Most people agree that the US healthcare system is broken and needs fixing. It is the most expensive system in the world in terms of expenditure per-capita ($6,401in 2005) and as a percent of GDP (15.3% in 2007), and for all the money spent it doesn’t even come close to having the best outcomes.

While the system is always changing and things will probably improve slowly as time goes on, a comparison with other countries makes it fairly obvious that we need a major shift in policy at the national level. The US has very little government management of the healthcare industry, and this situation has led directly to the problems that our system now faces. The lack of policy has led to a labyrinth of insurance payors that balloons administrative costs and makes obtaining halthcare a difficult and unreliable process for the patient. For clinics and hospitals, getting paid is a similarly troublesome mess.

It is tragic and nonsensical that a country with an abundance of wealth, great doctors and great medical facilities faces a crisis in its ability to adequately care for patients. Leaving aside the social justice implications of such a system — which have already been made very adequately by other commentators — it just doesn’t make sense to pay so much money for such poor results. The healthcare situation is even hurting the US economy on a macroeconomic scale, since for corporations the need to pay huge health insurance costs for employees makes it difficult to offer competitive benefits packages here. This is a major force behind the movement of auto manufacturing jobs from the Midwest to Canada.

Most of the public discourse about healthcare in the US devotes little effort to analyzing different possible solutions to the problem. It seems obvious that surveying similar countries’ systems would give us an indication of which direction to head, but this is rarely done. The primary alternative that reformers propose is the single payer model used by the UK.

The emphasis on near-complete government control of healthcare is unfortunate, and I blame it largely on enemies of reform who deliberately pose a false dilemma between private and public healthcare systems. The reality is that most countries with successful national healthcare policies have hybrid systems that combine important elements of government planning and private enterprise. This kind of mix would seem to be ideal for the US, both because it fits with our traditional preference for allowing private enterprise when possible, and because it would be a much less disruptive transformation to make.

PBS recently did a piece on the systems of five countries with different kinds of healthcare systems: http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/countries/

The five countries — the UK, Japan, Germany, Taiwan and Switzerland — all do things differently, but what they have in common is that they all have lower costs and better outcomes than the US.

Putting aside the UK, which uses a single payer system where the government pays for everything, the other four systems have the following general features in common:

• The government regulates the amount that healthcare providers are allowed to charge to consumers.
• Healthcare is universal; government assistance takes care of those who are too poor to afford it.
• Patients pay a portion of the cost of services and drugs, which creates an economic incentive not to abuse what is provided.
• Insurers may be government-run, non-profit or for-profit, but in all case the government regulates them and forbids them from rejecting any patients or any claims.

The systems that seem mostly likely to fit with the US way of doing things are those of Germany and Japan, since both allow independent insurers and private healthcare providers.

Since the pay of doctors is the single biggest expense in the healthcare system, the most important factor in controlling healthcare costs must be reducing doctors’ salaries. This will be accomplished by capping the amount that providers can charge for services, thereby forcing healthcare organizations to tighten the screws on doctors.

It is important to compensate doctors for this change, though. The medical malpractice lawsuit system needs to be reformed to reduce malpractice insurance premiums, although I don’t have a proposal right now for how to do this while still maintaining effective safeguards against malpractice. Medical school needs to be made much more affordable, both the ensure that the best and most committed students will be able to attend and so that young doctors with reduced salaries will not simultaneously be saddled with crippling debts from their schooling.

Most of all, though, I believe that nearly all healthcare personnel will be gratified to have a national system that allows their organizations to care for all patients regardless of their need and to never again worry about scrapping with insurance companies or collecting overdue bills from sick people. A lot of people would take a small pay cut to have that happen.

The federal government hired ICF International, a private contractor, to administer billions of dollars in federal grant money to people who lost their homes to Hurricane Katrina. ICF handed out the money to applicants, but it seems that they gave out more than they were supposed to:

AP: Katrina victims may have to repay money
http://news.yahoo.com/s/ap/20080329/ap_on_re_us/katrina_collections

A private contractor under investigation for the compensation it received to run the Road Home grant program for Katrina victims says that in the rush to deliver aid to homeowners in need some people got too much. Now it wants to hire a separate company to collect millions in grant overpayments.

