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Anthony Woodhead

Two households, both alike in


dignity?
________________________________________________________________

The public UK and market based US health systems certainly seem to


form two opposing houses. Yet, despite much rhetoric against
socialised medicine and free market competition, managers from each
system show affection for each other’s methods in attempts to address
quality, contain costs and improve the public health of their citizens.
Ultimately though, views on their relative merits come down to matters
of context and perspective. The first part of this essay will briefly
discuss their respective structures and tabulate some key quantifiable
differences; seeking to analyse reforms which have attempted to
improve each system; arguing neither is particularly successful in
containing costs and furthering public health. The second part will turn
to reflection on the merits of this form of analysis since the systems are
fundamentally so different.

Part 1: Comparative analysis of UK and US healthcare


management.

Public v’s Private: Volume v’s Variety

The UK spends 8.4% of GDP on healthcare, funding is predominately through


taxation with delivery to all free at the point of consumption. The NHS has grown
to be Europe’s largest organisation, employing around 1.4 million people. By
2006/7 the NHS budget was about £104bn. (Wellards, 2008) The US spends
15.3% of GDP, the private sector accounts for 54% of total spend with 34% of
this from private insurers, the remaining 15% coming from out-of-pocket
expenses. 46% comes from taxation, public spending in absolute terms is very
similar to the UK. Medicare, a means tested fund for the over 65’s is provided
with 52% of this amount, only 12% is used for Medicaid in supporting the very
poorest. Provision is mainly via private organisations. 70% of the population
have policies. 13% are covered through Medicare and 12% through Medicaid,
administered at the state level. 15% have no insurance, this is mainly working
families in the lowest third income bracket whose employers don’t provide plans.
(Reinhardt, 2005)

Table 1: Macro difference in US and UK health care


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United United
States Kingdom
GDP per capita, 2006 ($)a 45489 35669
Health expenditure, 2006 (%, GDP)b 15.3 8.4
Public Health expenditure, 2006 (%, GDP)c 7.0 7.3
Private Health expenditure,2006 (%, GDP)d 8.3 1.1
Per Capita health expenditure, 2006 ($)e 6959 2996
Obesity Rate, 2005 (%)f 32 23
Administration Costs, 2006 ($ per capita)i 465 172
Doctors per 1000, 2006d 2.4 2.1
Acute Hospital Beds per 10,000, 2005d 2.7 2.3
MRI's per million, 2006d 26.5 5.6
Male Life Expectancy, 2005 (yrs)m 75.2 77.1
Female Life Expectancy, 2005 (yrs)n 80.4 81.1
Deaths per 1000 live birthso 5 6.9
Reduction in “avoidable” deaths 19997/98- 5.1 27.2
2002/03 (per 100,000)p
a-e, m-o i
OECD, (2009(a)) Peterson & Burton, (2007)
f-g p
ACP, (2008) Nolte and McKee, (2008)

Aging population using new technologies

Healthcare spending has risen steadily over time but the US rate outpaces the
UK:

Graph 1: Change in health expenditure with time(OECD, 2009(b)):

It misconception that aging and, in the case of the US, increased administration
costs are the main drivers behind this increasing spend. As the table shows, in
real terms administration makes up to low a proportion (Garber & Skinner, 2008)
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and aging has much too gradually an impact. Though the retirement of the
‘baby-boomers’ will increase demand it will happen far too slowly to account for
all the increase. In the US, Reinhardt, (2003, p.30) shows that after modelling for
factors such as “medical care price inflation; greater resource intensity of
treatments, including the availability of new technology; overall population
growth; and so on” aging will add only 0.5% a year to a forecasted total
expenditure growth of 8.4%. Gray (2005) discusses studies that indicating similar
proportions in the UK contrasted with lower overall growth; these also show
stronger correlation between spend and proximity to death. In the UK 15.7% are
aged 65+ yet consume 43.7% of resource in the US it’s 12.3% and 48.8%
respectively (Blank and Burau, 2007 p.7)

