ACCUMULATING PERIPHERALS


The “can’t-do” American attitude by mattsteinglass
March 13, 2009, 8:44 am
Filed under: Health

American exceptionalism is generally assumed to entail the idea that because of the unique characteristics of the United States among nations, the restrictions that apply to other countries are irrelevant, and the US can do things like invade other countries with the expectation that its troops will be welcomed rather than shot at. But there’s another category of American exceptionalism: the argument that because of the unique characteristics of the United States, all kinds of programs that do work well in other countries (Norwegian guaranteed preschool, Swedish banking reform, South Korean industrial policy) can never work in the US. Along those lines, Megan McArdle turns Henry Farrell’s argument that Obama’s tax and governance reforms will never turn the US into France into an argument that American health care reform will never achieve a system as good as France’s:

A national healthcare system in the United States will not merely be something sadly less than ideal–it will be nothing like most of the internally coherent proposals.  It will be something jury rigged out of Medicare, S-Chip and insurance mandates, ugly and very expensive.

No, we won’t be like France.  In this narrow instance, it might be better if we were. Instead, we’ll be like America, where public institutions are costly, inefficient and generally not very well respected.  

There are two points to be made here. The first is that health care reform in the US is not aimed at achieving a system like France’s, it’s aimed at achieving a system resembling those of every other advanced economy in the world — Germany, Taiwan, Japan, the UK, Canada, the Netherlands, Italy fer chrissakes, and on through the OECD — in the sense that it achieves the objectives which all of those systems achieves, but ours doesn’t: universal coverage and control of costs. Those systems are all structurally different from each other in crucial ways, and each of them conforms in various ways with its own national culture and has evolved in a path-dependent fashion out of its own national institutions, just as ours will. And each of them is screwed up in its own way and deeply politicized, too. But they all also cost between 40% and 60% as much per person as our system does, and they all achieve guaranteed universal coverage. Our health insurance and care  system is screwed up in a fashion that is unique in the developed world in its awfulness. I can understand the grounds on which to argue that the US can’t precisely have the French system because of political, cultural, social and institutional factors, but I would like to see Megan make the case that the US is doomed to have the developed world’s worst health insurance system because of said factors.

The second point is a bit more abstract. It seems to me that if you’re going to argue that health care reform will not work in the US because in America, “public institutions are costly, inefficient and generally not very well respected,” you have to believe that American models of public institutions should not be exported to other countries. Megan seems not to be making the case that countries can never learn anything from each other because they are never able to adopt the desirable aspects of other countries’ institutions. She’s just saying that it’s an indelible characteristic of the US that our public institutions are uniquely bad, particularly as compared with French ones. (She says that “in this narrow instance, it might be better if we were”  more like France, but I can’t understand why she thinks there are other instances in which the US should be happy that its public institutions are costly, inefficient and not well respected.) But at a minimum, if you hold this stance of negative American exceptionalism, I think you’d have to refrain from criticizing other countries’ public institutions, which are apparently a lot better than ours.

As it happens I think many American public institutions are indeed more costly, less efficient, and less respected than those of other countries, and I think this has a tremendous amount to do with 30 years of American anti-government activism, which has hollowed out American public institutions. I don’t think that in the 1950s when the US was helping rebuild Europe the Europeans viewed American public institutions as particularly bad; I don’t think they had that view in the 1970s. But they do now. In Vietnam one gets to see this mainly in the interaction between American and European institutions of aid and advice: US PEPFAR-funded organizations inevitably involve more private care, specialization of care into different parallel branches (handling AIDS, say, through separate clinics and testing structures rather than integrating it with other forms of care), and facilitating the entrance of private health insurance into the market. The Europeans don’t think this way. Once the US’s health care system is restructured, maybe we’ll stop thinking this way, too.

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3 Comments so far
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Speaking as someone who is fairly leery of larger government programs in the US…

First, let’s say I could wave a magic wand, and cause one institution (it doesn’t matter which one) was equivalently funded to its average European equivalent, on a per-capita basis (or as a percentage of GDP, whatever).

Let’s say we did that, waited several years, and looked to see what happened. Here’s what I would expect:

1. A significant chunk would be “captured” by earmarks going to specific efforts desired by lobbyists.
2. A good chunk would be lost to status-seeking as the people involved enlarged their administrative budgets, improved their buildings, bought new furniture, etc.
3. Because of Republican pressure, a fair amount would be directed towards “competitive” contract bids

In the end, I suspect (75%) that we’d get a modest improvement in service, at a significant actual cost. Because, compared to Europeans, Americans are more status-seeking, our politicians are more corrupt, and Republicans are unheard of.

That’s the “negative exceptionalism”. And from my perspective, as long as I believe that American politicians are unusually corrupt, I don’t want any more money or power in their hands than absolutely possible.

And even if you argued that only Republicans are corrupt, it wouldn’t particularly sway me, since I rate the chance of never again seeing Republican majorities in government at about 3%. (in other words, they’ll be back, just as corrupt as ever).

