In the August 29 issue of the New Yorker, Malcolm Gladwell makes so many errors in discussing national health insurance, it’s hard to believe the piece was reviewed by an editor. To fisk it all would mean to delete it.
Arnold Kling does an excellent job junking Gladwell’s misguided notion of “moral hazard” (and the notion that American health care economists are mistakenly “obsessed” with the idea).
And Slate’s Mickey Kaus nicely rips Gladwell’s claim that health care copayments are a bad idea.
But Gladwell begins his piece discussing how the lack of dental care among the poor demonstrates the need for socialized medicine.
“People without health insurance have bad teeth because, if you’re paying for everything out of your own pocket, going to the dentist for a checkup seems like a luxury.”
Curiously, he does not follow up and tell you whether this method succeeds in producing better teeth in the UK, Canada, or elsewhere.
HT: Instapundit
In the NHS, dental care is free at the point of use. Almost all dentists in the UK are self-employed and see both NHS and private patients. As of 2002, 22,194 general dental practitioners worked in Great Britain, or 0.386 dentists per 1,000 population. According to 1998 OECD data, this figure is low compared to many other countries. For example, the corresponding figures of are 0.5 for Austria, Canada, Italy and Poland, 0.6 for the Czech Republic and the United States, 0.7 for Belgium and Germany, 0.8 for Norway and 0.9 for Finland. The 1995 figures are 0.5 for Denmark, Hungary, Netherlands and Switzerland, 0.7 for France and 1.0 for Greece and Sweden.
The shortage of dental care in Wales, for example, was described by a local health spokesperson thus: “He likened the queues to register for NHS dentists to “those queues outside food shops in Eastern Europe during the dying days of communism”, adding: “This is an absolute disgrace and this small amount of cash will not solve the problem”
In 2003, when a dentist in Wales announced that it would accept 300 NHS patients, some 600 queued to get on the list. After waiting 11 hours, some 300 were turned away. Money quote: A few hundred miles east, in Essex, a friend has been told that she can only become a national health dental patient “if someone dies”.
Indeed, due to the “continuing lack of access to NHS dentists ” the private dental care market in the UK is large and growing. As a result of low reimbursement, many NHS dentists are converting to private practice. The value of private dentistry grew from £289m in 1994-95 to just under £2bn in 2001-02. According to the New Statesman article above, the “most recent figures show that just 48 per cent of the population in Britain is registered with an NHS dentist. Roughly 1.5 million fewer people have access now than in 1998, and five million fewer than in 1994.”
According to the WHO, inequality in oral health appears to be universal, even in countries with a long tradition of oral health promotion, preventive oral care, outreach dental health services and high utilization rates. In Denmark, for example, socioeconomic status greatly affects the risk of dental caries in young children, despite the fact that they are covered by comprehensive public oral health programs. Multivariate analyses show more frequent dental caries in cases when sugar consumption is high, regardless of payment type.
Finally, dental care is not covered by public health financing in Canada, France, Australia, or Austria.
Gladwell also repeats the common error that the US health care system is fundamentally a free market with its “ruthless commitment to efficiency and performance “. Although more competitive than in many nations, the current US health care system does not operate as a free market. According to OECD data from 2001, health care accounts for 13.9% of GDP, and 44.6% of health care expenditures in the US were paid by public systems such as Medicare, Medicaid, the VA and other military care, public health clinics, and other programs. However, when one includes tax subsidies and public employee benefits, the current tax-financed share of health spending is nearly 60%. Government mandates and regulations add another layer of public expense to health care in the US. From 1970 to 1996, state and federal mandates increased 25-fold, an annual growth rate of 15%. It is estimated that 15 percent of the total increase in health care costs (representing $10 billion in 2001) is attributed to government mandates and regulations. Indeed, the Health Insurance Portability and Accountability Act (HIPAA) alone is expected to add billions of dollars in new compliance costs to the healthcare system. A recent analysis estimates that the 12 most common mandates together increase the cost of insurance by as much as 30%. Moreover, individual state insurance regulations serve to restrict the number of providers able to operate in their States, further limiting competition. Not surprisingly, as many as one in four Americans lack health insurance because of benefit mandates.
No, not a free market at all.
