Waiting, Here and There

by Russ Roberts on February 27, 2006

in Health

From an OECD study of mean waiting time for elective surgery in developed countries (with thanks to reader Anthony Batty):

Evidence. Survey data suggest that there are very low waiting times for elective surgery in the  U.S. Blendon et al. (2002) reported the percentage of respondents to a phone survey in 2001, who had  experienced elective surgery in the last two years and who said they had waited longer than four months  for elective surgery. It was found that 5% of patients had been waiting for at least 4 months in the United  States, as opposed to 23% in Australia, 26% in New Zealand, 27% in Canada and 38% in the United  Kingdom. Carroll et al. (1995) found that the percentage of the respondents in need of elective coronary  bypass who had been waiting for more than three months was 0% in U.S., 18.2% in Sweden, 46.7% in  Canada, and 88.9% in the United Kingdom. Similarly, Coyte et al. (1994) found that surveyed patients in  need of knee replacement had a median waiting time of three weeks in the United States and eight weeks in  Canada (Ontario). 

Read this sentence again:

the percentage of the respondents in need of elective coronary  bypass
who had been waiting for more than three months was 0% in U.S., 18.2%
in Sweden, 46.7% in  Canada, and 88.9% in the United Kingdom.

I guess one man’s "elective" is another man’s "emergency," but I am still comforted by that 0% figure.

The conclusion of the study:

Conclusion. The United States spends much more on health care compared to all other OECD  countries. Although bed capacity is lower compared with countries without waiting times, day surgery  capacity is probably comparable or higher. The majority of providers of surgery is private and is highly incentivised to meet demand by activity-related payments.

Highly incentivised.  Yes.  It does make a difference.

I posted earlier on the demise of Canada’s all-public system as reported in the New York Times.  I forgot to mention this remarkable quote from Dr. Brian Day, the medical entrepreneur who has been opening private clinics:

"This is a country in which dogs can get a hip replacement in under a
week and in which humans can wait two to three years."

The incentives are changing.  Good news for human Canadians.  Let’s  hope the United States moves toward a health care system where incentives play a larger rather than a smaller role and where people spend their own money rather than the money of others.

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{ 27 comments }

the Radical February 27, 2006 at 2:20 pm

"This is a country in which dogs can get a hip replacement in under a week and in which humans can wait two to three years."

The "human rights" crowd is conspicuously silent on this one.

Also odd that the Animal Liberation Front has yet to declare another victory over evil humans.

Don Lloyd February 27, 2006 at 2:59 pm

Russell,

"…I guess one man's "elective" is another man's "emergency," but I am still comforted by that 0% figure…."

Of course it could be that none of the 3 month group survived to answer the phone survey.

Regards, Don

faultolerant February 27, 2006 at 3:21 pm

Trapier, the study you cite (and the inevitable arguments against it) has been of great interest to me. I'm one of those consumers who pays the full-boat for healthcare. We have a HDHP (High Deductible Health Plan) with tax-free contributions (Via HRA/HSA) equal to our maximum out-of-pocket for the year.

This perspective has made my wife and I *much* better healt-care consumers. It is our perception that we haven't "done without" any coverage we deem necessary, nor have we had to subject ourselves to the opinions of someone at an insurance carrier.

I relish the freedom this new program offers and sincerely doubt that I would ever want a lesser program. Yes, it's expensive, but no more so than any COBRA plan, or (lately) the managed plans coming out of Teamsters and other unions. (No, we're not unionized, that's just a comparison)

The entire argument about "necessary" health care is troubling. Who is to say what's best for me, except me? Now that I'm in a purely consumer-driven market, my choices are so much broader than ever before. I can but wonder why someone would assert that I would forego "necessary" health care when, as a consumer, I don't forego "necessary" food or "necessary" transportation or "necessary" heating for my home. (The poverty argument is another whole entity, and not really what's being attacked by the Rand opponents).

