Senate Health, Education, Labor and Pensions Subcommittee on Primary Health and Aging Hearing
Federal Information & News Dispatch, Inc. |
Testimony by
My name is
My research has focused on cross-national comparisons of health systems and health policy, mainly in
My sincere thanks to you, Mr. Chairman, and your colleagues for inviting me to testify before this Committee on what the US health care system can learn from other countries. In health policy, other countries have for years taken lessons from the US in their efforts to reform their health care systems. The DRG payment system by which
Today's hearing is focused on "international single payer health system models that provide universal coverage of health care." I will tailor my remarks according to the three sub-themes the Committee wishes to explore, namely:
. Primary care access in single payer systems
. Health care costs in single payer systems, and
. Cross-country comparisons of health outcomes
Before proceeding with the Committee's agenda in more detail, however, I would like to provide the Committee with a summary of my main points:
1. If equity and social solidarity in access to health care and financing health care were fundamental goals of a health care system, the single payer system provides an ideal platform for achieving these goals.
2. Single-payer systems typically are financed by general- or payroll taxes in a way that tailors the individual's or family's contribution to health-care financing to their ability to pay, rather than to their health status, which until this year has long been the practice in the individual health insurance market in the U.S. (Table 1).
3. These systems protect individual households from financial ruin due to medical bills.
4. Single-payer health systems typically afford patients free choice of health-care provider, albeit at the expense of not having a freedom of choice among different health insurers. Remarkably, in the U.S. households have some freedom of choice of health insurers - to the extent their employer offers them choice - but most Americans are confined to networks of providers for their insurance policy. In other words, Americans appear to have traded freedom of choice among providers for the sake of choice among insurers.
5. In single-payer systems "money follows the patient." Therefore providers of health care must and do compete for patients on the basis of quality and patient satisfaction, but not price.
6. In a single payer health insurance system, health insurance is fully portable from job to job and into unemployment status and retirement. The "job-lock" phenomenon prevalent in the US is unknown in those systems, contributing to labor-market efficiency.
7. Because all funds to providers of health care in a single-payer system flow from one payer, it is relatively easy to control total health spending in such systems (Table 4). Indeed, total national health spending as a percent of GDP in countries with single-payer systems is lower than it tends to be in non-single-payer health systems. This does not mean providers are left without a voice. Provider inputs are part of the formal negotiations over health-care budgets.
8. For the most part, single-payer systems achieve their cost control by virtue of the monopsonistic market power they enjoy vis a vis providers of health care. It is a countervailing power that the highly fragmented U.S. health-insurance system lacks vis a vis providers (see Table 5).
9. As part of their effort to control total health spending, however, and to avoid the waste of excess capacity that easily develops in health care, some single-payer systems (the
10. A single-payer system is an ideal platform for a uniform electronic health information system of the sort, for example, used by our
11. Because they conveniently capture information on all health-care transactions, single-payer systems provide a data base that can be used for quality measurement, monitoring and improvement, and also for more basic research on what drives health spending and what clinical treatments works and does not work in health care. It enables evidence based medicine and the tracking of efficacy and safety of new drugs and devices once they are introduced after approval by government based on results of clinical trials.
A. A Taxonomy of
There is some uncertainty on what is actually meant by a "single payer" system, so I shall begin my testimony with a brief taxonomy of health systems used around the world. That taxonomy has two dimensions:
(a) Organization of the financing of health care, and
(b) Organization of the production and delivery of health care to patients.
Table 1 provides illustrates these dimensions.
Tablle 1 - A Taxonomy off Healltth Systtems
FINANCING AND HEALTH INSURANCE
OWNERSHIP OF PROVIDERS SOCIAL INSURANCE (Ability-to-pay financing) PRIVATE INSURANCE (Actuarially fair financing) NO HEALTH INSURANCE (Out-of-pocket)
Single Payer Multiple Payers Non-Profit For-Profit
Government A D G J M
Private, but non-profit B E H K N
Private, and commercial C F I L O
SOURCE:
National Health Service (Socialized Medicine): Cell A in Table 1 represents the purest form of single-payer health systems. In these systems government funds and organizes both the financing of health care and owns and operates the facilities producing health care. Physicians and other professionals in these systems are government employees. One thinks here of the inpatient sector of the British National Health Service (NHS), although outpatient services there are delivered by self-employed general practitioners. The health systems of
A unique type of multi-payer social insurance is called "all-payer systems".