Critiques could argue much increase is fuelled by supply induced demand;


proponents of free markets might equally conclude this is just providers
responding to what is wanted. However as Garber & Skinner (2008 p.7) highlight
both systems currently experience ‘flat-of-the-curve’ returns on investment and
the US experiences an even shallower production function, getting even less
‘bang’ for each additional buck. Though numbers of hospital beds and doctors
are comparable, the US uses more and newer technologies. This is exemplified
by the fact the US has nearly 5 times as many MRI machines as the UK; this is
still only half the number of Japan which comes out on top, however the US; “is
consistently at or near the top of all of these measures.” William’s ‘fair-innings
argument’ controversially proposes that better returns would be had in
healthcare if the balance of spend was shifted to the young (as cited in Nord,
2002) and issues concerning how to deal with these rising costs are compounded
by decreasing population growth:

Graph 2: Predicted Ratio of inactive elderly (65+) to the labour force


(OECD,2009(a))
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Efficiency, cost containment and reform

Recent UK reform sought to increase healthcare spending bringing it in-line with


other European countries. In 2002 Blair’s ‘third-way’ policies resulted in the
‘purchaser-provider-split’; this contestability was marketed as a way of giving
patients more choice, aiming to increase productivity through a quasi-
competitive market which in practice it is seldom allowed to fail. Savings remain
limited, particularly to rural areas, where there is little real choice. (Maynard,
2005(a))

Recent US reform has attempted to provide universal coverage but federal


politics and less centralised presidential governance makes this difficult. Clintons
tried and failed; at time of writing Obama is struggling to pass watered down
reform. (Marmor et. al, 2009) Often more reform occurs at the state level;
recently Massachusetts extended coverage to all but 2.6% of the population.
Brennan & Mello (2009) show this was by way of transferring public money from
an uncompensated care pool into subsidy funding and allowing the uninsured to
purchase insurance, whilst developing a new federal waiver that brought the
extra money needed to provide Medicaid rate increases for private hospitals and
physicians. However, they caution against extending this model to other states
since there was a much lower proportion of near-poor and non–Medicaid-eligible
uninsured combined with most insurance through by local non-profit companies.
Variation between states is massive as Dartmouth Atlas Studies (2006) highlight.

Health is a service industry; 70% of costs are on salaries, getting value for
money here is paramount to efficiency however success of pay for performance
reform has been limited. (Walshe & Smith, 2006) In the UK the consultant
contract was not signed as it would result in thorough management of clinical
activity deemed “unacceptable to the profession and its trade union” and the
QAF has also resulted in GP’s being reimbursed much more without significant
improvements in health outcomes (Maynard, 2005(a) p.73) In the US also, fee for
service also dominants and efforts to control this prove particularly difficult
under private healthcare. Capitation has been instigated with public funds in the
hope this would help curb private price cost inflation but with little success.
(Reinhardt, 2005) One man’s cost is another’s income; US citizens pay a lot more
simply because healthcare is more expensive. A study based on tracer diseases
including diabetes and lung cancer found they used approximately 30% more
inputs per capita spending roughly 75% more on increased prices. (Anderson et
al., 2003)

Both countries have tried to reduce overuse, underuse and misuse through
assessing new health technologies and implementing evidence based medicine.
As Banta (2003 p.121) shows, in the US there have been attempts at state levels
and by large private insurance companies, however, “with no effective national
co-ordination, HTA activities are carried out in many organisations with different
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goals in mind, often using different methods.” whereas the UK established NICE
in 1999. However due to political difficulties faced in overtly rationing health,
these organisations shy away from it and the ‘elephant-in-the-corner’ remains
cost containment. (Fuchs et al., 2007) As NICE (2008 p.9) indicate, “statutory
instruments and directions do not allow (them) to take budgetary impact or
affordability into account when advising on cost effectiveness.” In 2003 it
became a legal requirement that funding for all positive advice be made
available within three months of publication. This has led to pressure on PCT’s to
fund new technologies with marginal benefit at the expense of increasing
funding to more cost effective areas. (Maynard, 2005(a)) Rationing is an
anathema to private healthcare; however the state of Oregon did attempted to
explicitly ration public healthcare mathematically. Here to there were also
problems as patient and government pressure forced managers to move services
up and down the list by hand. Results were modest; however the amount of
people without coverage was reduced from 18% to 11%. (Oberlander, 2001)

