“Beautifully Covered”: What it’s Like to Live in a Country with Socialized Health Care

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Vienna General Hospital in 1784 (source)

While the Grand Old Party kicks the can down the road—and seemingly ever farther from the then President-elect’s promise of “insurance for everybody“—amid turmoil about how much health care to strip from relatively many Americans to pay for a tax break for relatively few Americans, I figured there would be no better way to honor the 4th of July than to celebrate the freedom of living in a country where no political party opposes the goal of universal health care.

That probably sounds obnoxious on this tender occasion, but I’m actually not trying to gloat. Instead, I offer the following in the spirit of expanding horizons and to provide food for thought for what I hope will be a continuing and constructive debate about health care reform in the United States. I should also note that my experience hardly makes me a policy expert, and I don’t have the foggiest idea about what would and wouldn’t work given the lay of the land in the US. That will be for you to decide!

Introduction

First things first. I live in Austria, a country about the same size as South Carolina with a fairly homogeneous population the size of Virginia’s. Health care is integrated into the overall social security system which is based on the “solidarity principle.” This basically means that all who can contribute must contribute and that all who have needs will receive the best care available regardless of their individual risk.

In practice this means that everyone with income of at least EUR 425.70 per month (capped at EUR 4980 per month) pays a fixed percentage in social security contributions. These percentages vary somewhat depending on whether one is self-employed and what kind of work one does if one is employed. For most employees, the total social security contribution amounts to 37.75% of gross wages, split between the employer (20.63%) and the employee (17.12%). Of that, 7.64% (split almost evenly between employers and employees) is health insurance. The self-employed pay 27.68% of their revenue with 7.65% earmarked as health insurance.

This Pflichtversicherung or statutory insurance is mandatory—one is not able to choose whether to pay it. If you are an employee, your social security contributions are automatically withheld. If you are self-employed, well, I would rather have the IRS come knocking on my door than the statutory health insurance fund—just like the Royal Canadian Mounted Police, they always get their man, and the 9.3% fine makes the ACA’s 2.5% tax look like chump change.

So for people who hate mandates, well, you’re not going to find a free lunch here. Then again, a mandate of some kind is the key to providing comprehensive health care to all (well, not quite, but close; more on that later) at a reasonable price, whether in Austria, the United States or elsewhere—the able-bodied must contribute if the system has any hopes of being sustainable. Nevertheless, there is a world of difference between the philosophical underpinnings of the Austrian mandate and anything the US has come up with so far, including the ACA, that I believe helps the medicine go down.

Let’s compare and contrast (based on the information here). On the left we have the mandatory insurance required by the solidarity principle; I’ll call it the solidarity mandate. On the right we have an ACA-style mandate designed to discourage healthy individuals from underinsuring themselves. I’ll call it the individual mandate.

Solidarity Mandate  Individual Mandate
Legally defined benefits apply to everyone; coverage is immediate with no exclusions. Individuals must find their own insurance policy and coverage is often subject to waiting periods or exclusions.
No risk assessment! Everyone who is covered is entitled to the same benefits regardless of age, sex and pre-existing conditions. Risk assessment! Coverage can be limited or denied for risks relating age, sex and pre-existing conditions.
Coverage with no additional premiums for close relatives (e.g., spouse, children, step-children, grandchildren, foster children) Premiums for each insured person
Contributions are a fixed percentage of income and do not fluctuate according to risk; no coverage limits. Premiums and coverage are a function of individual risk and benefits may be capped.
Straightforward coverage: all benefits are included in one transparent deduction. Varying premiums, co-pays, benefits, etc.
Care is an enforceable right. Care depends on the terms of the contract.
Not for profit For profit
Relatively efficient
(2.5% administrative costs)
Relatively inefficient
(8% administrative costs)

I’m open to the possibility that I’ve missed advantages of ACA-style mandates; if so, make the case in the comments below! I’d be grumpy too if I lost a plan that had worked pretty well and had to buy crummy and expensive insurance in its stead. But I actually feel pretty good about contributing to the Austrian system, though of course it too is not without its shortcomings (more on that below). But first a few more background details that strike me as relevant.

The solidarity principle applies across the board, which means that medical school is, get this, free (assuming you are a citizen and you complete your studies within the minimum time required plus a grace period of two semesters)! If you choose to take your time, you contribute EUR 363.36 per semester to the cost of your education. Since foreign students are not expected to stick around as tax payers after they complete their education they pay more: EUR 726.72 per semester. Doctors here might complain about not being reimbursed enough for their services, but being able to graduate from medical school without six or seven figures of debt put them ahead of the game at least initially in comparison to their American peers.

