uk v's us healthcare

8/8/2019 UK v's US Healthcare

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Anthony Woodhead

Two households, both alike in

dignity?________________________________________________________________

The public UK and market based US health systems certainly seem to

form two opposing houses. Yet, despite much rhetoric against

socialised medicine and free market competition, managers from each

system show affection for each others methods in attempts to address

quality, contain costs and improve the public health of their citizens.

Ultimately though, views on their relative merits come down to matters

of context and perspective. The first part of this essay will briefly

discuss their respective structures and tabulate some key quantifiabledifferences; seeking to analyse reforms which have attempted to

improve each system; arguing neither is particularly successful in

containing costs and furthering public health. The second part will turn

to reflection on the merits of this form of analysis since the systems are

fundamentally so different.

Part 1: Comparative analysis of UK and US healthcare

management.

Public vs Private: Volume vs Variety

The UK spends 8.4% of GDP on healthcare, funding is predominately through

taxation with delivery to all free at the point of consumption. The NHS has grown

to be Europes largest organisation, employing around 1.4 million people. By

2006/7 the NHS budget was about 104bn. (Wellards, 2008) The US spends

15.3% of GDP, the private sector accounts for 54% of total spend with 34% of

this from private insurers, the remaining 15% coming from out-of-pocket

expenses. 46% comes from taxation, public spending in absolute terms is very

similar to the UK. Medicare, a means tested fund for the over 65s is provided

with 52% of this amount, only 12% is used for Medicaid in supporting the verypoorest. Provision is mainly via private organisations. 70% of the population

have policies. 13% are covered through Medicare and 12% through Medicaid,

administered at the state level. 15% have no insurance, this is mainly working

families in the lowest third income bracket whose employers dont provide plans.

(Reinhardt, 2005)

Table 1: Macro difference in US and UK health care


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a-e, m-o OECD, (2009(a)) i Peterson & Burton, (2007)f-g ACP, (2008) p Nolte and McKee, (2008)

Aging population using new technologies

Healthcare spending has risen steadily over time but the US rate outpaces the

UK:

Graph 1: Change in health expenditure with time(OECD, 2009(b)):

It misconception that aging and, in the case of the US, increased administration

costs are the main drivers behind this increasing spend. As the table shows, in

real terms administration makes up to low a proportion (Garber & Skinner, 2008)

UnitedStates

UnitedKingdom

GDP per capita, 2006 ($)a 45489 35669Health expenditure, 2006 (%, GDP)b 15.3 8.4

Public Health expenditure, 2006 (%, GDP)c

7.0 7.3Private Health expenditure,2006 (%, GDP)d 8.3 1.1

Per Capita health expenditure, 2006 ($)e 6959 2996

Obesity Rate, 2005 (%)f 32 23

Administration Costs, 2006 ($ per capita)i 465 172

Doctors per 1000, 2006d 2.4 2.1

Acute Hospital Beds per 10,000, 2005d 2.7 2.3

MRI's per million, 2006d 26.5 5.6

Male Life Expectancy, 2005 (yrs)m 75.2 77.1

Female Life Expectancy, 2005 (yrs)n 80.4 81.1

Deaths per 1000 live birthso 5 6.9

Reduction in avoidable deaths 19997/98-2002/03 (per 100,000)p

5.1 27.2


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and aging has much too gradually an impact. Though the retirement of the

baby-boomers will increase demand it will happen far too slowly to account for

all the increase. In the US, Reinhardt, (2003, p.30) shows that after modelling for

factors such as medical care price inflation; greater resource intensity of

treatments, including the availability of new technology; overall population

growth; and so on aging will add only 0.5% a year to a forecasted totalexpenditure growth of 8.4%. Gray (2005) discusses studies that indicating similar

proportions in the UK contrasted with lower overall growth; these also show

stronger correlation between spend and proximity to death. In the UK 15.7% are

aged 65+ yet consume 43.7% of resource in the US its 12.3% and 48.8%

respectively (Blank and Burau, 2007 p.7)

