Profit and Loss


Outraged as Americans may be over eroding health coverage, we are not alone. We scramble for legislation to protect patients’ rights against belt-tightening HMOs; the British are in an uproar over the National Health Service’s decision not to pay for Viagra. As the BBC puts it, “A health service with a limited budget faces hard choices.”

Indeed, what sets the U.S. apart is not that we are struggling to cope with rising costs, but that we have left that task to companies, many of which are explicitly for-profit. In the U.S., the embarrassing irony is that we have much the same problems as Canada and Western European countries, while we spend far more on health care.

Our uniquely market-driven system has other dubious distinctions as well: other countries don’t have publicly held, for-profit health providers; nowhere else do stockholder concerns factor into health decisions. And, though we spend a startling 13.6 percent of gross domestic product on health (compared to between 7 and 8 percent for most European countries), we are alone among industrialized nations in not providing universal coverage for our citizens.

Which is not to say that all is well in health care abroad. Virtually all high-tech health systems face spiraling costs. In France— much as in American HMOs— patients now need referrals from their primary care doctors to see specialists. In Canada, tight budgets have led to staffing and equipment shortages. The British also complain of waiting lists and the government has recently decided that, in addition to Viagra, the National Health Service will no longer provide tattoo removal or the reversal of sex change operations, among other procedures.

But, even with the budget increases that would be necessary to correct these problems, health costs in these countries would make up only a fraction of what we pay in the U.S. According to Donald Light, professor of comparative health systems at the University of Medicine and Dentistry of New Jersey, British waits and shortages would be cleared up if the government spent an additional $500 a year per person. That extra outlay would bring costs in the U.K. to roughly half of the $4000 Americans spend per person each year on health care. (The European average is $1800.)

How to account for the paradox? One would think covering more people would cost more. Yet, according to Light, national health systems are cheaper partly because matters such as where to build hospitals and what kinds of doctors to train can be based on need instead of profit. The market has made health care less efficient. And, of course, government-run health budgets don’t include multimillion-dollar salaries for their executives.

Each developed country handles its health care somewhat differently. In Canada, the provinces provide their own health coverage, for instance, while in France, Germany, and the Netherlands the central government is responsible for insurance. In England, many doctors are actually government employees, though there are a growing number of private doctors who tend to those who can afford special treatment. Yet, one way or another, all these countries provide the basics— hospital stays, emergency services, and routine visits to doctors— to everyone.

The American response to unfavorable comparisons of our health system typically has been to take ideological issue with these national health services. When the prospect of a Canadian-style single-payer system was raised during Clinton’s attempt at health care reform, for instance, it was criticized as “socialized medicine.” Such systems have also been condemned both as “communist medicine” and, directly after World War II, as “kaiser medicine,” on the grounds that a national health plan would resemble the German health system. And whenever a national single-payer model has enjoyed its periodic moments of political possibility, the powerful American Medical Association has opposed it.

These days, criticisms of national health care systems (especially those in Canada and Great Britain, which experts often consider comparable to the U.S., because English is spoken and the technical level of medicine is near equivalent) are more likely to focus on rationing. The fear is that, if we try to cover everyone, certain health care services will be limited because of increasing costs.

Yet, even now, with the system of HMOs that has failed to make much of a dent in U.S. costs, there is a limit-setting of sorts. Physicians are increasingly required to obtain approval for treatments. Tensions are rising over who decides what treatments are experimental— and thus often not covered. Actual time spent with doctors can be unduly short.

And the still more dangerous and troubling limit-setting takes place not within managed care companies but outside them. The uninsured— who have grown by nearly 10 million over the last decade— are in effect denied coverage for all treatments. Such “social class­rationing” was denounced by no less a champion of conservatism than Margaret Thatcher.

The inadequacies of American health care— if not necessarily worse than those of other systems— are less openly agreed upon. While there are limits to what we can and do spend on health, experts note a particular American aversion to publicly discussing them. In Canada and many European countries, “the political systems made the decision to explicitly limit the resources going to health care,” says Jane Sisk, a professor of health policy at the Columbia School of Public Health. Such an approach provides an opportunity to make sure health services are distributed equitably.

Yet, says Sisk, “in the U.S. we rarely do that. Rationing is a bad word.” Thus the implicit rationing of managed care, a surreptitious chipping and whittling that takes place behind the scenes. Ironically, HMOs— the focal point of much of today’s frustrations with health care— are much like national health systems on a smaller scale. Back in the ’70s, the earliest HMOs were even known as “hotbeds of socialist medicine” precisely because, like some governments, they aimed to spread the costs of care over a group of people so sicker people needn’t pay more.

The difference, of course, is that, in the U.S., these minisystems are operating as businesses. Today these basic units of our system— even the minority that are technically nonprofit— are geared to make money in a competitive market. As insured Americans begin to wonder whether our insurance can get us the health care we need, and whether we can even hold on to our insurance, we might also question the wisdom of having our health care providers attempt both to save money and make a profit.

Research assistance: Hillary Chute and Louis Bardel.

This article from the Village Voice Archive was posted on March 30, 1999

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