Thursday, February 26, 2009

The Spectre of Socialized Medicine

Yesterday President Obama assured us that healthcare reform was at the top of his agenda. Opponents raise the spectre of socialized medicine and Britain's NHS is held up as an example of what lies down that path.

The truth is that both Britain and America have a mixed economy of social and private healthcare.

The great worry is that socialized medicine leads to rationing. At one time the NHS had a waiting list of five years for a hip replacement and there is a built in delay in getting the new cancer drugs, some of which have not been and may not be approved by NICE.

However, this indictment of the NHS does not tell the whole story. Even when it took 5 years to get a hip replacement on the NHS you could get one next week if you had health insurance. At the time I was practising around 20% of the population had healthcare insurance. This is a far lower percentage than in America, of course, but there are reasons for this, which I will explain. Health insurance for the 20% is largely provided by employers who naturally enough regard it as a good investment since it gives them control over when their employees will be absent on health grounds. The whole private healthcare industry is geared towards elective surgery, since it is this area that is easiest for socialized medicine to ration. If you were paying through your taxes for someone else's treatment you would be happy to cover treatment for cancer and heart attacks but you might be unsure about paying for their varicose veins or their sticking out ears to be remedied.

Private health insurance usually extended to the employees family. Many self-employed individuals were able to write off healthcare insurance as a business expense and saw it as a good investment.

The other element to my thesis is that America also enjoys socialized medicine. The largest plank in this is the VA service. Some commentators have suggested that this is the most efficient part of American healthcare. In addition there is Medicare and Medicaid and a separate provision for children. It is also true that there are government subsidies to the private insurance industry in the form of tax breaks. Finally, there are the county hospital ERs that provide free healthcare to the indigenous poor.

The UK currently spends about 7.4% of GDP on the NHS. Surprisingly, the American government spends a staggering 11% of a much larger GDP on healthcare. The healthcare purchased by insurance is on top of this.

There is no doubt in my mind that the very best healthcare is provided by doctors working in private practise. Isn't that what you would expect? The more you pay for something the more you are likely to receive for you money. After all, Honda makes very good cars, but Rolls Royce make better ones. In any business transaction you largely get what you pay for. It is also true that among the best paid doctors there are some flim flam men who are taking money under false pretenses, but that's the market for you.

The problem with the market is that we can't all afford Rolls Royces and some of us have to settle for a Ford. But even a Ford is expected to get us from A to B on time.

There was a time that the Ford provided by the NHS was a beat-up Edsel, but at that time only about 4% of GDP was being spent on it. I remember when I started as a hospital consultant I was single handed in haematology; now there are 5 people doing the job I was doing and 5 junior doctors being trained in the department where there were none before. There were 3 general physicians in my hospital; now there are 33. I have seen improvements in the quality of medicine that are almost unbelievable. Nonetheless, there are still blackspots in the system that need remedy.

The reason that private medicine has never been purchased by more than 20% of the population in the UK is that the NHS is so good. It is so good because it is very efficient, avoiding buying things that are unnecessary, using the power of central purchasing in the way that the Supermarkets do to drive down prices, yet at the same time allowing a high degree of local autonomy to take advantage of local situations.

I suspect that the reason that so many buy medical insurance in America is because the alternative is so awful.

Let's take some of the specific criticisms of the NHS. How about those long waiting times? Our own hospital has been at the forefront of getting these down. No-one has to wait more than two weeks to see a consultant about a suspected cancer. Hip replacement waiting times are down to six weeks. No-one in the country waits for more than 18 weeks for any procedure.

The NHS won't pay for expensive cancer drugs. There is some truth in this. But until recently the only way you could get rituximab for CLL in America was by terminological inexactitude. If you called your CLL a type of lymphoma then you could get the insurance companies to pay for it. You could do the same in the UK until the authorities got wise to the fact that there was no evidence that rituximab showed benefit in CLL. It was not until the German CLL8 trial reported that we were sure that rituximab improved the length of remissions in CLL. It is the pharmaceutical companies who are to blame for this. They could have conducted the relevant trials a decade earlier if they had had the will.

Doctors all round the world are still performing procedures for which there is no evidence of benefit. NICE has addressed this problem and is reducing the pressures on doctors to continue in their bad old ways. A good example would be the use of protein-pump inhibitors like omeprazole for indigestion. The bill for this is greater than the bill for all cancer chemotherapy put together. Even switching to ranitidine would make lost cancer chemotherapy affordable, but most indigestion responds perfectly well to antacids from the drugstore. If it doesn't then suspect peptic ulcer which can be cured by two weeks omeprazole and some cheap antibiotics.