Also, it’s worth noting that Austria doesn’t have a single payer to manage all of the statutory insurance contributions. Instead there are:

  • nine regional entities for each of the nine provinces
  • six entities that are associated with formerly public companies (historical relics, for the most part)
  • one social security institution for the self-employed
  • one social security institution for farmers
  • one social security institution for civil servants

Total: 18

You have no choice about which entity covers you—it depends on either your profession or your residence with your profession getting first dibs. It is unlikely that this is the most efficient way to run things, but administrative costs are still quite low (see table above), and the lack of choice can be chafing (see shortcomings below).

Then of course there is a private insurance market. Because by law the same level of coverage ought to be provided to all, private insurance marketed to those who are already covered by statutory insurance usually promises a more pleasant stay or coverage for recreational accidents. For example, someone with private insurance might get a hospital room to themselves rather than having to share one with other patients. And since according to a strict interpretation of the law only accidents that happen at or on the way to or from work are covered by statutory insurance, you might get private insurance if you are a weekend warrior type and want to rest assured that a helicopter will come pick you up off the mountain if you get in over your head. Private insurance is also available to those who are either not eligible for statutory insurance, such as tourists and illegal aliens, or who may opt out, such as diplomats. Thanks to everyone else keeping costs down, however, even the privately insured (and uninsured) enjoy relatively low premiums and out of pocket costs. So if you like the freedom of American-style care but don’t like the prices, come freeride over here.

Access to the system is simple and the administrative burden for the individual is light. Upon being registered by your employer or signing up with the entity for the self-employed, you receive an insurance card that is scanned at each visit to the doctor.  That’s pretty much all the paperwork you have to worry about. There’s no payment at the point of service and having to field bills or file a claim is a rare occurrence. Prescriptions cost the patient an extra EUR 5.85 each, though this is capped and under certain circumstances waived.

You are free to choose your own doctors, though there is a gate-keeping system in place. Except in emergencies, visits to the doctor always begin with a visit to a general practitioner; this doctor can be changed under normal circumstances only one a quarter. The GP either takes care of you right then and there or refers you to a specialist of your choosing, though the GP may make a recommendation. If the specialist can’t help, you may be referred to another specialist or regional clinic. Some health insurance funds also have in-house health centers with various specialists under one roof to keep costs down and increase patient convenience. Public and private hospitals, rehab and geriatric centers, universities, etc. also play various roles in the national health care system.

You can wait to go to the doctor when you feel sick and/or you can take advantage of an annual physical to identify problems before they become acute. Women are covered when pregnant and usually spend four (!) days in the hospital after giving birth.

My Experience

So what does all this look like for a regular schmo? Since my wife and I are both employed our child is covered by us both. So my wife can take her to the doctor on her insurance and I can pick up the prescription on mine. Or vice versa. If my wife were to lose her job, she would be seamlessly covered by my insurance by virtue of being related to me (see the table above). Once the relevant authorities are informed about marriages and children, all switching back and forth is automatic. It is truly an administrative marvel.

A couple of anecdotes. A few years ago I injured my knee slipping down some icy stairs while running in the wintertime. As I mentioned above, sports-related and other recreational accidents are not covered, only workplace accidents are, but in practice the distinction is a difficult one to make. So I hobbled in to the GP and he figured nothing major was wrong, I should just give up dreams of becoming a professional soccer player, take it easy and not worry about it. But my knee still didn’t feel quite right so after a few weeks I went back and asked if it was possible to actually, you know, look inside my knee. Well, sure, I could have an MRI but I would need to get a second opinion from the regional entity itself (gatekeepers not only keep hypochondriacs at bay but also doctors with fast and loose prescription pads). So I went down to the neighborhood branch of the regional entity, took a number and waited 20 minutes or so. A doctor took a look at the prescription and asked if I’d hurt myself. Indeed, I replied. Ok. You’re approved. It took all of 1 minute. Then I went to the closest lab that offered such services, made an appointment and a few days later had a picture of my knee, which I took to a specialist who commenced treatment. At the end of the year I received a statement of the services I’d consumed during the reporting period. Total cost to the regional insurance entity for the MRI: $250. I paid nothing beyond the usual contribution deducted from my wages.

