Consulate Care

Here’s another idea for medical reform: consulate care. Let countries like Sweden, France, etc. with approved national health care systems have bigger consulates, and open them up to paying customers for medical services. For example, you could sign up for Swedish Care, and when needed you’d go to their consulate to get medical care as if you were living in Sweden.

Now we might not approve consulate care for say North Korea or Uganda, but surely most developed nations are good enough. We don’t issue travel warnings suggesting people not travel to Sweden, for fear of getting sick there. So why not let folks travel to a Sweden nearby for their medical care?

Since most other nations spend far less than the US on medicine, consulate care should be a lot cheaper. And since those other nations seem to suffer no net health loss from their cheaper care, consulate care should be no less healthy.

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  • Dave Smith

    Combine this idea with the idea to telecomming your doctor….

  • Someone from the other side

    Sounds kind of like the franchise states in Snow Crash?

  • http://daedalus2u.blogspot.com/ daedalus2u

    This is a silly idea.

    The reason that health care in Sweden is cheaper and more effective than health care in the US is not because Swedish doctors have some magical ability to deliver more health care at lower cost, it is because the health care system in Sweden is designed and regulated to deliver more health care at lower cost.

    In the US, the health care system is designed to deliver profits to health insurance companies and pharmaceutical companies.

    Adopting something like this would increase costs in the US. Why? Because as a sovereign country, Sweden would get to pick and choose who it would insure and at what cost. Of course if they choose to only insure healthy people, the costs to provide those healthy people health care would be low. Because Sweden cannot be compelled to treat sick and injured who show up at the Consulate gate, they would have essentially zero non-reimbursed medical care.

    Swedish care would siphon off the high profit patients and leave the high cost patients to fend for themselves in the US system, or die in the gutter.

    This is a way of “off-shoring” medical care. It would lower costs for the healthy, but then the profits from those healthy patients go off-shore and are not used to subsidize health care costs for the less healthy.

    Because the wealthy could then get state-of-the art health care from off-shore, they would have no incentive to maintain the US health care system at first world standards.

    • http://suitdummy.blogspot.com Ely

      What would you counter-argue if someone made the claim that:

      “In the US, the health care system is designed to deliver profits to health insurance companies and pharmaceutical companies.” == “In the US, the health care system is designed to deliver more health care at lower cost.” ?

      It’s true that we spend too much on health care, and when that over-spending is government initiated, it distorts incentives for companies. But changing to a system where we spend less and yet remain as healthy does not have to be a socialized medical system.

      Note, I’m not at all trying to argue for or against socialized medical care in the U.S. I’m just trying to say that getting more care for less expense does not require the medical industry to be structured in a socialistic fashion nor single-payer fashion. There exist multiple solutions.

      • http://daedalus2u.blogspot.com/ daedalus2u

        I am not sure what you are asking?

        Do you mean government initiated or government mandated?

        The problem in the US is what is to be done with people who are too poor to afford health care. One solution is a form of socialized medicine, the other “solution” is to let them die in the gutter.

        What we have now is “let them die in the gutter”, unless they can make it to an emergency room and then the owner of the emergency room is responsible to cover the cost of care. That is a government mandated cost, even if the government does not pay for it.

        The consequence of that is that costs of emergency rooms that are not accessible by mass transit are lower (because the poor don’t have cars), and so insurance companies negotiate lower fees-for-service with the non-accessible hospitals, which compels inner city hospitals with higher emergency room costs to receive less for common procedures.

        This is exactly what allowing foreign consulates to have fee-for-service medical care would accomplish. Foreign consulates would have no obligation to treat poor US patients, they would be allowed to die in the gutters outside the Consulate.

        What solution is there to get health care for the poor other than paying for it? If there is a single payer and all medical care is covered by that single payer, then there is no incentive to trade-off one group against the other.

        For any type of multiple payer system there will be profit and cost incentives to get someone else to cover the high cost patients. That is what we have now. There is tremendous incentive for insurance companies to get rid of high cost patients and that is what insurance companies spend most of their administrative costs on. That cost doesn’t treat any of the high cost patients, it simply moves the costs onto someone else, or removes the high cost patient’s insurance so they have the opportunity to die in the gutter.

