Summer Journal Club, Week 7: Problems, Part 2

by Allan Joseph

Welcome to Week 7 of Project Millennial’s summer Journal Club. Previous posts can be found here. This week, we continue exploring bigger-picture question by discussing some of the more controversial “problems” with the American healthcare system. Because the Affordable Care Act has largely not taken effect yet, this post will mention problems that may be addressed by the ACA down the road.

You may have noticed — the healthcare system is controversial. Not only do people argue about the politics of healthcare reform, but we often don’t agree on what can seem to be relatively uncontroversial statements about the healthcare system itself. Economists divide their thinking into two broad categories: “positive statements,” which describe facts about the world (for example, “millions of Americans are uninsured”) and “normative statements,” which express opinions about how the world should be (“the government should help extend insurance to those who don’t have it”).

Let’s take a look at some of the positive statements people disagree on, focusing specifically on the evidence cited for and against each claim. As with last week, we’ll organize our thinking on these topics by cost, quality, and access.


Claim: From a systemic viewpoint, Medicare is cheaper than private insurance.

Evidence for this claim rests on the fact that Medicare spending has grown more slowly than spending by private insurers, and the government expects that trend to continue. In addition, Medicare sees administrative costs under 6 percent (including support from other federal agencies), while private insurance sees administrative costs of about 17 percent. Those who disagree with this claim argue that the comparison isn’t a fair one, as private insurers provide “significant value for those extra dollars,” and that private insurers put more money into preventive care, which reduces how much money they spend on claims and makes administrative costs look bigger (because they are a percentage of total spending).

Claim: The fear of medical malpractice suits is one of the primary drivers of rising healthcare costs.

Over 90 percent of physicians claim so-called “defensive medicine” requires that they order extra tests and procedures to avoid litigation, which then drives up costs. A 1996 study studied the effects of malpractice reforms on Medicare patients with heart disease, and found they could result in 5-9 percent decreases in spending with no decrease in quality. Some estimates have even gone higher than that, up to 34 percent. However, a recent, broader study attributed just 2.4 percent of national healthcare spending to defensive medicine, and recent malpractice reforms in Texas did not result in significant reductions in spending. Experts generally agree that malpractice claims themselves don’t contribute that much to spending, but what can be attributed to “defensive medicine” is tough to pin down, especially since fear of litigation isn’t the only thing driving defensive medicine — patients have expectations for diagnostic testing when they visit physicians, and they become dissatisfied when they are not met.


Claim: The American healthcare system struggles to deliver high-quality healthcare.

This is a hotly-contested debate: is the American healthcare system high- or low-quality? Aaron Carroll has a series on American healthcare quality forcefully arguing that the American system lags far behind that of other industrialized nations, most notably because of population outcomes. For example, America has the most preventable years of life lost per capita in the industrialized world in addition to poor measures of life expectancy and maternal childbirth survival. However, others argue statistics such as life expectancy are misleading because the US has significantly higher homicide and car-accident rates, which aren’t fair measures of healthcare systems. It is worth noting that some studies have attempted to look only at mortality that the healthcare system “should” be responsible for, and in those studies, the United States still lags behind its industrialized counterparts. In some cases, as we mentioned last week, the most technologically advanced treatments are available in America — it’s a great place to receive high-tech treatments, and the United States does pretty well treating severe diseases like cancer. Overall, it’s a little bit difficult to measure quality as a whole in the United States, because as the ever-awesome Dartmouth Atlas shows, there’s a huge amount of variation in healthcare quality around the country.


Claim: “Socialized medicine” results in longer wait times to see doctors.

“Socialized medicine” generally refers to “single-payer” systems, which include countries such as Canada, France, the United Kingdom, and many other industrialized nations. Canada is most often used for these comparisons, but when taken as a whole, the United States does worse than most “socialized’ countries when it comes to wait times for primary-care physicians. America does do better when it comes to seeing specialists and having elective surgery, however. Another point to note is that American Medicare is essentially a single-payer system for the elderly and, as evidenced by its political primacy, is well-received by those who use it. 

Claim: Having health insurance improves health.

Well, this is a doozy to end on. As you undoubtedly saw earlier this year on Project Millennial, the fight over the effect of health insurance on health is a bitter one, especially when it comes to insurance that isn’t particularly generous, like Medicaid. When we discussed why people purchase insurance earlier in our Journal Club, we didn’t say anything about it resulting in better health outcomes — it was a question of financial stability. Now, of course, people want to know if having health insurance, especially Medicaid, has any effect on health, and some observational research suggests even when controlling for important variables, Medicaid is correlated with worse health. However, such findings tend to suffer from selection bias, and there is a lot of evidence on the other side, much of which finds positive effects of health insurance, and some of which says it’s far too soon to make a call either way. In fact, back in Week 4 we discussed one of the most famous papers investigating this question. The question is still up for debate in the less-generous-insurance category, but seems to be fairly well settled in the private and Medicare insurance cases.

This wasn’t a comprehensive list of things people disagree on, especially since we avoided discussing normative claims about what should be done for the American system — but together with last week’s post, we’ve got a pretty good picture of the facts that are often thrown around in healthcare debates.

Next week: What’s up with vouchers?


Allan Joseph is a first year medical student at the Warren Alpert Medical School of Brown University, where he is pursuing an MD/MPP. You can follow him on Twitter @allanmjoseph.

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