There are at least two. The first is the problem of quality, sometimes called the quiet problem. We Americans like to think we have the best health care system in the world. Evidence indicates otherwise.
In an international scorecard of American Health Care System Performance, compared with performance in 19 other industrialized countries, the US scored:
Last in mortality from diseases that are amenable to health care
Near last in infant mortality in the first year of life
Near last in healthy life expectancy at age 60
Poorly in number of adults limited because of physical, mental or emotional problems
Poorly in percent of children missing 11 or more school days due to illness
Last in percent of people burdened by medical debt
And so on. And so on. And so on. The study from which the scorecard is taken contains multiple other indicators of the dismal state of American health care on a comparative basis. There have been a number of other studies of health care quality, comparing America's with the quality in other nations, (1,2,3, for example), all coming to about the same conclusion.
What's even more disconcerting is the rank of America among OECD nations when measuring the death rate from diseases that are amenable to treatment, diseases like TB and HIV, for example. In 2003, we ranked last among the nations ranked. Over the last decade, we made the least progress among civilized nations in reducing the deaths from amenable causes.
This is a quiet crisis, for very few people with loud voices are talking about it in this country. So far.
There is a second major problem in the American Health Care System. It is the inexorable, rapid rise in the cost of health care in America. Rising cost is the illness with symptoms felt in three areas.
The effect of health care cost on business.
The effect of health care cost on individuals.
The effect of health care cost on physicians.
Health Care Costs. Lets begin with health care cost, and lets begin with numbers. The actual rise in health care cost, from US Census bureau data
A 100 fold increase in health care cost in about fifty years. These numbers are presented in current dollars, not adjusted for inflation.
What does this mean for individuals? The Milliman Medical Index reports that the average medical cost in 2008 for a family of four was $15,609. About one dollar out of every six spent in this country on finished goods and services was spent on health care.
Not only do we spend great sums on health care in America, but our spending is substantially greater than expenditures in any other industrialized country, whether calculated per person or as a fraction of Gross Domestic Product.
So what's the cause of this enormous increase in spending on health care?
Let's step back a step first, and remember what medicine was like fifty years ago. When I entered my internship in 1957, there was no chronic dialysis, no transplantation. There were no artificial hips or artificial knees. There were no CT scanners, no MRIs. Treatment for a heart attack was three weeks bed rest and morphine as needed; there were no stents, no angioplasties, no triple by-passes. We had Phenobarbital as a tranquilizer. There were no ‘water pills’; edema was treated with injected mercurials, twice a week. My dad still made house calls on the way home from the office every day and every Sunday morning. GP’s…general practitioners…still did deliveries and major surgery.
The Congressional Budget Office has rightly concluded that technological advances are responsible for the majority of rise in health care expenditures since then. More minor factors have been the aging of the population, the emergence of third-party payors for medical care, disproportionate rise in health care cost compared with other costs, and a few others. There's not much room for cost control in the factors listed by the CBO.
But why do Americans spend so much more on health care than others in the world? There are at least three reasons.
Our health care is administered through health insurance companies. Up to a fifth of the dollars we give insurance companies are spent in underwriting, selection of favorable populations to insure, application processing, claims processing, claims denial, executive salaries, other administrative expenses and profits for shareholders. Hospitals, physician offices, and everyone else who provides health care have to spend substantially to deal with insurance companies, billing, filing insurance, appealing denials, and so on. By one reliable estimate, up to 31% of health care dollars go to administration in this country, far more than in Canada, despite a health care system in that country that is measurably similar in quality. We could save billions of dollars with a health care system that eliminated the administrative expenses generated by private insurance.
A second characteristic of American medicine is its commercialization. It's hard to turn on television without seeing a commercial for Viagra, or Claritin, or Lunesta. Popular magazines, other print media, billboards, what-have-you: we're all bombarded by messages to better our health, and to spend money in the process.
Another characteristic of medical care that contributes to rising cost is the way we physicians are paid. We prosper most when we provide the most expensive services to the most people in the shortest period of time. We have all the incentives in the world to generate medical expense, and precious little incentives to concentrate on quality, or spending time listening, or reading, or thinking. Between these incentives and the efforts of the advertising industry, it's not surprising that some estimates place as much as a third of total health care expenditures in the 'not really needed' category.
In short, our system is loaded with incentives for providers to provide and for consumers to consume. The only brake on runaway growth of health care is the increasing numbers of people who can't afford it.
The HRET annual employer health benefits survey indicates that the premium for family health insurance has risen to $12,680 in 2008.
Employers are between the rock and the hard place. It goes without saying that health benefit packages are of enormous importance in competing to recruit and to retain valued employees. It also goes without saying that health benefit costs are enormously significant for companies that offer goods and services in a competitive marketplace.
