Demand Supply

By many tangible measures, the U.S. health care system isn’t much to brag about. For example, the World Health Organization reported that in 2000 the U.S. ranked 24th in the world in “healthy life expectancy.”

“Basically, you die earlier and spend more time disabled if you’re an American rather than a member of most other advanced countries,” said Christopher Murray (M.D., Ph.D.), Director of WHO’s Global Programme on Evidence for Health Policy.

In life expectancy, infant mortality, and number of practicing physicians per capita, the U.S. long has ranked near the bottom among the 30 or so wealthiest industrialized nations. And this is in spite of the fact that we spend nearly twice as much per capita on health care as nations that get much better results than we do. We don’t even have as many hospital beds per capita as most other industrialized nations.

But worry no more, children. I learned today that “US Health Care Saves More Lives Than Socialized Medicine.” Captain Ed writes,

A new study by the Karolinska Institute in Sweden shows that the American health care system outperforms the socialized systems in Europe in getting new medicines to cancer patients.

According to the document linked by Captain Ed, “The proportion of colorectal cancer patients with access to the drug Avastin was 10 times higher in the US than it was in Europe, with the UK having a lower uptake than the European average.” In other words,if you are a colorectal cancer patient lucky enough to have health insurance and get diagnostic tests in time, you are far better off in the U.S. than anywhere else.

What more do you need to know? That proves the U.S. has The Best Health Care in the Worldâ„¢, right?

I understand the U.S. is still ahead of most other countries in the development of new drugs and high tech gizmos for diagnosing and treating diseases. Unfortunately, hospital care is not the be-all and end-all of health care. Take our famously nasty infant mortality stats, for example. On the whole I don’t believe we’re losing babies because of substandard hospital care. On the contrary; I’ve heard many times that the United States has superior intensive hospital care for high-risk neonates compared to other nations. However, as this abstract says,

Despite high per capita health care expenditure, the United States has crude infant survival rates that are lower than similarly developed nations. Although differences in vital recording and socioeconomic risk have been studied, a systematic, cross-national comparison of perinatal health care systems is lacking. …

… Compared with the other 3 countries, the United States has more neonatal intensive care resources yet provides proportionately less support for preconception and prenatal care. Unlike the United States, the other countries provided free family planning services and prenatal and perinatal physician care, and the United Kingdom and Australia paid for all contraception. The United States has high neonatal intensive care capacity, with 6.1 neonatologists per 10 000 live births; Australia, 3.7; Canada, 3.3; and the United Kingdom, 2.7. For intensive care beds, the United States has 3.3 per 10 000 live births; Australia and Canada, 2.6; and the United Kingdom, 0.67. Greater neonatal intensive care resources were not consistently associated with lower birth weight-specific mortality. The relative risk (United States as reference) of neonatal mortality for infants <1000 g was 0.84 for Australia, 1.12 for Canada, and 0.99 for the United Kingdom; for 1000 to 2499 g infants, the relative risk was 0.97 for Australia, 1.26 for Canada, and 0.95 for the United Kingdom. As reported elsewhere, low birth weight rates were notably higher in the United States, partially explaining the high crude mortality rates.

Conclusions. The United States has significantly greater neonatal intensive care resources per capita, compared with 3 other developed countries, without having consistently better birth weight-specific mortality. Despite low birth weight rates that exceed other countries, the United States has proportionately more providers per low birth weight infant, but offers less extensive preconception and prenatal services. This study questions the effectiveness of the current distribution of US reproductive care resources and its emphasis on neonatal intensive care.

(The study discussed in the abstract was published in the Journal of the American Academy of Pediatrics [PEDIATRICS Vol. 109 No. 6 June 2002, pp. 1036-1043] and is by Lindsay A. Thompson, MD, MS, David C. Goodman, MD, MS, and George A. Little, MD.)

Basically, our health care system is good at delivering difficult and expensive stuff but blows at simple, ordinary stuff, like preventive care, compared to other nations. This means we save some lives that might have been lost in Europe, but we also lose lives that would have been saved in Europe.

How did this come to pass? Certainly we Americans value creation and innovation. But it’s also the fact that our private, profit-based health care system is very good at creating new health care products that will make a lot of money. But where there’s no chance of profit, forget it.