On another occasion, our daughter became ill on Christmas Day. We were visiting relatives in the countryside far from our home and regular pediatrician. Most doctors are not in the office on holidays, of course, but there is a rotating roster of doctors who are on duty during holidays, weekends and at night. We drove 20 miles or so to see the one on duty who prescribed medication and, if things didn’t get better, an ambulance ride to the nearest hospital. Our daughter’s condition worsened through day and evening and so around 10 pm we called a nationwide hotline for medical advice, they advised a hospital visit and shortly thereafter an ambulance arrived and took the three of us to the nearest hospital (50 miles away). Upon arriving we were seen within fifteen minutes or so, prescribed a different medication and sent on our way again. The next day our daughter’s condition didn’t improve, so we went to a different doctor on duty that day (still on a holiday schedule) and received a third medication that finally helped. Later we received a statement for what that adventure cost the insurer(s). I don’t remember all the details, but I do recall that the 50 mile ambulance ride cost about $50, though it was driven by Red Cross volunteers, which no doubt helped keep costs down. The miraculous thing about all this is that even during a major holiday far from home, medical care remains just as available and free of charge at the point of service as it is at home and with no additional administrative overhead for the patient—we simply show our insurance cards and the wheels of health care are set into motion.

Shortcomings

Despite the objective of universal coverage and provisions for students, the unemployed, retirees, the poverty-stricken and refugees, there are gaps: those who are in the country illegally or who are employed under the table are simply not eligible, for example. Then there are people in transition like those who have graduated but haven’t found their first job yet or the recently divorced who were covered by virtue of their spouses but aren’t yet employed themselves or receiving other means of support. Then there are those who refrain from availing themselves of services provided to the poorest out of shame or on principle. The total number of uninsured that I’ve seen bandied about over the years is 100,000.

The public insurance entities have a fixed number of slots for their networks and doctors compete for a contract (or not; they are free to open a private practice or throw it all to the wind and play guitar in a cruise ship cover band, just like any other private citizen). While a contract will guarantee a steady stream of patients, the rate at which they are reimbursed varies from one public insurance entity to another and can be quite low.

This means that not every doctor can or will accept statutory insurance, and it can change from one quarter to the next, which can be disruptive when a doctor you’d been seeing for years will only continue to see you as a “private,” i.e. cash-only, patient. For example, my wife’s dermatologist will accept her statutory insurance but not mine. If I want to see her, I have to pay out of pocket, though I can submit the bill for reimbursement. My regional carrier reimburses up to 80% of its own reimbursement index, which last time amounted to about $18 of a $100 bill. At those kind of rates, volume becomes an important consideration for doctors who see regionally-insured patients, which can mean long waits and brief consultations, e.g., you might wait an hour and then be hustled out the door after five minutes with the doctor.

Another issue, though not unique to socialized medicine, of course, is the availability of resources. Doctors and hospitals cluster in more densely populated areas, potentially underserving rural areas. At the same time, there might a shortage of resources in urban areas too. An acquaintance, for example, who was diagnosed with cancer, was given a waiting time of six months for the imaging tests she needed for treatment in the Vienna area. However, in another province where she had family, a hospital was able to do the scans right away and another hospital in yet another province, where she also had family, was able to perform surgery in a timely manner and conduct follow up treatment. Both of these hospitals were in relatively low populated areas, and although far away from home, my acquaintance’s family support network made travelling an option for her.

Part of the reason for this state of affairs is that hospitals are built and maintained by the provinces, so you have nine different visions and policies for certain types of infrastructure. Vienna, for example, boasts one of Europe’s largest hospitals with 114,000 inpatients and 551,000 outpatients in 2016. All kinds of good things happen there, but it can be quite the circus at times and patients have to be, well, patient. Meanwhile, another province might have a prestige project in the middle of relatively nowhere with much lower occupancy rates.

A related issue is the use of general practitioners as the front line of medical care. Most such practices are equipped with a reception area and an examination room with little more than a bed, stethoscope and flashlight. Anything more involved than opening up and saying “Ahhh!” almost always means having to traipse to multiple locations through the city for blood tests, imaging, etc. as there are very few group practices, and supposedly the hospitals are for emergencies and those with a referral from a specialist. It’s obviously extremely inefficient for each general practitioner to have all this stuff on hand, but at times the time and effort to make the various trips while sick or injured seem absurd.

For example, there was the time some budding kickboxer took offense at the speed at which I had crossed the street (he was waiting impatiently in his car) and kicked me three times so hard that the next day I had a bruise the size of a football on my thigh and my leg hurt so bad I thought it might be broken. So I went to the nearest GP—across the street, fortunately—to ask if I should be hobbling around on this damaged limb. She looked at me like I was crazy and said “How am I supposed to know? You need an x-ray!” Yeah, well, the point was I didn’t know if I should be walking on it, and now I need to walk on it some more (no crutches—those are somewhere else of course) to find out whether I could walk on it! (It wasn’t broken, FWIW).