A few years ago, the chairman of General Motors commented that health benefits added $3000 to the cost of each vehicle GM made, and that he was competing against automakers in Japan where health care is a government service.
Starbucks pays more for health insurance for its employees than it does for raw coffee.
Employees now pay on average $3,354 of the annual $12,000 family premium. Increasing numbers of employees are provided insurance with annual deductibles of $1000 or more in addition to substantial co-payments for many services.
We've already noted that The Milliman Medical Index estimates that the average total cost for a family's medical care reached $15,609 in 2008. The median income for a family of four in Alabama in 2008 is estimated by the census bureau to be $53,690. It follows that it is no longer possible for the average Alabamian to afford health insurance for himself and his family on his own.
The census bureau estimates that 45.7 million Americans were uninsured in 2007. But who are they?
The majority are poor...but there are significant numbers of middle income and upper income people without insurance. Many of these are self-employed individuals with pre-existing illnesses that make them uninsurable.
The majority are non-white...but there are significant numbers of uninsured in all races.
Some are college graduates.
And many of the adult uninsured live in homes where there is at least one employed adult.
The economic consequences of being uninsured are hard.
It's no surprise that economic problems create medical care problems.
Underinsured people and people with very high annual deductibles behave exactly like uninsured people when it comes to skipping needed prescriptions, needed tests, needed medical treatment.
And the saddest statistic of them all:
18,000 Uninsured Americans died in 2007 of diseases
amenable to medical treatment.
To put that into perspective:
There were 12,000 deaths from HIV/AIDS in America
in 2007
The average primary care physician is finding a measurable uptick in
collectables, chiefly relating to copayments and deductibles.
The average specialist is seeing a perceptible decrease in elective procedures.
Free clinics, community health centers are seeing a significant increase in
patients.
Historically, economic downturns have associated with increased pressure on
physicians to provide uncompensated care. The pressure is predicted to be
substantial when coupled with a large number of individuals already underinsured
or uninsured.
The Department of Health and Human Services projects that total health cost will nearly double within the next ten years.
Should we
Work to relieve the burden on employers?
Work to reduce the number of uninsured?
Work to make everyone insured?
Work to control the rising cost of health care?
Work to improve the quality of American health care?
Do only what is politically feasible?
There's one overarching principle. We have to be smart about whatever we do. If we're dumb, measures to control cost can add to the number of uninsured. If we're dumb, measures to reduce the number of uninsured or to improve overall health care quality can greatly increase cost. The trick is to improve quality, insure everyone and control cost all at the same time.
1. Nearly 40% of employers don't offer insurance. As the economy deteriorates, the number can be expected to increase.
2. There are a number of proposals circulating in Congress (Senator Wyden's bill, for example) that provide disincentives for employers to continue to provide health insurance, coupled with incentives for individuals to purchase insurance for themselves and their families.
Recently a number of business organizations including the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Independent Business expressed strong reservations about proposals to shift health insurance provision from employers to employees. A survey of 187 corporate executives by the American Benefits Council revealed that three quarters of them felt the proposal would have a "strong negative impact" on their employees.
At present, hardly anyone earning less than 400% of the federal poverty level, and not covered by group insurance, purchases individual insurance. There's no reason to believe that the modest tax incentives that have been proposed would change that behavior. It appears that pushing people away from employer-provided insurance will greatly increase the number of people with no insurance.
3. Eliminate barriers to interstate purchase of group health insurance.
Repeal the federal law that prevents businesses from crossing state boundaries.
4. Strengthen the employer-based health insurance system.
Make provision of health insurance mandatory for employers, to eliminate competitive advantage between firms within this country.
International competitiveness would depend on total tax load and its distribution in different countries.
Make community rating mandatory, so that premium differentials cannot arise when employers have different illness experience among their employees..
1. Reduce the cost of health care so that more can afford it.
Preventive medicine, electronic medical records, more efficient care of chronic illness and others have been mentioned as ways to reduce the cost of medical care. There is no credible source that supports the idea that any of these measures would have any appreciable effect.
Provide first-dollar coverage of hospital and medical expenses, as is now the practice in Great Britain and Canada, among other countries.
Don't underestimate the impact of deductibles and copayments. 40% of Medicare recipients spend more than 20% of their income on medical care, which seems like an unbelievable figure until you recognize that many people in retirement live on social security only. It doesn't take many copayments to chew up 25% of a social security check.
2. Provide health care for free.
Medicaid and SCHIP are essentially free today. Millions of children remain
uninsured. The reasons are multiple, and many don't make sense to us, but
make immense sense to the people involved.
Some children just
have bad parents.