Why did ICF hand out too much money?

Brann said there was a sense of urgency in paying Road Home applicants, and ICF knew applicants might eventually have to return some money.

So, they started giving out the money early, before that had all of the applications. It’s not clear to me from the article exactly how this led to overpayment, but my guess is that once they had all of the applications they would compare them and decide who needed it most. In any case, they knew that they were probably doing things wrong at the time, but they didn’t care because they were keeping people happy with them for the time being.

The biggest grant amount allowed by the Road Home program is $150,000, so ICF believes it paid some recipients the maximum when they should not have received a penny. If ICF’s highest estimate of 5,000 collection cases — overpaid by an average of $35,000 — proves to be true, that means applicants will have to pay back a total of $175 million.

ICF paid out way more money than they should have. What’s more, they knew that they were probably doing this. Now, though, after the money has already been received and spent by many families, they want those families to pay back money. They are asking the displaced victims of Katrina to pay for their own errors, incompetence and general lack of concern for doing the job right in the first place.

But surely, ICF will suffer as well because of their mistake as well, right?

The prospect of Road Home grant collections comes less than two weeks after the Louisiana inspector general and the legislative auditor said they were investigating why former Gov. Kathleen Blanco paid ICF an extra $156 million in her waning days in office to administer the program. With the increase, ICF stands to earn $912 million to run Road Home, a contract that also sweetened its initial public stock offering, helping it buy out four other companies and enter government contracting in sectors including national defense and the environment.

Katrina victims pay back $175 million that in all likelihood they don’t have. ICF makes $912 in profit from the deal. Meanwhile, this deal puts enough money in ICF’s pockets to allow them to get more government contracts.

Aren’t there any consequences for this incompetence? Shouldn’t the money to make up the difference come out of ICF’s pockets rather than out of the pockets of aid recipients?

Hiring incompetent private contractors that end up doing a bad job and costing our government piles of money has been a hallmark of the Bush administration. They do it in part because of their ideological conviction that private enterprise is somehow magically more efficient than government, and in part because it makes the government look smaller on paper, which allows them to claim that they are “shrinking” government.

I have to laugh at the thought of John Negroponte, the US Deputy Secretary of State, standing in front of a bunch of angry Pakistanis getting grilled. Nobody back home has the guts to do that to him, of course, which makes it all the more entertaining when his happens abroad. Pakistan is so important to US interests that he has to just stand there and take it, trying to make nice with the newly elected parliament.

IHT: A chill ushers in new diplomatic order in Pakistan
http://www.iht.com/articles/2008/03/28/asia/28pstan.php

“How is Pakistan different to Honduras?” Saleem asked, a query clearly intended to tweak Negroponte about his time as ambassador to Honduras in the 1980s, when he was in charge of the American effort to train and arm a guerrilla force aimed at overthrowing the leftist government in Nicaragua. He was later criticized for meddling in the region and overlooking human rights abuses in pursuit of United States foreign policy goals.

The diplomat demurred, according to Saleem, saying, “You have put me on the spot.”

Dealing with this new parliament will be a lot trickier than it was to deal with Musharraf, I imagine, if only because we’ll have to talk to them more openly.

The latest (potential) development in the Microsoft/Yahoo takeover bid is one that I hadn’t thought of or expected at all. China wants to increase its role in regulating international companies, and it might try out this power on Microsoft if the takeover deal goes through. The International Herald Tribune ran an article on it:

China law could impede Microsoft deal for Yahoo
http://www.iht.com/articles/2008/03/28/technology/28yahoo.php

Formally enacted by the National People’s Congress last year, the measure gives Chinese regulators authority to examine foreign mergers when they involve acquisitions of Chinese companies or foreign businesses investing in Chinese companies’ operations. Beijing could also consider national security issues, according to a report by the official news agency Xinhua.

This is interesting to see because it marks a new stage in China’s coming-of-age as a world economic power. The power of its billion-person market will allow it to have an increasing say in how business is done. It’s too early to tell how they will use that power, though. Such international decisions will be far more visible and open to criticism than the kind of internal economic decisions that China is used to dealing with, I would think.