Conclusion

In principle, care is rationed and prioritized according to need. In practice, there can be frustrating wait times accompanied by the feeling that one is simply a small cog in a large, uncaring machine (I’m sure this is not unique to the local system, but it is something people worry about here too). Consequently, there is pressure to ration care based on ability to pay, and stories about the time one was able to skip to the head of the line by making an appointment with the head physician as a “private patient” abound. Interestingly enough, a counselor in the stake presidency preached against this impromptu (it’s not a matter of public policy, just boots on the ground trying to get ahead) move towards “class medicine” at the last stake conference, observing that just as we shouldn’t accept separate classes of medicine, we cannot accept separate classes of members in the Body of Christ. You know you’re not in Kansas anymore when a Mormon leader uses an example like that at church.

Anyway, I hope the above gave you in idea about what it’s like to live in a country with a pretty functional approach to universal health care. It’s obviously not perfect, and it could well be that other countries are currently better at generating medical innovations, but overall, the system is pretty great. The trick will be to keep it that way moving forward.

What features would you like to see adopted/improved/dispensed with entirely in your neck of the woods?

Comments

  1. Interesting article, and the system seems pretty similar to the one we have in the UK. I pay 12% of my earnings above £157 per week (so about £27 per week, or £1,400 per year) and that entitles me to all the health care I need, as I need it. People who earn too little to pay National Insurance are also covered, and I’m fine with that, because of course it includes my children and my mother. There’s an additional cost of £8.20 per prescription item if you’re in employment, and I get to choose my doctor.

    We’ve had superb care on the NHS over the years. Yes, if you choose to go private you can often jump the queue, get a private room, etc, but I’ve never seen the need. My sister and my dad both had cancer involving very expensive treatment, which of course cost them nothing, and my 86-year-old father-in-law was on kidney dialysis for several years, again at no cost to him (but apparently £2,000 a time to the NHS). My experience has been that the NHS is superb and works well when you are truly in need, but if it’s something less urgent you make well have to wait or go private. I’ve always been happy to wait.

  2. American woman here. My biggest worry with universal healthcare is the government deciding what is covered. We currently have a majority in our legislature who think birth control is a luxury item, pregnancy or even the ability to become pregnant is a pre existing condition, and abortion should be illegal in all circumstances. I’m terrified at the idea that they will decide what medical care I’m allowed!

  3. My biggest worry with universal healthcare is the government deciding what is covered.

    Fair enough. I hasten to add, however, that leaving the decision to one’s for-profit insurer might do away with the moral considerations that grandstanding politicians may favor but the risk and cost may result in such things not being covered anyway.

  4. Thank you for this primer, Peter. Frankly, it sounds like exactly what the US needs to move towards, Instead of 9 regions, we’d have 50. It’s the only way. Either that, or we’re going to become a more stratified, classist, caste country than we already are.

  5. Really solid post, Peter. Thank you! I really miss living in a country where the healthcare of the people is considered a part of the national economic infrastructure and therefore all benefit from universal healthcare. I’ve lived in four such countries in Europe and can really feel the difference in the air — a sense of wellbeing, confidence, and security. Its absence is noticeable in the United States, where even if you’re covered (at the moment), you know that (1) even the slightest accident, illness, or problem at work resulting in losing your job can make you lose insurance for yourself and your family at any time and (2) others all around you aren’t privileged enough to have insurance through their jobs or their insurance companies are gouging them with high premiums/deductibles and inadequate coverage.

    In America, one comes to realize we aren’t a decent society, not by a long shot, as long as we continue to press the fantasy that universal healthcare is immoral. That’s a fantasy created and promoted by the rich, for the rich, and that they’ve gotten the poor to adopt through masking their motivation of coveting their own wealth in pious language and not-sequiturs from religious principles. We have a very long way to go as we continue to see those who consider themselves the most pious continuing to preach the misguided ideology that government-administered healthcare through a tax like in Austria is not just and equitable but rather immoral. Or the Mormon argument you’ll hear from some who oppose universal healthcare of “I have no moral obligation to care for you or to contribute to paying the cost for your care.” Unfortunately, it’s a prevalent attitude among some Mormons who consider themselves politically conservative. They think it’s an instance of choosing this political viewpoint because they think the faith requires it. But it’s actually an exercise in forcing the Gospel to fit into an incongruous, pre-determined ideological mold that it doesn’t fit in.

  6. peterllc says:

    they think the faith requires it

    Yeah, the Mormon libertarians who consider taxes a form of theft would have a hard time with it, and I know many would faint at the slightest whiff of state coercion, but I hope that the idea of solidarity would appeal to most Mormons. I mean, what could be more Mormon than a little self sacrifice for a common cause? Where those who are able have skin in the game to help those who are not?