Gladwell’s article is so wide of the mark, its conclusions unsupported by evidence, and beset by internal contradictions, one wonders whether he suffers from “bad rapid cognition” .
Kevin,
Agreed, this piece was terrible, he didn’t even mention rationing by universal plans. The biggest moral hazard in US healthcare is politically mandated nonessential coverage.
Doesn’t the mere image of Austin Power’s teeth speak volumes about the quality of dental care under the NHS?
Help may be on the way:
http://www.cato.org/pub_display.php?pub_id=4363
jrdoll,
100% agreement. Like the delivery system of k-12 education, medical coverage has been destroyed by moral hazard of politics.
Iirc The New Republic also published a refutation of Cohn’s article against health care reform. I forget who authored it.
Is it possible to create health care insurance groups that cover, say, all retail workers in the US? Or all agricultural workers? Food workers/cooks/? Waiters? How much would that decrease insurance costs among groups most at risk for a lack of insurance and who might have trouble affording say the plan Wal-Mart offers because they pay so little and the plan costs so much?
Re: “…and who might have trouble affording say the plan Wal-Mart offers because they pay so little and the plan costs so much?”
The problem may be better solved if we undo the legislation that prohibits cheap catastrophic coverage and mandates expensive first dollar coverage. A real choice of plans to meet the evolving needs of individuals and families would be affordable.
People have been conditioned by comprehensive plans of the past that demanded no patient accountability. Costs rose astronomically as a result. There are two ways to approach medical costs: personal control, or control by an outside authority. The latter describes most insurance and government third party payors. I think I can spend my money better than they can.
Here in Illinois, they mandated liability coverage for all automobiles. The argument was all cars should pay for damage. This misses the point, insurance is to protect personal assets, not others. By forcing people without assets to protect, created a pool of assets, insurance, to acquire. Liability rates are higher today than they were before.
After reading all the stories about the chronic shortage of dentists in the UK in recent years, I thought I was doing well having a good NHS dentist in Nottingham. But eventually that practise went private as well. I now pay a monthly fee for an insurance scheme. The dentist told me that they just couldn’t give proper service with the NHS rules — they had to fit too many people in. NHS dentistry in Britian is becoming more and more of a joke.
BTW the insurance scheme is fine — £15 a month, which is a little expensive, esp. if you’re on unemployment benefit, but very little for anyone with a job. (Australia, I should note, where I grew up, has private dentistry, but poor people can always get important work done at a state hospital, like when I broke a tooth in a student water-fight. And Australian teeth are miles better than British ones, although this is probably due largely to the flouridated tap water).
Well, I’ve been saying this to anyone who would listen (and to many who wouldn’t) for the last 30-something years, ever since I spent most of 10 years working as a medical technologist/hematologist in cancer research, and I say it still. If we could do one and only one thing to restore sanity to our health care system, we would sever the luantic connection between health care insurance and employment. I doubt it’s politically possible, but it would go far towards removing the layers of dislocations that currently make insurance and receipt of health care such a terrible burden. People should expect to pay for ordinary health care. Have a sore throat? Go to the doctor and pay him for his services. There’s no reason why people should only be responsible for a co-payment, and somebody–ANYBODY–else should pay for all the rest. As for Mr. Gladwell, he’s just full of soup.
Good point, Kevin. Putting my financial planning hat back on, most health (& dental) plans violate one of the most basic rules on insurance, which is that you should only insure the losses you cannot absorb. For example, I carry the highest available deductible amount on my car insurance, since I can take a $1,000 loss without much pain. However, I also carry an umbrella liability policy against judgments over $1 million, since that could wipe me out. Similarly, any public insurance plan should prevent your being bankrupted by a cancer diagnosis, but not pay for a case of the sniffles.
Betsy, the employment link is the result of a previous government intervention in the market, by which employers were prohibited from bidding for workers by raising wages. So it’s even worse than you think: universal health care coverage would be a government intervention to cure the unintended secondary effects of a previous intervention. And so ad infinitum.
