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July 09, 2007

Biased Questions

Or, how to get the result you want by leaving out important points.

Dr. Rant:

The administrative cost of the US health care system is 31% of the total health care budget (reference).

When the NHS was introduced in 1948 it spent 2% of its budget on administration.

Both statements are true so clearly a state run health service is more efficient, no?

Just to stop us getting into the argument of whether it is or not let's just say that whether it is or not cannot be proven by the above.

Have a look at "excess burden of taxation" or "deadweight loss" on Wikipedia.

Then consider the following. That number for the US system includes all of the costs of raising the money to pay for the system. That number for the NHS does not include the costs of raising the money to pay for the system. Thus we must add the deadweight costs of taxation to our costs for the NHS in order to be comparing like with like.

A useful rule of thumb for such costs is 20% of the sum raised.

Makes something of a difference really, doesn't it? 

 

July 9, 2007 in Health Care | Permalink

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Comments

Wonder what % the NHS spends now? Levels upon levels of government have to eat up a good-sized chunk.

Posted by: skh.pcola | Jul 9, 2007 2:55:11 PM

Of what relevance is the amount that the NHS spent on admin 60 years ago?

Posted by: View from the Solent | Jul 9, 2007 5:15:05 PM

Page seven in the .pdf document linked. Verbatim: "Our dollar estimates understate overhead costs in both nations [the US and Canada]. They exclude the marketing costs of pharmaceutical firms, the value of patients' time spent on paperwork, and most of the costs of advertising by providers, health care industry profits, and lobbying and political contributions. Our analysis also omits the costs of collecting taxes to fund health care.."

Wanker.

Tim adds: Run this by me again? I say that the estimate does not include the cost of raising the tax money to pay for health care, the report says that it does not include the cost of raising the money used to pay for health care, and that makes me a wanker?
Have a journalist's lunch or something today?

Posted by: Alex | Jul 10, 2007 5:44:44 PM

No, you claim that the estimate for the NHS *doesn't* include it and the other *does* include it.

Viz - VerbaTim: That number for the US system includes all of the costs of raising the money to pay for the system. That number for the NHS does not include the costs of raising the money to pay for the system.

Verbatim again:Our analysis also omits the costs of collecting taxes to fund health care.. To omit: to leave out, to exclude.

Intuitively, an insurance system is going to have considerable admin costs because it's insurance; there are essentially three functions in any insurance company. The first is collecting premiums and investing them. The second is trying to prevent one's customers from claiming, and minimise how much they claim when they do. The third is trying to persuade the public that the second is not so. These two functions are a sizeable overhead cost, making up as they do two-thirds of the company.

Tim adds: Again, I'm still not getting you. As I say, and as you say, the estimates for the costs of the US insurance based system include the costs of raising the money. The costs raising the tax to fund the NHS are not included. That's what both I and the report both say.

Posted by: Alex | Jul 11, 2007 3:57:47 PM

Jesus wept, man. Our analysis also omits - GET IT - OMITS - the costs of collecting taxes to fund health care. The estimates for the costs of the US system OMIT the costs of raising the money.

Tim adds: Jesus wept indeed. It omits the TAX raising costs but includes the INSURANCE raising costs. As the US system depends in large part on raising insurance payments to pay for itself, while the UK one depends largely on tax revenues, then we are not comparing like with like in our calculation of the overheads of the two systems. My point, wasn't it?

Posted by: Alex | Jul 11, 2007 5:15:22 PM

OMIT. OMIT. OMIT. Which bit don't you understand?

Tim adds: The word "omit" is linked to the word "tax". Geddit?

Posted by: Alex | Jul 11, 2007 5:16:30 PM

You seem to have forgotten talking point number 1, which you normally wheel out at the first sign of any discussion regarding US healthcare - that actually they spend quite a lot of public funds on it..

Posted by: Alex | Jul 15, 2007 1:03:36 PM