  7. Health care insurance should be handled more like automobile insurance. Where you insure against catastrophe and handle routine maintenance without submitting a claim to insurance companies. Oil changes, tires, brakes, are all seen as part of the cost of owning a car. Markets and competition keep services affordable. Health care could be treated in a similar way. Why do you have to submit a claim for every treatment?

    A friend without any health insurance chooses to pay cash price and receives excellent care and relief. Usually treatment costs about $500 to diagnose and prescribe medications. He is quite healthy and only needs occasional medical advice. More people would benefit from simply knowing the price of healthcare. Unfortunately doctors are not trained give any thought to prices.

    Emergencies are a different situation but you are going to always have to triage all patients who show up at a hospital.

  8. Why do you have to submit a claim for every treatment?

    Well, you don’t here; only if you see a doctor who doesn’t accept your insurance and you want to be reimbursed for out of pocket costs.

    Health care insurance should be handled more like automobile insurance.

    That was my dad’s philosophy–he didn’t sweat the small stuff but was glad to have it when my mom got cancer. I’m a little torn, however, because catching things early is usually half the battle, and if you feel like you can’t afford the, say, $500 to diagnose and prescribe medications as in your friend’s case, you might delay care until the situation has become much more dramatic.

    So, in keeping with your car insurance metaphor, the roads might be safer if people could get their brake pads changed or their air bags checked at no additional cost and in the end be cheaper than paying for catastrophic damage and loss of life when brakes and airbags fail.

  9. Kevin Barney says:

    I appreciate the overview, since I’m very interested in the concept of socialized medicine but have no experience in an actual socialized system.

  10. Mark N. says:

    And we haven’t even touched on the fact that here (in the States), a very large chunk of what gets spent on health care is the end-of-life expenses, where the idea of quality of life usually seems to get tossed out the window and prolonging life ends up being the only thing that matters to a lot of people. How much of the total expense budget could be whittled down by focusing on that end?

  11. your food allergy is fake says:

    Is there a mechanism in Austria to incentivize healthy choices? Some of the most expensive long term illnesses (diabetes) can be prevented or mitigated by patient choices. The US system doesn’t appear to have a functioning incentive to avoid diabetes, although it’s not clear to me why, perhaps lack of education is part of it. Do universal health systems have ways to encourage health?

  12. I didn’t attend school here so I’m not sure about youth educational programs and I don’t know of any, say, financial incentives for leading a healthy lifestyle (for one, it would contradict the solidarity principle outlined above if you paid less just because you weren’t sick). But everyone is able to take advantage of an annual physical that involves questionnaires and discussion with the doctor about lifestyle choices and you can request an appointment with a nutritionist. I’m a believer in them, but no one is going to chase you down and remind you to make the appointment, so these measures remain a matter of individual initiative.

  13. Naismith says:

    And let’s not pretend that we don’t have to wait for treatment in the U.S., or have denials of care I have commonly had to wait 6-8 weeks for a procedure, and my insurance has decided that my nasal spur is not bad enough to warrant the test and surgery that my doctor says I need.

    When I was working in public health back in the 1990s, my boss used to say that claiming the US has the best medical system because we have a few facilities like the Mayo Clinic is tantamount to saying that we have the best transportation because we have (had) the Space Shuttle.

    Spectacular high tech is less impressive than rank-and-file access, whether it is to transportation or health care.

  14. Shy Saint says:

    Thanks for that comprehensive summary.

    I’ll add my Canadian experience from an American perspective.

    I lived in Canada for extended periods as an American. I have always found it easy to get ordinary health care and I have been impressed by the difference in our health costs as someone who paid for the services I received.

    At 9/11/01 I found the antibiotic cipro readily available when I had an outbreak of shingles and Americans were angst-ing over it’s availability southward. I paid about $5 (US) for a course of it. When my husband had repeated emergency cardiac issues he was always treated immediately and it a warm caring manner at about a quarter of the cost of treatment in the US.

    But what was most impressive was when there was an outbreak of hepatitis A at roughly the same time in British Columbia and Pennsylvania. I was exposed to the Hap A virus via food (eaten at a health food store, ironically!). Americans were being exposed via green onions at some restaurant along the PA turnpike. In BC the disease was discovered when the food prep employee turned up sick at a local hospital. News stories went out immediately and a series of impromptu rolling clinics were set up at communities around the province and alerts went out to other provinces for people who may have been exposed to present themselves to their equally prepared local health services.

