Avik Roy on Health Care: Faith in Markets, Prejudice Against Government Hurt Otherwise Good Proposal

Avik Roy is on to something with his call to conservatives: focus on health care costs. The Affordable Care Act isn’t really about controlling costs and has just thrown in a grab bag of miscellaneous stuff to address it. (Some of those ACA bits and pieces may be working, though.) But Roy’s supposed evidence for the cost control of “market oriented systems” left me confused: Copy Switzerland, because its “results are remarkable.”

Huh?

The last time I checked, Switzerland was way up there on the health care expenditure charts. Nowhere close to the US but above most everyone else. In fact, Switzerland, with its ‘more private than most countries’ health care system fits a pattern. Empirically, tight government control systems (like the UK’s) are cheapest—not a result that fits neatly into Roy’s belief system.

I looked at Roy’s diagram of OECD (i.e., rich) countries health care spending: Switzerland indeed way down there, 3rd from the bottom.  Not where I remembered it.

I went to the OECD’s health statistics site.  My memory had not deceived me. According to the most recent data available (2012), Switzerland was still fairly high: 11.4% of GDP (fourth in the OECD). The share of health spending in GDP is probably the most important way to look at what a country spends on health care—the share of its income, a measure of affordability.

Another way of looking at Switzerland health care spending is $6080 per person each year. (This is expressed in purchasing power parity terms, which avoid problems of exchange rate fluctuations.) By this measure, Switzerland is third among OECD countries.

Where did Roy’s numbers come from? I go back to his chart. Oh! It says public health care spending. Even though Roy started his Forbes article with employers’ concerns about their (private) health care spending, his numbers count only government expenditures. In fairness, the caption notes, “While single payer systems like the UK and Canada spend less than the US, market-oriented systems in Singapore and Switzerland are far more fiscally efficient.” Roy clearly sees being fiscal efficient, meaning the government spends relatively little, as the most important goal.

This focus—obsession—shows what is wrong with even the best of conservative health policy analysts—and Roy is definitely among the best: knowledgeable, seeking evidence, willing to criticize his own side too.

In the conservatives’ view, government spending is just bad. And the market is just good. It’s a matter of faith. One doesn’t need evidence of effectiveness in combating what Roy himself says is the most important goal: costs. And as Roy stresses, costs to ordinary (private!) people and employers are both a big problem. Further evidence comes from Roy’s tendency to either ignore or discount aspects of Switzerland’s system that have too much regulation for his tastes.

The truth is, even private health insurance is socialized: to have insurance you have to pool. Premiums from the healthy pay for the sick. Government money does bring particular problems, but what matters most is how much health care costs—all the costs.

I have no doubt that Roy did not think he was pulling a fast one. He truly believes that what we should worry about most is public health care expenditures.

Roy’s plan has a lot of good stuff in it—a serious alternative to the individual mandate, separating long-term care from the rest of Medicaid… But his opening is revealing: his view that government in health insurance and care is bad is not something to be demonstrated with evidence. Rather, it is a matter of faith.

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