Critiques could argue much increase is fuelled by supply induced demand;

proponents of free markets might equally conclude this is just providers

responding to what is wanted. However as Garber & Skinner (2008 p.7) highlight

both systems currently experience flat-of-the-curve returns on investment andthe US experiences an even shallower production function, getting even less

bang for each additional buck. Though numbers of hospital beds and doctors

are comparable, the US uses more and newer technologies. This is exemplified

by the fact the US has nearly 5 times as many MRI machines as the UK; this is

still only half the number of Japan which comes out on top, however the US; is

consistently at or near the top of all of these measures. Williams fair-innings

argument controversially proposes that better returns would be had in

healthcare if the balance of spend was shifted to the young (as cited in Nord,

2002) and issues concerning how to deal with these rising costs are compounded

by decreasing population growth:

Graph 2: Predicted Ratio of inactive elderly (65+) to the labour force(OECD,2009(a))


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Efficiency, cost containment and reform

Recent UK reform sought to increase healthcare spending bringing it in-line with

other European countries. In 2002 Blairs third-way policies resulted in the

purchaser-provider-split; this contestability was marketed as a way of giving

patients more choice, aiming to increase productivity through a quasi-

competitive market which in practice it is seldom allowed to fail. Savings remain

limited, particularly to rural areas, where there is little real choice. (Maynard,

2005(a))

Recent US reform has attempted to provide universal coverage but federal

politics and less centralised presidential governance makes this difficult. Clintons

tried and failed; at time of writing Obama is struggling to pass watered downreform. (Marmor et. al, 2009) Often more reform occurs at the state level;

recently Massachusetts extended coverage to all but 2.6% of the population.

Brennan & Mello (2009) show this was by way of transferring public money from

an uncompensated care pool into subsidy funding and allowing the uninsured to

purchase insurance, whilst developing a new federal waiver that brought the

extra money needed to provide Medicaid rate increases for private hospitals and

physicians. However, they caution against extending this model to other states

since there was a much lower proportion of near-poor and nonMedicaid-eligible

uninsured combined with most insurance through by local non-profit companies.

Variation between states is massive as Dartmouth Atlas Studies (2006) highlight.

Health is a service industry; 70% of costs are on salaries, getting value for

money here is paramount to efficiency however success of pay for performance

reform has been limited. (Walshe & Smith, 2006) In the UK the consultant

contract was not signed as it would result in thorough management of clinical

activity deemed unacceptable to the profession and its trade union and the

QAF has also resulted in GPs being reimbursed much more without significant

improvements in health outcomes (Maynard, 2005(a) p.73) In the US also, fee for

service also dominants and efforts to control this prove particularly difficult

under private healthcare. Capitation has been instigated with public funds in the

hope this would help curb private price cost inflation but with little success.

(Reinhardt, 2005) One mans cost is anothers income; US citizens pay a lot more

simply because healthcare is more expensive. A study based on tracer diseases

including diabetes and lung cancer found they used approximately 30% more

inputs per capita spending roughly 75% more on increased prices. (Anderson et

al., 2003)

Both countries have tried to reduce overuse, underuse and misuse through

assessing new health technologies and implementing evidence based medicine.

As Banta (2003 p.121) shows, in the US there have been attempts at state levels

and by large private insurance companies, however, with no effective nationalco-ordination, HTA activities are carried out in many organisations with different


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goals in mind, often using different methods.whereas the UK established NICE

in 1999. However due to political difficulties faced in overtly rationing health,

these organisations shy away from it and the elephant-in-the-corner remains

cost containment. (Fuchs et al., 2007) As NICE (2008 p.9) indicate, statutory

instruments and directions do not allow (them) to take budgetary impact or

affordability into account when advising on cost effectiveness. In 2003 itbecame a legal requirement that funding for all positive advice be made

available within three months of publication. This has led to pressure on PCTs to

fund new technologies with marginal benefit at the expense of increasing

funding to more cost effective areas. (Maynard, 2005(a)) Rationing is an

anathema to private healthcare; however the state of Oregon did attempted to

explicitly ration public healthcare mathematically. Here to there were also

problems as patient and government pressure forced managers to move services

up and down the list by hand. Results were modest; however the amount of

people without coverage was reduced from 18% to 11%. (Oberlander, 2001)