Your task, then would be to convince me and others like me that either a) American politicians are not particularly corrupt and b) American bureaucrats are not particularly status-seeking – in order for me to feel good that the money would not be wasted on empire-building and earmarks.

On the topic of Health Care reform – most of the costs of health care are from device and drug manufacturers. Lipitor and Cialis aside, most of the innovations in health care come from these device and drug manufacturers. This is one of the forms of American positive exceptionalism, IMO.

I don’t know about you, but I want to live to be 100, and still feel healthy and mentally alert. I don’t want that just for me – I want that for everyone on Earth. The more we tighten down on manufacturers, the less innovation we will see. I’m not saying it will go to zero. I’m simply saying it will go down.

And if the frequency of innovation goes down, it reduces the probability of the Happy-Healthy-Smart-Centurion. (In my mind, quite a bit). I don’t think it is either evil nor unreasonable of me to have Happy-Healthy-Smart-Centurion as a goal.

So, just so I’m clear, when you say “control health care costs” I hear “Matt Steinglass wants me to have an unpleasant old age with a poor memory, fragile bones and limited mobility”

You can handwave around the concept that government will do it better, but I am skeptical, and I would say “Show me where we see examples of governments being more innovative in health care than the US”. If you control for obesity and violence, Americans live as long as anyone else, if not longer. We die of cancer less frequently, we receive more prosthetics. Our medical quality-of-life seems to be better.

I’m not particularly happy with the current system, but right now, the US is the engine of innovation in Health Care that fuels the world – everyone else gets to cherry-pick the “best” options from the ones we have to actually do all the real-world experiments with. No wonder they have more controlled healthcare costs – anyone in any country could have better cost control if they let someone else pick up the bill for competitive analysis, wait a few years, and then only picked the winners and negotiated the price down too.

Comment by jb

jb, I see where you’re coming from, but I disagree with your arguments about drug manufacture and innovation. First, I applaud your plan to make it to 100, but medical effectiveness research shows that drug innovations will have fairly little to do with whether or not you make it there. Second, drug companies have indeed shifted from Europe to the US over the decades, but there is no evidence whatsoever that this reflects anything but venue-picking for the country where they can make the most obscene profits; there is no evidence at all that the level of innovation would decrease if drug company profits in the US were cut back. The people making that argument are…drug companies and their lobbyists. A press release from Pfizer is about as trustworthy as one from Kim Jong Il.

And so it’s just not true that the US is the engine of health care innovation and everyone else is free-riding on us. In many respects the US’s health care system is far behind those in the rest of the developed world, notably in electronic records and assessment, and in evidence-based medicine. The only category of treatment in which the US is better than the rest of the world is for certain kinds of cancers — not all — and the key variable there is the question of whether you will be treated at all, because the US’s ridiculous insurance system is geared to trying to let companies achieve competitive advantage by denying you coverage when it turns out you’re sick. I was just hearing last month about a well-off Italian woman who had to put off divorcing her American husband because she had begun treatment for cancer, and she would have lost her insurance coverage (obviously it would then have been impossible to get new coverage) and been forced to fly home to Italy without her kids and switch clinics in the middle of treatment. Her family was asking: What the hell kind of third-world country is the US? Whether or not you get treated for cancer depends on whether or not you go ahead with your divorce? What do these things have to do with each other? It’s a preposterously idiotic system that is beneath the dignity of a developed economy.

Comment by mattsteinglass

Hi Matt,

Thanks for the responses.

First, I’d love to see the research you mention, for my own education.

Second, we’ll just have to agree to disagree about this statement: “there is no evidence at all that the level of innovation would decrease if drug company profits in the US were cut back”

Books, movies, games, tv shows and songs all have this property – if the profits decrease, the publishers stop producing “experimental” or “genre-breaking” works, and focus only on well-established formulas that have proven to work in the past. In other words innovation decreases because the publishers simply can’t afford as many failures.

In my mind, the same would be true of drugs.

Lastly, I don’t know anything about the medical records industry in Europe, so I’ll just assume you’re right there. But I don’t see “evidence-based” medicine as being nearly as innovative as a field as, say, Biotech, Bioengineering, molecular engineering, cybernetics, etc, etc, etc. All of which, as far as I am aware, are dominated by the US.

And yes, the US system has lots of flaws, a lot of bureaucratic bullshit that can be quite frustrating. Health care rationing can also be quite frustrating, and I’m pretty sure we can trade anecdotes all day long about bad experiences in health care. But we can’t just ask what we would gain by switching to a European system, we must also ask what we would give up. And – based on what I consider to be reasonable, rational models of how innovation happens, and the behaviors of innovators in other, similar domains as profits ebb and flow – I think we would lose a lot of innovation if we start using government to control the prices of health care, instead of (admittedly poorly formed) markets.

Thanks

Comment by jb




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