The other criticism of socialised medicine is that it reduces doctors' incomes. The frightening example of Cuba is often brought up. And it is true. For my few private patients I was paid at 10 times the rate that the NHS paid me. On the other hand the NHS was paying me roughly the same as the Prime Minister was getting, so I shouldn't complain. Lots of people on salaries earn plenty - as we are finding out in the banking crisis.

There is a real problem with bureaucracy in anything run by the government and it is very important that the government is kept at arms length from anything to do with medicine. In the NHS every family doctor is an independent contractor, not a slaried employee. Nor is it necessary for a national health service to come from taxes; most European schemes are insurance-based. But with such a large number of Americans getting such poor healthcare, change is inevitable.


Anonymous said...

Obviously I can not comment on healthcare in the UK, but I can assure that we in the US are our own worst enemies.

The system that evolved after the adoption of Medicare in 1964 allowed for ever increasing fees for medical procedures.

For a variety of reasons, procedural medicine (surgeries, invasive diagnostic tests, MRIs, etc) commanded greater remuneration than did cognitive medicine (diagnosis, hand holding, treating the mundane) and with time the remuneration gap grew.

Compounding the problem, Medicare reimbursement provided "steady income" and along with regular, "steady" increases in reimbursement, served for years to drive up the reimbursements in the private sector as well.

Those unfortunate souls not under the cover of insurance were subject to paying the full bill (charges routinely far exceed reimbursements because of the way reimbursements are calculated) because any "discounting" of the charges could be construed as defrauding the insurance companies.

Certainly free care is available at the discretion of any physician and is provided by most hospitals, but the costs are indirectly passed on to those with paid insurance

In recent years, the per item reimbursements have often fallen or at least been held in check, but we American physicians have found clever ways to make even more simply see more patients, or do more procedures and purchase a free standing surgical center so that you may collect the reimbursements for the procedures you do there(which may exceed the reimbursements for the physician's component) or purchase a CT scanner or MRI machine to which you can refer your patients for diagnostic studies (have you ever wondered why Americans have so many CT scans and MRIs?).

We have a great deal of fixing to do! For years now Medicare reimbursements have (by law) been supposed to be adjusted for the purposes of cost containment (the cumulative amount of the legislated decrease is now about 20%), but each year Congress passes emergency legislation to defer the cuts...mainly with the lobbying of the AARP and various physician groups who falsely proclaim that American physicians may stop seeing medicare patients if the cuts are made.

Last year they brought an ill Senator Kennedy to Washington for the vote...very dramatic!

Since we all have to eat, I daresay that most physicians would continue to see Medicare patients despite their grousing!

American physicians (like physicians everywhere) are mainly goodhearted, but the system is VERY, VERY sick!


Anonymous said...

I would like to supplement my comments above by pointing out some other fallacies about healthcare in the US and offering a possible solution.

Most people don't realize that employer paid healthcare isn't really 'free' as employers surely calculate these costs into their pay structures.

What is, however, very UNFAIR about this system (apart from the fact that it tends to drive up costs for everyone) is that those who pay for their own healthcare MAY NOT deduct the costs of the premiums they pay...that's right...if you work for someone (or are self employed in a business0 your healthcare premiums can at least be paid with pre-tax dollars, but if you are retired without healthcare benefits (as are many) or unemployed every dollar paid for healthcare premiums is paid with after tax dollars.

While this is clearly unfair the american labor movement, fearful of preserving the benefits that they offer to their constituents has fought vigorously against any attempts to level the playing field as was first proposed by george W. Bush and then by Senator McCain.

I would suggest that we in America allow private insurance to be continued, but make all premiums tax deductible and also count employer paid premiums as taxable income.

At the same time I would propse that the existing Medicare platform be extended to ALL Americans and that the Medicare tax (currently 2.6% or so of earned income when one includes employee and employer contributions) be adjusted as needed to cover the costs so that all Americans would be covered under medicare part A and be offerred part B at a very small premium cost which could be paid by employers or individuals OR BY THE STATE governments (in lieu of Medicaid) for those less fortunate souls who cannot afford even those premiums.