Mitch,
Thanks for your comment. I know where the link came from. It was a bad idea then, and it’s a worse one now. My husband is a musician, and we’ve spent plenty of time unable to get health insurance, largely because as an independent contractor he was unable to get the same tax advantage for it that an employer gets for group plans. The perversities and disincentives are awful, and they don’t end there. Third-party payments for trivial expenses make no sense whatever. I could go on and on. If we did away with the employment link, lots of other things would follow to the chopping block, that’s my guess. Coverage mandates, over-use (I was always astounded at the number of normal test results we got in the clinical lab I worked for before I went into cancer research; you know something’s wrong when sophisticated tests yield something like 80% normal results–someone is justifying expensive equipment with third-party dollars, just to name one factor)–well, you see where it goes.
As my wife the doctor explains, health insurance is less about insuring your health in cases of emergency than it is an expensive payment plan for health services you are almost never likely to use.
http://www.architectureandmorality.blogspot.com
I am British & have lived in the US since 1994 & have not been to an American dentist since my first 3 months here when I needed a filling. 750 dollars later & a little wiser I had a visit with my British dentist back home. The “temporary” filling that the Amercian dentist put in was declared to be permanent & 11 years later is doing well. I get a check up every time I am home. Sometimes a filling along with the usual cleaning. For the cost of a dental visit & treatment in Cincinnati I enjoy a vacation in Ulster & a dental visit! I am the happiest customer he has. The other folks in the waiting room cannot get over my cheerfulness at writing a check for 20 pounds or 34 etc. The most I have paid I think was in the low forties. I love the States, support the Presidents efforts in Iraq, but have a real laugh at the “we have the best of everything” attitude from some folks in the States. Ever heard of Cadbury Dairy Milk, Mauds Ice Cream, front loading washers, Smart cars, Manchester United, 5 nations rugby etc etc. Yes America is an incredible country & I have awesome neighbours & friends here but some folks really need to get out a little more…
Fritz, I am puzzled by your comment. Do you think it is OK for those with no assets to drive without liability insurance? When they damage your car, or possibly injure you, what recourse will you have? Sue them and get an unforceable judgement, and pay the damages yourself? I’m not a nanny state advocate by any means, but the law requiring libility insurance for drivers is one I can support.
I thin it’s a disgrace that all Americans do not have National automobile tire replacement coverage. Why should the well-to do ride on Michelins? While adding dental coverage, we should include vacations, housing, counseling, massages, and everything else because they certainly can’t make the “right choices” Oh, just don’t tax me for this. Francois
Dave, you are describing the burgeoning medical tourism business rather well.
According to salaryexpert.com, “real, area specific, survey data” show that a dentist working in Omaha, Nebraska earns “an average salary of $95,328. Half of those in this position would earn between 70,133 and 113,221 (the 17th and 67th percentiles). These numbers are derived When benefits and bonuses are added to this salary, the average total compensation for this position would be $113,273.” Payscale.com shows the median salary for a dentist in Wisconsin at $90,080.
Apparently, the pay is not much different in the UK, however. Private practice dentists there make $91,490 (in US$), although government dentists pull in just $54,894 (hence the NHS dentist shortage).
So why the price difference? Anyone? Anyone?
That is, why does Dave pay less for dental services in the UK if salaries are no cheaper?
Wrong data? Cheaper fixed costs? Someone’s lying?
The advent of Health Savings Accounts is a step in the right direction. By putting decisions and medical dollars back into the hands of the user, they force people to be more judicious in there health care consumption. As opposed to a straight, high-deductible plan, the tax treatment of the “annual deductible” makes them even better. I am surprised that I don’t hear about more companies shifting to this type of coverage, as it seems to be a benefit which could be administered at a substantial savings over traditional plans, while providing much more flexibility to employees and offering the same or better coverage.
From my long of tooth prespective, our troubles in the U.S. started in the 50th when individual income taxes were so high that employers started to offer no cost dental plans instead of pay raises.
Of course you’re happy, Dave. The British taxpayer is paying for your “dental holidays”.
One thing you may not be aware of is that Health Savings Accounts are available as of January, ’05 and allow you to break the link between employment and health insurance. You pay your premium ($300 for a family of 5 with a $5k deductible from BCBS in my case) and have the right to deposit an amount equal to your deductible into a tax advantaged account. It’s pre-tax money and you can spend it on health care as you will. It rolls over so if you get something catastrophic later on, you’ll be able to survive even the exhaustion of your insurance.