    As an American I went to the clinic set up near me for a 3-day period. I got my gamma globulin shot and offered to pay for the medical service. They declined payment. They were authorized to eradicate the source of potential infection not to collect payment. They were not interested in who was or was not covered by the provincial healthcare network.

    I’m fuzzier about the sequence of events in PA but I do remember that the disease spread rapidly across the Eastern Seaboard. News services started picking up events when there were a number of severe illnesses and deaths which took a bit to time to be identified as related. Even when the origin and nature of the outbreak were finally identified people reported to local health care services according to their individual awareness of the seriousness of the disease and their insurance coverage and local services available. I am clear that 11 Americans died in various states while in BC a single victim was hospitalized and eventually recovered.

    A comprehensive national single-payer system results not only in a healthcare system that can respond immediately and effectively to ordinary and extraordinary health needs but addresses health needs as a matter of public health. That means they have better health statistics and can employ their resources most efficiently to prevent as well as cure disease. It is NO accident that such countries around the world consistently and demonstrably and unequivocally have longer life spans, lower infant mortality and better quality of life for people at every age.

  15. stephenchardy says:

    Why is health care so expensive in the US? Why does everything cost so much more than in other countries? I’m sure that the answer to such questions are as complex as the health care system itself. Good health care requires attention to detail, and in general health care is better when standards are set for treatment. It costs a lot of money to provide good health care, but providing lousy health care is more expensive in the long run. Our health care system in the US is deeply political and this means that a reasonable debate can’t be had. Obama haters are going to hate and Trump haters will do the same. Trump was likely correct when he said something along the lines of this: “We could come up with a perfect plan and the democrats would vote against it just because they oppose me.” While I agree that this may be true, we can’t know if its true because the plans proposed by the GOP and Trump administration are so bad that democrats, republicans, physicians, insurers, hospitals, and advocacy groups all work against them. Not because of politics, but because the plans have been so poorly thought through.

  16. Another hurdle is convincing a large majority to take a large hike in taxes for this. My family and I are blow the average health-wise, but last year we paid only 28% of our gross income on healthcare (calculation includes out of pocket expenses and adjustments for how much my employer pays). Trying to convince Americans that you want to only increase takes by 9% (to get to your 37%) is going to be an uphill battle up a cliff.

    I’m all for universal healthcare, but it’s going to take smarter heads than mine to figure out how to make it happen.

  17. Larry the Cable Guy says:

    If I’m understanding correctly, there is little for-profit involvement in the administration of the Austrian system, and a greatly reduced level of educational cost and earning potential for those who deliver care. Was the Austrian system changed to become so, or did it emerge that way from the inherent social systems already in place (i.e. much lower educational costs through various vocations)?

    The mind reels at attempting to unravel the privatized administrators of facilities and clinics in the U.S. that are already established, built and financed. The same would need to take place on an individual basis for the care providers, and that would mean getting not only the docs, but allied professionals (PA, nurses, pharm, dental hygienists, physical therapists, etc.) to all take a financial haircut in order to pull it off. You’d also need to get the educational institutions for those professions to dial down the costs by 85%, and then somehow have the same luck with the folks who are in business to supply the products, devices and tech that are all part of the current bundle of cost.

    Question #1: If we currently spend 1/5th of our GDP on the colossal bundle of health costs, how do you ethically dial down even half of those dollars (let alone get to 18/100 in the Austrian example), that are currently earned by 1/7 Americans, spread comprehensively throughout the country, who are probably highly motivated to continue the current model.

    Question #2: Say you can pull it off. How does one determine which lines of work can remain privatized, and which lines of work must be centrally-controlled in order to facilitate the public benefit?

    My sense is that there are a number of very workable steps to be taken in the financing and delivery of care, but that are obstructed by political extremism, and the need to be reliant on human nature. We are much more motivated when it comes to our wallets than our waistlines.

  18. Frank Pellett–

    My understanding is that the 37% includes social security. Currently, U.S. citizens pay around 15% for social security (with employers paying about half that). Someone who pays 28% for healthcare and an additional 15% for social security is paying a whopping 43% for these services.

  19. claiming the US has the best medical system because we have a few facilities like the Mayo Clinic is tantamount to saying that we have the best transportation because we have (had) the Space Shuttle.

    Pithy! And an excellent point.

    It is NO accident that such countries around the world consistently and demonstrably and unequivocally have longer life spans, lower infant mortality and better quality of life for people at every age.

    Indeed.

    Trying to convince Americans that you want to only increase taxes by 9% (to get to your 37%) is going to be an uphill battle up a cliff.

    Yeah, I’m afraid that rugged American individualism will continue (to be exploited in order) to doom prospects of universal health care any time soon.

