Health care status and health care costs international comparisons

 This is a review on the subject leveraging the information provided by a presentation titled "Multinational Comparisons of Health Systems Data, 2020" by Roosa Tikkanen and Katherine Fields from The Commonwealth Fund. 

Among developed countries Americans are by far the unhealthiest with: 

a) obesity rates far higher than any of the other shown among OECD countries; and 

b) a far greater % of individuals with multiple chronic conditions.  

On a stand alone basis, an unhealthier population should lead to higher health care costs. 

 

 

Because of Americans worse health, the resulting American lifespan is far shorter than among any of the other shown OECD countries.  On a stand alone basis, it may cause health care costs to be relatively lower.  

Americans utilization of health care services seem relatively lower than other OECD countries.  On a stand alone basis, this should translate into lower health care costs. 

On a relative basis, it appears Americans utilize their respective health care systems much less than their international counterparts.  On a relative basis, this should lead to Americans incurring lower health care costs.  

The lower utilization is captured by: 

a) Average number of physicians' visits per capita; and 

b) Average length of stay at hospital.

In summary, if we combine all those factors together, based on the mentioned "inputs" we may expect American health care costs to be somewhat in line with other OECD countries.  In other words, Americans' worse health pushing health care costs upward may be at least partly compensated by Americans lower utilization pushing these same health care costs downward.  

So, next let's see how those health care costs compare.  No matter how you look at it US health care costs are a huge outlier and way higher than the ones of their OECD countries counterparts. 

Of additional concern is that these costs are growing far faster as a % of GDP than for the other countries.  Back in 1980, US health care costs relative to GDP were in line or close to the ones in Germany, and Sweden.  Forty years later, US health care costs relative to GDP are 45% higher than in Germany and 56% higher than in Sweden. 

As shown on graph below, per capita Americans spend a lot more than any of the shown OECD countries.

As shown above, the US Government funded health care costs at around $5,000 are pretty much in line with the other countries.  American out-of-pocket costs (funded by private citizen) is also not that far out of line with other OECD countries.  But, it is the privately funded costs that are way out of line with other countries at over $4,000 per capita vs. much less than $900 for any of the other countries.  

The cause for such high privately funded US costs are multiple.  They include: 

a) US Medical schools are far more expensive.  See comparative costs for a slightly different set of countries from the Medscape International Compensation Report 2019.  Many European countries not shown below have either free Medical schools or provided at a nominal cost. 

b) US doctors earn far more than their counterparts in other countries.  This is in part for their need to recover their much higher cost of education.  See comparative costs for a slightly different set of countries from the Medscape International Compensation Report 2019. 
 

c) The US is the most litigious society.  This is associated with very costly malpractice insurance premium and the need to practice "defensive" medicine which may lead to over testing to protect against malpractice lawsuits.

d) The US large private health care system is "for profit" driven by shareholder returns and other Wall Street driven economic incentives that are often conflicting with what is best for the patient from an effectiveness and efficiency standpoint.  This "for profit" system has also lead to a greater concentration within the hospital industry and related doctors' networks increasing the oligopolistic market price power of such entities. 

e) US regulations are often further exacerbating the private sector health care costs.  For instance, Government programs such as Medicare and Medicaid are prevented from negotiating for lower drug prices.  This is probably unique among OECD countries.   

In conclusion, the US is associated with: 

a) a far unhealthier population (is that just a worst input, or a worst outcome?); 

b) a lower utilization rate of health care services; and 

c) a far more expensive health care sector whose costs are not only far higher than anywhere else; but, they are also increasing far faster.  

 

Medicare Plans?

 This is a quick review of some of the considerations when selecting Medicare plans.  At various Medicare plan selection websites or other Medicare information communications, I have observed Medicare plans being either differentiated between: 

a) Medicare Part G or N vs. Medicare Advantage; or

b) Medicare Gap vs. Medicare Advantage; or

c) Medicare Supplemental plans vs. Medicare Advantage. 

As you can anticipate, Medicare Part G or N, Medicare Gap, and Medicare Supplemental plans must be somewhat synonyms or closely related. All of these typically are plans that are attached to supplement Medicare's basic primary health care coverage.  That is certainly the case for Part G or N.  The latter two are identical except that Part G typically charges no copay for primary care office visits, meanwhile Part N does charge a small copay in exchange for lower premium.  

All these mentioned plans (Medicare Part G or N, Medicare Gap, and Medicare Supplemental plans), I think do not include any dental, vision, and drug coverage.  You typically buy this additional coverage separately.  Going forward, I will call all these plans the disaggregated plans. 

Medicare Advantage plans pretty much stand alone in their category.  They actually package and include all coverage into one single insurance plan (including, dental, vision, drug).  We could call it an aggregated plan vs. the disaggregated plans, but I will simply keep their current name Medicare Advantage.  

Medicare Advantage has numerous huge advantages.  They are far cheaper.  They often charge no premium at all, and they include the other mentioned coverage (dental, vision, drug).  The disaggregated plans will often cost you $100 or more per month for the supplemental health coverage alone.  When you include the additional coverage (vision, drug, dental), you may well have total monthly premiums of $200 or more. 

