Muddying the Health Care Debate

By Mike Koetting                    June 21, 2017

Every once in a while, I run across an article that stuns me.  The below post is an extended comment on an article on the Forbes website that advocates for a market-oriented health care system.  While a number of the specifics in the article are interesting and worthy of consideration, what really struck me was that the article illustrates how we have made the political conversation on health care incredibly difficult.

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On May 28, 2017 Chris Conover posted an article on the Forbes blog under the title Lancet Study Proves Markets Work In Medicine: When Will Progressives Accept This Hard Truth?  While the belligerence of the title was off-putting, I have enough respect for The Lancet—it is roughly the British equivalent of the New England Journal of Medicine—I thought I would take a look.

As described by Conover, the data in The Lancet article shows that, even after various allowances are made, systems in Switzerland and the Netherlands, which he describes as “market-based”, seem to perform better than Canada and the UK, which he describes as “single payor”.  The measure used is “unnecessary, untimely deaths”, based on 30 components of individual health.

From this he asserts that “despite their claims of believing in evidence-based policy, far too many progressives persist in disparaging efforts by Republicans to move the U.S. health system in a more market-oriented direction.”  Wow!  Is he really claiming that this evidence by itself overwhelms any other possible evidence.  Moreover, linking this particular evidence to the Republican-Democrat divide reflects neither the reality of the current debates nor the actual systems in Switzerland and the Netherlands, the latter of which actually could inform the current debate.

I won’t go into the details of either the Swiss or Dutch systems.  If you want more information, but still at a digestible level, check out a 2013 article in the Journal of Health Affairs by Ewout van Ginneken and colleagues.

But here’s what the summary of that article says:

These two European markets rely on offering people choices among private insurers, requiring people to purchase insurance, having standardized benefits packages, using community rating for premiums, and providing premium subsidies for lower-income people.

I find it hard to read this summary without asking:  “Isn’t that the ACA?”  For sure, it isn’t the AHCA, which removes requirements for purchase of insurance, allows for wide variations in benefit packages, eschews community rating and provides subsidies based neither on income nor medical need, but age.  Not to mention the fact it would remove insurance from about 5% of the population, something that neither the Netherlands or Switzerland would accept.  I would further add that both these systems, which have significant experience (Netherlands adopted in 1996, Switzerland in 2006) have discovered, and are making changes to address, practices that make their systems work better:

  • It is necessary to have well-developed risk-adjustment systems to protect insurers from adverse risk. These are exactly the systems that Republicans in Congress have refused to support for the ACA.
  • It is necessary to continue to review subsidy policies because changes in labor markets can quickly lead to large defaults on policy payments and reluctance to seek care. These are very similar to the Cost Sharing Reductions that were part of the ACA, but that Republicans have refused to fund.

Another notable difference between these two countries and America is the scarcity of for-profit insurers for basic policies.  Switzerland prohibits for-profit insurers in this sector of the market and the Netherlands allows them, but only one of the four major insurers is actually for-profit.

There are many more details in these two systems. (Turns out a lot of people knew health care was complicated.)  And while most of those details support the impression I’ve given above, it is also true that there are details that might in fact be unpalatable to many single-payor advocates.  Still, the Swiss and Dutch systems are much closer to the ACA than to the AHCA.  Which makes it all the more surprising that Conover ends his article by stating:

We clearly are on the wrong track, but also at a crossroad. Getting on the right track entails repealing Obamacare and replacing it with a more sensible patient-oriented, market-driven system.

He asserts this without any attempt to specify which features of the ACA are so objectionable, let alone how those might relate to (or deviate from) the Dutch and Swiss system.  Conversely, in extolling the outcomes of the systems in the Netherlands and Switzerland, he fails to suggest how the “efforts of Republicans to move the U.S. health system in a more market-oriented direction” actually move the country closer to the Dutch or Swiss systems as they operate on the ground.

So what’s the point—other than Conover is guilty of sloppy writing.  I think there are five important take-aways.

  1. It’s not helpful to simply incant markets and assume that solves all problems. Markets work.  But that’s not the issue.  The question is what specific outcomes does a society want in its health care systems and what is the exact role of markets in achieving those.  It is not either/or.  The question is what is the right mix.  Reducing this to a Manichean struggle between “markets” and “regulation” ensures unproductive thought.
  2. For something like health—which is as much a social good as an individual good—the market elements only work when appropriately supported. The Swiss and Dutch examples make that clear, even if Conover ignores it.  David Brooks, in a recent New York Times column, exactly nailed it:

If you want to preserve the market, you have to have a strong state that enables people to thrive in it. If you are pro-market, you have to be pro-state. You can come up with innovative ways to deliver state services, like affordable health care, but you can’t just leave people on their own. The social fabric, the safety net and the human capital sources just aren’t strong enough.

  1. The refusal of the Republicans to treat the ACA as essentially a market solution, which it is, is going to have repercussions that they will like less. The Republican “solution” is driving the population pell-mell toward supporting a single payor solution. If the AHCA is the “market solution”, it is going to be a tough sale.  It isn’t just progressives who don’t want anything to do with it.  Even Donald Trump called it “mean”.  Current polling shows support for the AHCA at less than 20% and “single payor” support now over 50%.
  2. Giving Conover some due, it is important to look at the data because there is evidence that approaches that include a significant market-oriented approach may perform better on some measures than more regulatory-dominated approaches.
  3. Finally, the careless labeling of policies muddies the debate. For instance, one of my concerns about “single payor” is that people use the term to mean a whole lot of things that don’t all necessarily go together.  In this respect, Democrats are often guilty of over-simplifying in the same way that the Republicans do.  Consider that Medicare-for-all, touted as one version of “single-payor”, would in many ways (assuming current Medicare) look pretty much like the Dutch or Swiss system, which Conover calls “market based”.

If we treat complicated policy issues in cartoon terms, we will wind up with cartoon outcomes.  The Lancet article that Conover was drawing from placed the United States 35th in terms of potentially avoidable deaths.  Given our impressive level of spending, that would be a joke—were it not so horribly unfunny.

Author: mkbhhw

Mike Koetting’s career has been in health care policy and administration. But it has always been on the fringes of politics. His first job out of graduate school was conducting an evaluation of the Illinois Medicaid program for the Illinois Legislative Budget Office. In the following 40 years, he has been a health care provider, a researcher, a teacher, a regulator, a consultant and a payor. The biggest part of his career was 24 years as Vice President of Planning for the University of Chicago Medical Center. He retired from there in 2008, but in 2010 was asked to implement the ACA Medicaid expansion in Illinois, which kept him busy for another 5 years.

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