In the U.S., the
The purest form of private insurance until December of 2013 - that is, before the Affordable Care Act (ACA) took effect on
The most widely sold private health insurance in the U.S., however, is employment-based insurance sold as group policies to business firms of all sizes. This approach in effect represents a combination of actuarially fair pricing and social insurance.
The premiums for the group policies sold to an individual firm covering all of that firm's employees are "experience rated," that is, they are based on the actuarially expected cost of that firm's group of employees. Other things being equal, firms with large proportions of older employees will pay a higher premium than a similar firm with more young employees.
Within the firm, however, each employee's contribution toward the premium for the firm's group policy is independent of that employee's health status, that is, it is community rated.
In a sense then, one can think of each firm's employment-based health insurance system as a form of private social health insurance.
Under the ACA, the group policies sold to small employers also will be community rated over all firms in a market area, to protect individual small firms from the high premiums that can obtain when several of a small group of employees are sick.
Uninsurance: Finally, cells M, N O represents health systems without health insurance. The bulk of the population of low-income, developing countries tends to fall into those cells. In the U.S., close to 50 million individuals fall into these cells.
A take-away from this brief survey is that, while most countries' health systems tend to fall neatly into a few cells of Table 1, one finds Americans in literally all cells in the table. We have purely socialized medicine (the VA health system), single-payer systems with mixed private delivery of care (
The Exchanges Under the ACA: Under the ACA, the system of health insurance sold on the state-based health insurance exchanges (some federally run, some organized by the states) represents a highly complex mixture of social insurance and private financing, depending on the income level of the insured. It does not fit neatly into Table 1. For very poor applicants it is basically social insurance purchased from commercial insurers or
B. The Role of Social Ethics
Different countries in both the developed world and emerging markets use different combinations of the cells in Table 1 to finance and deliver health care. In the chapter co-authored with
Health Care as a Social Good: As we note in the above cited paper, the political consensus in many countries supports a strict Principle of Social Solidarity.
Under that principle, health care is viewed as a social good that - like public elementary and secondary education and, in many countries, even tertiary education -- is to be available to all in need on equal terms and is to be financed strictly on the basis of ability to pay for health insurance and, thus, health care.
These countries usually do not rely heavily on cost sharing by patients at the time health care is delivered, as that might let ability to pay intrude upon the delivery of health care and impair access to care. That view is comfortable only with a strictly egalitarian health system.
Health Care as a Private Consumption Good: At the other extreme is the view that health care, like food, shelter and clothing, is just another basic private consumer good of which people with low ability to pay might be granted a bare-bones package through public subsidies, but whose clinical quality and the amenities accompanying the delivery of care can be allowed to vary by ability to pay for superior care. That view is comfortable with a multiple-tiered health care system.
Many Americans, although by no means all, seem to lean toward that view, although it would be rare to find a politician openly espouse the idea that the quality of health care and its amenities (e.g., the speed at which access to care is obtained) should be made to vary by ability to pay.
Compromises: In between these two extremes are systems that obey the Principle of Social Solidarity for the majority of the population (usually around 90 percent), but do allow a small minority of higher-income people to remain outside the system for the majority and opt for some other, private arrangement. One finds these systems in
C. Access to Primary Health Care under the Single-Payer Approach
Universal Access and Egalitarian Treatments for Patients: Single payer systems are an ideal platform of implementing a social ethic according to which all citizens who need health care should have access on equal terms to whatever health-care resources are available.
