How a public and private national health care system works: Facts, FAQ and detailed explanations. No BS.

05Aug09

I heard in the news some time ago that Obama had some plans to “copy” the Spanish health care system to design the US one, as it’s rated as one the best in the world. So this should be interesting for many.

This text is a bit long, but it’s written in Q&A format so it shouldn’t be too heavy to read, and I really hope it’s worth it. It took me some time and effort to write it all, but I still did it because I really think all you people deserve to be given some light regarding this issue. I see there’s a lot of interest in getting you confused, so I truly hope that this helps in eliminating some or all of that confusion.

I live in Spain. So all the info I’ll give will be aimed to compare the US health care system with the Spanish one, which is the one I know best, and everything is based on own/almost-own experience.

First of all, the data:

· WHO Chart rating the health care systems in the world

Spain: 7th
US: 37th
(you’re down there with Costa Rica or a dictatorship like Cuba).

· Performance chart of the world’s health care systems

Spain: 6th
US: 72nd
(with the likes of Bosnia, Argentina, Buthan, Nicaragua, or… Iraq!!)

· Healthy life expentacy chart from the WHO

Spain: 5th
US: 24th

· Chart showing the COSTS of the health care system in each country

US: 1st
Spain: 15th

Despite being one of the worst health care systems in the world, the US one is, by far, the most expensive one.

_________________________________________________________________

Now, the FAQ:

· But in a public option, it’s the government who gets to decide about your treatment instead of the insurance company! Isn’t that even worse??

In a public option, nobody gets between the patient and the medic. Everything’s already pre-paid, so a signature by your doctor saying that he approves that treatment is enough to receive it if you want and need it. The salary, income or bonuses that the doctor receives aren’t altered regardless of the treatments that he has approved for his/her patients, so he isn’t biased in any way when taking a decission.

Also, if there’s a treatment which he thinks would be better for you but isn’t covered, he’ll obviously tell you about it and recommend you a series of private clinics where you can obtain it. However, keep in mind that probably every treatment that you’ll require in your life will be already covered.

· But what about those few things that aren’t covered?

Well, the only real “common” thing that is currently not covered here is odontological medicine. This means if you need a teeth corrector, or some kind of surgery, etc., you’ll have to go to a private clinic and pay for it. Except one thing: extractions. If you just need one of your teeth extracted, then you can have it extracted for free in a public hospital.

However, children do get free revisions until the age of 12 I believe, in what is called the “buco-dental” program. This avoids and prevents further possible complications if they reach that age with healthy teeth. Pregnant women get free teeth cleanings as well, as it’s a period in which they have an increased risk of suffering mouth and teeth problems due to extreme sensibility, and complications could arise.

But, teeth-appart, we’re talking about out-of-the-record things, like an unjustified abortion (use condoms, people), aesthetic (unnecessary) surgery, or expensive and highly unfrequent or experimental treatments. Chances are, you’ll be happy to pay for that single thing if you really want/need it, and you’ll probably be able to, since everything else will be free before and after that particular thing (recovery, etc.). You won’t be in a situation like this more than once/twice in you whole life (being really, really unlucky… or an aesthetic surgery maniac!).

· What if I’m happy to pay for every medical treatment that I need (yes,  I have lots of money), as the current private system works? Why would I want a public system if I have enough money to pay for all the things I may need?

Keep in mind one thing: if you have free medical attention, you might go to the doctor when you feel a suspicious pain, he may detect a tumor, and it may be soon enough to extract it and get yourself healed. In other words, you won’t hesitate about going to the doctor whenever you think that something could be going wrong.

In your current system, however, chances are that you’ll try to avoid visiting your doctor as much as possible, because it costs you money. This causes lots of people to just wait for things to “go away”, and only if they don’t, they go to the doctor. For serious issues, it’s usually too late by then.

The same applies to almost every medical revision or treatment. If you regularly go to the doctor, you’ll require less attention, it’ll be cheaper and more effective to keep you healthy, and you’ll have less chances of requiring an expensive treatment. Short visits to get non-emergency revisions in the doctor’s office cost pretty much nothing to the system, and probably 5-10 minutes of time. In the end, however, they save a lot of money, time and lives.

· But we’re already suffering doctor shortage. If it’s free to go to the medic, there won’t be enough for everyone!!

First of all, people don’t get ill for fun. They have better things to do than go to the doctor if they’re healthy. At most, people who were not getting periodical revisions will start getting them now.

But keep in mind that it’s better to have 15 people in the waiting room with non-emergency issues, than having 5 of them with a critical life-or-death problem. In the first case, 2 or 3 doctors would probably be more than enough to give attention to those 15 people during the course of an hour. In the latter, anything less than 5 doctors and/or surgery rooms inmediatly available would be considered a critical resources shortage, as it would cost lives.

· Still, what if there isn’t enough money to pay for all the necessary doctors?

