But the situation on the ground suggests that markets work imperfectly in this realm. A new study conducted by the pharmaceutical company Novartis and McKinsey and Co. shows a stunning difference among countries with regard to health-care efficiency.
For example: Smoking rates are higher in France than in the United States, so the French population has higher rates of lung disease. Yet the French system is able to treat the disease far more effectively than happens in the United States, with levels of severity and fatality three times lower than those in this country. And yet France spends eight times less on treatments per person than the U.S. system. Or consider Britain, which handles diabetes far more effectively than the United States, while spending less than half of what we spend per person. The study concludes that the British system is five times more productive in managing diabetes than is the United States.
To be fair, there is one case in which the United States does better, battling breast cancer, where early screening and easy access to advanced treatment make the country the most effective place to tackle that disease. But overwhelmingly, the most effective care for diseases come from countries with much lower costs.
To understand the issue better, I spoke with Daniel Vasella, the chairman (and former chief executive) of Novartis and a physician by training. He is also frankly pro-market and pro-American, both of which have made him a target for some criticism in Europe.
Vasella emphasized that there is no single model that works best, but he explained that France and Britain are better at tackling diabetes and lung disease because they take a systemic approach that gives all health-care providers incentive to focus on early detection and cost-effective treatment and that makes wellness the goal. “In America,” he said, “no one has incentives to make quality and cost-effective outcomes the goal. There are so many stakeholders and they each want to protect themselves. Someone needs to ask, ‘What are the critical elements to increase quality?’ That’s what we’re going to pay for, nothing else.”