Public Health and social networks; bridging the gap between structure
and agency

US health problems are amplified by the lack of universal coverage; this alone
goes a long way in explaining their slightly reduced life expectancy; slightly
greater infant mortality and much smaller reduction in preventable deaths
compared with the UK. Public health problems correlate with inequality not
income. Willkinson & Pickett (2009 p.111) show “people in more equal societies
live longer, a smaller proportion of children die in infancy and health is better”
(see appendix). The social determinants of health have been known about for
some time. Marmot et al., (1978 p.249) found the lowest grade civil servants had
a mortality rate three times higher than those in the highest grade; concluding
"more attention should be paid to the social environments, job design, and the
consequences of income inequality." Recent US work into social networks by
Christakis & Fowler (2007 p.376) quantifies the strength of social networks,
showing for example “among married couples, when an alter became obese, the
spouse was 37% more likely to become obese.” Successful public health
management requires multifaceted approaches at a societal level but this is hard
to achieve and both systems struggle, the US in particular. (Marmot, 2010)

Equity equality and path dependant constraints

Klein argues (2005) once a particular system takes root it can be calculated with
some certainty as being more costly to change in comparison to any benefits
that might potentially be gained. Believing that by eschewing private funding the
NHS deprives itself of potential additional income and by having a fundamentally
top down approach, which ultimately constrains choice; it is less effective at
maximising returns when given more money.

A World Health Report (2000) ranked the US 37th out of 191 countries, coming
top for responsiveness, with the UK coming in 26th here and 18th overall. By its
controversial measures the UK fell short for offering to little choice and the US for
not providing universal coverage. Many US citizens argue they happily pay for
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what they want; they earn more so any net benefit comes at reduced cost to
them and as early adopters they subsidise others as new technologies eventually
trickle-down to the less well-off at lower cost. (Reinhardt, 2005) With any
comparative analysis ‘best’ comes down to a matter of perspective and reform is
limited by path dependencies; bringing into question the validity of such an
approach. The second part of this essay will turn to analysing this.

Part 2: A Critical Appraisal of Comparative analysis


By The Numbers

Since much of my analysis has drawn on health economic arguments it should


come as no surprise that I ere towards the positivist camp. I believe in the
scientific method, OXO, where Observation (O), combined with a perturbation (X)
along with a control allows for analysis of changes and if measured correctly, this
change can be attributed to the perturbation within know uncertainty proving
causation. (Pawson and Tilly, 1997)

Comparative analysis is at the core of ‘hard’ science and its rigour produces
some profound findings in healthcare. It has helped show the relative effects of
aging, discounting it alone as a major cost driver and in the work of Christakis
and Fowler (2007) allowed for comparison against a theoretical network that
would arise if distribution were random, proving the large strength of social ties
in obesity. However there is a problem in comparing only the US and UK by the
numbers because the US is so often an outlier and an N value of only two often
proves little. This is evident in Wilson and Pickets graphs; the trend, both
between and within nations, only becomes apparent though analysing groups of
countries, or states. (Mills et. al, 2006)