Well, as you can see in this chart, the US health care system is the most expensive in the whole world, yet one of the most uneffective ones. Why? Because it’s profit-based. There’s much more money lost in the way (profit, but also marketing, lawyers, intermediaries, etc.) than the money that is actually spent in paying for the facilites, equipment and medical staff salaries. Thus, there’s not enough money to pay for more medics, because the important thing for a private company is, obviously, to make profit so that they stay alive. If they’re losing money they’ll obviously cut the number of paid doctors.

But more importantly: in a public system, if the government sets a determined cost that people must pay to access health care, it’s because that’s the necessary amount to have enough doctors for everybody. If that wasn’t enough, then they’d just increase that amount, but why would they set a budget which is lower than needed? It doesn’t make sense. So basically, once a public system is working, it will have the money it needs, as the money income will have been calculated and adjusted accordingly. You have some of the best economists in the world (<insert economic-collapse related joke here>), and it’s just a matter of adjusting the numbers so that everything fits. It’s more than feasible for such a big and powerful country (the more people, the better for a system like this, as we’ll see later).

On top of that, everyone has access to it for free and it’s mandatory to pay, so there are no ads about it. There are no “campaigns” to try and convince you, no lawyers, no intermediaries, no anything. Just hospitals, equipment and medics. This makes it ridiculously cheap to mantain in comparison with a private system.

Thus, all the doctors are very well paid here as well and they have stable jobs, which encourages them to do their jobs better and give you good attention. More people become doctors, and more doctors prefer to work on the Social Security as it’s pretty much a lifetime-guaranteed job (i.e.: they don’t depend on any private company going bankrupt and shutting down).

In the end, the increase and quality of the doctors wins over the increase of patients.

· But what about the alternatives? Won’t we have a private option to choose from?

Yes. Public and private health are compatible. However, once you have a solid and working public system which is enough for everyone, private companies have to be competitive against something which is, huh… free. So they need to give good value for money, or otherwise they’re out of business. This fact alone, will solve almost all the problems you have right now with private health care.

If they ever tell you; “uh-oh, no, sorry, given that the Moon is currently aligned with Mars in a 35,4 degrees angle, we can’t cover this treatment”; you’ll go: “well f*** you”; and you’ll drop your insurance policy with them because you have actual alternatives. So they won’t be interested in behaving like that.

· So what will the advantages of private insurance be over the public option?

Well, usually, they grant you the right of having a complete hospital room for yourself instead of sharing it with another patient; they also tend to have zero or near to zero waiting times so that you get almost instant treatment anytime, etc.

In my opinion, the private option could be worth it for those people living in crowded cities, where it’s possible to find longer waiting times in the hospitals when in need of emergency attention. However, it’s just an alternative, but never a replacement.

Also, as an interesting note, most private insurance companies will give you a refund of a determined % of your policy if you haven’t used their services at all at the end of the year. This is done to encourage people to use the public option if they have minor issues instead of checking in to the private clinic for just a simple cold, so that they have less patients, and thus shorter (or null) waiting times for those that really need it, which is one of their main attractives.

· How’s the process of getting attention in a public hospital?

You have a Social Security card. Everybody does. So you just go to the hospital, explain your problem to the receptionist, and show your SS card. They check your number in their national, centralized database, and that’s it.

If it’s an emergency, they’ll pass an appointment to the quickest available doctor and you’ll be sitting in the waiting room. Depending on how crowded/empty it is, you may have to wait between 0 and, who knows, 30-60 minutes in a worst case scenario? (crowded hospital which has some sort of staff problem that particular day).

If it’s not an emergency, they’ll try to give you an appointment with your assigned doctor (which will usually be more comfortable for you) if he’s available that day. Otherwise, any available doctor. You just have to come back at that given time, and you’ll usually be treated without any waiting time.

Ok, by now, you should’ve figured out that the system actually works and that, if this is feasible for a country like Spain, it has to be feasible for the most powerful country in the world. Now, the question is: how does it work? Let’s look into that.

· So… who pays for all this and how?

Ok, first of all, every newborn gets a Social Security card straight away. Who pays for it, you ask? Well, the country. Everybody else.

Obviously, a person can’t work while he/she is still a baby-kid-teenager, etc., so they’re not injecting any money into the SS system at that age. But it’s ok, the system is designed so that it compensates with everyone else, as you’ll see now.

· So what happens when someone starts working?

When someone signs a work contract, the employer has to pay an extra monthly/anual amount of money, by law, to the Social Security. Also, a little part of the employee’s salary goes to the SS as well. How much? That varies a lot and highly depends on factors such as: the salary of the worker (it’s always a %), the kind of work, the length of the work contract, if the worker has a familiy to maintain, the health status of him/her and her family, etc. You’re probably familiar with this factors as they’re the same for your insurance agencies. However, the word uninsurable doesn’t exist here. Remove it from your mind. It is mandatory by law.

In essence, most of it is paid by the employer, and another smaller part is taken from the employee’s salary.

· And how much is it exactly?