However, there are a couple of considerations to watch out for with Medicare Advantage plans.  

The first one is that the additional coverage included in Medicare Advantage is most often really minimal.  It is both minimal in coverage amount and minimal in access.  I personally have a Medicare Advantage plan, and the dental insurance component did not include a single dentist in the town were I live.  We have about 10 of them.  I did not have access to a single one.  As a result, I ended up buying a separate dental insurance just as if I had bought a Medicare disaggregated plan to begin with.  Similarly, the drug coverage was really poor.  So, I ended up getting a free Easy Drug Card at easydrugcard.com, where I could get drugs at a much cheaper price than on my Medicare Advantage drug coverage. 

The second consideration is that a Medicare Advantage plan is truly different than Medicare.  

With a Medicare disaggregated plan, Medicare is the primary insurer.  And, whatever private insurance you have (Aetna, Blue Cross, United Healthcare) acts as the secondary insurer.  What that means is that whether any provider is within network or not of the secondary insurer, you can still use Medicare and typically get 80% coverage at any provider. 

The above is not true for Medicare Advantage.  Such plans are whereby Medicare has contracted with a private insurer to pretty much outsource the entire administration of healthcare coverage.  In such a case, the private insurer is the primary insurer, and Medicare the secondary.  What that means is that the private insurer network entirely controls your access to providers whether they accept Medicare or not.  I learned this the hard way.  I suffered a severe bike accident recently.  And, I needed physical therapy.  Within our town we are blessed with an abundance of excellent physical therapist offices with top Yelp reviews.  They all accepted Medicare on a stand alone basis.  So, I could have had access to those with at least an 80% coverage with any Medicare disaggregated plan.  But, I did not have access to any of the top ones with my Medicare Advantage plan.  With the latter, I had only access to a single PT office that had really pretty low ratings.  This was because the PT place was not "in network" of my primary insurer.  

Overall, am I upset with my Medicare Advantage plan?  No, not really.  I would even say that it is really good.  Even when I factor that I had to purchase dental insurance, my total monthly premium (on top of Medicare) is far lower than it would be with any Medicare disaggregated plan alternative.  My limited to access to PT place was definitely an impediment.  But, this PT place is actually pretty good.  Their lower Yelp ratings were due to billing issues, that are often not that difficult to resolve.       

The Next 200 Years and Beyond

 Within this study at the link below:

The Next 200 Years,

I envision what the World may look like over the next few centuries from a demographic and economic standpoint (looking both at respective growth and levels). 

If we look at a history of the World from such a perspective, our history is extremely simple.  You need to remember one single data: the onset of the Industrial Revolution at the beginning of the 1800s.

 Over the past 200 years, the World population has increased by 8 times, and the GDP per capita has increased close to 15 times.  Going forward over the next couple of centuries, these respective growth rates will certainly not replicate themselves. 

Looking out several centuries, our respective growth (in both economy and population) are likely to follow the pattern depicted in the graph below. 

From left to right, the graph starts with an S Curve beginning with the Industrial Revolution at the first inflection point of that S Curve.  Next, comes the extraordinary exponential growth over the next 200 years reaching out to the Present.  The latter is on the second inflection of that S Curve associated with a flattening of the mentioned growth.  Going out further to the right, we observe that growth has flattened.  And, it is soon sitting at the first inflection point near the top of a second and smaller inverted S Curve.  Following that curve, some of the growth rates mentioned may even turn negative.  World population is likely to decline and eventually stabilize past the second inflection of the inverted S Curve at some Equilibrium level.  Beyond that point, the respective growth rates (especially demographic growth) are likely to oscillate up and down around the Equilibrium level.  Mind you this process is likely to work itself out over several centuries.  

If you look at the present situation, there is already an abundance of evidence that the growth rates are flattening, if not even declining.  That is especially true for demographic growth.  The fertility rates in the vast majority of the developed World including China is already much below replacement rate (at around 2 children per woman).  Even within the least developed countries (LDCs) where fertility is relatively really high, it has plummeted within the past 60 years or so.  Within the next 100 years, even the LDCs fertility rates may be much below replacement levels.  Similarly, economic growth can't go on forever either.  And, economic growth in much of the developed World including China has slowed down over the past 60 years. 

This begs an interesting question.  What will the stock market be like in 500 years from now.  Over the long term the stock market growth is equal to: demographic + economic growth (per capita) + inflation + speculation.  But, in 500 years from now when we will likely have found an Equilibrium, the only factor left boosting the market will be speculation.  In essence, the stock market will become a Zero-sum game.  We will be betting on specific companies' stocks just like we are betting on a specific horse or basketball team within the sports gambling domain.  Such a stock market could remain viable.  After all, the gigantic derivatives market is very much a Zero-sum game too.   
 

Measuring the Impact of Monetary and Fiscal Policy on the Economy and the Market

This is a study attempting to statistically measure the impact of Government policies on the economy and  the stock market. The “causal” Government policies considered include:

 

1) Fiscal Policy, entailing Budget Deficit spending;

2) Monetary Policy with the Federal Reserve managing the Federal Funds rate; and

3) Monetary Policy with the Federal Reserve conducting large purchases of securities (Treasuries, MBS);

The dependent or impacted macroeconomic variables affected by the above Government policies will  include:

a) The overall economy (RGDP);

b) Inflation (CPI);

c) Unemployment Rate; and

d) Stock market.

