A Fantastic Article. Should be required reading for all.

So you asked about how other countries deal with health care. I have studied several of them especially the single payer models of Europe. Every single payer system must have two levers to control health care costs… price and “utilization” (rationing). England uses a model like our VA system in that doctors are employed by the National Health Service. They used various mechanism to control utilization in the country including staffing and overtime forcing doctors to prioritize since they can’t get to all the needs of all the patients. The NHS also sets the prices of many other health care products and services. Being a small country bad planning of health care resources can be more easily overcome given distances involved unlike our VA system.

France’s system looks a lot like our Medicare system. France provides a plan like Medicare. Then citizens can elect to buy supplemental plans that cover what the base plan does not or enroll in managed care plans similar to our Medicare Advantage plans. Even though from is a “single payer” system over 85% of the French have private insurance. France is encouraging its citizens to enroll in these managed care plans because its citizens use health care even more than we do in this country. So the primary means the government has to control health care cost is to set prices. There are some mechanisms by which providers can petition for higher reimbursement at the expense of the citizen and others bells and whistles… but the takeaway is France uses price controls in its basic coverage and is encouraging people to select private health plans that manage utilization.

Germany uses price as the primary vehicle for managing health care costs. As utilization has increased they have squeezed prices setting off the occasional physician strike. Hospitals get budgets that encourage them not to take patients who are old and sick and are unlikely to improve since they will consume to much of the budget. I have several cousins in Germany that are physicians and they earn about half of what our physicians do in many instances.

The common theme you see in France and Germany is price controls designed to keep health care costs within a targeted budget. Utilization controls exist in various forms, but they lean pretty heavy on the price controls. England as I said looks a little more like the VA or if you live in California, Kaiser.

I found no evidence that single payer systems are effective at managing care well. But the do have powerful “price” levers similar to our single payer models in this country including Medicaid, Medicare, the VA, and systems like Kaiser that operate similar to single payer systems within their own niches.

Based on my review, health care reform cannot ignore the fact that “pricing” in this country is so much higher than in Europe and so whether we have a single payer system or private health care system, we must accept that the normal pricing controls of a free market are not resulting in pricing levels competitive to Europe. On our side of the ledger, while where we manage care within private health plans we have some fairly good results with regard to utilization. In fact, France has begun to move towards a model we should think about some day… government pricing and private health plan utilization management with respect to the delivery of health care services… with regard to how to price health care to consumers again the models are very different… and a separate response would be needed for to answer that question… I have provided a fairly high level overview… so like anything as complicated as health care, there are nuances in the different systems that cannot be explained in a paragraph…