Could BNH Be Created Now?

Dave Schuler March 16, 2014

In an op-ed in the New York Times economist Victor R. Fuchs offers a suggestion for trimming U. S. healthcare spending which, despite the fact that I agree it, I think is impossible:

The excess in the United States is primarily attributable to a more expensive mix of procedures and services, higher prices paid to drug companies and physicians, and inefficiencies in the financing of health care. There are undoubtedly cultural differences between the United States and other countries, but it is also true that Swedes differ from Italians, Germans from French, and the English from all of the above.

What these countries have in common that distinguishes their health care systems from the American is universal insurance for basic care, a larger share of government in financing health care (typically about 75 percent of the total versus 50 percent in the United States), and more aggressive control of expenditures.

It reminds me of one of my favorite Yiddish wisecracks: if my grandmother had balls she’d be my grandfather.

Rather than return to something we’ve argued about around here, perhaps, fifty times over the last 10 years, I want to turn the question on its ear: would the British have created the British National Health system under the conditions that prevail in Britain and in healthcare today? I do not believe they would.

We have the additional problems that we have not historically been willing to limit government medical programs to “basic care” or control expenditures aggressively, viz. the annual postponing of cost control referred to as the “doc fix”.

2 comments… add one

steve Link

The Brits might not right now, but I think they would have before the Great Recession. The pattern throughout the world has been for countries to provide national health care when they become wealthy enough to do so. (South Korea, Taiwan, Japan, Australia) They all go with universal plans. They all cost less than ours. I do suspect that if they implemented national health care in the last 10 years it would be different and would probably be more of a single payer model. I would expect resistance to the govt owning and running such a large chunk of their health care.

The one factor mitigating against their forming national health care is the preference for higher levels of inequality. The wealthy don’t want to have to help pay for the health care of others.

Steve
PD Shaw Link

The British apparently do not have an aggressive form of healthcare cost controls:

In the UK, for example, to balance the books over the long term, health and social protection spending will have to be cut by one half compared with current plans or taxes increased by a staggering 14 per cent of national income. Of course, increasing taxes from 38 per cent to 52 per cent of national income will simply be impossible without choking off economic growth and actually reducing tax revenues. . . .

The calculations published in The Government Debt Iceberg are not some irrelevant machinations of US boffins trying to frighten us into reducing the size of government. These numbers are compatible with other work produced independently and using different methods. The Kingâ€™s Fund, for example, has estimated that health and social care could consume nearly one fifth of national income in 50 yearsâ€™ time. When you add on rising debt interest and pensions costs, such spending commitments look pretty scary.

We might get lucky and innovate our way out of some of these problems. Past innovations have raised the cost of healthcare; future innovations might reduce it. However, the basic message is that systems of financing healthcare and pensions in the last 50 years were flawed. We will pay the price over the next 50 years. We should reform these systems with great urgency.