      • http://omicron-theta.blogspot.com/ Ari

        @Ely

        I’m no health economist but there’re several, someone might call them laws of economics, but let’s just say cold realities when dealing with health care in market. Its just not about incentives (you could fix that in theory), its simply about the fact that market is not place for redistribution (redistribution is more of a side effect).

        You would see this if most of health care really worked, or when genetic pooling and more accurate algorithms will allow companies to see your health future very accurately, and price you accurately. Neither would be very pretty. I think Robin wrote about that system (something about pills that let you live forever).

        “I’m just trying to say that getting more care for less expense does not require the medical industry to be structured in a socialistic fashion nor single-payer fashion”
        This is true as long as health care is more about signalling, and doesn’t work that much. For care that works, you really need to have honest redistribution in one way or another, or people will die. Single-payer or socialized medicine is one option. Insurance isn’t really redistribution.

        Presently, another problem with health care market and the homo sapiens are the incentives and irrationality due signalling reasons and whatever. Lack of accountability is a big problem. You really don’t want to pay big rents to random individuals and companies just to signal your loyalty to free market movement. 🙂

        In any case, health care will be a complete mess for foreseeable future.

        @daedaelus
        “Because Sweden cannot be compelled to treat sick and injured who show up at the Consulate gate, they would have essentially zero non-reimbursed medical care.”
        For acute demand-driven care, I’m sure for quite a many operations you could get more efficiently. Now that’s a win.

        “Swedish care would siphon off the high profit patients and leave the high cost patients to fend for themselves in the US system, or die in the gutter.”
        Why? They’re not paying the bill. We also assume such a government-driven system would have much less incentives for maximizing any “profits”. In fact the very sick would provide highest “profit”. And what does this has to do with dying in the gutter? Its not a health care system, its alternative care, like ordering medicine from abroad. How US system works is a separate issue.

        “Because the wealthy could then get state-of-the art health care from off-shore, they would have no incentive to maintain the US health care system at first world standards.”
        Possible but it would have to happen at pretty damn big scale, so unlikely. This sounds more like an excuse, you could always fix the system. People come up with irrational fear arguments against immigration quite often so I wouldn’t be surprised if it would be happening here too. Prediction markets!

    • http://un-thought.blogspot.com/ Floccina

      daedalus2u,
      At the link below Dean Baker deals with some of the issues that you bring up.

      http://www.cepr.net/documents/publications/free-trade-hc-2009-09.pdf

      Dean Baker has been suggesting we outsource some of our healthcare to lower cost countries for a long time.

      • http://daedalus2u.blogspot.com/ daedalus2u

        @Ari, @Floccinia, The problem is that markets are not driven by efficiency, they are driven by cost.

        There is a component of efficiency in cost, but for health care the biggest driver isn’t efficiency, it is the cost of uncompensated care of the uninsured. Foreign health care markets with single payer government funded health care don’t have uncompensated care for the uninsured, so they have lower costs for compensated care because the compensation pool doesn’t need to cover those without insurance who walk in the ER with a life-threatening disorder. Dean Baker’s piece completely ignores that.

        Why would a foreign country install medical facilities in its consulates and give away free care to US citizens? Free care that is paid for by that country’s nationals? The only way foreign health care providers would provide care is if they were paid for the care they received. Their only advantage is freedom from US laws and FDA regulations. The biggest cost savings would be due to not supplying care to those who can’t pay for it. Current US law mandates that anyone who walks into an ER with a life-threatening disorder must be treated regardless of ability to pay.

        How do the sickest provide the highest profit?

        Customers who pay the most money for the least service provide the most profit. That occurs in a health care insurance market when only the healthiest individuals are sold health care insurance and everyone with a pre-existing condition is denied coverage.

        The reason that US insurance reimbursement procedures are so byzantine is to ration care by complex regulations. Frustrate care acquisition so much that eligible people can’t jump through the hoops and the cost of that non-delivered care goes right to the bottom line. The result is that insurance companies with the most complex and byzantine regulations have the highest profits and out compete insurance companies who actually provide health care.

