care in this country. Employers could deduct the cost of their plans as an ordinary business expense while employees could rely on their pre-tax medical insurance plan to cover major medical expenses. Since these were group insurance plans all employees had to be covered even if they had pre-existing medical conditions. Increasingly these group insurance plans came to dominate the market.

Nevertheless, the basic principle of insurance still governed these group plans. They all involved a pre-payment of claims most often through automatic payroll deductions.

This system of corporate sponsored insurance worked remarkably well for the great majority of Americans for many years. There were obvious problems, however, that needed to be fixed. People would lose their coverage when they lost or changed their jobs. Self-employed people did not ordinarily have access to these plans. Unemployed workers would eventually lose their coverage. People with pre-existing medical problems would find it almost impossible to get coverage on their own.

Attempts had been made to deal with these problems but critics of the system still insisted that over 30 million people were without medical insurance. Even if that number was accurate it would be wrong to say that all those people lacked access to medical care. One of the problems with the system was that so many people refused to purchase medical insurance and just went to local hospital ER for even ordinary care.

Instead of trying to fix the problems in the old system, proponents of the Affordable Care Act (Obamacare) sought to overhaul the entire health care system in this country. Now instead of getting a tax break for providing employees with medical insurance, employers would be forced to provide such insurance or pay a penalty. Even though the Obama administration has arbitrarily extended the corporate mandate for a year, some employers have already chosen to drop their plans.

More importantly, it is clear that almost half the country will qualify for a partial or full subsidy from the government in order to purchase their medical insurance. Not only is this incredibly complex and difficult to administer, but it is also open to fraud. Nevertheless, under the ACA a very large percentage of Americans will not have to pay premiums for their medical insurance. No matter what you call it, this is no longer insurance but welfare.

How is the government that is already over 17 Trillion dollars in debt going to pay insurance premiums for almost half the people in this country? Will it just print more money, or will it have to raise the taxes on the other half. Despite these subsidies it would appear that most of the un-insured will not be able to navigate the red tape necessary to enroll, or even be willing to enroll. 

In the next year it would not surprise me if more people lose medical insurance than sign up for Obamacare.

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