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Sunday, January 04, 2015 8:46 PM

US and Canadian Expatriates Comment on US Healthcare

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I have a couple more emails from readers in response to Single-Payer "Medicare for All" Proposal; Live and Let Die; Why Does Single-Payer "Work" in Europe?

Comments From a US Expatriate

Reader David a US citizen living in Europe writes ...

Hi Mish,

I am a native born US citizen who has worked mainly outside of the USA since 2003. In 2012 I liquidated everything in the USA and moved to Europe for the foreseeable future.

In Europe the rules are different for every nation depending on whether you are working for a company, self employed, or a “person of means”. France and Luxembourg have single-payer universal coverage. In Hungary and Spain, you don’t need health insurance if you can prove you can pay your medical expenses (person of means). Switzerland mandates that all people must have some form of health insurance (private). Ireland has a couple of levels:  public, private, etc. Germany allows you to take the state system or take a private system. 

In most “Single Payer” systems that I have seen, the patient pays the bill and the bill is reimbursed at 80% (or whatever) via a SEPA transfer to their account. For those "of means" with no insurance, the person simply pays the bill.

Using Luxembourg as an example, if you go to a doctor and the bill is 50 euros for the visit, You pay the doctor the 50 euros and he hands you a receipt that you submit for reimbursement. The government wires you 80% of the bill within 2 weeks.

Note that the patient sees the bill, and pays the bill at the time of treatment and is typically reimbursed later.

Views From a Canadian Expatriate

Reader Peter, a Canadian expatriate now living in the US writes ...
Hello Mish

I have a few observations about single-payer healthcare. First, here are a few tidbits about me so you know where I get my perspective:

  • I grew up in Canada and lived in Canada for 29 years before moving to the US in 1994, so I have personal experience with both systems.
  • My family still resides in Canada and I was involved with my Father's experiences with the Canadian system before he passed in 2013.
  • I worked for a Blue Cross payer from 2008 to 2012.

First, Obamacare is 10,500+ pages of legislation, whereas the Canada Health Act is 18 pages.

Second, in spite of the massive number of pages of legislation, Obamacare failed to tackle many underlying problems in the US system:

  • Tort Reform. An Ob/Gyn is probably paying $50K or even $100K per year for liability insurance. That cost of doing business is transferred down to the consumer. Assuming $100K, 200 working days, and 25 patients per day (likely high!), the consumer is effectively paying $20 of the fee just for the physician's liability insurance.
  • Pharmaceutical Pricing. Many "wonder drugs" are being created and then slammed onto US consumers, along with high prices. These drugs typically go through a efficacy and pricing review before being introduced into single-payer systems. The US consumer tends to pay for the brunt of the R&D costs of these "wonder drugs".
  • Rationing - The "R" Word. In Canada and other single-payer systems, you queue up for an elective procedure. Period. You can go elsewhere and pay for it yourself if you have the money. Otherwise, expect to get in line for that elective MRI, surgery, or other procedure. The British Columbia Ministry of Health even has a website showing Surgical Wait Times.
  • Revenue Ask any US citizen if they're willing to pay 10-20% more in Federal taxes for a single-payer system. The response is always "the rich will pay". The math doesn't work because there simply aren't enough rich people out there.

People in single-payer systems have grown accustomed to the concept of waiting. In the US, who is willing to wait months? No US politician is willing to tackle the problem of the dirty "R" word.

Third, the single-payer systems in Canada and various European countries are showing their cracks too.

  • Revenue. Revenue streams are limited due to existing, high taxes.
  • Aging Populations Living Longer. In the US system and single-payer systems, a disproportionate amount of money is spent on keeping the aging living longer.
  • Limited Access to Care. My Mother experiences this now in Canada. Several types of physicians have been capped on the number of patients they can see per day. One needs to go early if they hope to see a physician at a walk-in clinic.
  • Death Panels. The UK's National Health System has started to implement some controls (some call them "Death Panels"), in that if you're terminally ill and only have a few months to live, the system is not going to pay for significant interventions and instead will try to just keep you comfortable until you pass.

I thought about this with my Father during his last two years of life after a significant fall, and I periodically wondered about the total cost and his marginal quality of life. There is no easy solution.

The US system will break down once the politicians are no longer able to print money to support it. Guys like Gruber are just there to make money off the system - they are not providing a long-term vision.

There is no easy solution.

No Easy Solution?

Actually there are plenty of solutions, some short-term, some long-term, all of them free market based.

Making healthcare both better and more affordable is easy. Finding the political will to cooperate in fixing the problems is what's hard.

I will propose eight healthcare reform ideas in a third post shortly. Even though they are free-market solutions, they are not at all incompatible with Obamacare.

Mike "Mish" Shedlock

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