Isn't this yet one more time when the "experts" think they know what's better for consumers than consumers actually do? I'd much rather make choices that are in MY best interest, and not have them handed down to me by some distant "expert" who only cares for me as a number and not a person.

It's my opinion that the Rand study was quite accurate: intelligent, motivated health-care consumers are the best – and IMHO, the ONLY – way to manage health care.

Alex February 27, 2006 at 4:41 pm

Can anyone explain this for me;
"The median wait time between a referral by a family doctor and an appointment with a specialist has increased to 8.3 weeks last year from 3.7 weeks in 1993, according to a recent study by The Fraser Institute, a conservative research group. Meanwhile the median wait between appointment with a specialist and treatment has increased to 9.4 weeks from 5.6 weeks over the same period."
From the New York Times article about the Canadian Health Care System. Why did the median times go up, since there were no changes in the health care system(that I am aware of)? I think this is a valid question, because it would appear that the Canadian system was comprable to that of the US in terms of waiting times at a fraction of the cost in 1993, but a sizeable gap opened up by 2005. Why is that? If anyone can get info on this, I would greatly appreciate it.

John Dewey February 27, 2006 at 6:34 pm

Alex, here's an explanation that makes sense to me:

"Since the 1990s, Canada has experienced an exodus of physicians. Their number one destination? The United States and its much maligned healthcare system. At last estimate, there were over 8,000 Canadian physicians practicing in the United States. The vast majority have let their Canadian licenses lapse, indicating no desire to return."

"The plight and flight of Canadian doctors reached its peak in the mid-1990s when the government tightened its healthcare budget and physician reimbursement declined dramatically. And yet, although the Canadian government has tried to reverse the trend by committing more tax dollars to its healthcare system, physician emigration still jumped by 68% in 2001. According to Dr. Hugh Scully, co-chair of a Canadian task force on physician supply, the equivalent of two or three medical school classes are leaving the country each year. Its a not a situation that a country with too few medical students can afford to maintain."

http://tinyurl.com/f7jtq

Aaron Krowne February 27, 2006 at 6:39 pm

The US health care system is wonderful if you need surgery or have cancer. I mean, you may not be fully covered and go bankrupt, but hey, at least you needn't wait because private health care providers will be lined up at your door to charge inflated rates for medical services.

Except lots of people are waiting. Before I started studying the health care issue, my own experience told me there was a problem. I have to face waits of weeks or months to get routine/preventative care, and the costs are outrageous. And I have a "really good" employer-sponsored healthcare plan, and what's more, I'm an employee of the health care provider!

If all is a-OK in US health care, why has the cost increased at about 3 times inflation in the past half decade? Normally progress *lowers* costs. And the bulk of the baby boomers aren't even retired yet!

The gleeful quote about the US "spending the most" on healthcare is laughable. This (new) feature of our spending patterns is actually shocking, not comforting.

When you take the "US healthcare sucks" and "US health care is superlative" data together, it doesn't take a rocket scientist to see what is going on: incentives are structured unfairly in favor of health care providers, resulting in a burdensome load for consumers in general. Of course, with health care providers themselves financially healthy, they have ample ability to take care of patients with critical concerns first.

John Dewey February 27, 2006 at 6:40 pm

I left out the best paragraph from Dr. Sydney Smith's article:

"And why are Canadian physicians leaving their patients in the lurch? Not for the money. They leave for better research opportunities, for greater professional and clinical autonomy, better job choices, and better medical facilities. They leave, in other words, for all the advantages conferred by a free-market healthcare system — the same advantages that we American physicians take for granted when we yearn for a Canadian-style system."

John Dewey February 27, 2006 at 6:53 pm

Aaron,

My wife has worked for 30 years alongside surgeons in hospitals large and small. She believes that surgeons and hospitals practice much more defensive medicine now than when she started. Many doctors blame malpractice lawyers and the idiot juries who deliver outrageous awards.

