Would you be willing to pay for universal health care?
In reading a recent article in Time magazine about the rise of the ethical consumer, I came across the results of a recent poll commissioned by the magazine which asked: “Are you willing to pay more in federal taxes to provide universal health-care coverage for all Americans?”
The result: 50% said yes, 46% said no, 5% don’t know/no answer (yes, it adds to 101%, but presumably that is a rounding error). In my mind, this really illustrates the polarisation of opinion on this topic.
So I thought I’d see if I could find some data on whether people are better off paying taxes for universal health care or not.
Health care is an extraordinarily complicated subject, which may be one of the things that makes it interesting. There is no real ability to do controlled studies on health care systems. Things like culture, climate, genetics, diet, and so forth, can make a big impact in health care outcomes regardless of the system of health care delivery, and these things can also change over time.
However, I did come across a fascinating bit of research by Adam Wagstaff at the World Bank. He looked at a number of OECD countries that had moved from tax-funded to insurance funded systems, or vice versa, from 1960 to 2006. The conclusions were quite clear. “…(social health insurance) systems, on balance, have certain characteristics that make them more expensive than tax financed systems, do no better in terms of most health outcomes … may do worse in respect of outcomes that require strong population-level public health programs (such as breast cancer), and do worse in terms of encouraging informal labor markets and discouraging employment.”
I don’t believe most Americans truly understand the cost of their health care system. The cost they pay in terms of higher unemployment and lower wages (since employers are required to pay higher health insurance premiums) as well as the direct cost of health insurance, out of pocket expenses, and of course, the taxes to pay for Medicare and Medicaid (estimated at 18% of the total federal budget in 2009).
Australia reflects Wagstaff’s conclusions. We have parallel tax-funded and insurance-funded systems. One analyst, Jennifer Doggett, claims that private health insurance funds’ administration costs are about 13% of revenue, compared with 3% for Medicare (Australian Medicare, not US).
Professor Stephen Leeder of the Australian Health Policy Institute at the University of Sydney made a submission to the House of Representatives Health and Ageing Committee’s inquiry into health funding in 2005. It’s printed in the Australian Parliament magazine at http://wopared.aph.gov.au/house/house_news/magazine/ath24_10%20fixes%20for%20our%20health%20system.pdf.
Echoing Karen Davis of the Commonwealth Fund in Manhattan, he described ten steps that health services can take to control costs and improve efficiency. The tenth step was to find ways of controlling the costs of health care financing administration.
According to Davis, administering complex private health insurance plans in the US, creates overheads of 12-15 per cent. Close to the 13% Doggett claims.
In Australia, private health insurance pays for, among other things, treatment in a private hospital. There is also a publicly funded hospital system that covers the bulk of consumers. Leeder states that “there is no convincing evidence that care in the private system is superior to public system care in health outcome or financial efficiency. Heart patients, who get more procedures in the private hospitals, have no better outcomes. Comparisons of the administrative costs of public and private health insurance administration reveal a three or four fold higher cost than for [Australian] Medicare in the smaller multiple private health insurance companies”.
So, with higher overheads and arguably similar health outcomes, private health insurance doesn’t seem such a good venture for the Australian government to subsidise. Yet there is currently a 30% tax rebate in Australia for private health insurance premiums, costing Australian taxpayers nearly A$4 billion last year.
As a beneficiary of the rebate, I shouldn’t be complaining. But I do wonder if we’d get better value from our $4B if it were invested in providing, among other things, systems that raised the efficiency of the public health system and helped to reduce the incidence of “adverse events” – health industry parlance for the medical errors that consumed 8% of all hospital bed days in Australian in 1992. Wish I had a more recent figure on that, but the preventable cost was estimated then at about 5% of the health budget. If that still applies, it is now about $5B.
If universal health care fixes that, in Australia, the US or anywhere, I’m in favour.