Reference Materials

Healthcare Reform without Tears: 3 Questions, 9 answers

Author: Samuel Metz

Date: 04/25/2012

What makes health care reform so controversial is its complexity. Nearly one of every five dollars in our wallets will be spent on health care. Health care obeys almost none of our conventional rules of economics; for instance, as health care costs go up, health care needs do not go down. And it is a sword of Damocles hanging over all our heads – most American families are one hospitalization away from financial catastrophe.

This essay rearranges what most of us already know in a fashion that may make understanding health care reform easier. The format is three questions with three answers each, each answer accompanied by appropriate documentation. The goal is not to justify a specific solution, but increase appreciation of the nature of the problem so any proposed solution can be evaluated.

1. Why do we need health care reform?

This is not rhetorical. Many elected officials state unequivocally that the US enjoys the “best health care in the world ^(1-8).” It is difficult to substantiate this belief.

a. The US pays twice as much annually for health care as the average industrialized nation. This is true on a per capita basis and percent of gross domestic product (GDP) ^(9,10). Correcting for smoking, obesity, traffic fatalities, race, and homicides makes no perceptible difference ⁽¹¹⁾. We spend more on health care than any other nation in the world.

b. If US citizens were twice as healthy, we could accept twice the spending. But on most measures of public health, we rank at or near the bottom of industrialized countries. In such basic health care measures [mm1] as maternal mortality ^(12,13), lives lost to preventable and treatable disease ^(14-16), and even foot amputations per 100,000 diabetics ⁽¹⁷⁾, our record is dismal.

c. The medical, financial, and social consequences of our expensive, ineffective health care system are devastating. We are the only industrialized country which allows families to lose homes, limbs, or lives when they lack money for health care ^(18,19). Medically-related bankruptcy, which accounts for most personal bankruptcies in the US ⁽²⁰⁾, is nearly absent in other industrialized countries.

2. What are the goals of health care reform?

Many reform proposals define success with intermediate variables that fail to reflect meaningful and measurable endpoints. Examples of such intermediate endpoints are percentage of citizens with insurance policies, reductions in federal spending, decreased use of physician services. But ultimately, reform must achieve three goals.

a. Access to health care when we need it. [mm1] A plan caring for citizens who are young, healthy, and employed but expels them when they become old, sick, poor, or jobless is not reform. Most Americans purchase health insurance through their employers ⁽²¹⁾. As the average worker changes jobs nearly a dozen times before reaching 40 years old ⁽²²⁾ and changes insurance companies on average every six years ⁽²³⁾, there are many vulnerable periods in which insurance (and access to health care) can be lost. This lost access does not happen in other industrialized countries ^(17-19). It should not happen here.

b. Reduced costs. Reduced costs does not mean redistributed costs. Solutions that shift spending among patients, insurance companies, employers, and employees are not reform. Annual per capita spending and percent of gross domestic product dedicated to health care are the ultimate measures of cost.

c. Improved public health. We want more than lower costs. We want better health.

3. How do successful health care systems provide better care to more people for less money?

The health care programs of our industrialized neighbors in North America, Europe, the Pacific Rim, and East Asia all provide better care to more people for less money ^{(9,10,12,14,15)}. Although they bear little resemblance to each other ^(17,18), they share three common characteristics missing from the American private health insurance system.

a. Health care access includes everyone regardless of health. Unlike the US, other industrialized countries provide lifetime access to all citizens regardless of age, health, employment, or economic status ⁽²⁴⁾. The US is alone in fragmenting its population and then discriminating against the sick, either by restricting access or charging higher prices. We are the only country that considers it acceptable that some citizens have no access to health care. Even our publically subsidized health care programs exclude some citizens whose lack of income prevents access to health care ⁽²⁵⁾. Other countries allow all citizens access to needed care regardless of circumstances.

b. Little or no cost sharing. Other industrialized nations encourage inexpensive primary and preventative care to decrease subsequent need for expensive emergent or intensive [mm1] care. We are unique in using high deductibles, large co-pays, and excluded conditions to discourage citizens from seeking health care (26).

c. Financing by publically accountable, transparent, not for profit agencies. We are the only country in which private insurance companies use medical underwriting to fragment populations into risk pools, and then base benefits and premiums on the likelihood of needing care ⁽¹⁷⁾. In other industrialized countries, such discrimination is outlawed. Financing agencies remain beholden to the health care interests of patients, not to the financial needs of owners, and must make their policies, benefits, and payments open to public inspection.

