Friday, June 19, 2009

Bottom line: Other Countries Cut Out Services to Reach their Low Cost Status

By: Richard G. Fessler, MD, PhD

Will a single payer health care system hold down the increasing cost of health care in the United States? President Obama and other proponents of this socialized form of health care argue that it will. Of course there are many ways to debate this question, but much objective evidence suggests that it will not. Let’s look at this from two perspectives. First, what does the comparative cost data between the United States and government controlled health care systems (such as Canada) tell us? Second, what are the financial implications of this “less expensive”, government controlled health care system for the American taxpayer?

Most international comparisons of health statistics are based on data collected by the OECD (Organization for Economic Cooperation and Development). According to the OECD, the United States spends more for its health care than any other country on earth, whether analyzed as dollars per person or percentage of GDP. One problem with these statistics, however, is that not all countries report their cost data using the same guidelines.1 Thus, often the statistics are comparing apples to oranges; or put another way, garbage in = garbage out! For example, Germany includes the cost of nursing care in their cost statistics, Great Britain does not.2 Other countries count hospital “beds” whether it is occupied and staffed or not, others only count it if both are true.3 Obviously, cost data for these countries will vary depending upon what they include and do not include.

A study by Gerald Anderson et al, published in Health Affairs attempted to more accurately assess health care costs across international borders.4 To do this, these authors calculated the average annual increase in the percentage of per capita spending on health care by OECD countries. As seen in the figure below, health care spending in nearly all of the studied OECD countries grew at about the same rate as the US, or greater! In fact, according to these researchers, the real expenditures for hospital and physician services actually decreased in the US during the 1990’s, putting the US well below the mean for other OECD countries. When you consider that the US has greater access to health care and technology, less rationing, and a host of health care stressors not seen in other countries (e.g. a higher rate of homicide, obesity, and AIDS), these results argue strongly for the “strength” of our current health care system.

Average Annual Real Growth in Per Capita Health Spending 1960-1998:
United States 2.6
United Kingdom 2.5
Canada 0.8
Australia 2.7
New Zealand 2.6
Germany 2.3
Netherlands 2.6
Japan 3.5

The figure above does show that the increase in per capita health spending was much less in Canada than any other country. What is not seen in the figure, however, is that it did this by cutting services to the extent that patient access to care was compromised. For example, block grants to Canadian provinces for health care were cut in 1986, 1989, and (cut IN HALF) in the second half of the 90’s.5 Provinces, in turn, cut funding to hospitals, cut physician fees, limited purchases of new technology, and removed coverage of some services from provincial insurance plans.5 As a result available hospital beds were reduced by 1/3 (6.6/1000 to 4.1/1000) between 1987 and 1995. 6 In Saskatchewan alone, over 50 hospitals were closed. In 2002 it was reported that the Canadian health care system was underfunded by over 5 billion dollars annually!7 Throughout this period, satisfaction with the Canadian health care system fell precipitously.

A strong argument can be made, therefore, that cost increases will not be held down by a government run health care monopoly. Moreover, it also seems likely that access to health care and health care technology will become more restricted. If the Canadian experience is repeated in the US, Americans will not be happy! The second question we wanted to address, was how much will this “less” expensive, (and inferior) health care system really cost the American taxpayer?

Estimates of the cost of the socialized health care system proposed by President Obama are not being disseminated yet, as all deliberations of his health care task force are being kept quite secret. (Wait, didn’t he campaign on a policy of transparency?) However, we can get an idea by examining the impact of policies enacted during the first 100 days of his administration. According to a study conducted by USA TODAY, it will cost EVERY American household $55,000 just to cover the commitments already made by the Federal government, and this doesn’t include the “big ticket” items such as “universal medicare”!8 The US government took on $6.8 trillion in new debt in 2008, and no end is in sight. That means that, right now, the US would already need to set aside $63.8 trillion in a lump sum to pay obligated benefits that won’t be covered by future taxes. (That’s a half million dollars debt for every household in America.) Where do you suppose that money is going to come from? When all the sleight of hand ends, it comes down to this, you either raise taxes, cut benefits (as seen in Canada above), or both. The more I study the “model” systems which President Obama’s health care policies are based upon, two things become very clear: 1) the quality of health care in the US will become significantly inferior to its current state, and 2) it will cost the American taxpayer MORE, not less! As a surgeon, my recommendation for or against surgery for every patient is based upon a realistic analysis of risk vs benefit. (In neurosurgery, you can’t afford to live in a fairy tale.) If the American public were my patient, I most certainly could not recommend proceeding down the reckless pathway proposed by our current President and his administration.

1 OE CD Health Ststems: Facts and Trends 1960-1991, “Organization for Economic Cooperation and Development, 1993.”
2 Goodman, John C., Musgrave, Gerald L., Herrick, Devon M., Lives at Risk, Rowman and Littlefield Publishers, Inc, New York, 2004, pp 78.
3 Hensher, M., Edwards, N., Stokes, R., “The Hospital of the Future: International Trends in the Provision and Utilization of Hospital Care”, British Medical Journal 319:845-848, 1999.
4 Anderson, Gerald F., “Health Spending and Outcomes: Trends in OECD Countries 1960-1998.”Health Affairs (May-June) 2000. pp 150-157.
5 Gray, Gwen, “Access to Health Care Under Strain: New Pressures in Canada Amend Australia”, Journal of Health Politics, Policy, and Law, 23:905-947, 1998.
6 Possehl, Suzanne R., “Northern Plights”, Hospitals and Health Networks 71:56-60, 1997.
7 Spurgeon, David, “Canadians Need to Spend C$5bn More a Year on Health Care”, British Medical Journal 325: 1058, 2002.
8 Cauchon, Dennis, “Leap in US Dept Saddles Taxpayers”, USA Today, Friday, January 30, 2009.

Richard G. Fessler, M.D., PhD is a professor of Neurosurgery at Northwestern University in Chicago, Illinois. He is very active in the research and development of new surgical techniques that are designed to provide patients with less blood loss, faster recoveries and improved outcomes over traditional spinal surgery. You can learn more about Dr. Fessler’s work at Northwestern University’s Feinberg School of Medicine by visiting

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Anonymous said...

Let's see the growth rate since 1990 to 2008.... Do you happen to know what those figures are? Anyone on this site seen their health care costs rise at a 3% clip for say the last five years?! Heck, if those numbers were actually real, we wouldn't be having this discussion.

Another well qualified idiot purposely distorting facts to support an opinion of fantasy.

Please tell me you all saw through this lunatic's piece of fiction?

Rick Beagle

Bravo33 said...

Interesting choice of words Beagle. Of all the comments I have read here, yours are the only ones that qualify as the remarks of an idiot.

"Another well qualified idiot purposely distorting facts to support an opinion of fantasy."

Aside from "well qualified," I'd say this comment has you pegged perfectly.

Anonymous said...


It would appear that you have given up reasonable discussions in favor of personal attacks?

Of course you have, and that says oodles about you.

I hope you find some peace.
Rick Beagle

Anonymous said...

Thanks, for the discussion. No distortion here, just presentation of facts. Although they may not support your specific desires, it would be wise to at least check them out before signing on to a specific ideology. I have. They are referenced.

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