Is U.S. Health Care Terrible?

Published June 18, 2014

Consumer Power Report #424

Is the U.S. health care system terrible compared to the rest of the world? That’s the claim of a new study from the Commonwealth Fund, but it’s a flawed examination:

A new report from liberal think tank the Commonwealth Fund released on Monday ranks the United States health care system as the worst among 11 developed countries, but the report is deeply flawed.

The first giveaway that something is amiss should be the fact that the United Kingdom ranks as the top health care system of those studied. As I reported in a feature last fall, the U.K.’s National Health Service is facing severe problems and has been plagued in recent years by cascading scandals involving horrific neglect of patients. In U.S. policy debates, liberal supporters of single-payer health care have even backed away from touting the NHS as a model to strive toward in recent years, instead pointing to systems such as France, which offers relatively more choice.

The problem with the Commonwealth Fund study is that it’s rigged to produce a result that favors socialized health care systems. The study determines that the U.S. system is worse because it lacks universal health insurance coverage and the report emphasizes “equity” as one of the key factors in evaluating a health care system. But it’s an ideological decision to view equity as one of the most important factors in judging a health care system, just as it is for the study to leave out a factor such medical innovation, which would work to the advantage of the U.S., or choice, which would work against the centralized NHS.

The study also doesn’t mention cancer outcomes. As it turns out, the U.S. ranks well ahead of the U.K. in five-year survival rates for 22 out of 23 types of cancers, according to data from the American Cancer Society. The study also relies on surveys of patient satisfaction, which are subjective, because they vary based on people’s expectations. If people have low expectations, then a system with objectively bad health outcomes could still be viewed as satisfactory.

Avik Roy has more:

One of the disappointing things about healthcare policy research is that its volume is inversely proportional to its quality. Each year, sheaves of research papers are produced by academics and think-tankers, thick with tables and charts, purporting to argue that 62% of all bankruptcies are due to medical expenses, or that 45,000 people a year die because they don’t have health insurance. These studies are then broadcast uncritically by the press, and repeated as gospel by soundbite-seeking politicians. Unfortunately, the methodologies used in such research are often poor, and in the two examples above, intentionally misleading. (Megan McArdle is one of the few writers who has tackled this subject well.)

Such is the case with a new study published last week by the Commonwealth Fund that argues that, compared to six other developed countries, “the U.S. health care system ranks last or next-to-last” on measurements of its quality, access, efficiency, equity, and “healthy lives.” Overall, the study ranked the Netherlands first, followed by the United Kingdom, Australia, Germany, New Zealand, and Canada, with the U.S. ranking dead last.

The study is typical of the genre: drawing conclusions that are not warranted by the data; failing to account for alternative (and more plausible) explanations; and using flawed methodologies. The point of view of the authors is clear: in the first paragraph of the report, they write that “newly enacted health reform legislation in the U.S. will start to address these problems by extending coverage.” But they do their cause no favors with such a tendentious report.

I have been mocked in the past for my defenses of the American health care system as essentially impossible to compare to the health care systems of Europe given the dramatic cultural differences – namely, the prevalence of guns and cars here in the United States as compared to Europe. While this is a broad generalization, when looking at how America’s system performs in treating and curing disease for the aged and for those with serious diagnoses, the outlook is very good – in some instances, the best. More on this topic here:

If you really want to measure health outcomes, the best way to do it is at the point of medical intervention. If you have a heart attack, how long do you live in the U.S. vs. another country? If you’re diagnosed with breast cancer? In 2008, a group of investigators conducted a worldwide study of cancer survival rates, called CONCORD. They looked at 5-year survival rates for breast cancer, colon and rectal cancer, and prostate cancer. I compiled their data for the U.S., Canada, Australia, Japan, and western Europe. Guess who came out number one?

Another point worth making is that people die for other reasons than health. For example, people die because of car accidents and violent crime. A few years back, Robert Ohsfeldt of Texas A&M and John Schneider of the University of Iowa asked the obvious question: what happens if you remove deaths from fatal injuries from the life expectancy tables? Among the 29 members of the OECD, the U.S. vaults from 19th place to … you guessed it … first. Japan, on the same adjustment, drops from first to ninth.

It’s fine that organizations like Commonwealth are more interested in producing fake studies to create biased visions of the American health care system. We just should see them for what they are: political talking points, not fair analyses of the good and bad of the systems in question.