        It is a race to the bottom. Insurance companies don’t make money by providing care, they make money by collecting premiums and then denying care. When those people denied care get sick enough, they go to an emergency room where they get the most expensive kind of care, which gets paid for only by fees to health facilities associated with that ER.

        If an insurance company only contracts with health care facilities that are not required to fund non-reimbursed care, then that insurance company can negotiate lower fees for non-emergency services. It doesn’t matter where those health care facilities are, local or overseas. If they don’t need to fund non-reimbursed ER care, they will have lower costs and can negotiate lower fees.

        This does nothing to fund the ongoing non-reimbursed ER care in the US, it just removes a funding stream from it (excess fees for non-ER care at facilities associated with an ER). That increases the fees that the facilities that do supply non-reimbursed ER care must charge.

      • http://un-thought.blogspot.com/ Floccina

        daedalus2u,
        I think that you are thinking all or nothing at all. We have 2 problems with healthcare in the USA. One is access for the poor but the other is cost. If you can address the cost even a little that is good. If you can address the access even a little that is good.

        None of these plans are likely to happen in a big way but hey maybe it starts with a trial plan for people very close to the Canadian border

        Here is my preferred compromise plan:

        http://un-thought.blogspot.com/2009/09/healthcare-compromise.html

      • Poelmo

        @Floccina

        Tackling the cost side will require massive government intervention: America has a perverse system with no caps on tuition for medical schools, doctor salaries, insurance and hospital executive pay, insurance premiums and it does not collectively buy medicines while it bans the import of cheaper medicines from abroad and lets people freeride. Subsidies for poor families won’t change a thing (the insurance companies will just increase their premiums). Also, Americans are just more obese than Europeans and Asians, so until that changes healthcare costs will be higher in America, no matter what clever schemes America comes up with.

      • http://omicron-theta.blogspot.com/ Ari

        Daedaelus, most of what you wrote had nothing to do with my post so I’ll just reply where it was relevant. Besides you’re repeating some of what I said. It would be less confusing if you would respond in-person because I didn’t come here to defend US health care system or health insurance systems.

        “Why would a foreign country install medical facilities in its consulates and give away free care to US citizens? Free care that is paid for by that country’s nationals?”
        Obviously either the customer or US government would pay it, not the consulate state.

        Again additional care is consumer surplus and win-win. This has nothing to do with insurance or ER. The point of this is to provide some care and operations at lower cost. This won’t fix US health care system and insurance rent-seeking and whatnot. That is completely besides the point.

      • http://daedalus2u.blogspot.com/ daedalus2u

        If there was an efficient, free and fair market in health care, additional provider capacity would lower prices. But there is nothing about the US health care market that is efficient, free or fair.

        I don’t think you understand the drivers of high cost of medical care in the US.

        In the US, there is a very large cost of ER care of the uninsured. This cost does not exist anywhere else in the developed world. There is no program to pay this cost, it is “absorbed” by the health care system by charging higher prices for everything else. This is in addition to the other inefficiencies of the US health care system.

        Health care procedures are cheaper on a per-unit basis in Sweden because health care providers in Sweden do not have to “absorb” the cost of uninsured ER care.

        Moving health care procedures from the US to Sweden doesn’t cover any of the costs of uninsured ER care in the US. Those unique US costs are only covered by procedures done and paid for in the US by health care organizations with an obligation to provide ER health care to the uninsured.

        In other words, fees charged in the US have a component for the actual procedure plus a component to pay for uninsured ER care. Fees charged outside the US only have a component for the actual procedure, so they appear cheaper than the US procedure. Moving the procedure off-shore, only moves the cost of the procedure off-shore. It does nothing to pay for uninsured ER care.

        All moving care off-shore accomplishes is the removal of the externality of paying for uninsured ER care.

        It should cost more to off-shore medical procedures because travel cost has to be included too. That off-shoring medical care is still cheaper, indicates just how badly messed up the US health care system is. It is only “cheaper” because it doesn’t include the externalities of paying for US ER uninsured care. There is the issue of more middlemen in the US (insurance companies) and the rapacious profits they take and the administrative costs they incur to avoid patients with potentially high costs.