Some parents have
never heard of Medicaid and SCHIP (called "All Kids" in Alabama)
Some parents are
illiterate, and ashamed to have that become apparent.
Some parents are
absolutely intimidated by the thought of going into a courthouse to apply.
Some parents don't
know how to get the birth certificate for their children, needed to prove citizenship for
both programs.
Some families only
have one car, and one parent can't leave the house (while the courthouse is
open) while the other works.
And some parents
really believe that if they sign their kids up with Medicaid, the Welfare will
come and take their children away.
3. Employer mandates: Make employers offer insurance to all employees or pay a stiff penalty that the state can use to subsidize insurance.
Detested by employers. Is a component of the Massachusetts and San
Francisco plans. Massachusetts employers tolerate the requirement in that
state, partly because the penalty is not large, partly because there is also an
employee mandate (see below)
Even when employers provide health insurance (with some degree of premium sharing), many employees can't afford the part of premium cost their employers require them to pay as their part of insurance.
4. Employee mandates: Make all employees purchase insurance, with subsidies for low-income families.
Detested by labor. Effectiveness of any mandate is determined by the cost of compliance, penalties for non-compliance and timely enforcement.
There's a good paper discussing the problems with mandates as a tool to compel behavior.
In Alabama, about 25% of the drivers on our highways used to be uninsured. Then we passed a mandatory auto insurance law. Now about 25% of the drivers on our highways are uninsured.
Health care legislation was painstakingly hammered out in California in 2008, but the final product died in committee because organized labor feared employees would be forced to purchase insurance they couldn't afford or that they'd find wasn't worth what they'd be made to pay.
Mandates are generally disliked or resented. By contract, universal insurance like Medicare is generally well thought-of by those it covers.
The cost of enforcing mandates on employers or on employees would be very substantial.
The only way to eliminate the entire problem of the uninsured is to insure everyone, automatically, much like Medicare. Insurance that starts when you're born, stops when you die, covers all medically necessary care in between. Insurance with first-dollar coverage, meaning no deductibles, no co-payments. Insurance that covers all necessary medical and hospital care.
This kind of universal medical insurance has been shown to be economically feasible in studies in the early 90's by the General Accountability Office, the Congressional Budget Office and the Economic Policy Institute (Rasell. "An Equitable Way to Finance Health Coverage. International Journal of Health Services, 1999, 179-188). More recently, feasibility of universal health care has been demonstrated for several states, Colorado coming prominently to mind. Feasibility arises from eliminating the administrative cost of health insurance. Elimination of private insurance cost can offset the cost of a governmentally administered program that extends coverage to everyone.
For that matter, the federal budget surplus existing at the end of the Clinton administration was enough to have provided health insurance for all of the uninsured.
However, the most compelling argument for the the reasonableness of cost of universal health insurance coverage is that every major industrial country in the world has some form of health insurance for all of their citizens. Every one...except the United States.
Incidentally, extension of Medicare to everyone resolves the problem of the burden of health insurance cost on employers.
While it sounds simple to eliminate private insurance carriers and to use the savings to pay for universal health insurance, the development of a politically palatable tax as a replacement for insurance premiums would be a major challenge.
There is also the question of what to do with individuals who are in this country illegally. Canada, as an example, cares for its illegals through a combination of charitable clinics and public health service clinics. Canadian physicians will acknowledge that the care of illegals has room for improvement.
Dr. Ezekiel Emmanuel is an oncologist, an ethicist at the National Institute of Health, a widely respected, long-time student of health policy and the brother of the chief of staff for Barach Obama. He has proposed a value added tax, of a kind widely used in Europe, the proceeds from which would be used to fund all health care for all Americans. Growth in health care expenditures would be limited to any growth of income from the Value Added Tax.
Conversion from fee-for-service medical care to largely capitated care or paying physicians a fixed salary would remove one incentive to the drive for rising health care cost. Initially physicians greet thesuggestion of capitation with a smile and great delight at the prospect of working less hard, less hours, until they realize that they remain in a competitive system, with reimbursement dependant on their ability to attract and to retain a substantial panel of patients.
Primary care physicians generate much less medical cost than do specialists, particularly procedure-performing specialists. In some countries, anyone can go to a specialist who wishes to, but the specialist is reimbursed significantly more if the patient comes on referral from a GP than if the patient comes on his own. It follows that in those countries, primary care physicians play a much larger role in delivering medical care than in this country, and do so at lower cost.
In Great Britain and Australia, pharmaceuticals are subjected to review by panels of physicians, drug-company representatives, pharmacists, nurses, ordinary citizens and others. The purpose of the review is to determine not only if the drug works, but how much improvement in life expectancy, of what quality, does the drug produce. NICE...the British National Institute for Health and Clinical Excellence...usually uses the figure of about $30,000 per quality-adjusted life year as the cut-off point above which it is not apt to recommend use of the drug. NICE is under ongoing furious attack from pharmaceutical makers of some of the specialty drugs costing hundreds of thousands of dollars a year.