Because these systems operate with common, uniform fee schedules that apply across the board to all relevant providers, society signals to the providers of health care through these fees that society assigns to the provider's services the same value, regardless of the socio-economic status of the patients. This is in contrast sharply with the US system, under which the fees or prices paid the providers of health care can vary substantially by the socio-economic or demographic characteristics of the patient. Physicians, for example, receive in many states the economic signal from society that their time and skill are valued less if applied to a patient covered by
Patient Free Choice of Providers: With the exception of government-run health systems, such as the U.S. VA health system, single-payer systems (e.g.,
Neither
Patients in
By contrast, a remarkable feature of U.S. health care is that for the sake of choice among health insurance carriers, Americans have bargained away a good deal of their freedom of choice of providers. In general they are limited to the providers in the network of providers that contracts with the particular insurance carrier chosen by the patient, or patients must pay considerable more out of pocket for going outside the networks which, incidentally, are reported becoming narrower over time, especially under policies sold on the exchanges under the ACA, but also now in
Waiting Lists: Single-payer systems are structured to be able to control the flow of money into health-care systems. On the plus side, it enables these systems to control better the level and growth rates of health-care spending per capita. On the downside is the danger that the system may be underfunded, which means in this context that fewer real health-care resources (health professionals, inpatient capacity, imaging capacity, and so on) is put in place than the citizenry might wish and - and this in crucial - is also willing to pay for. There then might develop queues to certain of the available resources, and these queues need to be managed by criteria of medical urgency. Sometimes this process is called "evidence based management of queues."
Critics of the British and Canadian health systems, for example, commonly take rationing by queues - especially for imaging services and certain high tech procedures -- as their main focus, although the late
Defenders of single-payer systems such as
A significant proportion of noncardiac imaging studies may also be inappropriate. For example, one study found that nearly 30 percent of
The
Rationing of Health Care: There is great confusion in the debate on health policy over the concept of "rationing" of health care.
Some people believe that "rationing" happens only if government is involved in allocating scare resources. The implication is that rationing can be avoided by letting free markets allocate scarce resources. In a market-based system, however, scarce resources also must somehow be allocated in the face of possible excess demand. It is done in markets through rationing by price and ability to pay.
In other words, an individual may be denied access to a health care resource either by queuing or some other administrative arrangement, or he or she may be denied access to health care for want of ability to pay for it. As Reinhardt puts it in his "Keeping Health Care Afloat: The United States Versus Canada," n10
I don't buy the argument that government-run single-payer health systems are inherently less efficient than market-oriented health systems. In the end, each nation must decide which style of rationing - by the queue or by price and ability to pay - is most compatible with its culture. Mantras about the virtues of markets are no substitute for serious ethical conviction.
This point about styles of rationing health care is illustrated in Table 2 with cross-national survey data collected by the
As is shown in the top three rows of Table 2, individuals in the single-payer Canadian health insurance systems did experience longer wait times to see a specialist than did Americans, although only slightly longer wait times to see a primary-care physician or nurse. 35% of Canadians waited less than a month for elective surgery, versus 68% in the U.S.; and while 25% of Canadian respondents waited 4 months or more for elective surgery, only 7% of American respondents reported waiting that long. Interestingly, access to health care in
On the other hand, as the last four rows of Table 2 show, many more Americans than Canadians or citizens in
The degree to which some Americans are rationed out of health care by price and ability to pay can also be inferred from research published in 2008 by
In short, in the face of the available empirical evidence on health-care utilization by the uninsured, the argument that Americans without health insurance or with only shallow health insurance are not rationed out of health care is simply incredible.