I've also heard doctors complain because patients are not responsible for much of their costs. Medicare patients, in particular, have no disincentive to seeking more medical care than they need. My brother-in-law recently pointed out several geezers sitting in his waiting room with very minor cuts or bruises, who apparently had nothing better to do with their time.

I don't think the medical profession believes U.S. health care is A-OK.

liberty February 27, 2006 at 7:15 pm

>I have to face waits of weeks or months to get routine/preventative care

You had to wait weeks for routine care? That is uncommon in the US. But in the UK you have to wait months for any care other than certain kinds of emergenicies – routine, elective, chronic etc.

I have private health insurance and there is a list of in-network providers. I can call the whole list looking for routine-care providers that have open slots within the coming week and pick one and get an appointment very fast. The same goes for dental, chronic specialist care (although their may be fewer to choose from) etc.

In the UK my mother uses the NHS. She can get an appointment at the one doctor in her area and she may wait weeks to get a phone call and then months to get an appointment. She can only see her specialist one time a year, while my sister in the US can see a specialist as often as she likes, usually waiting no more than a couple of weeks to see the one of her choice.

Kevin February 27, 2006 at 8:54 pm

*** This is a country in which dogs can get a hip replacement in under a week ***

For the record, for any Economists doing research, my cat was diagnosed with a blown knee ligament, surgery was immediately scheduled, and it was conducted two business days later (in the US. Better, Texas.)

Of course, I've been flat broke and eating her cat food all month as a result of paying for the procedure (that'll make the pet-healthcare commies happy).

Al February 27, 2006 at 11:43 pm

Canadian physicians leave Canada because many do not feel valued. In the late 90s medical school enrollment was decreased because doctors were perceived to be the enemies of cost containment. All living creatures move to comfort and many of my physician friends didn't feel comfortable here anymore. As your HMOs become more authoritarian we are seeing a return of many of our doctors.
As for waiting lists, they should be called risk lists. If there was not a benefit to the patient, the procedure would not have been recommended. The proper medical term is "risk stratification".
Just remember also that the payer will call the shots. Dr. Rachlis, a strong proponent of the Canadian Health Care system and preventative medicine, coined the phrase " it's better to build a fence at the edge of a cliff than a hospital at the bottom of it". Just remember, a fence can also become a corral, with the government telling you how to live your life.

Mike February 28, 2006 at 9:17 am

Aaron,

I simply do not believe you are being truthful.

I live in rural Kentucky which is one of the poorest, most miserable places in the U.S. and have had bouts both of employer provided health care and no health care coverage and have NEVER ever experienced problems with preventive care. Even the free clinics in my part of the state are very easy to gain access to for routine appointments.

Second, you should try reading some of Arnold Kling's stuff on health care – it is a very reasoned understanding of health costs. Yes, malpractice insurance is a problem and so is the fact that very few people pay much for their own health care, but the real reason as I see it is that we are all MUCH richer than ever and you would expect health expenditures to increase dramatically as incomes go up. Western European nations are much poorer by comparison and simply cannot spend as much as we do.

When you have $10 to your name, you secure food and shelter first. When you have $100, you may look for some leisure goods. When you have $1000, basic medical care looks good. When you have $10000 perhaps you see a dentist too. When you have $50000 an eye doctor probably sounds good to see every year. … You get the point.

Last anecdote, my wife and I just had a child and when I inquired how much each procedure would cost and why certain things were done, people turned pale white that I would even ask such questions. It turns out that what could have cost $10,000 without me asking, ended up costing $5,000 – even though ,my out of pocket in all of that was $2,000.

Helen's_kid February 28, 2006 at 9:23 am

Aaron,

Well spoken, you are among the smartest people I have read.The incentives for health care professionals are heavily weighted in their favor. To my mind the one incentive most affecting the high cost of health care in the U.S. is the accounting procedure that allows revenues to be offset by bad debt. It works like this.

