Is public health spending a problem?

The Institute of Medicine recently released a report calling for a doubling of federal spending on public health from $11.6 million per year to $24 million annually.  I believe that spending on public health is probably more effective than spending on healthcare, but the Institute of Medicine (IOM) does seem to be exaggerating the U.S.’s shortcomings in public health spending.  In multiple sections, the IOM calls attention to the fact that “the United States is now falling behind many of its global counterparts and competitors in (several) health outcomes,” and uses this fact to imply that the lack of public health spending is a primary cause.  It’s an interesting argument, but I’m not sure that the numbers bear it out.  Among its OECD counterparts, the U.S. seems to be in the middle of the pack in public health spending.  Our healthcare system is worse than those of our OECD counterparts in many ways, but public health spending is not one.

Prevention and public health services as a percentage of total health spending (see OECD website for more figures):

		Prevention and public health services
Country
Canada		7.0
New Zealand		6.7
Finland		5.3
Slovak Republic		4.6
Hungary		4.3
Netherlands		4.0
Sweden		3.6
Slovenia		3.6
Germany		3.5
United States		3.4
Korea		3.1
Belgium		2.7
Czech Republic		2.6
Spain		2.6
Switzerland		2.5
Estonia		2.2
Denmark		2.2
France		2.1
Poland		2.1
Norway		2.1
Austria		1.7
Iceland		1.4
Italy		0.6

Wny healthcare markets are different

Naomi Freundlich posts about whether the high cost of cancer care is really worth it.  It’s a good post, and I found this paragraph particularly interesting:

 A recent study in the Annals of Internal Medicine  found that over-diagnosis accounted for 15% to 25% of breast cancer cases identified by a large screening program. For example, a woman who is diagnosed with a tiny growth in her breast that is unlikely ever to progress (a so-called pseudo-cancer), or progresses so slowly that she will die of something else, would be counted as one who has been “cured” of cancer through early diagnosis and better treatment in the Health Affairs study. She will have undergone surgery, radiation, and perhaps chemotherapy that cost tens of thousands of dollars—treatment that likely caused physical and psychological harm, but in the end added no “value” in terms of extra life-years.

I think this problem illustrates the difference between public health and health care, and, more broadly, it makes the point of why health markets are different than other markets.

As an issue of public health, yes, I think there is a real issue of whether “over-diagnosis” of cancer might be a problem.  As Ms. Freundlich writes, the cost-benefit of those screenings and subsequent treatments might not be worth it.

As an issue of healthcare, I don’t think there’s any real issue.  If my wife was diagnosed with such a “psuedo-cancer,” and this “pseudo-cancer” could be a threat down the road, we would happily pay whatever it took to treat it, particularly if our doctor advised us that it might increase her life span.

This is one reason why healthcare markets are so different from other markets.  All things being equal, my wife and I would prefer for our medical costs to be low.  But if a life-threatening issue came up, there is no amount of money that we wouldn’t spent on a treatment that could save or just prolong our lives.  Some of these treatments might not be cost-efficient on a societal level, but we would pay them happily, and a society that attempted to prevent us from doing so would be inhumane.

Coding is not the problem

Sarah Kliff posted recently on the ICD-10 (the International Classification of Disease) and cited several arguments against their implementation:

ICD-10 has come under a lot of criticism, especially from industry, as what’s wrong with American health care: It’s overly bureaucratic and too aggressively regulated. “Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour,” the Economist bemoans of the ICD-10 system in a recent article. It is most certainly true that American doctors spend a lot more time on paperwork and billing than their counterparts abroad, who work in government-financed health-care systems.

But this argument seems to lack perspective.  Yes, it’s true that U.S. doctors spend 400% more time on payer interactions than their Canadian counterparts.  And yes, administrative costs in the U.S. healthcare system are formidable.  But it seems harsh to treat coding regulations as the culprit.  Most of the developed world–Canada included–has already adopted ICD-10.  140,000 codes seems excessive, certainly, but based on its widespread use in countries with vastly more efficiency healthcare systems than ours, it seems unlikely that coding could be anything more than a drop in the bucket of the administrative waste in our healthcare system.