At the same time Medicare costs could be controlled by an appropriate review of allocations and remuneration schedules.

Private insurance could (as in the UK) supplement this coverage at the choice of those who pay for it and good basic healthcare could be made available for every American at a much lower cost WITHOUT having to reinvent the wheel.

This likely would never happen because it's too fair and too many people's Oxen would be gored.

I fear, instead, that in their zeal to make things better politicians may bankrupt us!


Anonymous said...

The bottom line is that the American system is the best in the world. More research is done in the US, many more scientific papers are published, and the best cutting-edge clinical trials are available in America.

Secondly, it is a demonstrative fact that NICE, that old, sad, nanny of the NHS exists only to deny care to those who suffer under socialized medicine.

The abuses of NICE are legion. One example is the years-long refusal to deny the best kidney cancer drugs to UK patients. (The fact that a couple were grudgingly approved recently will come as cold comfort, undoubtedly, to the many patients who died waiting for approval for drugs that can add years of life to cancer patients.

What the socialist Obama desires is a full takeover of the US health care system. This ultimately means doctors will be government employees whose sole function is to push paper around and to save money by denying care.

If this terrible idea is allowed to be forced on a gullible public, it can never be undone, as Dr. Hamblin has pointed out regarding Medicare. (Reimbursement rates are so low in Medicare that many doctors just refuse to treat Medicare patients.)

For a few people who are uninsured, we are apparently willing to deliberately ruin the best health care system in the world. Once you take the 20 million illegal aliens out of the uninsured calculation, and factor in the young people who think they are invulnerable, and those who can self-insure, the problem largely vanishes.

Cancer patients will start dying in large numbers when care is denied them. Off-label cancer drugs such as rituximab simply won't be available to CLL patients. Drug research will dry up as reimbursements are cut to the bone.

It's a terrible tragedy we are facing, and those who want it will suffer the consequences. Who cares what percentage of GDP is spent on health care? Obviously, the demand is there. Is it better to spend this money on spa treatments or Mercedes cars? What better industry than the industry which gives us better, healthier, and longer lives?

Anonymous said...

This is DWCLL again...Let me explode some of the myths expounded by "Anon":

Medicare reimbursements are, indeed, lower than those offered by most insurers, but not so low as to truly discourage participation by healthcare providers, except for those who are truly in demand and who are (in my opinion) more concerned with their own bottom line than with the Hippocratic Oath that all physicians take.

In about 1987 Medicare reimbursements began to be reined in. This was done initially by targeting certain procedures and certain specialties.

My own specialty was targeted early on and the reimbursements for my bread and butter procedures (which had risen steadily for years) were dramatically cut.

Currently the reimbursement (in many instances) is less than 25% of the dollars-not corrected for intervening inflation-that I received for doing the same thing in 1987.

Despite that I have been doing fine, because the reimbursements for cognitive services (making diagnoses, talking to patients, hand-holding, making rounds in the hospital, etc) have not been cut very much overall. In the meantime, we have learned how to see more patients and do more procedures in the same amount of time, and I can assure you that any physician who cannot make a good living either doesn't care to (eg, by working for indigent clinics, etc) or is incompetent.

During the last few years, more and more private insurers have been negotiating their reimbursements as a blanket %age of medicare's, 115% of medicare, for example.

I love seeing medicare patients as I know that no approvals are required for me to order any test/procedure/treatment and as reimbursement is timely.

Many private insurers (and HMOs especially) can make your office jump through hoops to get paid.

This, no doubt, adds jobs to the system (both in physician's offices and in the insurance companies) but this brand of work (denying claims, chasing claims, getting certifications) is not especially productive labor and adds nothing directly to a patients healthcare.

I seriously doubt that when "push come to shove" that many physicians would choose to drop out of medicare participation as the income is so good, predictable and steady.

Many physicians who don't participate ,in my experience ,are either delusional, selfish or are physicians who principally do elective "cosmetic" type of surgery which isn't covered by many insurance plans anyway.

Medicine in the US is good, but the system is sick.

I, too, worry that the politicians will screw it up and do agree that too much government participation and control is scary. Any universal system will be subject to some sort of rationing. The type of rationing and the means by which it is accomplished are the things that should concern us the most.

Currently too much care is given in a reckless fashion. Far too much money is spent on pointless end-of-life care (when good comfort care should be all that is offered) when situations are all but hopeless.

