In a better world, everyone would have read this right around 1995, and by 1996 we would have had health insurance that listened to it.
Its first half is an utterly authoritative look at how health systems work in Canada, Germany, Australia, France, Japan, and the United Kingdom. In all of them, health insurance is guaranteed as a fundamental right of citizenship. In all of them, doctors are treated as a special, higher-caste class of worker, so in all of them, doctors must be handled with kid gloves. In Australia, for instance, malpractice cases are reviewed by a panel of doctors, which avoids making them feel like malpractice decisions have been imposed upon them by an ignorant jury. Some countries, notably Germany, have heavily regulated “sickness funds” run by corporations or unions, with transfer payments between the sickness funds depending upon their risk profiles (e.g., sickness funds covering mostly young, healthy people end up subsidizing those funds that cover older, sicker people). Others, like Canada, have insurance systems run mostly by the provinces. In none of the countries studied do they use a system like the one we’re talking about in the United States, where people are required to buy insurance and have to pay if they don’t buy it. For one thing, the administrative overhead of such a system is enormous. As White puts it,
Individuals’ incomes and needs for subsidy would change during the year, creating further difficulties … . Such a subsidy program would require a choice between three unpleasant options: having a huge bureaucracy (to process all applications quickly and accurately), a smaller bureaucracy that was thorough but made people wait, or a smaller bureaucracy that was less thorough so as to reduce waits and that therefore made lots of mistakes.
There’s an important distinction in here: people in other countries “do not pay a price for personal insurance; they do not shop; they contribute.” As White puts it, “The international standard finances whole systems, not individuals, in a redistributive manner” (italics his). Funding health care is just another part of taxation, so the administrative overhead is tiny. “[T]he international standard risks little error,” White writes, “is simple to implement, and provides a stable insurance system. Any system of direct subsidies to individuals has none of these features, yet still, if it is to be adequate, requires the same net transfers from people with higher incomes to people with lower incomes.”
This was the part of Competing Solutions that struck me the hardest. The health-insurance conversation, at least since Hillary Clinton and Barack Obama were competing for the Democratic nomination, has been centered around the “mandate”: whether people will be required to buy insurance. Those of us who toss around terms like “adverse selection” have had the policy upper hand: if people aren’t required to carry insurance, only the sickest people will bother to get insurance, and the whole system will unravel. To the extent that the conversation veered off the mandate at all, it was to discuss the politics of the mandate. Literally no one, in any of the reading that I’ve done over the last two years, has discussed the wisdom of structuring a system like this. Which is odd, when you think about it, because the conversation has even more broadly been about cost control rather than universal access; you’d think that restructuring health insurance to look more like Medicare and in the process lower administrative costs would have been at the top of the list. Yet it was literally nowhere to be found. Another example of redefining “left-wing.”
I don’t mean to focus too much on this part of White’s book, which is really only a few pages toward the end. The funding section illustrates a pervasive feature of Competing Solutions, however: White’s absolute, from-the-ground-up, magisterial grasp of health-insurance issues, quite often leading to realizations that wouldn’t otherwise have occurred to me — debate in this country being as radically circumscribed as it is. White’s book is the very best of academia: slowly, patiently, methodically, and fairly covering an issue from every angle, with surprise the natural product of honesty.
White focuses on far more than just insurance; Competing Solutions is a guide to the reform of entire health systems, as practiced in other countries and as it could be practiced here. It addresses issues like how to encourage doctors to work in rural areas (“Wildavsky’s law”: “even Stalin and Beria couldn’t get doctors to move to the countryside”); how to discourage capital over-/under-invesment, for instance in MRI machines; whether the government should pay for medical education; and, of course, the dreaded “rationing.”
If this book were in everyone’s hands, we could all turn to the sections on France whenever someone holds it up as an example of Eurosclerotic creeping socialism, and look at bits like this:
Private insurance has different functions in France and Germany. In Germany it provides special convenience to some persons who are willing to pay higher fees to providers. In France it provides some supplemental benefits and compensates for cost sharing.
What’s that? France has private insurance? Indeed:
just as most Americans on medicare [sic -- White is diligent about not capitalizing the word] purchase medigap policies, over four-fifths of French citizens obtain supplementary coverage. Usually they obtain it from “mutuelles,” which are descendants of the guild funds. Mutuelles pay for both cost sharing and some extra benefits. Hospitals and the private clinics bill a patient’s mutuelle directly for coinsured inpatient care. A few mutuelles run their own clinics, at which the patient need not lay out any cash for ambulatory care. Private insurance provides some of the same coverage. But private insurers do not have clinics; they risk-rate [i.e., charge premiums that vary with how healthy they think the patient is], and the government favors mutuelles with a range of tax policies. Therefore even some insurance company workers have their own mutuelles!
(Internal footnote omitted.) There’s a hell of a lot of information in that paragraph. This book is dense, in a great way. Even the footnotes are charming: in one, which lists six foundational documents beneath the Clinton “managed care” plan, White writes, “[F]or a summary that expresses the beliefs of some remarkably uninformed supporters, see … .” At the end of that note he writes, “In 1994 the group produced a watered-down version that violated much of their original analysis. At best it was a concession as a matter of political realism; at worst, it represented the real interests of the group’s paymasters, large insurance companies.”
That’s where the book is driving, the whole way through: the intellectual incoherence and obvious insufficiency of every mid-90s American health-care plan. Thank god for the Congressional Budget Office, truly: Ira Magaziner and the others tried very hard to produce a bill that “looked like America,” in the sense that it doesn’t resemble what every other country on earth already does. The CBO, quite rightly, replied to each of them that they need evidence before they’ll claim that these bills save real money. As White, in his biting way, puts it:
“How can you say it can’t be done?” a member of the Clinton administration’s working groups on health care reform reports being continually asked by the groups’ director, Ira Magaziner. “It’s never been tried before!” One might reply that if something has never been done before, that is not the strongest evidence that something is possible. But when analyzed piece by piece, the case for managed competition without a global budget does not hold up. Both the competition and the management have been oversold.
The competitors to the Clinton plan, namely the Chafee and Cooper-Grandy bills, were even worse. No one wants to issue a “Medicare-for-All” bill, it would seem, and even after all this reading I still can’t figure out why.
So I can’t recommend highly enough that you read this book. I hope it has as much of an enlightening effect on you as it did on me. It’s the sort of book that I will undoubtedly return to for years, tapping one vein or another of health-system knowledge. Competing Solutions is inexhaustible.