A doctor (hospital) performs a procedure and presents the patient with a very high bill. The patient can pay the bill, in which case the doctor realizes a huge profit for his efforts. Or, some insurer receives the bill. The insurer has limits to what it pays and generally pays a portion, leaving a portion unpaid. This unpaid portion may be more affordable to the consumer and it may get paid, in which case the doctor makes a huge profit. If this unpaid portion is left unpaid, it becomes bad debt, which is used by the doctor to offset income. The poor doctor has suffered a loss. If no one pays the bill, the doctor has invested hardly anything and now has a windfall bad debt, with which to offset even more income. Any good doctor's practice borders on bankruptcy. Any doctor or hospital that shows income is doing something wrong. It is in the health care provider's best interest to present a high bill. Fixing this little accounting practice would almost certainly fix the rising cost of health care in this country and stem the exodus of doctors from Canada.

Xmas February 28, 2006 at 10:51 am

Helen's Kid,

Though some of that bad accounting comes from the payout rates of Medicare/Medicaid and the insurance companies.

If I remember the system correctly, I believe that Medicare only pays 80% of the costs for any procedure. At the same time, it also requires that hospitals and doctors offer the lowest costs for any procedures to Medicare. Therefore, doctors and hospitals cannot give discounts to hardship patients not on Medicare because then they are forced to offer the same, discounted price to all Medicare patients, of which Medicare will only pay 80%.

Kebko February 28, 2006 at 11:06 am

Helen's Kid:

The revenue from
(1) charging $1,000 & getting paid for it
or
(2) charging $5,000 & only getting paid $1,000 & writing off the rest as bad debt

would both be exactly the same. There is no accounting advantage from #2.

John Dewey February 28, 2006 at 1:09 pm

Helen's kid said:

"A doctor (hospital) performs a procedure and presents the patient with a very high bill. The patient can pay the bill, in which case the doctor realizes a huge profit for his efforts."

"Any good doctor's practice borders on bankruptcy."

Can you you support these statements? Do you know many doctors who are either realizing huge profit on the treatment of an individual or who are bordering on bankruptcy?

The doctors in my family – and the ones my wife works with – are all very well off. That's because they work very long hours and treat very many patients. It's also because they have invested a major portion of their lives preparing for their careers. And it's because they have talent and perserverance that few of us can claim to possess.

Can you direct me to the source for your argument that bad debt significantly distorts medical costs? I would like to pass that by the doctors I know.

Helen's_kid March 1, 2006 at 10:42 am

John Dewey

Some years ago, I aquired the contents of a cardiac clinic in Las Vegas, Nevada. It included financial records and medical histories. I had these items destroyed. The clinic specialized in cardiac catherizations. What I found interesting was the monthly statement. For example a physician might bill $27,000 in office visits, but only receive $15,000 in cash which was offset by $12,000 in uncollected billlings for a net income of $3,000. That puts him in the class of us ordinary folk. Do some research.

Take a trip to the parking lot of any major hospital. You will notice that the most convenient parking is reserved for physicians and is clearly marked. Now assess the value of the cars parked in those spaces and compare them to a random selection of cars parked in the patient parking spaces. I'm going out on a limb here, but, you will observe that physicians have the more valuable cars. That puts them a cut above us ordinary folk. Pardon the pun. I was dismayed that you asked if I had any evidence to support my statements. I noticed that you also made statements that need support. Like:

"they have talent and perserverance that few of us can claim to possess." Where do you get that? I found from my examination of patient medical files that the wording was transcribed verbatim from one patient to the next. The procedure was identical from one patient to the next. It was as though patient care was a carbon copy, copycat, assembly line, medical billing factory procedure of currently accepted medical procedures. Which it is!

Patient: I have to have a stent put in.

Doctor : BFD! We do so many, we can do it with our eyes closed. That doesn't bring the price down. We still bill for our talent and perseverance.