      • http://un-thought.blogspot.com/ Floccina

        daedalus2u,

        The Kaiser Commission on Medicare and the Uninsured estimates that about 50 million uninsured Americans are responsible for about $43 billion annually in uncompensated care. To cover the costs of the uninsured, the average American family pays an additional $1,000 in the cost of their insurance.

        Uncompensated care is part of the problem but only a small part.

      • http://omicron-theta.blogspot.com/ Ari

        @daedalus

        a) So basically you are saying that without insurance surgery costs more in US than because of ER? If so, source please. I’ve seen better arguments made in favor of protectionism.

        b) If the numbers Floccia is giving are right, then its still a small part of the 1-2 trillions US is spending on health care.

        Also consulates require minimal travel costs.

      • http://daedalus2u.blogspot.com/ daedalus2u

        Ari, it ends up in the “overhead” and gets added to everything.

        To a first order that the US uses insurance doesn’t matter. The costs of uncompensated care have to be paid by someone, that adds to the cost of US procedures.

        The problem is that insurance companies can game the system to avoid paying for those costs. Those costs don’t go away, they simply get moved to other payers. There are costs to this, the costs of figuring out how to game the system and the costs of structuring the insurance reimbursement system to take advantage of it.

        Now those costs are higher because they are borne by fewer payers. There is now an even greater incentive to game the system to avoid them. The more gaming there is of the system, the more incentive there is to game the system.

        As long as the incremental cost to incrementally game the system is less than the cost to not game the system, the system will be gamed.

        That is why health care is so expensive in the US. There are so many incentives to game the system and they are built in and developed over time so they are structural and implicit. Getting rid of them means starting over, but delaying starting over is another way to game the system so it doesn’t happen.

        Everything spent on gaming the system is wasted. It doesn’t provide any health care, it just moves the costs of providing health care to different payers. In every health care system with multiple payers, those payers will have an incentive to game the system to shift costs to other payers. With rigid regulations, in theory that gaming can be reduced, but when the incentives to game the system remain, then those regulations will be corrupted by corrupt payers and the system will be gamed.

        That is one of the major savings in going to single payer health care. There is no incentive or ability to game the system and shift costs onto other payers.

      • http://omicron-theta.blogspot.com/ Ari

        @daedalus

        It is up to government who pays the ER costs, it could be the hospital customers or it could be the government itself. You don’t provide any source for this claim and assume ER is the only making price difference. I guess this fits some political agenda, but truth is, there’re probably real costs from excessive medical regulation, maybe even some cultural factors, otherwise bad institutions or whatever.

        Consulate care would provide some competition for operation costs. I’m sure if you would have to have an operation, you’d very angry that some consulate could provide a life-saving surgery at 1/5th the cost? Or maybe those who want such but wouldn’t be allowed would be angry? I don’t know. You decide.

        No, this wouldn’t fix the screwed up incentives in US health insurance system, and I don’t know why you are inclined to give an armchair economic lecture on that, because I didn’t come to defend it. You could have single-payer, government-run or something else and still have consulate care.

        But armchair economic analysis, especially of very complex system like health care is cheap. There’re actually health economists who analyze things as a day job; are you one? The quality of armchair economic analysis is on par with armchair medical analysis, or maybe armchair physics.

        And like Robin said once, disagreeing can mean disrespect. I would consider it rude to disagree with a physicist about his day job research as layman.

  • http://un-thought.blogspot.com/ Floccina

    A shorter step than that would be to respect medical Licenses from any developed country (and of course from any state) and allow free entry to practitioners (give all Dr and nurses green card automatically). Companies from France could then setup here. Providers might want to come and practice here as a sort of working vacation and see the USA.

    • swedenborg

      respect medical Licenses from any developed country

      Treatment would continue to occur on US territory and be subject to US law. Could this happen?

      The time before that, I was lying in bed and found a lump on my right side, just below my rib cage. It was like a devilled egg tucked beneath my skin. Cancer, I thought. A phone call and twenty minutes later, I was stretched out on the examining table with my shirt raised.

      “Oh, that’s nothing,” the doctor said. “A little fatty tumor. Dogs get them all the time.”

