This article has at least one thing backward:

India's health care system is hardly a model... Health care accounts for just 5.1 percent of India's gross domestic product, against 14 percent in the United States.

Health care as a lower %age of GDP is a success, not a failure.

Health care as a lower %age of GDP is a success, not a failure.

I agree - it's a rather weird benchmark to use. BUT, healthcare as % of GNP can't be used to make a case for either success or failure. For ex., richer folks will have fewer chronic ailments (laser eye surgery, hip replacements, arthroscopic knee surgery) more cosmetic procedures, etc. and thus more total spending on healthcare.

It's like trying to make a comparison based on "a higher %age of GNP spent on food". That could either mean foodgrains or eating out at restaurants ;-)

Umm, percentage of GDP does reflect quality in some sense - I wonder how many people with mild MS such as mine would be picked up and treated in India as opposed to the US. And actually, richer folks will have better (and long term and more expensive) treatments for their chronic illnesses. One of the reasons medical economics does not work the way you might think, on the surface.

Anyhoo, I think my profession needs to get on the ball so we can serve as a resource when pathology is eventually outsourced :) Any techy person want to help me with a consult service for slides from India? Oh wait, nix that. I just don't have the time.

Someday.

healthcare as % of GNP can't be used to make a case for either success or failure.

It certainly can. General health care (excluding elective procedures, which are minority) is an operations/maintenance function, the opposite of investment/R&D. If it's growing, it's a national danger signal, just like growth in G&A spending in any corporation. It indicates an unhealthy or aging population, rampant ineffiency and/or price gouging.

richer folks will have better (and long term and more expensive) treatments for their chronic illnesses.

To the extent that medical treatment takes and longer and costs more, it's a good sign for the industry but a bad sign for the country. Again, it indicates a procedure is not progressing down the commoditization (and thus affordability) curve fast enough. It indicates the lack of free-market forces.

There are sectors where high spending is an indicator of health (medical research, purely elective procedures), but for general health care the U.S. system is blinking red right now. ~15% of GDP is just bloated. It's way outside the healthy benchmarks for an ops function. The vast majority of the care given is for non-elective issues, and 15% is way too high, the highest in the world, even given our R&D leadership premium. For all that spending, we haven't even achieved the maximum life expectancy compared to other industrialized nations.

Our medical R&D is fantastic, but our general care system is outrageously inefficient.

Ohh, that old we don't even have as good a life expectancy as other countries canard. We have a very different ethnic mix in the US, we have a very different immigrant population, and the figures are not counted the same from country to country. Take infant mortality - we have a lot of older woman in this country who have babies (and a lot of women who use fertility treatments) so that there are lots of preemies born to older moms. Higher risk pregnancies, more problems.

But you are right about market forces - if a tube of aldara costs the insurance company 200 dollars but it costs you 5 for your copay, what is the chance you'll use it properly or have a sense of how expensive your treatments really are? And also, if you want a cadillac, you pay for a cadillac. I take avonex beta, 1400 dollars a month. I am doing great (for a while, some national health programs in other countries didn't even offer this drug and yet insurance here pays for it.) There are now new drugs on the horizon, ready for approval 6 months or so from now. I can add them to what I take and they are sure to be expensive. My insurance will probably pay. And yet, I'm doing just fine. I'll just do better with it. So I guess I get a bit irritated when people think we are paying more and getting less. No. We are paying more and getting something different. None of the physicians I work with, from Europe or Canada, think their systems are better. But I guess I am working with a biased sample. Many of them came here because they could do more in this country than in England, Canada, France, Germany (the nationalities I work with).

Ohh, that old we don't even have as good a life expectancy as other countries canard.

Granted that it's a complex topic. But we're spending 50% more (% of GDP) than other industrialized countries on health care. That's not a small difference. Setting aside genetic factors, we should be totally dominant on life expectancy.

if a tube of aldara costs the insurance company 200 dollars but it costs you 5 for your copay, what is the chance you'll use it properly or have a sense of how expensive your treatments really are?

Yes. Separating the payer from the recipient is a formula for massive waste, both in health care and in the government (the unitemized, pre-withheld income tax is a black hole/slush fund for Congress).

if you want a cadillac, you pay for a cadillac.

I doubt elective luxury is a significant portion of U.S. health spending. I think a lot more of it is waste.

None of the physicians I work with, from Europe or Canada, think their systems are better.

Massive conflict of interest here. Their paychecks depend on an inefficient system and gatekeepers like AMA certification. I'm arguing what's good for the country, not what's good for the medical industry. It simply should not be 15% of U.S. GDP, trending towards 20% in the next few years, when every other industrialized nation is at 7-10%.

manish - I'm in a weird position where I agree w/ almost everything you're arguing EXCEPT for the specific benchmark you're using -

It simply should not be 15% of U.S. GDP, trending towards 20% in the next few years, when every other industrialized nation is at 7-10%.

What 'should' be true or not true w.r.t. GNP allocation is almost entirely a function of consumer spending choices. If I'm richer, why shouldn't I spend more of my $$$ on making myself healthier, removing pain, improving my appearance, etc. far beyond the normal threshold of "urgent medical need"? If I'm richer, why shouldn't I insist that my Lasik be performed by a Stanford-trained eye doc rather than one from the Tijuana school of med?