TABLE 2 COMPARATIVE DATA ON ACCESS FOR SELECTED OECD COUNTRIES, 2010 AND 2013
Insured all year Uninsured
PERCENT OF ADULT WHO RESPONDED:
Saw a doctor or nurse last time they needed care
- same or next day 41% 76% 52% 53% 36%
- waited 6 or more days 33% 15% 16% 21% 40%
Waited to see a specialist
- less than 4 weeks 39% 72% 80% 77% 70%
- 2 months or more 29% 10% 7% 5% 10%
Wait time for needed elective surgery in past 2 years, 2010 survey
- less than 1 month 35% 78% 59% 68%
- 4 months or more 25% 0% 21% 7%
In the past year:
Did not see doctor when sick or did not get recommended care because of cost 8% 10% 4% 21% 58%
Did not fill RX or skipped doses because of cost 8% 9% 2% 15% 36%
Had other cost-related access problems 13% 15% 4% 27% 63%
Had serious problems paying or was unable to pay medical bills 7% 7% 1% 15% 42%
SOURCE:
The rationing of health care in the U.S. is troubling in light of the fact that the U.S. spends over twice as twice as much per capita on health care than do most other health systems in the developed world,
Asked in an interview with a writer of the
Delivery System Capacity: Table 3 provides data on health systems capacity in selected OECD countries and
It can be seen that both
TABLE 3 DELIVERY SYSTEM CAPACITY IN SELECT OECD COUNTRIES AND
Canada United Kingdom France Germany Japan US
Physician/1000 population 2.4 2.8 3.3 3.8 2.2 2.5 3.2 2.48
Nurse/1000 population 9.3 8.6 8.7 11.4 10 11.1 8.7 5.75
Hospital beds/1000 pop. 2.8 3 6.4 8.3 13.4 3.1 4.8 4.28
MRI units/1 m. pop 8.5 5.9 10.8 22.6 46.9 31.5 13.2 NA
CT scanners/1000 pop. 14.6 8.9 12.5 18.3 101.3 40.9 23.2 NA
Doctor consultation/capita 7.4 5 6.8 9.7 13.1 4.1 6.6 15.3
MRI exams/1000 pop 49.8 41.4 67.5 95.2 NA 102.7 48.3 39.1
CT exams/1000 pop 127 77.5 154.5 117.1 NA 273.8 128.2 110 (2013)
Ave length of stay (days) 7.7 7.4 5.7 9.5 18.2 4.8 7.5 10
C-section/1000 live births 261.1 237.5 202.3 308.9 NA 313.6 267.2 360*
Source: OECD Health Data 2013. http://stats.oecd.org/Index.aspx?DataSetCode=HEALTH_REAC Data for
*Taiwan-C-section rate: average of 380 performed at primary care clinics and 340 performed as inpatient.
D. Controlling Health-Care Spending
Spending: Table 4 presents data on health spending per capita in purchasing power parity dollars for selected OECD countries and
TABLE 4 NHE AS PERCENT OF GDP AND PER CAPITA US$ PPP FOR SELECTED OECD COUNTRIES AND
Canada United Kingdom Denmark France Germany Japan Korea Australia Sweden U.S. OECD Ave Taiwan
11.2 9.4 10.9 11.6 11.0 9.6 (2010) 7.5 (2012) 8.9 (2010) 9.5 17.7 9.3 6.5
4522 3406 4448 4118 4495 3213 2199 3800 3925 8505 3322 2186
Source: OECD Health Statistics-2013. Data for
Prices: Although Americans are known to use more of some high-cost, high-tech services than do citizens in other countries - e.g., CT- or MRI scans or some types of heart surgery - overall Americans actually use fewer real health care resources than do citizens in other countries. Americans see physicians less frequently, have fewer hospital admissions and days per admission and generally consume fewer prescription drugs. The main driver of the huge spending variance appears to be the much higher prices Americans pay for health-care products and services. As Anderson, Reinhardt, Hussey and Petrosyan (2003) reported in their much cited paper "It's the Prices, Stupid: Why the United States Is So Different from Other Countries", higher health spending but lower use of health services adds up to much higher prices in
The much higher prices of health care in the U.S. also have been documented by Laugesen and Glied (2011) n16 as well as New York Times' staff reporter
In bargaining with the providers of health care over the prices of health-care products and services - either formally or informally through the political process - single payer systems can act as what economists call "monopsonies," that is, single buyers. It is well known in economic theory that monosponists can extract the lowest prices from suppliers of any good or service. Consequently, and other things being equal, one would expect health spending per capita in single-payer systems to be lower than they will be under system in which payers have less market power.
By contrast, in the U.S. the payment side consists of a highly fragmented health insurance system in which each insurer has relatively weak market power vis a vis providers in a given market area. That circumstance shifts market power from the payments side of the health care system to the provider's side which can explain at least part of the higher prices Americans pay for health care.
