US pays price of expensive, exclusionary health system

ONE OF THE STRIKING TRAGEDIES OF MODERN AMERICA HAS BEEN THE PHENOMENON OF ‘DEATHS OF DESPAIR’

It is astonishing how far the debate on health care has moved in the US, at least for the Democrats. Not long ago offering universal, governmentfunded health care was viewed as tantamount to communism; now it’s a touchstone of many presidential hopefuls.

Not before time. The US health-care system is a monument to perverse incentives, unintended consequences and political inertia.

It is astonishingly bad — indeed, it’s so astonishingly bad that even people who believe it’s bad don’t appreciate quite how bad it is.

I don’t say this out of any great devotion to the UK alternative. The National Health Service (NHS) works well enough for a vast tax-funded bureaucracy, but it might work better if we didn’t view any attempt at reform as the desecration of a holy institution.

Nor do I have bad experiences of US health care. My daughter was born in the US, where my family had sensitive and expert medical care.

But that’s what you’d expect with a good health insurance plan — something many Americans don’t have.

About 27-million people — 10% of the non-elderly US population — have no insurance at all. That is precarious, given that a serious illness or accident could incur bankruptcy-inducing costs. Yet the astonishingly large number of people living on the edge is still progress: before the passage of the Affordable Care Act under president Barack Obama, the figure was closer to 45-million people.

It’s this lack of anything resembling universal access that seems most grotesque to observers from other rich nations. But it’s just the beginning of the costs the US health system imposes on Americans.

The financial costs are most obvious, and they are truly extraordinary. For a family of four, the US system costs about $13,000 a year more than that of Switzerland, which itself is substantially

more expensive than any other. The US system costs more than twice as much, per person, as the universal coverage provided by the UK’s NHS. Even the government-funded part of the US system costs more per capita than the NHS.

Why so expensive? It’s because US doctors prescribe more treatments, and those treatments cost much more than they do elsewhere. Most governments limit the price of treatments, free-riding on the US market to stimulate investment in medicine.

US hospitals and drug companies have enormous leeway to raise prices — insurers have limited bargaining power, and uninsured patients even less.

Nor is all this money bringing any obvious reward. Compared with other rich countries, the US ranks at or near the bottom on life expectancy, infant mortality, adolescent pregnancy, sexually transmitted infections, drugrelated mortality, obesity, diabetes, heart disease, lung disease and arthritis. No, the health-care system can’t be blamed for all that — but it is hardly covering itself with glory.

One of the striking tragedies of modern America, brought to light by the research of the economists Anne Case and Angus Deaton, has been the phenomenon of “deaths of despair”, from suicide, alcohol abuse and overdoses. Such deaths go a long way to explaining why mortality rates for middle-aged white Americans have stagnated or perhaps even risen in the US, while falling fast in other rich countries.

I recently asked Case and Deaton to what extent the US health-care system was to blame. Their answer, in a nutshell: it would be an exaggeration to blame the system entirely but not a gross exaggeration.

The most obvious connection is that the opioids that have played such a role in these deaths of despair were supplied by the health-care system.

Opioids are a simple and profitable palliative for a widespread condition (“I’m in pain”) rather than a cure for anything. Doctors and drug firms make more money if they prescribe more opioids, and human nature being human nature, find ways to justify that decision.

The dysfunction of the US health-care system has also eaten away at American wellbeing in other ways. Those extraordinary costs — more than $10,000 per person — must be paid by someone. When they are paid by employers, through workplace health plans, rising health-care spending becomes a substitute for the rising wages workers so desperately want.

And those extortionate costs also give employers a powerful reason to jettison staff at every opportunity, employing freelancers in the hope of cutting costs. As a result, people feel disconnected from the workplace. Jobs become insecure ways to scrape a living, rather than sources of pride. For many, despair follows.

Reforming US health care will require an almighty effort. With politics gridlocked and soaking in lobbyist money, it’s not obvious the US government is capable of running the kind of health-care system that works elsewhere — even if Congress decides to try.

But try it must, because the status quo is a tragedy.