Public Health and social networks; bridging the gap between structure

and agency

US health problems are amplified by the lack of universal coverage; this alone

goes a long way in explaining their slightly reduced life expectancy; slightly

greater infant mortality and much smaller reduction in preventable deaths

compared with the UK. Public health problems correlate with inequality not

income. Willkinson & Pickett (2009 p.111) show people in more equal societies

live longer, a smaller proportion of children die in infancy and health is better

(see appendix). The social determinants of health have been known about for

some time. Marmot et al., (1978 p.249) found the lowest grade civil servants had

a mortality rate three times higher than those in the highest grade; concluding

"more attention should be paid to the social environments, job design, and the

consequences of income inequality." Recent US work into social networks by

Christakis & Fowler (2007 p.376) quantifies the strength of social networks,

showing for example among married couples, when an alter became obese, the

spouse was 37% more likely to become obese. Successful public health

management requires multifaceted approaches at a societal level but this is hard

to achieve and both systems struggle, the US in particular. (Marmot, 2010)

Equity equality and path dependant constraints

Klein argues (2005) once a particular system takes root it can be calculated with

some certainty as being more costly to change in comparison to any benefits

that might potentially be gained. Believing that by eschewing private funding the

NHS deprives itself of potential additional income and by having a fundamentally

top down approach, which ultimately constrains choice; it is less effective at

maximising returns when given more money.

A World Health Report (2000) ranked the US 37 th out of 191 countries, coming

top for responsiveness, with the UK coming in 26th here and 18th overall. By its

controversial measures the UK fell short for offering to little choice and the US fornot providing universal coverage. Many US citizens argue they happily pay for


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what they want; they earn more so any net benefit comes at reduced cost to

them and as early adopters they subsidise others as new technologies eventually

trickle-down to the less well-off at lower cost. (Reinhardt, 2005) With any

comparative analysis best comes down to a matter of perspective and reform is

limited by path dependencies; bringing into question the validity of such an

approach. The second part of this essay will turn to analysing this.

Part 2: A Critical Appraisal of Comparative analysis

By The Numbers

Since much of my analysis has drawn on health economic arguments it should

come as no surprise that I ere towards the positivist camp. I believe in the

scientific method, OXO, where Observation (O), combined with a perturbation (X)

along with a control allows for analysis of changes and if measured correctly, this

change can be attributed to the perturbation within know uncertainty proving

causation. (Pawson and Tilly, 1997)

Comparative analysis is at the core of hard science and its rigour produces

some profound findings in healthcare. It has helped show the relative effects of

aging, discounting it alone as a major cost driver and in the work of Christakis

and Fowler (2007) allowed for comparison against a theoretical network that

would arise if distribution were random, proving the large strength of social ties

in obesity. However there is a problem in comparing only the US and UK by the

numbers because the US is so often an outlier and an N value of only two often

proves little. This is evident in Wilson and Pickets graphs; the trend, both

between and within nations, only becomes apparent though analysing groups ofcountries, or states. (Mills et. al, 2006)

Through meta-analysts, science looks to build up bodies of evidence and theories

are only valuable if they provide repeatable results. However with social science

it is difficult to control for all factors, making attributing causation problematic.

McLaughlin (2001) argues social constructs based on associations and

interactions can never be be neutral representations of reality, but are part of

complex networks of both technology and social relationships. (in Green, 2000,

p. 454) Difference between Evidence based Medicine and Evidence based

Management highlight the issue well and Morrell (2007) provides a particularlyinteresting polemic against the narrative of this approach. Since the aim of

building evidence based on stocks of knowledge can ultimately be traced to

ideological concepts of positivism, he suggests calls for a paradigm shift from ad

hoc to coherent research programs and increased systemic reviews of evidence

based management are fundamentally are intriguing, self-referential paradoxes

that follow a traditional narrative review format, whilst simultaneously calling

the value of such research into question.(p.624) He argues that moves towards

normal science which has a higher degree of paradigmatic consensus and

where there is less debate over first principles (p.621) are rather a form of

physics envy which he terms physician envy in the healthcare context. This is


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why I think numbers often seem more descriptive in social science; though

science argues this is a reductionist form of analysis.