— Benjamin Domenech



4. Obamacare’s expansion is a one-size-fits-all, all-or-nothing approach.

The White House’s one-size-fits-all, must-be-138-percent-of-the-federal-poverty-limit-or-lower, all-or-nothing approach minimizes the common-sense design improvements and program integrity changes most governors support. Health solutions for populations in large, urban areas like New York City won’t necessarily match those for populations in sparsely populated rural areas. State lawmakers deserve the freedom to design solutions that work best for the people that live in their states. Rather than forcing a single solution down the throats of 50 very different states, the White House should give state lawmakers the flexibility they need to design programs that fit the unique needs of their residents.

5. Medicaid expansion could increase the cost of private health care.

Many hospitals and health care providers shift their costs of treating Medicaid patients to those with private health insurance. This is because health providers are paid less per Medicaid patient treated than they are generally paid per privately insured patient (many hospitals lose money treating Medicaid patients). To make ends meet, hospitals will often charge higher rates from private insurance plans in order to make up the difference. As a result, expanding Medicaid could actually make quality private health care less affordable.

6. Medicaid expansion crowds out other private health care options.

One of the architects of Obamacare, Jonathan Gruber (who also coauthored that Oregon Medicaid study), estimates that Medicaid expansions can reduce private coverage by 60 percent. A RAND study also found that of 60 percent of Medicaid expansion is just replacing coverage that people already had.

Given that Medicaid has been shown to have no positive effect on physical health outcomes, it makes no sense to give people an incentive to shift from quality private health coverage to sub-standard government coverage. Medicaid was created to give low-income families access to quality care–it was never meant to be a replacement for private coverage of people who can afford it.

SOURCE: The Federalist


The Obama administration is contacting hundreds of thousands of people with subsidized health insurance to resolve questions about their eligibility, as consumer advocates express concern that many will be required to repay some or all of the subsidies.

Of the eight million people who signed up for private health plans through insurance exchanges under the new health care law, two million reported personal information that differed from data in government records, according to federal officials and Serco, the company hired to resolve such inconsistencies.

The government is asking consumers for additional documents to verify their income, citizenship, immigration status and Social Security numbers, as well as any health coverage that they may have from employers. People who do not provide the information risk losing their subsidized coverage and may have to repay subsidies next April.

Federal subsidies for the purchase of private insurance are a cornerstone of the Affordable Care Act. More than eight out of 10 people who selected health plans through the exchanges from October through mid-April were eligible for subsidies, including income tax credits. So far this year the federal government has paid out $4.7 billion in subsidies, and the amount is expected to total $900 billion over 10 years.

Since June 1, the government has notified hundreds of thousands of people that “the information in your application doesn’t match what we found in other records.” Accordingly, the notice says, “you need to follow up as soon as possible and provide more documents to make sure the marketplace has the correct information.”

“If you don’t send the needed documents,” it says, “you risk losing your marketplace coverage or help you may be receiving to pay for such coverage.”

The government has a long list of documents that consumers can use to establish their eligibility. These include copies of birth certificates, Social Security cards, high school diplomas, driver’s licenses, pay stubs and voter registration cards.

SOURCE: New York Times


Several thousand Iowans are receiving notices this week that their health insurance premiums could rise substantially next year.

The letters went out to people who bought individual health insurance policies from CoOportunity Health or Coventry Health Care. The companies are the two main Iowa carriers selling insurance on the government’s new online marketplace, which is a key part of the Affordable Care Act.

CoOportunity Health sent letters to 9,100 Iowa customers saying it has proposed raising base rates 14.3 percent next year. Coventry told customers it plans to raise their rates by varying amounts, averaging 8.7 percent. A Coventry spokeswoman said she wasn’t sure how many letters went out.

The two companies proposed their rate increases to Iowa’s insurance commissioner, who will hold public hearings before deciding whether to approve the new prices. Customers also are invited to send comments to the insurance division, which has begun posting them online.

Predictably, consumers are unhappy to see proposed price increases. “It feels like the ultimate bait and switch when an increase comes so early in … enrollment and implementation of the (Affordable Care Act),” one CoOportunity customer wrote. Another consumer wrote: “It’s upsetting and I feel like we were used and betrayed.”

Cliff Gold, CoOportunity’s chief-operating officer, expressed sympathy. “We wish we weren’t increasing this much either,” Gold said in an interview.

Gold said about half of his company’s proposed price increase was due to an unexpected quirk in the way the federal and state governments are enforcing new coverage rules under the Affordable Care Act.

