Thursday, January 20, 2011

Health care: I pay for insurance

Fair warning: this is another "political" post. I just can't seem to stay out of this.

A friend of mine, Damian Gryski, sent me a fascinating link comparing the US and Netherlands in several key areas that you would want to know about if you lived here. I found the following bit particularly interesting:

spend 48.19% less money on health care
Per capita public and private health expenditures combined in Netherlands are $3,481 USD while The United States spends $6,719 USD
This entry contains the per capita public and private health expenditure at purchase power parity using US Dollars. This figure combines government, personal, and employer spending on health care
Source: World Health Organization
A right or a privilege?
Photo by edenpictures
Please note that "per capita" spending doesn't mean what you and I pay, it's what is paid overall and the US is paying around twice the amount as the Netherlands. So while the US is has the most expensive health care system in the world, one which operates fabulously if and only if you have the money to participate in it, my wife and I spend only €220 a month on our health insurance. That's a bit higher than normal, but only because we spent a extra to cover any issues she might have with her pregnancy.

And the US? Back in 2009, US households were spending an average of $13,000 per year for health care. Your out-of-pocket health care costs in the Netherlands more than make up for an apparent 15% drop in income (naturally, the situation is far more complex than this facile analysis).

During the recent US debate about health care — well, no, I have to stop already. There was no "debate" in the US. There was idiocy everywhere as politicians and media were busy supporting their team rather than the American people. One argument I kept hearing over and over again was what a disaster "socialized" medicine has been for Europe. And yes, you can find individuals for whom it's been a disaster, just as you can find individuals for whom the US system has been a disaster. However, you can't look at individuals to tell if a system works or not. You have to look at the system. You have to look at its aggregate outcomes and in Europe, it's indisputable that our aggregate outcomes generally involve a better quality, coverage and cost of health care.

But do we really have socialized medicine over here? What we have varies from country to country. In the UK, there was definitely what one would call "socialized" medicine and that served the vast majority of people very well. Sometimes people would buy supplementary insurance to handle issues which the National Health Service was less likely to cover, but all in all, the health care in the UK was free and excellent.

Here in the Netherlands the health care system is different. I am required by law to have insurance. No insurance company may turn me down if I apply and they must charge me a flat rate. Children are free. Actual health care costs are subsidized by the government. Despite the widely held US belief that government intervention always makes things worse¹, the Dutch government has clearly done a better job than the US government. Of course, the same is true for most European governments in this regard.

Soldiers receive treatment for IED injuries
Enjoying socialized medicine
while defending your freedom.
Photo by the US Army
Ironically, when I was a child my health care was free because I was a military dependent and the US military enjoys the finest in socialized medicine while fighting to keep our country free of socialism. I never could figure that one out. Some have been offended by my characterization of the US military's doctors, government-paid and operated hospitals and complete "cradle to grave" free health care for military personnel and dependants as "socialized", but I honestly can find no definition of socialism which doesn't cover this situation (lest anyone forget, the US military is a branch of the US government). Mind you, this is not a criticism of the excellent health care the US military provided for me and my family. I'm just pointing out that sometimes we need to step back and put things in perspective.

Compare the Dutch "everyone must have insurance" system to the mess in the United States. They have so many problems with their health care that the government has tons of public programs to try and plug the gaps:

  • Medicare, generally covering citizens and long-term residents 65 years and older and the disabled.
  • Medicaid, generally covering low income people in certain categories, including children, pregnant women, and the disabled. (Administered by the states.)
  • State Children's Health Insurance Program, which provides health insurance for low-income children who do not qualify for Medicaid. (Administered by the states, with matching state funds.)
  • Various programs for federal employees, including TRICARE for military personnel (for use in civilian facilities)
  • The Veterans Administration, which provides care to veterans, their families, and survivors through medical centers and clinics.[66][67]
  • National Institutes of Health treats patients who enroll in research for free.
  • Government run community clinics
  • Medical Corps of various branches of the military.
  • Certain county and state hospitals

Before you think about moving abroad, check out the health care system of your target country, its costs (always lower than the US) and its outcomes (usually better than the US). And stop getting your news through profit-driven corporate media and find out the truth for yourself.

1. This is a naïvety which is breathtaking, to say the least, but one which is enshrined not only in US political thought, but in astoundingly popular, yet foolish, economic theory (why the hell hasn't the Chilean disaster and the Soviet transition to "capitalism" put the lie to the Chicago School fanatics?)


  1. Here in the Netherlands the health care system is different. I am required by law to have insurance. No insurance company may turn me down if I apply and they must charge me a flat rate.

    Yeah, the insurance companies must charge a flat rate. The government takes a percentage though. For 2010, income over EUR 33k/year is taxed 7.05% to contribute for health care. For 2011, that percentage is raised to 7.75%. However, since 2009, employers are supposed to cover this. But that's done pre-tax. So, on my payslip, first an amount X is added (to cover the cut the goverment takes for health insurance), then taxes are calculated (including over the amount X) and subtracted, then X is removed again.

    Up to a few years ago, health insurance was different in the Netherlands. There was a special, mandatory, health insurance for "low" incomes ("low" being relative, somewhere between 30% and 50% of the people classified for this). You would not pay a fee yourself, and the fee was income dependent. A small percentage of your wages was subtracted, and matched by your employer. As a student, I've had months where I only paid 1 or 2 *cents* on insurance that way.

