Source: jpmorgan.com

It’s no surprise that those issues which become political can inflame emotions. Hence, the current crisis in healthcare in the United States – and what precisely should be done about it – certainly has tongues wagging.

The level of polarization in public and political opinion is reflective not so much of different basic viewpoints since everybody wants a healthier nation for cheaper. What it does reveal is that this issue is enormously complex: Even people at the highest levels of government don’t seem to be sure what the root causes of the problem are, never mind how to solve them. As things stand,  a number of troubling trends and statistics are as clear as they can be. For one, health care costs are rising faster than tax revenue. In addition, the value received for this simply isn’t what one would expect.

 

America Versus the World

Source: jpmorgan.com

America, privately and collectively, spends 250% of the OECD average per capita on health care roughly half of which is funded from public coffers. The OECD organization roughly represents the developed world, with some other members being Chile, France, Israel, and Japan. Although metrics such as average life expectancy can be influenced by numerous factors, making it difficult to quantify and compare the relative level of care received, it seems that America just isn’t receiving as much doctor as per dollar.

 

Capitalist Switzerland chose a (mandatory) private insurance model; At third most expensive on the OECD list, it spends only 64% as much per person. Japan weighs in at barely 37%, despite having a life expectancy of 84.7 (79.8 in the U.S.). Most of the others have what can be described as a single-payer system, a health industry largely under direct government control or some other kind of socialized model. There is something to be said for this in principle: poor health costs the economy and society monetarily as well as in other ways, not just the people are affected so government spending on this problem benefits the country as a whole. At the same time, everyone gets sick roughly equally, regardless of social class, but this hits the poor disproportionally. On a more practical level, a more left-wing approach allows better economies of scale on a national level – something which has been explicitly avoided in the U.S.

 

The Japanese Model

Source: japantimes.co.jp

Although having a history spanning back to the 8th century, a long period of self-imposed isolation meant that Japan was still a feudal country when the modern world arrived on its doorstep, starting in 1854. One of the results of this is that the Japanese approach to law, technology and many other aspects of economic life was determined partly by conscious decisions, instead of simply evolving from social pressures. As a country, it is now a unique blend of traditional outlooks and modern developments. In the sphere of healthcare, this has resulted in a universal plan funded by public contributions and means-determined premiums.

 

Introducing the Japanese system of healthcare in the U.S. will cause a revolution in more ways than one: Insurance companies are banned from making profits, Doctor’s fees are capped, and hospitals by law – are owned and managed by doctors who work there. The average Japanese sees a doctor more than four times as often as his American counterpart, stays in hospital three to four times longer and can generally choose any doctor he wants and even make an appointment for a day of their choosing. Nobody goes bankrupt due to illness or injury.

 

Essentially, the Japanese approach to the medical industry can be described as corporatist: Doctors, hospitals and drug companies are listened to carefully. But after the government has decided what prices and practices are allowed, little flexibility is possible. Despite being highly respected, Japanese doctors take home less than their counterparts internationally, nor are they allowed to enter what American doctors would consider private practice. Insurance companies are similarly limited: New clients cannot be denied coverage based on previously existing conditions or negotiate rates. As a plus, this reduces the cost of administrative expenses – making up a full 20% of total healthcare costs in the United States – by a factor of four.

 

Trouble in Nippon

However, all is not rosy across the Pacific. Low birthrates and, ironically, outstanding medical care have resulted in one of the oldest populations in the world. With fewer people entering the workforce and paying taxes, the system may not be able to survive in its current shape for many decades longer. In addition, healthcare simply costs more as people pass middle age. Hospital capacity is already under some strain, as routine cases and critical care receive similar levels of attention.

 

Although Japan has a robust pharmaceutical industry, the lack of market pricing locally may put this at risk. This can happen in the future if the government reduces the price it is willing to pay for certain drugs beyond the point at which continued research and development is possible. At the hospital end, something will also have to give eventually: Advances in medical technology may make it impossible to continue purchasing the best possible equipment and materials, leading to doctors having to make tough decisions about how budgets can best be spent.

 

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The United States remains the only large developed country without a system of universal medical care. While the winds of change seem to be blowing, nobody seems quite sure in which direction, nor what the implications will be. On one side of the ocean, we have a system devoted to unrestricted profit, on the theory that the best service provider will be the one that provides the best care, most cheaply. On the other hand, we see an example of a system that places good care for all patients first, and competitiveness far second. Both extremes seem to be in trouble. We) can only hope that the middle way eventually chosen includes a degree of preventative care.