Health Care II

Lecture 12

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How to be political about health care

1. Read Arrow (1963) 2. Choose your priority

Coverage? Cost? Quality? Freedom?

3. Figure out the U.S. system 4. Look at the cross-national data 5. If necessary, return to (1)

(Try not to shut down the government)

GOVT 3723 - Politics and Markets - Pepinsky

Priorities

1. Coverage Either forced participation, or “extreme price discrimination” (Arrow) Cost = a function of the size of the risk pool, i.e. coverage through participation rather than indigence (why?)

2. Quality By what standard? Best “high-end” or best “low-end”? Is the best “high-end” care even knowable?

3. Freedom

Non-participation by individuals, discretion by doctors Not freedom to consume whatever healthcare you want, or need

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Freedom

Quality Coverage /

Cost

Health Care Trilemma? (Swenson 2007) Pre-Reform U.S. Health System

Various Forms of “National Health Care”

GOVT 3723 - Politics and Markets - Pepinsky

Innovation?

0

20

40

60

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20

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Country

France

Germany

Switzerland

UK/Sweden

United Kingdom

United States

GOVT 3723 - Politics and Markets - Pepinsky

© 2013 Tom Pepinsky

Source: Wikipedia

Trilemmas in Practice

1. Pre-2008 US system Free choice but allow moral hazard and adverse selection

2. Single-payer national health care (like Medicare) Eliminate adverse selection but allow moral hazard and eliminate freedom of non-participation

3. Government provided health care (like the military)

Eliminate adverse selection and contain moral hazard, eliminate freedom of non-participation and some doctor discretion

Obamacare? A peculiar elaboration of mutant employment-based system, somewhere between (1) and (2)

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A Peculiar Elaboration

Swenson and Greer:

Health care -> industrial and labor relations

GOVT 3723 - Politics and Markets - Pepinsky

A Peculiar Elaboration

Ways of providing near-universal coverage 1. Individual mandate

• Individuals must buy insurance • Common across the world (Japan, Netherlands) • Governments must help to make the insurance markets

2. Employer mandate • Employers must provide health insurance, or help to pay for it • Also fairly common, often combined with individual mandate (France,

Germany) • Governments must make the insurance markets for employers that cannot

3. Nationalized health care • Health care is like a road: it’s there, free or very cheap, use it as you like,

we all pay through taxes • Can have government providers (U.K.) or private providers (Canada)

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So, about those data…

All from the World Development Indicators, 2010

GOVT 3723 - Politics and Markets - Pepinsky

Health Expenditure and Life Expectancy

AFG

ALB

DZA

AGO

ATG

ARG

ARM

AUS

AUT

AZE

BHS

BHR

BGD

BRB

BLR

BEL

BLZ

BEN

BTNBOL

BIH

BWA

BRA

BRN

BGR

BFABDI

KHMCMR

CAN

CPV

CAF TCD

CHL

CHN

COL

COMZARCOG

CRI

CIV

HRV

CUB

CYP

CZE

DNK

DJI

DOM

ECU

EGY

SLV

GNQ

ERI

EST

ETH

FJI

FIN

FRA

GAB

GMB

GEO

DEU

GHA

GRC

GRD

GTM

GINGNB

GUY

HTI

HND

HUN

ISL

IND IDN

I RN

IRQ

IRL

ISR

ITA

JAM

JPN

JORKAZ

KEN

KIR

KOR

KWT

KGZLAO

LVA

LBN

LSOLBR

LBY

LTU

LUX

MKD

MDGMWI

MYS

MDV

MLI

MLT

MRT

MUSMEX

FSMMDA

MNG

MNE

MAR

MOZ

M M R

NAM

NPL

NLD

NZL

NIC

NERNGA

NOR

OMN

PAK

PAN

PNG

PRYPER

PHL

POL

PRT

QAT

ROM

RUS

RWA

WSM

SM R

STP

SAU

SEN

SRB

SYC

SLE

SGP

SVK

SVN

SLB

ZAF

ESP

LKA

LCA

VCT

SDN

SURSWZ

SWE

CHE

SYRTJK

TZA

THA

TMPTGO

TON

TTO

TUN

TUR

TKM

UGA

UKR

ARE

GBR

USA

URY

UZBVUT

VEN

VNMYEM

ZMB

0

2000

4000

6000

8000

50 60 70 80

Life Expectancy

He

alth

Exp

en

ditu

re P

er

Ca

pita

GDPPC

a

a

a

a

20000

40000

60000

80000

GOVT 3723 - Politics and Markets - Pepinsky

© 2013 Tom Pepinsky

Health Expenditure and Life Expectancy, Rich Countries Only

Australia

Austria

Belgium

Canada

Chile

Czech Rep.