    It has been argued that the current, flat fee, system is a disadvantage for low incomes and the "social-economic weak". They now have to pay the fee themselves. They may not be able to every month, or the temptation to spend the money on something else may be too big. Insurance companies *will* terminate insurance of people not paying their fees. People can get compensated for the fees; typically when they file taxes, or by applying for an advance tax return. But there are a lot of people who have difficulty doing any kind of paper work or financial administration. It can be high hurdles especially for the people needing the compensation the most (resulting in people not getting the compensation, and eventually, no longer being insured).

    Health care is probably better in the Netherlands that it is in the USA, but it isn't ideal here either. And how it works out for individuals will differ as well. I've spend a few years in the USA as well. Had health insurance via the company I worked for. Paid less than I pay here.

  2. DING DING DING!: "Ironically, when I was a child my health care was free because I was a military dependent and the US military enjoys the finest in socialized medicine while fighting to keep our country free of socialism."

    I've always thought it silly that a communistic enterprise (the US military) went to Vietnam and Korea to fight........ communism. [splat] And, the triage/stopgaps you mentioned could save millions, if not billions, of dollars by grouping together. Isn't that the /point/ of insurance? Having fragmentation is exactly the problem in this case. Economies of scope/scale, people!

    If it is dark and smells like poo, your head might be lodged in your...

  3. Have you found your health insurance to cover your needs or is it a 80/20 sort of plan? I do not know what 20% of cost would look like over there but in the US it still can bankrupt you. I am lucky enough to have Medicare however it only pays 55% of my expenses as they discriminate against the mentally ill. Even with two insurances I go into debt each month to cover the cost. Before doctors’ appointments and hospitalizations I pay 60% of my income on healthcare. I chose my university as it had a group plan for graduate students that you could not be denied. I could not get an individual policy. I am really looking forward to 2014 (and/or further postgraduate work in the UK). ---end rant

  4. I think that you make a sort of bungled argument here, Ovid. You correctly point out that health care in the US is absurdly expensive, and that it is administered by a byzantine mix of public and private entities. However, you then go on to make a number of assertions which are arguable at best: that most European health care systems 'indisputably' have better health outcomes in aggregate (cf. ), that Tricare and the VA provide a high quality of care (really puzzled where you got this idea from! perhaps the system worked much better when you were a military dependent, but it's an abomination now), etc. I think your post would have been stronger if you had compared some of the pros (quick access to health care, high quality of care) and cons (very high cost, access to care tied to employment, paperwork jungle) of the US mixed public-private system vis-a-vis a prototypical European setup rather than implying that every American who disagrees with your policy preferences is an ignorant fool.

  5. @KaeseEs: I'm confused on a couple of points you've made. First, you can't take an out of date (2002?) and unsourced graphic about cancer survival rates which provides no context and use this as a rebuttal. The cancer survival rates have been a rather contentious issue because there's a huge disparity in those rates depending on your ethnicity and income. There's also a question of how it's recorded. Overdiagnosis of breast cancer in the US may be a contributing factor while early diagnosis of untreatable cancers may simply lead to people be reported as "living longer" before they die. As that first article states:

    "For instance, it makes little sense to screen for a disease like amyotropic lateral sclerosis (Lou Gehrig's disease) because there is very little that can be done for it; diagnosing it a few months or a few years before symptoms appear won't change the ultimate outcome."

    However, even if it did turn out that cancer survival rates were better in the US than in Europe, that tells us little about the overall success of the US health care system vis-a-vis the rest of the world. Remember that you have to look at the systems as a whole rather than pull out individuals or individual statistics. Yes, I could easily find plenty which show you that life expectancy and infant mortality rates are better in Western Europe (look it up, it's true!), but that doesn't mean a better overall quality of life.

    To be fair, I didn't provide support for the word "indisputably" embedded in my post because it's so well known to those familiar with the issue that I didn't think I'd have to provide research to back this up, but you can dig into the World Health Organization's 2010 World Health Statistics report (pdf) and see for yourself.

    As for your comments that I claimed Tricare and the VA provide a high quality of care: I didn't say that. Please reread.

    At the end of the day, I think the evidence stands very, very firmly in favor of the success of the European health care system. Even if somehow one could argue that the US system is "just as good", the costs associated with it can hardly justify it (particularly if you're one of the millions who are uninsured and praying you don't get sick).

  6. @Steffanie: In the Netherlands, there do not exist health insurances where you have to pay X% of the costs. Most health insurances make you pay the first XXX/year, and cover the rest. But XXX isn't extremely high. For me, for instance, it's EUR 150/year. And then only on medication and other supplies I get from the pharmacy (and I cannot complain, my insurance company is paying for supplies that aren't covered...) Note that when I fetch prescriptions from my pharmacy, the pharmacy doesn't bill me. It sends to bill to my insurance company, who then sends me an invoice (usually about half a year later). I just paid my health insurance for 2011, and it came to a little over EUR 1200.

    Now, it doesn't cover everything. I don't have dental coverage (it's an option). I've only limited coverage of "alternative" health care. At most 12 visits/year to a physical therapist will be covered. And a few more things.