March 16th, 2012
06:00 AM ET

Zakaria: Private health insurance is not efficient

By Fareed Zakaria, CNN

At King's College Hospital in London, Dr. Nigel Heaton performs a liver transplant surgery - with a live donor. A young man is giving part of his liver to his younger brother. The liver is cut in half, with one part for the younger brother and the other part staying in the donor.

As Dr. Heaton says, "The liver’s a remarkable organ.  It’s made up of eight segments, so you can take pieces of the liver, and it’ll function perfectly well. The transplant costs tens of thousands of dollars, but under Britain's National Health Service (NHS), the patient doesn't pay a thing.

Heaton continues, "When patients come to us, we only evaluate them from the point of view of their need.  Do they need a liver transplant?  The cost never comes into it. As a surgeon, I love that because it means the focus is on the care of that I can deliver."

Dr. Clair Gerada, the chair of Britain's Royal College of General Practitioners says:

"Nobody pays a doctor’s bill with the NHS.  People will go their entire life without paying a single upfront cost. Our health service is fair.  It means that irrespective of what you afford, irrespective of your illness, you will be able to access health care."

Compare that to the U.S., where an estimated 137,000 people died over seven years because they were uninsured. Of course, the Brits do pay for their health care in another way - with taxes. their sales tax is a whopping 20% and income taxes are as high as 50%.

All of that money feeds a health care behemoth. The NHS is Europe's largest employer, with well over 1 million people on the payroll. So you'd think it would be inefficient.

T.R. Reid, a former overseas bureau chief with The Washington Post toured the world's health care systems for his recent book, The Healing of America. Reid says:

"That seems sensible, right? The private sector can do things more efficiently?  It doesn't work in health care. The least efficient payers in the world are the American private insurance companies.  They have administrative costs of 20 to 30%.  That's a 30% tax on every dollar you spend on health care. Britain is totally socialized medicine [and its] administrative costs [are] 5%.  Canada is private doctors and public payers - 6% administrative costs. So it turns out, for some reason in health care, governments are doing this more efficiently than our private sector."

Why is that? I explore this question and more in depth in "Global Lessons: The GPS Road Map for Saving Health Care," a GPS special, which will debut on Sunday, March 18, at 8:00pm and 11:00pm ET & PT on CNN/U.S. It will air on CNN International on Saturday, March 24 at 9:00pm ET.  My companion article for TIME will be in the edition that hits newsstands on Friday, March 17.

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Topics: Health

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