Variations of such publically accountable, transparent, not-for-profit systems are mandated insurance, two tier private and/or public insurance, and single payer ⁽²⁷⁾. Single payer is a system of universal care with low cost sharing that uses one publically accountable, transparent, not for profit financing agency ⁽²⁸⁾. [mm1] Single payer nations include Japan, Canada, Iceland, the United Kingdom, Sweden, Norway, Finland, Italy, Portugal, and Spain. Domestic examples of single payer or variants of single payer are multi-employer health plans, the Veterans Health Administration, TriCare for uniformed services, Medicare, and Medicaid.

Implications

This essay attempts to eliminate factors which distract or polarize health care discussions. Many debaters use health care reform as a tool to advance other platforms such as human rights or smaller government. While such platforms may be important in the public arena, they fracture health care discussions with issues largely unrelated to the urgency, goals, or options for health care reform.

Answers to the third question have several important implications.

1. There is no common role for government. In some nations the government provides nearly all medical care; in others, government provides no care. However, in all nations, government ensures all citizens have access and all providers are paid appropriately.

2. A second point is the variety of methods to pay providers and deliver care. All of the methods of provider payment used in the US (e.g., fee-for-service, salaried physicians, capitated funding) are in use by nations that provide better care at lower cost to all citizens. If our attempts to follow these successful examples fail, it is not primarily due to our delivery system.

3. The third point is perhaps most important. All three factors common to successful systems relate to health care financing and access, not to health care delivery. Other studies support this concept, that our greatest (though not only) obstacle to a successful health care system is not the poor quality of our hospitals, doctors, nurses, or the treatment they provide, but rather a financing system that impedes access to health care ^{(14,15,25,29-32)}.

For a reform proposal to succeed, it must first address the root cause of our dysfunctional health care system that consumes too much money while providing too little care. That root cause is our method of financing care that impedes access to health care rather than promoting access. American health care reform must begin by improving financing before attempting to improve delivery.

---

References

1. Johnson R. “ObamaCare and Carey’s Heart.” Wall Street Journal on-line. March 23, 2011. “We need to recognize that the finest health-care system in the world is at risk—and repeal ObamaCare before it's too late.” Sen. Ron Johnson (R-Wisc)
2. “Senator John Barrasso makes remarks on coverage at health summit.” Washington Post on-line. February 25, 2010. “I do believe we have the best health care system in the world.” Sen. John Barrasso (R-Wyo)

3. Kristof ND. “Unhealthy America.” New York Times on-line. November 4, 2009. (link no longer valid) Sen. Richard Shelby (R-Ala). President Obama’s plans amount to “the first step in destroying the best health care system the world has ever known.” (link no longer valid)

4. “Senator Rand Paul, MD on health care reform.” MD Peers and Perspective. June 6, 2011. “The debate should start by acknowledging that we have the greatest health care in the world, and that 100% of people in the country have 100% access to emergency care. Those things are sort of lost on people when they talk about the uninsured. Everybody in our country can receive medical care.”   

5. “GOP Senator steps up war of words with Obama over health care reform.” Fox News on-line. July 21, 2009. Senate Minority Leader Mitch McConnell (R-Ky), "We do start with the notion, however, that we have the best health care in the world." (link no longer valid)

6. “John McCain on health care.” On the issues. December 9, 2007. Sen. John McCain (R-Ariz) “The real question is: How are we going to keep health care costs down, because we have the highest quality of health care in the world in America today?”  

