The Worst Health Care Reforms: What Can We Learn

by Matthew Bandyk

The Worst Health Care Reforms: What Can We Learn | iHaveNet.com

The debate on US health care reform has been all about two opposing sides: "more government" versus "the free market."

Advocates of the former position tend to point to international examples of great health care systems, which presumably the point the way forward for our own reforms.

Foreign Policy just published a list making the opposite point: what NOT to do based on four international examples.

What I take away from the list is this: the dualistic way Americans are arguing about health care is misguided.

Every country has massive government involvement in health care. The differences show up because some mess it up more than others.

Of the four countries on the list, Russia and Turkmenistan's problems are most obviously caused by Soviet-style policies, so let's put them to the side. China, on the other hand, the article attempts to portray as another country that shows the perils of a free market in health care.

It says China has put in a place "a market-oriented model."

The result has been governments unable or unwilling to foot the bill, and so a majority of Chinese citizens have to pay health care costs out of their own pockets, and much of it is unaffordable.

While none of this is inaccurate, the article fails to supply the bigger context in which China's system operates: that there is no real market, "free" or otherwise," in health care at all.

According a paper by Princeton economist Gregory Chow:

After almost three decade of economic reform towards a market economy in China, the most striking fact is that the supply of healthcare remains almost entirely public. People in China, whether in government or outside, still believe that healthcare is a part of the social welfare system and that therefore the supply of it is the sole responsibility of the government.

The government health care system in China is underfunded, but it also the only player in town.

There is no functional private market to fill the gaps. Chow goes on to discuss the city of Suqian, and how its experiments with privatization -- "to eliminate the monopoly of public supply healthcare" -- led to success.

Between 1999 and 2004, the average expenditure per visit was reduced from 75.49 to 70.19 yuan, or by 7 percent in hospitals at the city-county level, and from 37.62 to 27.84 yuan, or by 26 percent in hospitals at the village level. The average charge per bed per day was reduced from 182.18 to 175.38 yuan, or by 3.7 percent in city-county level hospitals, and from 62.24 to 51.71 yuan, or by 16.9 percent, in village level hospitals. The average expenditure for a patient leaving a hospital was reduced from 2150.8 to 2124.12 yuan, or by 1.2 percent in city-county level hospitals, and from 554.36 to 484.80 yuan, or by 12.5 percent in village level hospitals.

But the fourth country on FP's list is probably the most controversial inclusion.

But this isn't saying that the United States has the worst health care in the world -- that's clearly false.

But the incredible lack of bang that we get for our buck makes it hard to disagree that we have some of the world's worst health care reforms.

But is an "an under-regulated private insurance market" at fault here, as the article states?

Actually, the US insurance market is very heavily regulated at the state level.

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The Worst Health Care Reforms: What Can We Learn