This is what the “magic of the marketplace” has given us. You know how markets work; where there’s a demand, someone will hustle to provide a supply, and competition encourages the creation of better products at lower cost. Our system is very good at creating new drugs and new technologies and then marketing them to hospitals, physicians, and even potential patients. And I’m not saying this is a scam; many of us have benefited from the drugs and gizmos. The problem is that some parts of the health care process just don’t make any money. And where it isn’t profitable, our system is falling apart.

Yesterday I wrote about our nation’s emergency rooms. In short, they’re bad, and they’re getting worse. Emergency room capacity is shrinking, although demand is growing. People are dying because they wait too long to get treated.

Go to to read the second part of their three-part series on the crisis in emergency medical services. Then ask yourself if this is the sort of emergency care you’d like for yourself or someone you care about. Probably, it isn’t.

But emergency rooms are big money losers for hospitals. They suck up expensive resources, and often the people who use ERs have no insurance and can’t pay.

Here’s what the “free market” people never seem to wrap their heads around: Unprofitable demands do not generate supply, even when those demands are desperately needed.

Put another way, not everything that’s worth having can generate enough profit to pay for itself.

Most nations come up with a simple answer to this problem: They pay for vital but unprofitable services with taxes. That’s a big part of what government is for, some would argue. But you know American conservatives; they’d rather accept greater suffering and death (as long as it isn’t theirs) than pay taxes that support a dreaded “entitlement” like basic health care. It just sticks in their craw that their tax dollars might be used to benefit someone else. And it never occurs to them that someday they might be the “someone else.”

Of course, the irony of this is that, thanks to lobbying and other efforts, some parts of the health care industry enjoy generous corporate welfare. But to Republicans welfare is just fine as long as it’s going to them.

By now “market forces” have so skewed our health care delivery system that, even if we began to allocate our health care dollars according to need rather than profit, it would take years before the neglected parts of our systems were built back up to where they should be.

While our emergency rooms rot, the health care industry just loves to provide boutique medical services for health care consumers who can pay for them. Expensive mass market ad campaigns are aimed at people with unsightly toenails, male pattern baldness, and erectile dysfunction to drive up optimum demand for the product before the patent runs out. For example, recently I’ve seen ads in which young women are sitting around a table discussing a newly discovered premenstrual syndrome — it sounds just like PMS to me, but apparently it’s much worse — for which there is (surprise!) a remarkable new drug to treat it.

If you’ve got toenail rot and insurance, Big Pharma wants your business. If you bust your head open and need your life saved in an ER — good luck.

I’m not a bit surprised that the U.S. is doing a good job of developing and delivering new cancer drugs to patients, because that’s the sort of thing we’re still doing well. But to extrapolate from this news that the entire U.S. health care system is superior to the “socialized” systems of Europe is, um, a bit of a stretch.

11 thoughts on “Demand Supply

  1. Well, an English friend of mine expressed surprise that I would receive a bill for hospitalization – my insurance thankfully covered it – but told me that this is part of basic health care in the UK, that is, without charge to the patient.

  2. Lynne — The U.S. is the only industrialized democracy on the planet that does not provide health care for all citizens. The British system is not one of the better ones, because Tony Blair’s government has been nickle and diming it to death for years. The Brits pay much less per capita than most nations, and it shows.

  3. The problem is that some parts of the health care process just don’t make any money.

    Great post, and the most succinct explanation I’ve seen of the underlying problem with market-driven healthcare.

  4. People without insurance are using the ER as their primary care physician. The hospitals are not allowed to turn people away (as it should be) and the ER system chokes. The answer has to be universal health care so the incentive to use the ER for any & all medical needs is ended.

  5. Wasn’t there a time when hospitals were not “for profit?” I mean aside from the “county” hospital.

    I’m 55, and remember from childhood going to the doctor for 10-20-ish dollars, and if you had insurance, you filed a claim and got re-imbursed.

    I don’t know how that would relate to hospitalization. I’m just asking, maybe someone knows. Wasn’t there a time when hospitals were not all for profit businesses? Granted, many of them might have been Catholic or private hospitals, with donors, private funding, etc.