    My understanding is that the 37% includes social security. … Someone who pays 28% for healthcare and an additional 15% for social security is paying a whopping 43% for these services.

    Right on both counts.

    Was the Austrian system changed to become so, or did it emerge that way from the inherent social systems already in place (i.e. much lower educational costs through various vocations)?

    In a nutshell: yes and yes. Socialised health and accident insurance were introduced in Austria in the late 19th century, as were other social welfare state reforms, but major expansions occurred in the postwar period. There is a long tradition of professional vocations with on the job training and the universities were nationalised in the late 18th century. Higher education is viewed, at least in the abstract, as a public good and everyone has a right to study (though one must demonstrate fitness to do so).

  20. ty, Tim, that helps.

  21. Frank, in Austria only 7.64% is for health insurance, and that is split between the employer and employee. The 37% you’re talking about is the total that they pay for all of their social security benefits, which go far beyond health care.

  22. Sorry, didn’t see Tim’s comment.

  23. We’re fooling ourselves if we think America can see Euro style healthcare pricing without massive increase in taxes. The best you can hope for is to apply Medicare style pricing on paper, which is a pipe dream because Medicare freeloads on existing admin overhead and drives up non Medicare rates at the margin. And nearly every provider will go bankrupt at Medicare rates across the board.

    Next campaign to slash nurse and doctor salaries. Their admin salaries will necessarily decrease too because the nurse generally isn’t gonna nurse if she can make more as a secretary.

    And the insurance company profit incentive is not why our insurance costs are high. Many insurance companies are nonprofits and equally high.

    The costs of multiple insurance admins won’t bring the savings sought for as anyone who thinks you can just cut out the “middleman” and save money is an amateur.

    Just like our former amateur in chief who promised savings from the digital records etc from Obamacare and all that did was drive up tech spending and admin costs.

    No free lunch guys. We can’t restack the deck and get universal care withno copay without doubling our monthly rates or severely rationing care.

    And the people saying trust us, we’ll do it like Europe this time used up their trust capital when they passed a bum law and spent a half a billion bucks on a dud website and another half a billion on advertising agencies that donate to their campaigns…

    Whatever the merits of healthcare reform, the people running the show can’t be trusted. The process needs less politicization not more.

    Good post though!

  24. Yes, thanks, john f, it does seem I’d pulled the wrong number to compare against. Comparing my 28% with Austria’s 7.64% seems like a good deal, even at twice the price.

    I deal with people using explanations like Dcd all the time, and it seems nothing will convince them otherwise. There’s a good chart showing the comparison of cost to lifespan for several nations, with the US being a severe outlier of both high costs and lower lifespans, but the only response it elicits is something vague about government being evil.

  25. I would wager that a high percentage of American Mormons fall for the Republican propaganda that we need a market-based health-care system. Just get the government out of it (I hear that all the time). But that is simple nonsense. The market works well in some industries and for some products, but not for health care. The market does one thing: it provides a product for those who can afford it. If I can’t afford a new iPhone, then I won’t get one. But health is not like iPhones, parsnips, or wedding photography. Having a healthy populace is actually a societal good, like having a well-educated populace. We all benefit if more of us are healthy. And it is both un-Christian and inhuman to allow people to suffer needlessly or go bankrupt because they are stricken with an illness or injury that they had no control over. We educate all our kids at taxpayer expense (although Republicans would like to marketize this too). So why is it so hard to accept the idea that we maintain the health of our citizens at taxpayer expense? This is a one-party problem, and that one party has proven that it has no solution. As this fine post points out, socialized systems are not perfect, but they are much less costly and are far more just than the mess we have in America (even with the ACA).

  26. it's a series of tubes says:

    One of many difficulties in making comparisons like this: the Austrian healthcare system utilizes medical equipment, procedures, and pharmaceuticals, some subset of which (probably a large majority) was developed elsewhere. These are real and massive costs; healthcare equipment, expertise, and medicine don’t simply spring into being, but arise only after significant investment of real resources of time, money, and brainpower. For example, the costs associated with identifying, developing, and bringing a new drug to market can run to multiple billions USD.

    Thus, Austrian citizens and healthcare providers are benefitting from investments made elsewhere. The same is true of pretty much every country and system we could analyze. It’s not exactly the economic free-rider problem, exactly, but how should those costs be allocated in the consideration? Is a mapping of the cost and investment data even possible?

    I’m not taking any particular side here, just wondering how it is ever possible to make an apples-to-apples comparison with so many potentially confounding factors at play.