" That's because they work very long hours and treat very many patients."
You are correct, however, they may only see patients once a week or twice a month. They schedule everyone for the same clinic day, at the same time, and after waiting like what seems an eternity for service they provide the same excuse for oversleeping. "The doctor had an unexpected emergency."

I'm going to reserve my views on the evils of insurance and medical billing for a later date.

Keith March 1, 2006 at 11:39 am

Helen, if I were you, I'd stop seeing doctors all together. Why support such evil? How dare they excel on the backs of us "ordinary folk". Don't they understand the benefits of mediocrity?

John Dewey March 1, 2006 at 11:43 am

Helen's kid,

The discarded records from a single cardiac clinic might represent anecdotal evidence, but perhaps not a large enough sample from which to draw conclusions.

Here's a quote from a CPA who probably has a little more experience with medical billings:

"Q: How much bad debt should a two-person family practice reasonably expect per year?"

"A: It depends on how you define a bad debt. When you receive only 80 cents on the dollar from a managed care contract, the 20 percent is not a bad debt; it is a contractual write-off. A true bad debt is where the patient is unwilling or unable to pay. This type of debt is pretty rare and typically amounts to only about 1 percent of billings. In hard economic times or economically depressed communities, bad debt can run as high as 2 percent to 3 percent of total billings. Keep in mind that bad debts are nearly zero when you make a practice of collecting co-pays and deductibles at the time of service."

F. Michael Arnow, CPA, CFP*
Arnow & Associates
Glendale, Wis.

http://www.aafp.org/fpm/20020700/ask.html

H Kid, is it possible that much of the $12,000 in uncollected billings you uncovered are not actually bad debt? But instead the contractual write-off Mr. Arnow refers to?

My claim about the talent and perserverance of MD's is based on:
- my personal observations over 35 years of physicians who are friends and relatives;
- numerous articles I've read about how medical schools only accept the most talented aplicants;
- other articles I've read about how hard future doctors must work to survive medical school, internships, and residencies.

The many physicians my wife has worked with the past 35 years, and the ones in my family, do not see patients just once or twice a month. They cannot schedule all patients on the same day fo the week. They DO work very long hours each day. True, they are rewarded well for their talent and their efforts. But they deserve every penny they receive.

99 March 2, 2006 at 3:02 am

****"In the UK my mother uses the NHS. She can get an appointment at the one doctor in her area and she may wait weeks to get a phone call and then months to get an appointment. She can only see her specialist one time a year, while my sister in the US can see a specialist as often as she likes, usually waiting no more than a couple of weeks to see the one of her choice."*****

liberty: I take it your mother either doesn't possess the means to purchase private healthcare, or if she does have enough money, she prefers the save it and use the taxpayer-funded NHS.

I say this because in Britain, unlike in Canada (or at least unlike in the Canada of very recent past) the government allows private capital to supplement the public healthcare system, and those who can afford to access this private system are free to do so — for a price. Thus in Britain, healthcare quality is significantly a matter of income or wealth.

But this is also the case in America. If you've got the bucks, you can have truly wonderful healthcare. If you don't, you may get no healthcare at all, or be facing bankruptcy if you do.

Which system is better? It would be nice if we could have a utility machine and measure satisfaction with scientific accuracy in both countries. I suspect average utility would be higher in the US than the corresponding British number for those Americans who have solid insurance coverage and stable employment (or those who are covered under America's version of socialized medicine, the VA and Medicare). But that average utility figure for the US would undoubtedly drop after figuring in those who can't afford coverage (including, for instance, those with preexisting conditions).

John Dewey March 2, 2006 at 10:13 am

99,

Are many people in the U.S. unable to receive medical care? I think most hospitals and public clinics treat the truly poor. The care they receive may not be the best we offer, but it is probably better than the standard in nearly every other nation.

