Friday, August 15, 2014


On August 14, the Wall Street Journal carried this op-ed piece by Dr. Scott Atlas of the Hoover Institution at Stanford University (subscription required, sorry).

You’ll find it well worth the time to read. Particularly interesting to me is Atlas’ statement that “NHS insurance costs $3,500 annually for every British man, woman and child.” 

I looked up the corresponding figure for the U.S. in the National Health Expenditure Tables published by CMS each year.  Doesn't everyone know by now that the US per-capita annual expenditures are far higher than the UK’s?  So that’s not the interesting part.

The interesting part is that the annual US per-capita health expenditures were $3,500 back about 1994.   But in 1994, that level of expenditure was accepted in many quarters as conclusive evidence that the US needed single-payer medical care; that the private insurance industry had failed to control medical cost; and even that the American free market system had failed.  And here we are 20 years later observing the same annual $3,500 per capita . . . as evidence of NHS success in UK!  Meanwhile the much higher US cost is still accepted in the same quarters as evidence that the US needs single-payer medical care; that the private insurance industry is failing to control medical cost; and that the American free market system has failed.   

I’d like to suggest a slightly different interpretation.  I suggest the history shows that the UK trails the US on cost by about 20 years.  In other words, UK's cost reached our 1994 level in 2014; and so UK’s cost may well reach what ours is today, in 2034.  This interpretation also suggests the UK is not retarding the growth of medical cost any more successfully than the US.  The US is simply the leading indicator for cost growth over time.  This interpretation also suggests the higher US point-in-time costs arise from other factors.

I would also note that the UK has for years led the US in terms of restrictions on its citizens’ access to specialized medical services and newer technologies.  In many respects, such restrictions make sense where overutilization is known to occur; in many other respects, setting an army of bureaucrats on a mission to "cut medical costs" is a terrifying idea.  But the US now seems committed to a path over the next 20 years at least, that will produce similar sorts of deterioration in hospital services, growing wait times, and other restrictions on specialty and high-tech care as have  plagued NHS.  In this sense, UK is the leading indicator for the US.  Our policy leaders should be paying attention.

Of course, as we learn more about Obamacare, we may find the US is sinking to the more restrictive UK service levels much faster than anyone imagined - but accompanied by increasing, not reducing, cost.  Lower access to medical care - - higher prices - - Yum!
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