This is a simplified real life example (I’ve removed the two yearly and mandatory ‘extra’ payments and other things), supposing someone who is a construction worker (a ‘bricklayer’, you call it? Sorry, English is not my first language). He works all 12 months of the year, and he’s single. Imagine you want him to receive exactly 850€ a month:

This guy’s salary would be 850 x 12 = 10200€ a year.

Well, the employer has to pay the money equivalent to 40% of that salary to the Social Security. This means 10200 x 0.40 = 4080€ a year. So, from the employer’s point of view, he has to spend 10200 + 4080 = 14280€ a year for the employee to legally receive 10200€ a year.

Now, from the employee’s point of view, he has to pay 6.40% of his salary to the Social Security.

So that’s 10200 x 0.064 = 652.8€ a year, which is 54.4€ extra a month that the employer would have to pay to the employee if he was to receive 850€ clean a month.

Keep in mind that being a construction worker is one of the most injury (even death) prone professions, so its percentages are higher. This varies from one profession to another.

· And what happens when you’re unemployed?

It’s the same situation as when someone’s still too young to work. You just have the right to access Social Security, so it doesn’t matter if you currently don’t have a job. Having a job, or the kind of job you have, changes if/how much you pay, but not the coverage you receive, which is always the same. This way, the government will have extra reasons to try and get everyone working, which should help to reduce unemployment.

· So a regular employee gets most of the SS paid by his boss, but… what if I’m the boss?

If you own a business you have to pay it yourself. It’s an amount that is obviously a percentage of the yearly income of the business.

· So, does the system sustain itself? Or does it lose money every year?

Well, according to the stats, it seems the Social Security is slightly winning money some years (which is of course reinvested back into it) , and slightly losing money in others.

Here you have a news item (in Spanish, sorry, I couldn’t find anything in English) stating that the SS got a superavit (won money) of 14,104 million € in 2007, which is the equivalent to 1.34% of Spain’s GDP. Due to the current economic situation, and thanks to the horrible economic politics of Zapatero, it is thought that the SS could lose some money in the next years. However, let’s hope that he loses the next elections and things go back to normal :D.

But keep in mind that, being a government organization, it can ‘afford’ to lose some money, as the government is backing them. A private company would have to shut down if they ever lost money, or even if they just stopped winning, as their primary goal would be to obtain profits.

On top of that: for a system like this, the bigger the country, the more feasible it is.

It’s obvious that the vast majority of the people who inject money into the system (workers) will never “use” most of that money, as they will not need medical treatments that cost so much (just like it happens in a private insurance company). Having always many more employed than unemployed people in the country, this causes the system to obtain more “profits” when there’s more people in it.

However, the main difference with a private company is that, when you inject money in an insurance company but you don’t use it, they pretty much keep it for themselves as their profit. This sometimes reaches stupidly high margins of profit while constantly denying treatment to users. In a public system, however, the money that you don’t use is kept there anyway, and it will help the other people should they need it (maybe someone living in the other coast, or maybe a relative of yours), or otherwise will be reinvested back into the system. It’s a “closed” circuit, there are no “money leaks”, so everything that people pay will certainly be spent on medical services, no matter where or when.

Now, some typical questions by unconvinced/skeptical people:

· If this would be so good, then why is there so many people against it?

I’ll answer with another question:

Why does the RIAA want to eliminate the sharing of mp3 files in the Internet?

They’re seeing how their massive business slowly sinks. What do you expect them to do?

· But this is the damn USA, everything works different here, we’re special, we won’t be able to get anything like this done, etc. etc.

Look at this chart again. EVERY ****ing country got it done, because it’s obviously the best option for everybody. Stop underestimating yourselves. You might have shitty leaders like everyone else, but if everyone votes something, they’ll have to do it, like it or not.

Your only possibility of failure is getting convinced by those shitty leaders into thinking that this is wrong, and thus causing you to vote NO. And that’s exactly what they’re trying to do. With lies. Just show them that they can’t this time. Take out some of that American pride and use it for something as great as this. Try to explain things to your friends in a proper way. Try to solve the main problem most people have with this subject: lack of information.

You just need to stop focusing the debate around the YES/NO discussion, and take it to the HOW and WHEN now. In some years time, you’ll realize this is probably the most important political reform you’ve ever been through for decades.

And no, I don’t have any particular interests in this, I don’t live in the US, and I won’t get any benefits out of the possible reform that YOU have the oportunity to get.

However, if I lived in a country where we had a different system from what the rest of the (first) world has, and people happened to be dying because they had no money to pay for their medical attention, I would certainly TAKE A LOOK OUTSIDE and check out what the other countries are doing. Because if it isn’t happening anywhere else, it’s obvious that only WE are wrong, and that it’s absolutely possible to make it right.

I can’t think of any more questions right now, but feel free to ask anything about it and I’ll try to help (I’m no expert, just a regular student who lives in Spain and is astonished by the way you’re being mistaken and abused in relation to health care).

Take care.



One Response to “How a public and private national health care system works: Facts, FAQ and detailed explanations. No BS.”

  1. 1 Ken Lucier

    Excellent article


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