  6. Stephanie — I’m 55 too.

    Years ago hospitals got along partly with government/charitable subsidy and the rest from getting paid for services by patients or insurance companies. The problem is that years ago medical care wasn’t ruinously expensive because there was only so much doctors and hospitals could do. No CAT scans, no heart transplants, etc. Now there is technology available to save people who couldn’t have been saved in the past, but it costs zillions of dollars. If we could go back to the level of medical care available in the 1950s we could cut medical costs down to a little fraction of what it is now, but I don’t think that would be a popular idea.

    The cost of providing medical care has ballooned to the point that only the extremely wealthy or well insured can pay for the medical services that modern technology has brought us. And for a whole lot of reasons we allocate resources in stupid and wasteful ways, so that even though we are spending huge amounts of money on health care more and more people are having to go without basic medical care because they can’t pay for it.

  7. All of what you’ve posted is the obscene truth about our twisted, “sicko” (h/t to MM), for-profit system. I’d gladly fight for, and switch to a single payer system, one well funded and well run, such as France’s, in a New York minute. In fact, I think a lot about leaving the USA, and one of the motivations is to reside in a country that is set up for universal health care, whether you’re rich or poor, employed or not.

    That said, one of the factors stressing the US health system, and I suspect all health systems is the belief in applying all available technology to save the lives of the elderly who are near the end of their lives anyway. All the technical improvements in medicine you cited I suspect are used disproportionately by the elderly.

    I presently am caring for an ailing, elderly parent, and have spent a great deal of time in nursing homes and hospitals. I have seen firsthand how so many members of this age cohort live out their lives in suffering every day. Extrapolating from my own family’s situation, I can see the age 80+ cohort sucking down the lion’s share of health care, and I suspect (I could be wrong) driving up the cost of it for everyone.

    Were our beliefs about life and death, and assisted suicide different, I don’t think you’d see the age 80+ cohort hanging on for every last second of dear life. I believe that painless, assisted suicide, a la Dr Kervorkian should be available, instead of being stigmatized and illegal. It says much about our culture that we have all these exotic, expensive technologies to prolong life, and yet we are terrified of death, which is as natural as birth.

    Given these facts:

    -Our health care system is very broken
    -Exotic technologies have arrived which extend life, esp for the elderly
    -Our country is deeply in debt and will likely be cutting back on things like social security and medicare; if some sort of socialized health care system is created (I’d give it a 50:50 chance) it’s likely to be quite lame

    I think you’re going to see legalized, assisted suicide revisited, simply as a cost saving measure, although it will take a weakening of the religious right for this to happen. In the meantime, I’m shopping around for another country…

  8. That our allies, the UK and Australia pay for all contraception, must offer a spike of dissonance within our religious rightie prez and the Dobson/Falwell bunch. Do the religious righties grab for blinders and ear muffs seeing/hearing this fact?

    The profit squeeze affecting medicine does take place in hospitals which claim non-profit status [ property tax exclusion benefits, et al], and the ‘medical’ profit squeezers include collection agencies who are now partnering with the medical profiteers to herd bunches of folks into small claims courts to get those last drops of blood out of the unfortunate.

    Yes, Bonnie…..our system is offering extended shelf life, especially inasmuch as Medicare pays, rather than offering a quality of life which would include a natural dignified death. Do note that this extended shelf life program now includes legal mechanisms which force estate transfers, not to heirs, but to non-heirs ready to scoop up all remaining assets.

  9. Thanks for posting this topic.

    I think one of the shameful indicators of the failure of our health care system lies in the striking difference in the infant mortality rate among African-Americans and Americans of European origin. Needless to say this difference falls heavily along economic lines as well. The system works for wealthy or well-insured people, pretty abyssmally for working class people.

    It is my understanding that in large part our public health system was initiated during and after World War One because public health in general was so poor that it was difficult to find citizens fit enough to serve. Certainly even conservatives could see some advantage there.

    The “magic of the free market” reminds me a bit of Rousseau’s “State of Nature” being some mythical, natural situation that sets all things right. Nice fantasy, if you can believe it.


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