Through meta-analysts, science looks to build up bodies of evidence and theories


are only valuable if they provide repeatable results. However with social science
it is difficult to control for all factors, making attributing causation problematic.
McLaughlin (2001) argues social constructs based on associations and
interactions can never be “be neutral representations of reality, but are part of
complex networks of both technology and social relationships.” (in Green, 2000,
p. 454) Difference between Evidence based Medicine and Evidence based
Management highlight the issue well and Morrell (2007) provides a particularly
interesting polemic against the narrative of this approach. Since the aim of
building evidence based on ‘stocks’ of knowledge can ultimately be traced to
ideological concepts of positivism, he suggests calls for a paradigm shift from ad
hoc to coherent research programs and increased systemic reviews of evidence
based management are fundamentally are “intriguing, self-referential paradoxes
that follow a traditional ‘narrative’ review format, whilst simultaneously calling
the value of such research into question.” (p.624) He argues that moves towards
“normal science” which has a higher degree of “paradigmatic consensus” and
where there is less “debate over first principles” (p.621) are rather a form of
physics envy which he terms physician envy in the healthcare context. This is
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why I think numbers often seem more descriptive in social science; though
science argues this is a reductionist form of analysis.

Context remains king but methods can be mixed.

As Pawson and Tilly (1997) highlight, the difference in the social sciences is
Context + Mechanism = Outcome (CMO). Since it is impossible to control against
everything, the effect of any management initiative taken from one country and
introduced to another will always differ simply because the environment differs.
This has been evident with different US states, binging into question the validity
of comparing the UK against a ‘nation of nations’. (Mills et. al, 2006) The OECD
caution:

“Adaption can be assisted by learning from other governments but, unless


countries are very similar indeed, learning will work better at the level of
system dynamics than at the level of instruments and specific practices”.
(2005, p. 13)

Hypothesising that comparative analysis is generally more useful in accounting


for macro level mechanisms. However I feel there argument can also fall down at
the micro level. The closer evidence based management gets to evidence based
medicine the more context is controlled. With clinical medicine occasionally we
know exactly what should be done but are slow to act and even prevented from
doing so for a variety of contextual reasons discussed in part one. Radical
relativism argues attempts are ultimately futile, since context and perspective
are everything. (Hantrais, 1999) I am unwilling to fully concede to this. I feel
some dynamics of complexity science apply to healthcare management. So
called ‘butterfly-effects’, mean even small changes in context yield large
difference in outcomes; however results are determinable, to a limited extent, in
an admittedly extremely complex, non-linear fashion. Hence some macro level
concepts influence the system greatly allowing broadly predictable outcomes, as
the OECD highlight. (Gleick, 1987)

With regard to public health, Tan et al., (2005 p.43) discuss how historically
public health management was about identifying the ‘cause’ of a disease usually
traced back to an acute infection. With advances in our understanding of health
todays epidemics have fuzzier boundaries being a result “of the interplay of
genetic predisposition, environmental context, and particular life styles.” The
limits this complexity places on management means in the short term it is also
feasible to introduce a degree of perturbation, measure small changes and
observe some limited connections. However in the long term management must
be social in the sense that consensus on broadly acceptable course of action
must be agreed upon and worked towards.

Since Willkinson and Picketts (2009) work shows equity having strong correlation
over a large range of variables in health-outcomes it be what chaos theory terms
a ‘strange-attractor’ of health; strange as it can’t be fully differentiated, limiting
predictability. When combined with the work of Christakis and Fowler (2007) this
gives limited insight as to social causes, a small inroad in bridging the macro-
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micro gap. Mason (2006 p.23) believes mixing qualitative methods with
quantitative structure helps us to think “beyond the micro-macro divide, and to
enhance and extend the logic of qualitative explanation” By meshing or linking
rather than integrating we can develop multi-nodal dialogic explanations that
“allow the distinctiveness of different methods and approaches to be held in
creative tension.” Though it is positivistic to say so, I feel such approaches have
much merit.

However, results are never neutral in the sense that they can be judged from
differing perspectives. The use of absolute compared to percentage figures also
gives rises to debate about relative attribution. In absolute terms Americans
clearly spend more on healthcare than the UK but by thinking about this in
proportion to their total earnings the difference is reduced. (Mills et. al, 2006)
Comparative analysis is rarely performed for purely academic reasons; often the
goal is for convergence toward what is perceived, and presented as ‘best’
evidence based practice. Pollitt (2001 p.491) argues we should distinguish
between different stages of policy: “discourse, decisions, practice and results;”
with each requiring different research strategies; decisions being the most
straightforward and results is the most difficult. This has been evident in the
analysis; the political rhetoric is relatively easy to distinguish as were the
intentions of reform however there was much debate as to best practice and the
merits of results.