Context remains king but methods can be mixed.

As Pawson and Tilly (1997) highlight, the difference in the social sciences isContext + Mechanism = Outcome (CMO). Since it is impossible to control against

everything, the effect of any management initiative taken from one country and

introduced to another will always differ simply because the environment differs.

This has been evident with different US states, binging into question the validity

of comparing the UK against a nation of nations. (Mills et. al, 2006) The OECD

caution:

Adaption can be assisted by learning from other governments but, unless

countries are very similar indeed, learning will work better at the level of

system dynamics than at the level of instruments and specific practices.

(2005, p. 13)

Hypothesising that comparative analysis is generally more useful in accounting

for macro level mechanisms. However I feel there argument can also fall down at

the micro level. The closer evidence based management gets to evidence based

medicine the more context is controlled. With clinical medicine occasionally we

know exactly what should be done but are slow to act and even prevented from

doing so for a variety of contextual reasons discussed in part one. Radical

relativism argues attempts are ultimately futile, since context and perspective

are everything. (Hantrais, 1999) I am unwilling to fully concede to this. I feel

some dynamics of complexity science apply to healthcare management. Socalled butterfly-effects, mean even small changes in context yield large

difference in outcomes; however results are determinable, to a limited extent, in

an admittedly extremely complex, non-linear fashion. Hence some macro level

concepts influence the system greatly allowing broadly predictable outcomes, as

the OECD highlight. (Gleick, 1987)

With regard to public health, Tan et al., (2005 p.43) discuss how historically

public health management was about identifying the cause of a disease usually

traced back to an acute infection. With advances in our understanding of health

todays epidemics have fuzzier boundaries being a result of the interplay of

genetic predisposition, environmental context, and particular life styles.The

limits this complexity places on management means in the short term it is also

feasible to introduce a degree of perturbation, measure small changes and

observe some limited connections. However in the long term management must

be social in the sense that consensus on broadly acceptable course of action

must be agreed upon and worked towards.

Since Willkinson and Picketts (2009) work shows equity having strong correlation

over a large range of variables in health-outcomes it be what chaos theory terms

a strange-attractor of health; strange as it cant be fully differentiated, limiting

predictability. When combined with the work of Christakis and Fowler (2007) thisgives limited insight as to social causes, a small inroad in bridging the macro-


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micro gap. Mason (2006 p.23) believes mixing qualitative methods with

quantitative structure helps us to think beyond the micro-macro divide, and to

enhance and extend the logic of qualitative explanationBy meshing or linking

rather than integrating we can develop multi-nodal dialogic explanations that

allow the distinctiveness of different methods and approaches to be held in

creative tension.Though it is positivistic to say so, I feel such approaches havemuch merit.

However, results are never neutral in the sense that they can be judged from

differing perspectives. The use of absolute compared to percentage figures also

gives rises to debate about relative attribution. In absolute terms Americans

clearly spend more on healthcare than the UK but by thinking about this in

proportion to their total earnings the difference is reduced. (Mills et. al, 2006)

Comparative analysis is rarely performed for purely academic reasons; often the

goal is for convergence toward what is perceived, and presented as best

evidence based practice. Pollitt (2001 p.491) argues we should distinguishbetween different stages of policy: discourse, decisions, practice and results;

with each requiring different research strategies; decisions being the most

straightforward and results is the most difficult. This has been evident in the

analysis; the political rhetoric is relatively easy to distinguish as were the

intentions of reform however there was much debate as to best practice and the

merits of results.