Even sillier is all of the healthcare expenditure on what I consider unproven or irrational testing which is magnified in the elderly.

As an example, consider the value of a screening colonoscopy in an 82 year old with 3 other serious health problems. It is unlikely that the benefit exceeds the risk and cost.

Doctors often don't consider how they will use the information gained or the price that will be paid when complications (which are inevitable) occur.

Some of this is because these things are paid for without question. Some is because physicians may own the surgical centers and CT scanners/MRI machines which are used. Some is driven by unreasonable patient expectations and some by the fear of malpractice litigation.

Whatever the cause, we need help in controlling spiraling healthcare costs which bring diminishing returns and which may preclude care to others who may actually derive more overall benefit from the effort (eg, a HSCT in a 42 year old with CLL whose current insurance may not cover this).

I have droned on long enough...good day,


Terry Hamblin said...

I am always pleased to see a healthy debate on this topic. For myself I am happy to see the good and the bad in each system. The American system has produced some very great benefits, but there are great lacunae of poor service. It is also very expensive, and a lot of those excessive costs are wasted.

All healthcare is rationed. When the NHS first came into being patients could get free hot water bottles (perhaps legitimate in a cold island without central heating). Clearly this was inappropriate for a taxpayer funded system. The taxpayer might altruistically wish to help someone with heart disease or cancer, but keeping warm in bed is a personal responsibility.

Similarly, the taxpayer would certainly object to funding cosmetic surgery, sex change operations, IVF, and perhaps extraordinary and pointless heroics for the dying.

However, somebody has to pay, whatever the system of funding, and I can't see why insurance premium payers should be any happier about wasted money, though when it is lost in on-costs for employment accountability is lost.

The traditional means of rationing in the NHS has been the waiting list. These had become a national disgrace, but good management and improved funding has almost abolished them. Instead, NICE has been given a rationing function. In my opinion, NICE has tackled the wrong topics. There is a lot of waste in the system to be cut before you need to worry about expensive drugs for rare tumors.

At one time the cost of indigestion treatment in the UK was £2 billion while at the same time the cost of all cancer chemotherapy was £169 million. Inappropriate use of protein pump inhibitors like omeprazole was the culprit.

Anonymous said...

I worked for the US government in Medicare. Medicare is a hybrid rather than a fully socialized system. Medicare claims are actually paid by private insurance companies under contract to the government - using federal funds, of course. Similarly, medical providers are usually private enterprise, with some exceptions such as state, county, and local entities.

Let me present another viewpoint - that of our elected officials. The goal of a politician is to be re-elected. Many US political ads featured stories of Medicare beneficiaries telling how their elected official fought the Medicare bureaucracy and got their claims paid after Medicare had rejected them. It is human nature to support a politician who fixes something wrong that directly affects us - much stronger support than for a politician who voted for a program where everything worked well from the start.

There was a clever bureaucratic procedure for doing this. When a Medicare beneficiary wrote directly to us appealing Medicare's rejection of their claim, we had something like 30 days to respond to the beneficiary. But when the beneficiary wrote to their elected official, who in turn wrote to us, we had like 10 days to issue a final response. The difference between a response and a final response was that if the politician did not like our answer (i.e., if we upheld the claim denial), the politician was likely to write back and we would then have to respond again - so we would miss our deadline of issuing a final response. There was thus a lot of pressure for us to simply tell the insurance company to pay the denied claim when a politician wrote to us.

Anonymous said...

Once Obama gets through with destroying the American health care system, there will be nothing less. There is a lot of grumbling within the current lame brain administration that old people need to just die and get out of the way.

The thinking is that the 'baby boom generation' (of which Barak is part of, even though he denies it) is so massive that the taxpayer simply cannot afford to treat these patients. Denial of care to the sickest and the oldest patients are now seriously being considered. This will be easy when one thinks of the massive immigration of legal and illegal immigrants in this country, most of whom are young and resentful of the old, well-off, white baby boomers.

The Irish, for example have already decided to deny life-prolonging care to cystic fibrosis patients as a waste of money (

Once US doctors become federal employees with a union, strikes, 20 legal holidays a year, strict enforcement of overtime hours etc., we can expect banana republic levels of health care.

Even though America will slip below Mexico and Haiti in health care terms, the liberals will trumpet...FAIRNESS!

It is coming, one step at a time, but this is the ultimate goal. Eventually, everyone will have genes screened, and only those passing government tests will be allowed to breed.