Many people who face bankruptcy due to medical costs are victims of their own gamble. Most of the non-poor uninsured could sacrifice and find a way to buy high-deductible insurance policies. But many decline to purchase them, instead choosing to assume the risk themselves. It's a gamble that most win, but one that is very costly to lose.

I think most U.S. citizens believe the U.S. health care system should be changed. We've been fortunate that our leaders haven't pushed us toward the disaster a more socialized system would deliver.

Tile March 4, 2006 at 2:10 pm

If the cost of medical care is so unreasonable, why do people still pay for the surgeries? I'm a college student econ major so I'm still relatively new to this whole thing, but I do hear a lot about the role of prices. I was under the impression that if prices get too high then people stop buying the product and the price begins to fall back towards the equilibrium price.

So if doctors are charging rediculous prices, why do people still pay what the MDs charge for their services? It sounds to me like the cost of healthcare isn't too high, because people still pay for it. Are medical costs not subject to supply and demand?

I'm trying to learn how to "think like an economist," so please tell me what I am overlooking in my logic. Thanks guys.

Joe March 4, 2006 at 4:27 pm

Here is my post to your question

To sum up Alex's post: Ask any economist and they will tell you that anytime something is free, there will be a shortage of it. Even if Canada had the same number of Drs. per capita as the US you would still have less capacity. Socialism will wreck your system eventually just as it is recking ours. That's right ours is socialism too. It's just corporate socialism instead of government socialism. The high deductible thing is a way to introduce capitalism into heath care. It is one way to fix it. There are others too.

Lisa Casanova March 4, 2006 at 6:12 pm

Tile,
I made a recent visit to an emergency room. Cost of visit: $2,900 (Note that this was mainly to obtain medication that can only be legally dispensed with a doctor's permission and supervision to keep addicts from getting it). Amount I paid: $350 (I'm insured). The cost of medical care is extremely high, but we are insulated from it via the third-party payer system that exists in American health care. So, we really don't feel the pain of high prices that would bring about the effects you're wondering about.

Jaroslav Borovicka March 7, 2006 at 2:09 pm

Tile and Lisa: The cost of medical treatment is huge, and the problem lies elsewhere than in what Lisa mentions. Paying $2900 for an emergency room, just to get the medication you need, is extreme. Even if you paid only $350 on your visit, you still feel the high prices (on average) through your insurance fees. It is a matter of fact that the cost of medical sector are exploding (16% GDP in 2004).

The problem is the extreme information asymmetry in the whole system. It's like with your garage – if you bring your car in, they can charge you a lot, simply because you, with average technical knowledge, have no chance to verify whether they are honest or not. A similar, but even worse situation occurs with healthcare. If it comes to "pay or die", you always choose to pay, whatever the cost are.

I now leave aside the problem of huge research costs etc., which I admit is an objective issue. But we should also see all the inefficiencies connected to the mentioned information asymmetries, and very complicated contractual agreements between the parties (the firms in the healthcare business are often very close to small monopolies).

Robert July 19, 2007 at 5:11 pm

"This is a country in which dogs can get a hip replacement in under a week and in which humans can wait two to three years."

Over 90% of hip replacement surgeries in the United States are covered by Medicare – our very own nationalized health care system.

Ours works better than Canada's because we throw more than double the money at it, per patient, per year. But good job quoting incredibly misleading statistics.

Joe July 20, 2007 at 12:12 am

WOW!!!!

Great survey.

It's good to know that in the US you get faster service…Thats great.

"I guess one man's "elective" is another man's "emergency," but I am still comforted by that 0% figure."

Well I agree with this sentence and it just shows the state of the US helthcare. other countries trully have a different meaning for "elective", its everyone gets treated not just those with money.

Just a bit more evidence…

In every other country but the U.S. bankrupcy by medical fees is nonexistente.

You can't compare waiting times between a public service and a private one. Do you compare PBS with FOX News???

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