If/when we get associational health care accounts, I expect that we’ll be moving to that and getting insurance via our church or other stable affiliation to take advantage of group rates.
Scott:
Re: taxpayer-supported ‘dental holidays’.
How does that work? Are all fees supported publicly? Or just those that participate in the NHS?
One thing about TM’s comment, if you were to exhaust your lifetime insurance cap, (mine is set at $8,000,000), your accumulated amount in the HSA would likely be insignificant in the scheme of your healthcare, even if compounded over many years. However, any money compiled pre-tax in the HSA, having rolled over year after year, can be withdrawn at a later date for expenses other than health care, subject to a 10% penalty and regular tax rate. This really makes the HSA a great alternative, especially for the self-employed. One of the points of my earlier post, though, was that an employer could potentially provide health care by paying the dramatically lower premium of a high-deductible policy, and provide the employee with the maximum calendar-year HSA contribution for deposit, and STILL get off with less expense than traditional insurance. While being a money-saver, it would also provide an incentive for the employee and their family to use those health care dollars much more judiciously than if every expense were just getting “picked up” by the traditional insurance plan. THAT’S a huge source of waste in the current system, over-use of medical resources because they are perceived to be “free” if your insurance pays 100%.
Kevin,
Private dental work in the UK is not subsidized. You only get the tax-payer support if you have an NHS dentist. On the NHS the basic stuff is free, and you pay a nominal amount for things like white (as opposed to mercury) fillings, like £30-40.
I presume Dave was talking about going to an NHS dentist — private dentists here are not cheap. Maybe American dentists are really, really expensive, but $750 (ten years ago) for a filling sounds like it wasn’t a standard job, and if he’s having non-standard filling jobs done in the UK privately, we aren’t talking £40. I’ve had private work for difficult filling jobs and caps, and we’re talking £400-800 a job.
as an independent contractor he was unable to get the same tax advantage for it that an employer gets for group plans
That is, however, no longer the case; a self-employed taxpayer may deduct medical insurance premiums on line 31 of Form 1040 (2004 version of the form). That has been the case since 2003, I think. I do it myself.
Dave,
Last time I looked, Manchester United was an American owned team. :)
I can’t believe that no one here is pointing out to Dave that $750 for what I assume was a regular silver filling (even with an exam, cleaning, etc.) is highway robbery.
Even today, a quick internet search suggests that normal filling prices are in the $250-$350 range. Unless the price of silver was particularly high 10 years ago, one would imagine the price of fillings back then would’ve been less than this.
For reference: when I had my wisdom teeth out (around 1991), I went to see a senior oral-surgeon (if I remember right, a professor at New York University’s school of dentistry) with an office overlooking Central Park and $750 was the charge for removing 2 wisdom teeth.
(Though, as an aside, while visiting Canada I had a cavity in one of my remaining wisdom teeth and I was told that I could have the remaining pair of wisdom teeth removed, instead of getting a filling, for nothing or next to it…but I opted to get the filling and later have them out in NYC).
Of course, if Dave got a gold filling, all bets are off, since those can cost $1200, but I don’t think gold is used for “temporary fillings” since they are known to last several decades, so I’m assuming that this is not what Dave got.
That’s weird that they would remove only 2 wisdom teeth but not all 4. I’d think they would want to get them all out at once to make it easier. It’s probably cheaper in the long run as well. That’s what I had.
Whenever something is paid for by an insurance company, the cost of that thing is increased by the cost of the work done by the company. In other words it may cost a $1.15 to buy a dollars worth of health care through an insurance policy.
Re: Dave the Brit (about half way up the comments) does seem to have been ‘taken for a ride’ by a dentist. Single filings for myself, are now US$70, back in ’94, when he had his for the incredible US$750, it was about US$55, and lower in the previous years.
I would also say this, sadly, that the UK immigrants to the US that I have known, are just really full up on critiques of US medical practices. They continue to complain about this many years after coming here. I include WWII ‘war brides’. This might not be noticable, the USA not being perfect and all, but that’s not the end of the whining.
Complaints about the political system here dominate their ‘conversations’. Ditto complaints about the progression of the immigration system as it applies to them (British citizens having the very LEAST problem of all nationalities, save maybe Canucks). The whining spreads out from there in many directions.
