America’s crazy health care debate goes global

By Phil Levy

America’s fevered health care debate has begun to spread around the world like a virulent pathogen. Some critics of President Obama’s health proposals loudly warned that the United States could end up afflicted by its own version of the U.K.’s National Health Service. They meant that as a bad thing. The British were not amused.

Of course, plaudits have been flying across the ocean as well.  Paul Krugman managed to discern that the Obama plan would render us just like Switzerland. This was a remarkable conclusion, since there currently is no Obama plan, just an amalgamation of three House plans, one Senate plan, and a Senate proposal to be named later. Apparently, though, when the dust clears, we’ll look like the Swiss. And he meant that as a good thing. Soon enough, though, we’ll have critics poking holes in the Swiss approach, raining scorn on the Dutch, and hip-checking the Canadians.

Is it really necessary to go global with our uncivil health debate? Necessary or not, it’s natural. In a sense, all of the major developed countries are trying to solve the same puzzle: how to construct a system that meets their population’s health needs. If another country has found the answer, it’s reasonable to ask whether that solution might work here as well.

To decide whether we’ve found our answer, though, we first need a good grip on the question. What are a population’s health needs? This is where it gets tricky. It’s exceedingly difficult to distinguish health ‘needs’ from health ‘wants.’ No matter where we draw the line between basic health care and deluxe treatment, there will be someone whose ailment puts them just on the far side, whose life may depend on access to the latest and costliest treatment available. The plot thickens when we allow for treatments that are not available today, but might be available tomorrow with sufficient investment and innovation.

In this sense, the demand for health care is boundless while the resources to meet that demand are emphatically not.  This is the textbook definition of an economic problem: how to meet unlimited demand in a world of limited resources. The problem is many feel a philosophical revulsion at treating health care as just another product; they see it as a right.

No matter how strongly that belief is held, however, it doesn’t get rid of the budget constraint. That, in turn, leads to the rationing debate. One way of rationing scarce health resources is to have private insurance companies offer policies that meet some, but not all, demands for health services. That will lead to two types of horror stories: those who have coverage but have claims denied; and those who do not have coverage. The United States has a system of this type, albeit a dysfunctional one, since it is generally employers, not consumers, who contract with the insurance companies.

A second way of rationing scarce health resources is to have a government determine who receives which treatments and when. This will lead to horror stories about interminable waits for care or advanced procedures that are unavailable. Some form of public provision of health care is more common in the rest of the world.

Much of the debate over different countries’ approaches devolves into just such an exchange of contemporary horror stories. That still neglects tomorrow’s horror stories, which are necessarily more difficult to observe. What if policy caps on payments stifle innovation so that tomorrow’s cure is never brought to market?

If we are to compare how different countries solve this health dilemma, we first need to set up our criteria for a solution. At a minimum, a system must be financially viable for the longer run. No points for paying on credit today and worrying about the bill tomorrow. Given the combined challenges of government borrowing, population aging, and rising medical costs, this criterion narrows the crowd of potential solutions dramatically.

Even if we do find an answer abroad, there are reasons to wonder how readily such an answer can be ported over to the United States. Across a range of safety net programs, such as unemployment benefits, we have seen that homogeneous populations have an easier time reaching a consensus than heterogeneous ones. The United States marks the far end of the heterogeneous scale. What happens when one region of the country chooses to indulge in deep-fried Twinkies and another doesn’t? That can certainly have health cost implications.

So as we scour the globe for a magic health care elixir, one that lets us meet those unlimited wants at bargain rates, we can expect to keep holding our fellow countries up to scrutiny, finding them wanting, and denouncing them. To soothe hurt feelings, by way of compensation, perhaps our congressional leaders could offer their parliamentary counterparts abroad some guidance in how to ignore criticism.