The law, passed in 2010, said that by 2014, all insurance policies would have to meet new requirements. Those included that no one could be excluded from coverage or charged more due to pre-existing health problems. However, the government last year let carriers extend their previous policies through 2014, then it allowed another two-year extension.

In general, Gold said, the old policies only covered relatively healthy people, because those with chronic health problems were excluded from the pool. The extensions let members of the old pools retain their relatively low premiums, while leaving the rest to buy new policies that meet the Affordable Care Act rules, Gold said. That effect is forcing up premiums for people in the new plans, he said.

SOURCE: Des Moines Register


Recently the Commonwealth Fund, a think tank that supports the law, released a paper on overall premium levels. The analysis by Jonathan Gruber, a paid consultant to the Obama administration on the Affordable Care Act, argues that premium increases routinely exceeded 10% before the law was enacted in 2010 and that Obamacare will help lower the scope of increases in future years.

But during the 2008 presidential campaign, Barack Obama promised on numerous occasions that his plan would “cut costs” and “lower your premiums” by $2,500 per year for the average family. Ironically, the foundation for Mr. Obama’s promises rests in a memo released by three consultants to the 2008 campaign–one of whom, David Blumenthal, now heads the Commonwealth Fund.

Since the law was enacted, Commonwealth and other supporters, while saying that Obamacare would mitigate premium increases, have largely failed to address the earlier promise that the law would reduce them outright. Another author of the 2008 memo, David Cutler, said in 2012 that, in retrospect, Mr. Obama made “occasional misstatements” when pledging that premiums would fall by $2,500 annually. In August 2012, PolitiFact rated that premiums pledge a “promise broken.”

Supporters of the law started out saying that Obamacare would reduce premiums in absolute terms. Now, backers say that the law will lower premium increases relative to what they would have been without the law–a tougher metric to quantify and a more difficult measure of success to sell politically. This is another example of how in Washington, where one stands on an issue frequently depends upon where one sits.

SOURCE: Wall Street Journal


Over and over, the Post editorializes against Virginia Republicans’ senseless refusal to accept the $2 billion in federal funds available under ObamaCare’s Medicaid expansion [“The Virginia GOP’s Medicaid Plan: Just Say No,” May 30]. But who’s being senseless here?

The U.S. Treasury would raise those funds by borrowing them. It is a mathematical and accounting certainty: if Virginia participates in the Medicaid expansion, the federal debt rises. The burden of paying for the expansion will fall on voters who haven’t even been born yet.

It’s little wonder that every Democratic politician in Richmond and a few Republicans embrace this opportunity to spend the money of people who cannot vote them out of office. Or that ideologues and special interests are encouraging that impulse. That’s how we got a $13 trillion national debt. What’s amazing is that so many politicians are finally saying no. And for refusing to increase the federal debt, the Post pounds them almost daily.

Would any members of the General Assembly support the Medicaid expansion if the cost fell on people who could vote them out of office? If it were financed, say, with a $2 billion increase in Virginia’s sales tax? Would the Post even support it?

SOURCE: Forbes


Evidence has been building for years that Medicare is likely overpaying for ambulances to ferry New Jersey dialysis patients to and from their thrice-weekly treatments. The number of dialysis-related ambulance rides increased 857 percent in the state from 2002 to 2011, more than three times the national average, according to a report from the U.S. Department of Health and Human Services’ inspector general.

The Centers for Medicare and Medicaid Services (CMS) announced recently that it would begin requiring prior authorization for certain types of ambulance rides in New Jersey, Pennsylvania and South Carolina, states with unusually high utilization rates and costs. But the new program won’t begin until the fall–and for now, business continues as usual.

The DaVita center in Paterson is the state’s largest, with 60 treatment stations that sometimes run 19 hours a day. By 9 a.m. on a recent day, ambulances were coming and going every few minutes as the first shift of patients was departing and the second arriving. Patients were wheeled in, some with blue bags labeled “DaVita” sitting beside or behind them.

Ambulance usage appears substantially higher at the Paterson facility than at other large clinics, including those run by DaVita, the nation’s second-largest dialysis chain. Ambulance companies dominate the list of service providers that most frequently see Paterson patients within 30 days of a treatment there, Medicare data shows. That’s not the case at large DaVita centers outside of Northern New Jersey, where doctors, labs and hospitals are more likely to see patients after treatments.

SOURCE: ProPublica