Hoover Daily Report

Where ObamaCare is Going

via Wall Street Journal
Wednesday, August 13, 2014

The Obama administration showed its hand long ago with the nomination of Tom Daschle, an advocate for Britain's socialized National Health Service, as secretary of Health and Human Services in 2009. (Mr. Daschle withdrew amid criticism for nonpayment of taxes.) The White House installed another outspoken NHS fan, Donald Berwick, as an interim appointee (2010-11) to run the Centers for Medicare and Medicaid Services.

This summer, the Commonwealth Fund—a private foundation focused on health care that is a favorite of progressive policy types—issued a report ranking the NHS as the best medical system among those in 11 of the world's most advanced nations, including Canada, France, Germany, Switzerland and Sweden. Coming in last: U.S. health care.

Yet the Commonwealth rankings are contradicted by objective data about access and medical-care quality in peer-reviewed academic journals. For instance, Americans diagnosed with heart disease receive treatment with medications significantly more frequently than patients in Western Europe, according to Kenneth Thorpe in Health Affairs in 2007. In Lancet Oncology in that same year, Arduino Verdecchia published data demonstrating that American cancer patients have survival rates for all major cancers better than those in Western Europe and far better than in the U.K.

Similar examples concerning the deadliest and most significant diseases abound in medical journals. One may ask why the Commonwealth Fund's health-care rankings published in June don't reflect that reality. Theanswer lies in the report's methodology, which relied heavily on subjective surveys about "perceptions and experiences of patients and physicians."

Yet even as the single-payer system remains the ideal for many on the left, it's worth examining how Britain's NHS, established in 1948, is faring. The answer: badly. NHS England—a government body that receives about £100 billion a year from the Department of Health to run England's health-care system—reported this month that its hospital waiting lists soared to their highest point since 2006, with 3.2 million patients waiting for treatment after diagnosis. NHS England figures for July 2013 show that 508,555 people in London alone were waiting for operations or other treatments—the highest total for at least five years.

Even cancer patients have to wait: According to a June report by NHS England, more than 15% of patients referred by their general practitioner for "urgent" treatment after being diagnosed with suspected cancer waited more than 62 days—two full months—to begin their first definitive treatment.

In response the British government has enlisted private care for help, including most recently through the Health and Social Care Act 2012. In May last year, the Nuffield Trust, an independent research and policy institute, along with the Institute for Fiscal Studies, the U.K.'s leading independent microeconomic research institute, issued a report on NHS-funded private care. The report showed that over the past decade the NHS, desperate to reduce its ever-expanding rolls, has increasingly sent patients to private care. The share of NHS-funded hip and knee replacements by private doctors increased to 19% in 2011-12, from a negligible amount in 2003-04.

In 2006-07, according to the report, the NHS spent £5.6 billion on private care outside its system. This increased by 55% to £8.7 billion in 2011-12, including a 76% rise in spending on nonprimary care, going to £8.3 billion from £4.7 billion, despite significant reductions in spending on private care attributed to the financial crisis.

Britons who can afford to avoid the NHS are eager to do so. Even with a slight decrease due to the 2008 financial crisis and its aftermath, about six million British citizens buy private health insurance and about 250,000 choose to pay for private treatment out-of-pocket each year—though NHS insurance costs $3,500 annually for every British man, woman and child.

The socialized-medicine model is struggling elsewhere in Europe as well. Even in Sweden, often heralded as the paradigm of a successful welfare state, months-long wait times for treatment routinely available in the U.S. have been widely documented.

To fix the problem, the Swedish government has aggressively introduced private-market forces into health care to improve access, quality and choices. Municipal governments have increased spending on private-care contracts by 50% in the past decade, according to Näringslivets Ekonomifakta, part of the Confederation of Swedish Enterprise, a Swedish employers' association.

Swedish primary-care clinics and nursing facilities are increasingly run by the private sector or receive substantial public funding. Widespread private competition has also been introduced into pharmacies to tear down the previous government monopoly over all prescription and non-prescription drugs. Though Swedish economist Per Bylund calculates that the average Swedish family already pays nearly $20,000 annually in taxes toward health care, about 12% of working adults bought private insurance in 2013, a number that has increased by 67% in five years, according to the trade organization Insurance Sweden. Almost 600,000 Swedes now use private insurance, though they are "guaranteed" public health care.

The recent Veterans Affairs scandal, following the disastrous ObamaCare rollout, was a red flag about problems of nationalized health. Now concrete evidence is coming in from other countries that have tried it for decades. The reality is that the key goals for health-care reform—reducing spending, expanding access to affordable coverage, preserving personal choice and portability of coverage, promoting competition in insurance markets, and maintaining excellence in medicine—do not require government to directly provide insurance or health care.

Dr. Atlas is a physician and a senior fellow at Stanford University's Hoover Institution.