 

        Despite an extensive amount of work, I was truly unable to statistically measure a causal impact of the mentioned causal independent variables (Government policies) on the dependent ones (the economy, the market, etc.).  Nevertheless, I still found doing this statistical exercise very informative.  You can find the work at the following link:  

 

Macroeconomic Relationships

 

Climate Change Models

 I am just sharing here some climate change models.  The main objectives included: 

1) being able to fit the historical World temperature data; 

2) being able to forecast World temperature using true out-of-sample or Hold Out testing; and 

3) being able to demonstrate causality between CO2 temperature concentration and temperature level. 

The models disclosed within this following link:

Climate Change Models 

... were surprisingly successful in meeting objectives 1) and 2).  They did very well at fitting the historical temperature data and forecasting temperature (out-of-sample).  By just using CO2 concentration (in either nominal or log transformation) as the main independent variable, the models could reasonably accurately estimate or predict temperature level.  

The most surprising model was a Vector Autoregression (VAR) model using just one single lag (1-year lag given the yearly frequency of the data).  And, this same model using historical data up to 1981 was able to predict reasonably accurately yearly temperatures from 1982 to 2020!  In decades of modeling time series, I have never encountered a model that works so well (either developed by myself or anyone else).  The most surprising thing is that this same VAR model does not even use the known values of the independent variable (natural log of CO2 concentration) from 1982 to 2020.  Without feeding any information to the VAR model over the out-of-sample period, it still could predict temperature pretty well.  

Notice how the VAR forecast over the 1982 to 2020 period is typically much under + or - 0.2 degree Celsius off.  

Going back to the third objective of the climate change models regarding confirming statistical causality between CO2 concentration and temperature, the modeling results using Granger causality methodology were far more humble.  Establishing Granger causality was rather challenging.  This was probably due to the temperature level variable being so autocorrelated.  Notice that this was not a technical flaw within any of the developed OLS regressions or VAR models because the two variables were very much cointegrated (as tested using Cointegration regressions). 

Marin County Drought Analysis

 In the Summer of 2021, after a very low rainfall during the past 12 months Southern Marin County (just north of San Francisco) faced an imminent water crisis with potentially less than 12 months left of water supply.  I contacted our local water utility, the Marin Municipal Water District (MMWD), to obtain historical data regarding rainfall.  And, I provided to them this attached analysis.  

Drought Analysis

The MMWD Board indicated that this water crisis was due to unexpected historically low rainfall during the preceding 12 months.  Granted, the rainfall was the second lowest in the over 100-year history of the data.  Along, the same line they wrote in local paper editorials that this was due to abrupt change in the climate that they could not have foreseen.  

My analysis indicated that this explanation was flawed.  Since our local rainfall when viewed over several years had actually been much more abundant in recent times vs. during our local dry period that ended in the early 1950s.  

 Thus, the current water supply crisis is not due to climate change and increasingly dry conditions (drought over several years).  Instead, this water supply crisis is due to a water supply-management crisis.  The MMWD Board has failed to plan for any water supply backup in any form.  Every other week, the MMWD Board writes an editorial in our local paper of how we should conserve more, let our gardens die, take shorter showers, etc.  At time of this writing, they have finally considered redeveloping a pipeline that would allow the MMWD to import and purchase more water.  But, before this pipeline is even implemented, they are already considering how to dismantle it once "we don't need it anymore."  Note that this absurd lack of planning is not unique.  MMWD had built this same pipeline during a severe drought in the 1970s, only to dismantle it in the early 1980s ("when it was not needed anymore").  Granted at the time, MMWD was in part motivated by CALTRANS to do so.  But, you would have hoped that rational minds at the time could have easily convinced CALTRANS to not request dismantling this critically needed back up source of water.

Many other solutions have been suggested to the MMWD Board to shore up our back up water supply, including different variations of desalination.  Invariably, the Board turns those suggestions down as too expensive.  Meanwhile, they have successfully implemented desalination operations in many other localities in California including Santa Barbara and San Diego.  And, I bet their respective water rates are much lower than the ones from MMWD.   

The MMWD lack of vision reminds me of the prescient book by Jared Diamond "Collapse."  This famous anthropologist reviews throughout history how civilizations have disappeared.  Among the several key conditions associated with such "collapses", he mentioned: a) water scarcity and related mismanagement; and b) population growth exhausting resources. 

The MMWD Board has pretty much worked hard on both dimensions to make our little local civilization collapse.  While, they have chronically refused to plan and implement permanent water supply back up, as of this writing they still have not restricted new water hook ups to allow more residents to move in the area and exhaust our limited water supply faster.    

Medical Decision Making with Clinical Tests

The following analysis (Test Decision) provides an analytical framework on how to interpret clinical tests you may undertake.

Test Decision

At a high level, I can give you a summary of the whole concept.