Denmark

Estonia

Finland

FranceGermany

Greece Iceland

Ireland

Israel

Italy Japan

Rep. Korea

Luxembourg

Netherlands

New Zealand

Norway

Poland

Portugal

Slovak Rep.Slovenia

Spain

Sweden

Switzerland

UK

USA

2000

4000

6000

8000

75 77 79 81 83

Life Expectancy

He

alth

Exp

en

ditu

re P

er

Ca

pita

GOVT 3723 - Politics and Markets - Pepinsky

© 2013 Tom Pepinsky

Health Expenditure and Infant Mortality, Rich Countries Only

Australia

Austria

Belgium

Canada

Chile

Czech Rep.

Denmark

Estonia

Finland

FranceGermany

Greece Iceland

Ireland

Israel

Italy Japan

Rep. Korea

Luxembourg

Netherlands

New Zealand

Norway

Poland

Portugal

Slovak Rep.Slovenia

Spain

Sweden

Switzerland

UK

USA

2000

4000

6000

8000

2468

Infant Mortality Rate

He

alth

Exp

en

ditu

re P

er

Ca

pita

GOVT 3723 - Politics and Markets - Pepinsky

© 2013 Tom Pepinsky

Health Expenditure and Number of Doctors, Rich Countries Only

Australia

Austria

Belgium

Canada

Chile

Czech Rep.

Denmark

Estonia

Finland

FranceGermany

GreeceIceland

Ireland

Israel

ItalyJapan

Rep. Korea

Luxembourg

Netherlands

New Zealand

Norway

Poland

Portugal

Slovak Rep.Slovenia

Spain

Sweden

Switzerland

UK

USA

2000

4000

6000

8000

2 4 6

Physicians per 1000 citizens

He

alth

Exp

en

ditu

re P

er

Ca

pita

GOVT 3723 - Politics and Markets - Pepinsky

© 2013 Tom Pepinsky

Health Expenditure and Number of Nurses, Rich Countries Only

Australia

Austria

Belgium

Chile

Czech Rep.

Denmark

Estonia

Finland

FranceGermany

Greece Iceland

Ireland

Israel

Italy Japan

Rep. Korea

Luxembourg

New Zealand

Norway

Poland

Portugal

Slovak Rep.Slovenia

Spain

Sweden

Switzerland

UK

USA

2000

4000

6000

8000

0 5 10 15 20 25

Nurses per 1000 citizens

He

alth

Exp

en

ditu

re P

er

Ca

pita

GOVT 3723 - Politics and Markets - Pepinsky

© 2013 Tom Pepinsky

Private Health Expenditure Rich Countries Only

0.0

2.5

5.0

7.5

AUS

AUT

BEL

CHE

CHL

CZE

DEU

DNK

ESP

EST

FINFR

AGBR

GRC

IRL

ISL

ISR

ITA

JPN

KOR

LUX

NOR

NZL

POL

PRT

SVK

SVN

SW

EUSA

Country

He

alth

Expe

nd

itu

re (

% o

f G

DP

)

GOVT 3723 - Politics and Markets - Pepinsky

© 2013 Tom Pepinsky

Public Health Expenditure Rich Countries Only

0.0

2.5

5.0

7.5

AUS

AUT

BEL

CHE

CHL

CZE

DEU

DNK

ESP

EST

FINFR

AGBR

GRC

IRL

ISL

ISR

ITA

JPN

KOR

LUX

NOR

NZL

POL

PRT

SVK

SVN

SW

EUSA

Country

He

alth

Expe

nd

itu

re (

% o

f G

DP

)

GOVT 3723 - Politics and Markets - Pepinsky

© 2013 Tom Pepinsky

Total Health Expenditure Rich Countries Only

0

5

10

15

AUS

AUT

BEL

CHE

CHL

CZE

DEU

DNK

ESP

EST

FINFR

AGBR

GRC

IRL

ISL

ISR

ITA

JPN

KOR

LUX

NOR

NZL

POL

PRT

SVK

SVN

SW

EUSA

Country

He

alth

Expe

nd

itu

re (

% o

f G

DP

)

Expenditure

Public

Private

Total

GOVT 3723 - Politics and Markets - Pepinsky

© 2013 Tom Pepinsky

So are Americans just sicker?

Maybe we are just sicker, so we spend more and we get less!

Well, yeah, but…

GOVT 3723 - Politics and Markets - Pepinsky

Questions?

GOVT 3723 - Politics and Markets - Pepinsky