The best health care in the world, cont.

by Andrew Sprung

Patrick links to libertarian Matt Welch's stunning confession and demonstration, based on extensive personal experience, that the "socialist" French health care system is vastly superior to the U.S.'s disintegrating patchwork. (The French enjoy universal coverage with small co-pays, minimal wait times, access at will to any doctor in the country, and complete medical records embedded in a chip on each citizen's national health card).  Patrick also links to Clive Crook, who argues that the virtues of the French system can't be duplicated in the U.S.  I take issue with that.

Crook quotes as follows from an article he wrote this summer:

The success of the French system does not establish the superiority of public insurance. It establishes the superiority of a system that, as much by historical accident as by design, has kept doctors' pay very low. This, in turn, requires a medical-liability regime that minimizes litigation (so much for patients' rights in that sense) and guarantees essentially free training for medical professionals.

The idea that France's system could be grafted onto the American setup is most misleading. To be sure, in organizational terms, it could be. Structurally, the two countries' systems are not that different. The French scheme is like Medicare on a much larger scale -- with all the virtues and drawbacks of that system. But plug American rates of pay into that design and the impressive cost advantage vanishes.

It's true that Americans pay more than twice as much per person, and probably way more than twice as much per procedure, as the French do, and that that gap won't be closed any time soon. But it's also true that if we adopted the key element in the French system, along with a series of cost control measures seeded into the pending reform bills, we could begin to close that gap.

France's system is not single payer: there are about 14 nonprofit "sickness funds" that pay patients' bills. But it is single pricer -- the government negotiates payment rates and sets the coverage rules for all insurers. The government has monopsony pricing power -- as does the government in every other country in the world that offers universal health insurance (i.e., every wealthy country in the world except the U.S).

Obviously, the pending health care reform bills in the U.S. do not create a "single pricer" system. Either a strong public option or a Medicare expansion would have been a large step in that direction. Cost pressures down the line will probably push us in that direction, though.  When Medicare essentially sets the baseline payment rates for all procedures, we'll have plugged the hole in our system that makes it more expensive than any other.

Of course, we'll be starting from a baseline where we pay twice as much as the French and other wealthy countries.  But that's where the reform bills' pilot programs come in.  The French system does share a core weakness of ours, a fee-for-service payment structure, which provides no incentives either to providers or to patients to limit care to what's proven to work.  The Senate bill in particular has impressed a wide spectrum of top health care economists with a series of initiatives designed to chip away at that system. These include pilot programs to seed reforms like accountable care organizations, bundled or global payments, and incentives or penalties for things like infection rates and readmission rates.

The pilot programs strike many people as small bore. But Atul Gawande has come up with a startling precedent for pilot programs seeding (literally) an explosion of efficiency and efficacy with an industry basic to our biological well being: the model farms and other demonstration projects implemented by the Department of Agriculture in the early 20th century.  These, in conjunction with comparative effectiveness research projects and a "hodgepodge" of other USDA programs, led to a halving of food prices and of the percentage of Americans tied to the land within three decades.

"The government never took over agriculture," Gawande writes,

but the government didn’t leave it alone, either. It shaped a feedback loop of experiment and learning and encouragement for farmers across the country. The results were beyond what anyone could have imagined. Productivity went way up, outpacing that of other Western countries.By 1930, food absorbed just twenty-four per cent of family spending and twenty per cent of the workforce. Today, food accounts for just eight per cent of household income and two per cent of the labor force. It is produced on no more land than was devoted to it a century ago, and with far greater variety and abundance than ever before in history.

Gawande enumerates in loving detail a host of pilot programs in the Senate and House bills that he suggests have the potential to drive a similar revolution in health care. Like Obama, too, he looks to American history to find hope, and to renew faith in government.