  27. Thus, Austrian citizens and healthcare providers are benefitting from investments made elsewhere.

    Of course. As I mentioned above, Austria has about the same population as Virginia; it would be absurd for a country of that size to reinvent every wheel made elsewhere. No doubt the staggering prices Americans pay for drugs, for example, subsidise their development.

  28. The first thing that I would change with the US system, would be to get employers out of it. Nobody starts a business because they dream of handing employee insurance issues. During WWII, wages were capped. So to attract better talent, companies started offering benefits which weren’t counted as salary, like medical insurance. Then when WWII was over, the insurance industry didn’t want to return to pre-WWII subscription rates; and convinced Congress to give a tax break to employers two provide health insurance. Now we’re stuck with it. I want to flip it: declare providing health insurance to employees as an unacceptable corruption of the free market, and fine employers who do so.
    It’s also my understanding (though I couldn’t find a source for it, after hearing about it in a Planet Money podcast) that it’s illegal in the US for Hospitals to advertise their prices. The idea is to prevent a race to the bottom competition amongst providers. I would be okay with removing that.
    This American Life did an excellent podcast while the ACA was being debated about HMO’s. HMO’s were created to bring down the cost of insurance. The idea is that a doctor would submit his prognostic, and if the HMO said “That statistically doesn’t match the symptoms” the HMO would deny the request. This made them the enemies, and villains in movies. So the HMO’s disbanded, because if people didn’t think that they were helping, then what’s the point? So there’s nothing in place to try and keep health care costs down in the US.

  29. Rich Baker says:

    Peter: Really appreciate your post. Reminds me of an outstanding PBS Frontline documentary from 2008, called “Sick around the world” (google it to view), which asks the obvious question I pine to hear addressed in the American political echo chamber: “What might the USA learn about healthcare delivery from the experiences of other first world countries?”

    The film goes on to examine the pros and cons of the healthcare systems in the U.K., Germany, Switzerland (which closely paralleled the US model until it flipped to universal health care at the turn of the century), Taiwan and Japan. All five are democracies. All provide universal healthcare. All post better outcomes at far lower (for some, nearly half as much) cost than the American system.

    It seems our political discourse in the USA is too proud to look beyond our borders to see what can be learned from those real-world experiments?

    None of their models is perfect. Each has inefficiencies. Economic winners and losers vary. But ALL beat out today’s system in the US — by a wide margin.

    Message to Congress: Pick one! Any one of them. It does not matter! Everyone would be covered. All would enjoy better outcomes. And outlays for entitlements would drop significantly.

  30. “I deal with people using explanations like Dcd … but the only response it elicits is something vague about government being evil.”

    Hi Frank – remove inner city violence (in high gun control areas) and how does that stat change? Further remove stillborns counted as an infant death in the USA compared to stillborns not counted as an infant death in Europe, and how does it change?

    We’re on top, if you account for these two factors. To say nothing of the fact that Americans walk less, abuse more drugs, and likely die more from too much doctoring (10% of all deaths are from doctor error in the USA, according to a 2016 Hopkins study).

    If you take the simple fact that we likely die from too much doctoring, perhaps we’re simply spending too much? Changing coverage to give more care at 0-copay to more people won’t help that medical culture will it? Nationalizing or federalizing healthcare payment and delivery won’t solve that problem any more than insurance companies refusing to pay for more treatment. But whenever that’s tried people freak. I guess you’re only hope in that scenario is state control can cram the change down people’s throats. But I’d rather have multiple provider and private company solutions to choose from so people can pick their own elixir.

    There’s a dozen other factors your comparison doesn’t control.

    // resume suspension of disbelief

    Oh, and yes, our governments are definitely run and staffed by a combination of ignorant, evil, immoral, biased, mistaken, well-intentioned-but-over-their-head, and competent-but-vastly-outnumbered people.

  31. If you take the simple fact that we likely die from too much doctoring, perhaps we’re simply spending too much? Changing coverage to give more care at 0-copay to more people won’t help that medical culture will it?

    As I mentioned briefly in the OP, there are gatekeeping measures in place to deal with both the demand for and supply of health care, so I don’t think it’s a foregone conclusion that further socializing care in the US will lead to even more unnecessary procedures and deaths.

  32. Oh good, we’re now up to the “Trump won the popular vote if we don’t count California” rationale, mixed with “people are lazy and stupid”, and wrapped up in “facts you didn’t think about”

    Dcd, I get plenty of this from various family and friends, with all sorts of opinions and bad uses of statistics. Mostly just makes me tired and sad. We’ve gone deep into suspicion, fear, and hate, convinced that the other side is evil and would change if they only listened to us.

    We’ve got to find better ways to go about doing this, or we really will drown in the violence that is the only result of these attitudes.