Conclusion
Part one indicated how even two fundamentally different systems experienced
similar problems in managing the health of their citizens. It was found that
increasing spending on healthcare in both systems was mainly related to our
increasing ability to consume it, particularly in the latter stages of life. Rationing
was shown to be difficult in both systems with reform often being a protracted
affair, yielding limited improvement. It was argued that many reasons the US
experiences reduced returns on investment was due to the fact their society is
less equal and coverage is not universal.

Part two briefly discussed the nature of evidence in social science and the
difficulties in controlling against context and determining causation. Pollitt’s
framework was found to be particularly useful in differentiating between rhetoric,
intentions, actions and results and it was decided that whilst it might be possible
to adopt scientific management in the short term, particularly with evidence
based practise; in the long term management decisions must be about social
consensus. It was argued by mixing quantify with qualitative methods the value
of comparative analysis to policy makers could be increased.

Ultimately there is merit in comparing two radically different systems, mainly


because it helps highlight universal problems in managing healthcare, regardless
of whether the goals are libertarian or egalitarian. However, since health
correlates much more with equality than cost, I can’t help but wonder if this
analysis has been comparing the wrong divide. It seems somehow fitting to end
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with words from a Conservative Prime Minister: “Two nations between whom
there is no intercourse and no sympathy; who are as ignorant of each other’s
habits, thoughts, and feelings, as if they were dwellers in different zones, or
inhabitants of different planets: the rich and the poor.” (Disraeli, 1845)
Anthony Woodhead

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NB The Title, unreferenced, is the opening line from William Shakespeare’s
Romeo and Juliet. 1597 and this essay was largely written before Obama,
thankfully, managed to pass a health care reform bill, but obviously before
any papers were available analysing it’s effects.

Appendix

HTA- Health Technology Assesment


NICE- National Institute for Health and Clinical Excellence
QAF- Quality and Assessments Framework
OECD-Organisation for Economic Co-operation and Development
PCT- Primary Care Trusts

U.S. state abbreviations:

Alabama: AL Louisiana: LA Ohio: OH


Alaska: AK Maine: ME Oklahoma: OK
Arizona: AZ Maryland: MD Oregon: OR
Arkansas: AR Massachusetts: MA Pennsylvania: PA
California: CA Michigan: MI South Carolina: SC
Colorado: CO Minnesota: MN South Dakota: SD
Connecticut: CT Mississippi: MS Tennessee: TN
Delaware: DE Missouri: MO Texas: TX
Florida: FL Montana: MT Utah: UT
Georgia: GA Nebraska: NE Vermont: VT
Hawaii: HI Nevada: NV Virginia: VA
Idaho: ID New Hampshire: NH Washington: WA
Illinois: IL New Jersey: NJ West Virginia: WV
Indiana: IN New Mexico: NM Wisconsin: WI
Iowa: IA New York: NY Wyoming: WY
Kansas: KS North Carolina: NC
Kentucky: KY North Dakota: ND

Willkinson & Pickett (2009) graphs are created from statistical sources and
methods detailed in full at:
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http://www.equalitytrust.org.uk/why/evidence/methods [Accessed 25th March


2010]

The site states:

In our book, for all of our international comparisons, we use the 20:20 ratio
measure of income inequality from the United Nations Development Programme
Human Development Indicators, 2003-6. As survey dates vary for different
countries (from 1992 to 2001), and as the lag time for effects will vary for the
different outcome we examine, we took the average across the reporting years
2003-6. For the US comparisons we use the 1999 state-level Gini coefficient
based on household income produced by the US Census Bureau. Sources:

United Nations Development Program. Human development report. New York:


Oxford University Press, 2003, 2004, 2005, 2006.

US Census Bureau. Gini ratios by state, 1969, 1979, 1989, 1999. Washington,
DC: US Census Bureau, 1999 (table S4).
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