Table 5 gives a general impression of the impact of market power n19 on the prices of health care. The data come from an annual survey conducted by the
First, average prices in the U.S. are significantly higher than elsewhere for all the procedures shown in the table. It is so also for the many other procedures for which the Federation collected prices.
Second, there is a remarkably wide range of prices for the same procedure in
Third, as Table 4 shows, single-payer Canadian prices are anywhere from 24% to 61% of the average U.S. prices for the same procedures, in spite of the geographic closeness of that system to the U.S.
Fourth, although prescription drugs are sold in a global market, Americans tend to pay substantially higher prices for these products than do patients or their insurers in many other parts of the world. It is probably also so for medical devices.
TABLE 5 Cross-National Comparison of Prices Paid by Private Health Plans for Selected Procedures or Products 2011
CT Scan: Head
As % of U.S. average 24% 28% 53% 63% 19% 100% 303%
MRI Scan N.A.
As % of U.S. average N.A. 26% 55% 84% 47% 100% 255%
Normal Delivery (a)
As % of U.S. average 34% 27% 23% 92% 75% 100% 164%
Appendectomy (a)
As % of U.S. average 43% 24% 24% 45% 60% 100% 214%
Coronary Bypass Surgery (a)
As % of U.S. average 61% 24% 25% 38% 64% 100% 204%
Angioplasty (a)
As % of U.S. average 38% 22% 24% 47% 60% 100% 219%
Hip replacement(a)
As % of U.S. average 45% 30% 30% 46% 62% 100% 211%
Nexium
As % of U.S. average 19% 12% 29% 36% 91% 100% 185%
Plavix
As % of U.S. average 45% 30% 67% 37% 98% 100% 106%
Lipitor
As % of U.S. average 37% 31% 62% 68% 80% 100% 116%
(a) Physician and Hospital fees combined
SOURCE:
The issue of relative market power in health care, of course, reminds one of the late
The prices paid for health care distribute income from payers (ultimately, individuals and families) to the providers of health care. The distribution of income in general - and in health care in particular -- is an intensely ideological issue. My point here is not to explore that contentious issue, but merely to note that by their very structure, single-payer health systems generally can better control health spending per capita for a given set of health care services and products than can any system other than possibly a national health service (cell A in Table 1).
Administrative Costs: The relative market power in a health care, however, is not the only factor driving relative prices.
Single payer systems are ideal platforms for the smart application of electronic health information systems. They, along with a common nomenclature and coming fee schedules yield significant savings in the administrative overhead of a health system. Administrative cost in
The low administrative costs typically associated with single payer systems stand in sharp contrast to the high administrative costs in the US multi-payer private health insurance market. An
In their "Medical Spending Differences in
In their paper "U.S. Physician Practices Spend Nearly Four Times as Much Money Interacting with Health Plans and Payers Than Do Their Canadian Counterparts," n26 Morra and Nicholson, et al. report the following results:
In their key findings, the authors note that very little time was spent by medical practices submitting quality data in either
Earlier, in 2005, Kahn, Kronick, Kreger and Gans n27 estimated that overall just "billing and insurance related (BIR)" functions represents 20% to 22% of privately insured health spending in
Other Factors Driving U.S. Prices: The income aspirations of U.S. physicians are likely to be informed by what ambitious and bright young Americans can earn elsewhere in our economy - especially in finance, law, management consulting and lobbying. The incomes available in these other profession, easily accessible to individuals capable of succeeding in medical school, undoubtedly set a floor to the incomes of U.S. physicians, that is, their fees. Economists view them as the opportunity costs of entering medical practice. American physicians undoubtedly seek to reduce some of these opportunity costs.
Furthermore, U.S. physicians graduate from medical school with debts averaging close to
Malpractice premiums and settlements in
E. Cross-Country Comparisons of Health Outcomes
In
The IOM was quick to add, however, that
No single factor can fully explain the U.S. health disadvantage. It likely has multiple causes and involves some combination of inadequate health care, unhealthy behaviors, adverse economic and social conditions, and environmental factors, as well as public policies and social values that shape those conditions. Without action to reverse current trends, the health of Americans will probably continue to fall behind that of people in other high-income countries. The tragedy is not that the U.S. is losing a contest with other countries, but that Americans are dying and suffering from illness and injury at rates that are demonstrably unnecessary.