There is something about all this ‘critique’ of former Brit Americans that does not compute. I have lived in Suffolk, known many ‘blokes’ in many parts of the world, but this is just a matter of NO understanding to me. Can anyone account for this, or am I just unlucky in my Brit aquaintances??? G
Gerry, I think all Europeans have an inferiority complex. Brits, outside of the Left don’t hate America.
The fact is, Americans win just about every time and Europe’s a poor third much of the time.
But Brits like to complain and they’d do it no matter which country they were in.
Its not actually negative often, its just their way of talking. They like discussion, argument, and intellectual challenges. They’re waiting for you to come back with an interesting response.
What drove me crazy in America was it was so hard to get a good argument going, I really missed that. People either agreed or disagreed, but generally wouldn’t discuss much.
Brits often converse through polite disagreement, whereas Americans tend to shy away from legnthy, detailed argumentative discussion. That’s my experience anyway.
Dentistry
The reason there are so few dentists in the UK is that they do not do a lot of unnecessary work, as their main income comes from insurance.
There is a shortage, which will probably go in time.
But British people do not generally have to worry about thousands of dollars of bills arriving for unnecessary work, as do Americans and people in other countries.
Well, the $750 is why I presumed Dave was having something advanced done, not a normal filling, and why I presumed he must be getting his British dental work done on the NHS, not by a private British dentist, because they don’t charge £30-40 for advanced work (or for anything, in fact).
If he was getting his work done on the NHS then his comparison was ridiculous anyway, because the cheapness of his treatment was a result of the fact that it’s been paid for through higher taxes.
What puzzled me was that I presumed every British person knew this — even the most dim-witted and resolutely left-wing of my friends/acquaintances is aware that the government/taxpayer is paying the NHS bills — so I though that maybe he was making some more subtle point. But I can’t see what.
tt wrote:
>The reason there are so few dentists in the UK is that they do not do a lot of unnecessary work, as their main income comes from insurance.
>
>There is a shortage, which will probably go in time.
>
>But British people do not generally have to worry about thousands of dollars of bills arriving for unnecessary work, as do Americans and people in other countries.
This is all wrong. Ignore it.
tt wrote:
But British people do not generally have to worry about thousands of dollars of bills arriving for unnecessary work, as do Americans and people in other countries.
Before you get billed for unnecessary work, you have to agree to have the work done. Is it too much to ask patients to think critically about such things, as they do for other purchases? My dentist once recommended expensive work that I thought was unnecessary, so I changed dentists. Who are these Americans who submit to whatever course of treatment the dentist suggests?
Can i suggest that before attacking my article, you first read it? I never once say that I’m in favor of dental insurance. I merely point out that people without general medical coverage can’t afford to pay for preventative dental care. And nor do I saw that the health care system is an efficient free market. I say–quite the opposite–that the amazing thing is that a country that is otherwise committed to economic efficiency would tolerate such a grossly inefficient health care system. Trust me. It’s not that hard to read a 4000 word article.
Anecdotal evidence that probably doesn’t prove anything but is interesting.
My impression is not that we don’t read articles, but that we start with different assumptions. Gladwell probably weights “Several years ago, two Harvard researchers, Susan Starr Sered and Rushika Fernandopulle, set out to interview people without health-care coverage for a book they were writing, “Uninsured in America.” They talked to as many kinds of people as they could find, collecting stories of untreated depression and struggling single mothers and chronically injured laborers—and the most common complaint they heard was about teeth.” more heavier than we would.
He dismisses “moral hazard”, but we are more likely to want to consider the long-term effects.
Of course, the current system does seem full of “moral hazards.” For instance, emergency rooms have become points of socialization (this year I’ve ended up in them twice and was struck by the level of familiar chatter among the other patients). And one of my ems students claimed that there were two prices on some equipment – an exorbitant one for medicare and medicaid, with a lower one for others.
Most of our local doctors (this isn’t considered, I suspect, the most desirable of locations) are from third world countries – many displaced Indians that came here directly from places like Uganda. Are we outsourcing medical education because our schools teach so little science or because the med schools have developed monopolies and intend to keep them? (I don’t know – am just asking.)
Problems can arise because of a language barrier.
Malcolm: I felt this deserved a detailed response. As a result, I have created a new post. Thank you.