Saturday, August 27, 2005

Health care productivity

What would it mean for a country to have greater productivity in the health care sector than another country? A given amount of input would produce more output. Henry wants productivity to be the main explanation for difference in health care costs (rather than just prices). In the case of physicians, this would require that if we observe differences in the cost of physician services the explanation is that one set of physicians is more productive than another (the alternative hypothesis is that the differing structures of the health care sector lead to different prices). I present to you France.
Since May 1992 [article from 1993], for example, the average charges for an office visit to a French GP and a specialist are $18 and $25, respectively, in contrast to the average price of $42 for an office visit to an American GP.
Given that this is just for the General Practitioner's time, you have prices in America 2.3 times higher than in France. Explaining this solely in terms of productivity requires, well, a stretch. Because no one would claim that the average French medical education is worse than the average American medical education. Rather, they are about equivalent, which means that the physicians are of equal skill, and so should receive the same wage. Thus, market structure (power of the participants) has to matter.

Historically this makes sense. As Paul Starr has argued (shown?), physicians in America have effectively wielded force to hinder changes to the medical system that would hurt either their autonomy or their monetary interests (though they've been unable to resist HMOs...). This, I think, is not the case in France where you have strong ideals of liberty, equality and brotherhood which give credence to a more egalitarian system. Comparisons of pay show this: in 1990, the average salaries of French and American physicians in private practice were $69,300 and $164,300 respectively.

In a broader context, positing productivity as the reason doesn't make sense because the average French worker is just as productive as the average American worker (in fact, slightly more productive), so to argue that in the health care sector productivity levels are dramatically different strains credulity.

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