      I thought of other things dogs have that I don’t want: Dewclaws, for example. Hookworms. “Can I have it removed?”

      “I guess you could, but why would you want to?

      Read more.

  • http://theviewfromhell.blogspot.com Sister Y

    Some of those countries don’t even enforce prescription power – what would happen to the war on drugs?

  • http://omicron-theta.blogspot.com/ Ari

    Interesting idea. As I’m no health economist I won’t try to judge too much.

    I imagine two, not necessarily big, signalling problems here:
    1) Would be sort of admission of failure from the government
    1) Countries who wouldn’t be allowed to care, could protest

    The really great thing of living in Nordic welfare state is that you hardly ever have to worry about paying medical bills or health insurance. Not completely but not to the extent as in a country where you are on your own. While a lot of this might be illusionary, it does give a lot of peace of mind. I think this has considerable effect on national psyche. I’m well aware of the RAND experiment too.

    While ago I was listening to quite a smart local politician who knows quite a bit of economics (imagine that) talk about health care, and he was well-pleased with our system in world comparison. I think he thought Germany’s system had lots of problems, and only country was Singapore with health savings account he thought we could learn from. He also suggested to move health care budget from municipal (many of which are dying due late urbanization) to state level. This leads to quite nasty game theoretic problems as severely-ill can bankrupt small towns, and they might even try to get “rid” of these people.

    There are of course the usual motley crew of inefficient policies like quotas for doctors, pharmacy monopolies, over-regulated (read: over-priced) prescription system et cetera.

    But health care in any first world country will be a mess for foreseeable future. Lack of accountability, bad incentives, irrational humans and list just goes on — matter which system you have. You can fix some of that with state-run systems but then you have other efficiency problems. But I’m well pleased with our system, although a lot of it could be improved.

  • Poelmo

    The idea is ridiculous because the people who would join such a program would mostly be those with bad health (and even the average American is unhealthy by Western Europeans standards).

    @Ely

    No, singlepayer healthcare is really the only way to make healthcare affordable to everyone. Even in Sweden and France healthcare would be unaffordable to many people if everyone paid the same insurance premium. The way they solve that is by making rich people pay more into the system. Private businesses would never make rich customers pay more, so in a private healthcare system the government would have to hand out subsidies/reimbursements which a) means it’s not really private healthcare anymore and b) will cause the insurance companies to up their premiums unless the government limits the premiums by law (which definitely makes it no longer a private healthcare system).

    If you want to make healthcare affordable for all, in a private healthcare system you’d have to make healthcare so cheap that even someone on minimum wage could afford the insurance premium, that means healthcare has to become much, much cheaper than it is today, you’d need something like an 80% cost reduction, and that’s just for France and Sweden whose healthcare costs per capita are already more than 30% cheaper than America’s. The free market won’t reduce costs by 80% and neither will governments.

  • Geof

    Interesting idea Robin. Since people choose this what would happen with adverse selection and the associated costs?

  • Roger

    The health care market in the US is inefficient with rampant over-regulation, rent seeking, entrance barriers and poorly thought out forced cross subsidies. On top of this, there is a disconnect between the person paying for the service and receiving the service.

    Net result of all of these factors is that it is now cheaper to buy travel and free market health care outside of the US than it is to buy Health care in country.

    Several commenters have brought up that part of the reason is that our health care is really health care and a buried welfare transfer. Exactly! We screwed with the market and guess what we get?

    • Poelmo

      You’re not getting it: even if doctors, hospital personnel, pharmaceutical reseachers and medical faculty members worked for minimum wage and all administration was handled by computers, then healthcare costs would still be much more than $1000 per capita per year (it’s now $7000). Not even Singapore, the most efficient of the rich countries when it comes to healthcare comes anywhere near that $1000 mark (they’re in the $2500-$3000 range I believe). Why did I choose a $1000 mark? Because that’s how cheap healthcare would have to be to be both fully privately funded and affordable to people on minimum wage (since about 20% of citizens are children the insurance premium would be about $100 per adult per month). Even if the free-market was 100% effective and devoid of vultures and corruption it would not be able to lower costs to that $1000 mark. The natural resources and labor involved with modern healthcare just cannot be funded with that kind of money.