We probably both agree that healthcare is an inefficient market on many levels (of course, for others, "markets" and "health" are a prima facie Bad Thing).

BUT, if the market became more efficient, I'm NOT convinced that overall % of GNP would go down remarkably so much as the total # of services / products delivered would increase dramatically resulting in a TBD on overall GNP impact.

Med / GNP alloc's in other nations are artificially depressed by their free ridership on US med R&D. If they really were investing in med R&D at US levels, their GNP alloc would trend much closer towards the US.

Manish, you are absolutely right about the fact that there is a lot of waste and that we spend too much as a portion of GDP. But some of the increased spending is because people get better care. That's all I'm trying to say. I review cases that come from other countries - I see what they do and what we do here. Waste is a tricky term to define in terms of medicine.

I take Avonex - very expensive and for a time not even on the National Health plans of some countries. Now there are new drugs coming down the pike - I am doing great but I will probably add them to my MS treatments. So, the point is, I will continue to pay more to feel better as the stuff comes out. So with something like your health, more means more. Man. I wish I had your and Vinod's writing skills. I wish I could communicate what I am trying to say more efficiently! Hmmm. I'll have to ask some of the med bloggers I know to address the point and then link to this post.

Cool. I love sepia mutiny :)

If I'm richer, why shouldn't I insist that my Lasik be performed by a Stanford-trained eye doc

You should, but elective is probably a small proportion of med spending.

Most of the 80/20 rules (the wealthiest n% pay most of the nation's income taxes, etc.) don't apply because medical care consumption is not scalable: wealthy individuals are limited by time and their own health in terms of how many elective procedures they can accept. It's the mirror image of doctors' problem, the non-scalability of providing services. It's not like mass-producing products or stock market profits.

if the market became more efficient, I'm NOT convinced that overall % of GNP would go down remarkably so much as the total # of services / products delivered would increase dramatically

That's the 'new copy machine' effect, which happens when there's significant pent-up demand and the marginal cost of additional consumption is near zero.

In the non-elective case, this doesn't hold because people get medical care for most acute problems, the pain/time/money cost of medical care not near zero, and in an efficient market people will bear more of the fractional cost of any procedure themselves.

In the elective case, I grant there is pent-up demand, but the cost is still not near-zero, and the portion of med spending which is totally elective is probably not significant.

Net net, the copy machine effect exists, but I don't think it'll be significant. In an efficient market, by definition, prices will come down and overall spending most likely will come down significantly.

Med / GNP alloc's in other nations are artificially depressed by their free ridership on US med R&D.

Granted, but adding up all medical R&D doesn't even come close to total health care spending, it's not a significant portion of the argument.

I mean, come on, in a couple of years we'll be spending fully one-fifth of GDP on life support/ops. That's high overhead for any process. In Manhattan, admittedly a pricey market, the cheapest individual insurance costs $370/month. That's close to the monthly cost of garaging a car here, which is already insane.

some of the increased spending is because people get better care.

Granted, and I spend on elective health care too. But I don't think people in our income brackets comprise the bulk of medical spending.

Susan Dentzer, the health correspondent for "The NewsHour With Jim Lehrer", wrote a Taking Liberties: An Irregular Feature for the Irreverently Inclined column in the Washington Post on just this topic. (Free registration may be required.)

It's the Taj Mahal of Health Insurance Schemes

Also see my post on medical tourism:

...the U.S. medical system is specifically designed for restraint of trade to keep prices high. Big Med has not set up an international credential system, which is the only way, for example, that you're at ease spending $10K on a procedure after far less research than you do for a $300 camera.

An anecdote here about health care in Spain:

This troubled the doctor [in Spain] greatly, not because of the cost of the exam, which turned out to be free, but because of concern about the cost of the drugs which were to be prescribed. We took the prescription, went to our local pharmacy, and had it filled. Cost? About 3 bucks.

Spain spends about 7.5% of its GDP on health care. We spend about 13.9%. About 4% of our GDP is spent on a subset of health care called... "health care administration."

It is just not GNP that makes America health different. Several contemporary studies (mostly OECD data) comparing advanced and less advanced countries show that Americans enjoy significantly less health care and they are not very satisfied relative to their international peers. Across all studies, we do lead the world in elective procedures. No one thought this would be true even five years ago.

The monopolistic pricing that is coming from unabated hospital and medical group mergers in the US along with the big Pharma attitude that they have an inelastic market model in the US are the seeds of their destruction. When a retired GM assembly line worker from a small Indiana town is lecturing me at Thanksgiving that aggressive prescription drug pricing is shifting now from Cananda to Mexico you know we are on our way.

Just as thousands of bright Indian (also Chinese, American, etc) woke up and found no jobs in Silicon Valley, our doctors and nurses may wake and find their jobs are now being performed in India, Thailand and South Korea. Worse yet, the Indians, Thais, etc. may open hospitals in America-- if the Japanese can build the Lexus and we buy it, they may figure out open heart. Within five years of Ford opening several border plants just south of El Paso, the Japanese populated Indiana, Ohio and Kentucky with highly efficient auto plants.

And our own radiologists in many communities are pushing the envelop with Indian over-reads after 6 o'clock.