Conclusion

Part one indicated how even two fundamentally different systems experienced

similar problems in managing the health of their citizens. It was found that

increasing spending on healthcare in both systems was mainly related to our

increasing ability to consume it, particularly in the latter stages of life. Rationing

was shown to be difficult in both systems with reform often being a protracted

affair, yielding limited improvement. It was argued that many reasons the US

experiences reduced returns on investment was due to the fact their society is

less equal and coverage is not universal.

Part two briefly discussed the nature of evidence in social science and the

difficulties in controlling against context and determining causation. Pollitts

framework was found to be particularly useful in differentiating between rhetoric,intentions, actions and results and it was decided that whilst it might be possible

to adopt scientific management in the short term, particularly with evidence

based practise; in the long term management decisions must be about social

consensus. It was argued by mixing quantify with qualitative methods the value

of comparative analysis to policy makers could be increased.

Ultimately there is merit in comparing two radically different systems, mainly

because it helps highlight universal problems in managing healthcare, regardless

of whether the goals are libertarian or egalitarian. However, since health

correlates much more with equality than cost, I cant help but wonder if this

analysis has been comparing the wrong divide. It seems somehow fitting to end


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with words from a Conservative Prime Minister: Two nations between whom

there is no intercourse and no sympathy; who are as ignorant of each others

habits, thoughts, and feelings, as if they were dwellers in different zones, or

inhabitants of different planets: the rich and the poor. (Disraeli, 1845)


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NB The Title, unreferenced, is the opening line from William ShakespearesRomeo and Juliet. 1597 and this essay was largely written before Obama,

thankfully, managed to pass a health care reform bill, but obviously before

any papers were available analysing its effects.

Appendix

HTA- Health Technology Assesment

NICE- National Institute for Health and Clinical Excellence

QAF- Quality and Assessments FrameworkOECD-Organisation for Economic Co-operation and Development

PCT- Primary Care Trusts

U.S. state abbreviations:

Alabama: ALAlaska: AKArizona: AZArkansas: ARCalifornia: CA

Colorado: COConnecticut: CTDelaware: DEFlorida: FLGeorgia: GAHawaii: HIIdaho: IDIllinois: ILIndiana: INIowa: IAKansas: KSKentucky: KY

Louisiana: LAMaine: MEMaryland: MDMassachusetts: MAMichigan: MI

Minnesota: MNMississippi: MSMissouri: MOMontana: MTNebraska: NENevada: NVNew Hampshire: NHNew Jersey: NJNew Mexico: NMNew York: NYNorth Carolina: NCNorth Dakota: ND

Ohio: OHOklahoma: OKOregon: ORPennsylvania: PASouth Carolina: SC

South Dakota: SDTennessee: TNTexas: TXUtah: UTVermont: VTVirginia: VAWashington: WAWest Virginia: WVWisconsin: WIWyoming: WY

Willkinson & Pickett (2009) graphs are created from statistical sources andmethods detailed in full at:
http://www.who.int/whr/2000/en/http://equalitytrust.org/http://www.who.int/whr/2000/en/http://equalitytrust.org/


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http://www.equalitytrust.org.uk/why/evidence/methods [Accessed 25th March

2010]

The site states:

In our book, for all of our international comparisons, we use the 20:20 ratiomeasure of income inequality from the United Nations Development Programme

Human Development Indicators, 2003-6. As survey dates vary for different

countries (from 1992 to 2001), and as the lag time for effects will vary for the

different outcome we examine, we took the average across the reporting years

2003-6. For the US comparisons we use the 1999 state-level Gini coefficient

based on household income produced by the US Census Bureau. Sources:

United Nations Development Program. Human development report. New York:

Oxford University Press, 2003, 2004, 2005, 2006.

US Census Bureau. Gini ratios by state, 1969, 1979, 1989, 1999. Washington,DC: US Census Bureau, 1999 (table S4).
http://www.equalitytrust.org.uk/why/evidence/methodshttp://www.equalitytrust.org.uk/why/evidence/methods


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