7. “Senator Fred Thompson on health care.” On the issues. February 7, 2007. Former Senator Fred Thompson (R-Tenn) “Americans have the best healthcare in the world.” 

8. Selix C. “Rep. Bachman thinks US health care system is best in the world, but the statistics say otherwise.” Minnesota Post on-line. August 31, 2009.  (link no longer valid) Rep. Michele Bachmann (R-Minn) "Let's not destroy the greatest health care system the world has ever known.”  (link no longer valid)

9. Organisation for Economic Co-operation and Development Library, Health at a Glance. December 8, 2009.

10. The World Health Report 2006, Annex Table 2 Selected indicators of health expenditure ratios, 1999–2003

11. Muennig PA, Sherry A. Glied SA. What changes in survival rates tell us about US health care. Health Aff (Millwood). 2010;29(11):2105-2113.

12. Organisation for Economic Co-operation and Development Stat abstracts.  (link no longer valid)

13. Deadly Delivery: The Maternal Health Care Crisis in the USA. Amnesty International, March 2010.  Index: AMR 51/019/2010.  

14. Schoen C, Davis K, How SKH, Schoenbaum SC. US health system performance: A national scorecard. Health Aff (Millwood). 2006;25(6):w457-75.

15. Nolte E, McKee CM. Measuring the health of nations: updating an earlier analysis. Health Aff (Millwood). 2008;27(1):58-71.

16. Wilper AP, Woolhandler S, Lasser KE, McCormick D, Bor DH, Himmelstein DU. Health insurance and mortality in US adults. Am J Public Health. 2009;99(12):2289-95.

17. Organisation for Economic Co-operation and Development Library, Health at a Glance. December 8, 2009.
18. Reid TR. The healing of America. New York: Penguin Press; 2009

19. Himmelstein DU, Warren E, Thorne D, Woolhandler S. Illness and injury as contributors to bankruptcy. Health Aff (Millwood). 2005, February 2, Web Exclusive W5-63.

20. Himmelstein DU, Thorne D, Warren E, Woolhandler S. Medical Bankruptcy in the United States, 2007: Results of a National Study. American Journal of Medicine, 2009;122:741-6.

21. Income, Poverty, and Health Insurance Coverage in the United States: 2008. U.S. Census Bureau, issued September 2009. 

22. Weisberg J. We are what we treat. Newsweek July 18, 2009. http://www.newsweek.com/2009/07/17/we-are-what-we-treat.html

23. Ian Urbina. In the treatment of diabetes, success often does not pay. New York Times, January 11, 2006, p.1.

24. Docteur E, Oxley H. Health-Care Systems: Lessons from the Reform Experience. OECD Health Working Papers. December 5, 2003.

25. Centers for Medicare and Medicaid Services. Medicaid Eligibility Overview, last updated August 11, 2011

26. Davis K, Schoen C, Schoenbaum SC, Doty MM, Holmgren AL, Kriss JL, Shea KK. Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care. The Commonwealth Fund, May 2007

27. True Cost – analyzing our economy, government policy, and society through the lens of cost-benefit

28. Physicians for a National Health Program website

29. Organisation for Economic Co-operation and Development (link no longer valid)

30. Mark Pearson, Head Health Division, Organisation for Economic Co-operation and Development. “Disparities in health expenditures across OECD countries: Why does the United States spend so much more than other countries?” Written statement to Senate Special Committee on Aging. September 30, 2009

31. Preker AS. The introduction of universal access to health care in the OECD: lessons for developing countries. In: Achieving Universal Coverage of Health Care. Nitagyarumphong ES, Mills A (editors). Ministry of Public Health, Bangkok, 1998, p.103.  

32. American College of Physicians. Achieving a high-performance health care system with universal access: What the United States can learn from other countries. Ann Intern Med. 2008;148:55-75