      In short it is impossible to have affordable healthcare when everyone pays the same premiums because healthcare just cannot be made cheap enough to become affordable to people near minimum wage. Some form of government intervention is therefore necessary (and in case you were wondering, yes, Singapore has singlepayer healthcare). This can take the form of the government dramatically increasing minimum wage, or forcing insurance companies to cap their premiums and make wealthy clients pay more, or by using taxes fund healthcare.

      By now you’re probably asking “well, then why was healthcare so affordable in the 1950s and 1960s?” Here’s my answer: 1) it wasn’t affordable to everyone, especially in the South many people died of preventable diseases, 2) the percentage of elderly people in the population has more than doubled since those days, 3) there were no MRIs, chemotherapy, bonemarrow transplants, open-heart surgery, etc… and 4) in those days people didn’t eat at KFC every day and didn’t drive to the mailbox. Yes, besides these factors there is a lot of waste and corruption and some bad habits can be curtailed, but if you take those out of the equation you’ll only end up at Singapore’s level which is still a long way from that $1000 per capita per year.

      • Douglas Knight

        Singaporean healthcare costs about $2100 per capita on health care. ($7400 in the US) Much of this is subsidized by the government, but that hardly makes it not a free market, any more than food stamps distort the market for food. Other actions of Singapore’s government may distort its healthcare system, though.

      • Poelmo

        @Douglas Knight

        35% of people in Singapore are foreigners, working migrants who are young and not necessarily covered by local insurance. So it’s safe to say they’re in the $2500-$3000 range for actual citizens. It’s not much of a free market with 29 out of 43 hospitals being state run, most people being insured through a government scheme and the government subsidizing most of the care.

  • http://zgp.org/~dmarti/ Don Marti

    Sounds like a way to let US cities benefit from a medical tourism trend that’s already happening: http://zgp.org/~dmarti/business/medical-free-trade/

    (The transformation of post-embargo Cuba into “Bedpan Island” will dwarf this, but it’s still a way to keep the US medical industry competitive, the same way that international competition is keeping the US software industry competitive.)

  • Poelmo

    Since no one else is saying it, I’m gonna say what everyone here (or at least every non-American here) is thinking…

    Why doesn’t the US just copy Canda’s healthcare system and get over itself? If consulate care is considered an option then isn’t that a silent admission that the systems other countries came up with are simply better than America’s system, so why bother with a half-assed solution?

    On the other hand, it would be hilarious to see the look on your republican or libertarian neighbor when you ask him why his car was seen parked outside the Swedish consulate the other day…

    Being seen at a European or Canadian consulate would become the new being seen in a gay bar or a brothel for conservatives. 🙂

  • Simon

    One thing to keep in mind is that the US government already spends about $2700 per person on health care (not just on poor people). So we could probably swing getting all the poor people signed up for e.g. French health care.

  • Dave

    Wow! The people here have some really good ideas. However they are not in the pits like me. Two things you have not discussed.” Rule out” and” cover for”
    The hospital is a bee hive of people slinging about orders that are then applied to people. Then someone has to pay for it. Here is what happens at one hospital when you walk in and claim you are sick.

    I have discovered that the hospital is what is known as an “idiocracy” because the operate just like the movie of the same name.

    I was talking to this guy and describing what happens in the Emergency Room. A nurse asks you where you hurt. The nurse then pushes a button on a computer screen that describes you symptom. This automatically orders the “appropriate” x -ray and Lab tests for that condition. Then when the doctor sees you the tests are already done. The doctors have already decided what tests are needed. They need every test that will cover or rule out this condition. In other words if you get sent home after you are seen,the doctor and die anyway the doctor and the hospital are covered because you have had all the tests to “rule out” the condition.

    Damn.my friend said.that sounds just like the movie.

    As you might imagine this is expensive and they keep coming up with more tests to do. Also you might imagine that some people can’t pay. Well someone pays.–you.
    Robin has suggested a great solution. Close all the emergency rooms and send everyone to the Swedish Embassy.
    Another solution is to send all these patients to the trial attorneys offices.