Several other measures to control the cost of care have been described.
Efforts to improve the quality of medical care in this country don't have a high priority in most thinking, even though measures of care quality aren't outstanding by international comparisons (see above) and even though physician adherence to care guidelines is very far from ideal. In Great Britain, in about 2001, compulsory clinical audits in both hospital and clinical health services were introduced following clear-cut failure of voluntary self-assessments. The action was taken by the Blair government explicitly to improve the quality of care. Physician morale plummeted.
Measures primarily intended to improve quality of health care almost always increase its cost, of course. There are exceptions.
Political change is a fascinating study. Women's suffrage, civil rights, a host of issues smoldered for years, then seemed suddenly to pop to the surface and to receive attention. Sometimes there was a political leader like Roosevelt, sometimes a Martin Luther King, sometimes a broader groundswell like that which brought the Viet Nam War to a close. The point is that while health care reform has been talked about for years with no apparent effect, there's no telling when something, possibly quite unexpected, will precipitate action.
With 42% of the 19-64 population uninsured or underinsured, possibly the ingredient missing to achieve universal coverage is simply leadership.
There's been much learned from the failure of the Clinton Administration's attempt to reform health care. The next bill sent to the Congress will certainly be much smaller, much easier to understand than the last. Business sat on the sidelines of the last debate; now it's a player. And sources of opposition are easier to anticipate and to deal with now:
We know that large insurance companies will oppose health care reform as if their lives depended on it...which they do. We know that they'll be joined by big drug-makers and by highly compensated medical specialists who have a vested interest in maintaining the status quo.
We know that 85% of people who presently have insurance are satisfied or fairly satisfied with what they have, and are understandably reluctant to trade what they have for the unknown. Almost every plan on the table (except HR676) preserves the right of individuals to continue their present coverage if they choose.
While several of the proposals are budget-neutral, at least on paper, there's invariably worry that health system reform will lead to increased taxes, particularly at a time of softness in the economy.
The structure of the American political system favors the lobbyist and the opponents of change.
We know that many Americans (alone among other major industrialized nations) distrust government and the idea of a governmental bureaucracy providing their health insurance coverage (though they do like Medicare). And it's a 2 1/2 trillion dollar industry that's being restructured. Some of this distrust is vague and cynical; some deep-rooted in a philosophical world view that demands a limited, small government with minimal regulation. There are still some people who believe philosophically and passionately that Medicare should never have been created.
The concept of 'Personal Responsibility' implies that individuals are responsible for putting food on their own tables, a roof over their own heads, clothes on their own backs and for their own health care. Individuals have only themselves to blame for the consequences of irresponsible decisions. Still, there is a world of difference between a decision to purchase a plasma TV instead of an insurance policy, on one hand, and a decision to pay rent, buy food and put clothing on their children instead of buying insurance with scarce dollars, on the other. At some point, many would agree, there is a moral responsibility for society to help when problems become too great for responsible individuals to handle.
On the other hand, supporting reform of the health care system now are many physicians including two Nobel laureates and three former Surgeons-General of the United States.:
A number of professional medical organizations:
The U.S. Conference of Mayors. (see page 6 of the link)
The organizations and people listed above have explicitly endorses universal, comprehensive, single-payer health insurance, as represented by the Conyers bill, HR676, a bill that would extend an improved form of Medicare to everyone. There are a number of others who support the concept of universal, comprehensive insurance coverage, but who have not specifically endorsed HR676.
Sympathetic organizations favoring extension of some or all medical services to many more citizens:
The AFL-CIO and much of organized labor (though a number of labor organizations have explicitly endorsed HR676, as well):
And a substantial number of organizations with heavy business representation. There's need to be careful...despite wonderful names, not all of these organizations favor the same agenda that we do.
The political struggle promises to be interesting. One final thought...in the past, struggles for one position or another took place and then were lost, and we all settled back to a continuation of things just as they've always been. Very soon...maybe now...the inexorably rising cost of medical care and its twin consequences, pressure on business and on individuals, will force a change in the health care system. The status quo is no longer a viable option.
There's a nice history available of efforts at health care reform dating back to the start of the 20th century.
What follow are some pages describing what others have done to deal
with health care problems:
International solutions
State (and city) solutions
Cities
And finally these are the
major proposals of Senators McCain and Obama.
And then, mostly because I don't have another convenient place to put them, these are Presentations that we've made to various audiences. You will need the Microsoft PowerPoint program on your computer to be able to see the slides.