Regular Metrics of Population Health Status: This is an important caveat. An individual's health status is the product of a highly complex process, including that person's experience in utero, n28 nutrition and education in early childhood and health behavior during childhood, adolescence and adulthood. Cross-national research on average population based health statistics - such as age-adjusted mortality rates, infant mortality and maternal death rates and disability and morbidity-- health of populations suggest that health-care per se actually is not the dominant factor in driving these statistics. Education and per capita income are more important factors. They in turn are correlated with life style choices and the physical environment in which people life, national and local public health policies, and the personal stress they bear.
To illustrate, the decline in life expectancy of almost six years among Russian males in the period immediately following the collapse of the
As the PowerPoint slide below, taken from the website of the
Perhaps some of the growth in obesity and the associated diabetes could have been prevented through better access to primary care. But it is reasonable to argue that much of that growth has been beyond the influence of health care proper.
Unfortunately, most of the health-status data by which different nations are compared tend to be those not significantly driven by health care per se, and there are also methodological issues regarding the definitions and use of metrics. For example, it is known that teenage mothers are more like to have premature birth and low weight babies, who have a higher risk of neonatal deaths and that the U.S. have a large proportion of babies born to young single others. The authors in an article published by the
Mortality Amendable to Medical Intervention: Ideally in cross national comparisons of health outcomes one would like to see studies that measure outcomes from medical interventions directly, with careful statistical control for other confounding variables. But such studies are rare. The only papers of which I am aware are those using what is called "amenable mortality" or "avoidable mortality."
The concept of "amenable mortality" refers to deaths that are potentially avoidable/ preventable if timely and effective health care were available. In is used widely in recent decades as one indicator by which to measure the performance of a health system. According to the 2012 IOM report, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America, 75,000 deaths might have been prevented in the US if states delivered higher quality care. n32
In 2011, the OECD published a working paper entitled "Mortality Amenable to Health Care in 31 OECD Countries: Estimates and Methodological Issues" which contained the display below (Figure 1). n33
Figure 1 exhibits two estimates of amenable mortality rates, one developed from the list reported by Nolte and McKee n34 and the other by Tobias and Yeh.
As the list shows, on this metric the U.S. health system does not fare particularly well (24th among 1 countries and below the OECD average), and worse than
A recent comparison of factors underlying differences in mortality rates from the leading amenable causes of death in
The VA system is, as noted earlier, a government-run single payer system with a widely acclaimed health information system, sophisticated quality measurement tools and integrated health care. As
"You're much better off in the VA than in a lot of the rest of the U.S. health-care system," she said. "You've got a fighting chance there's going to be some organized, thoughtful, evidence-based response to dealing effectively with the health problem that somebody brings to them." n36
F. Conclusion
Ultimately, the question of what kind of health system would be in the best interest of Americans has to be resolved by them through their political representatives.
Citizens in most nations in the industrialized world have long enjoyed universal, stable and fully portable health insurance that is not lost with the job or in retirement. Not all of them use a single-payer approach to reach that goal. They use a variety of different approaches.
But single payer systems have shown themselves to be effective in achieving universal access to health care without breaking either the nation's treasury or those of individual households.
In conclusion, I would mention that I have been intrigued by the views of former Secretary of State and Chairman of the Joint Chief of
As told by
After these two events, of Alma and Anne, I've been thinking, why is it like this? ...
I am not an expert in health care, or Obamacare, or the Affordable Care Act, or whatever you choose to describe it, but I do know this: I have benefited from that kind of universal health care in my 55 years of public life. ...
We are a wealthy enough country with the capacity to make sure that every one of our fellow citizens has access to quality health care.. (Let's show) the rest of the world what our democratic system is all about and how we take care of all of our citizens. ...
I think universal health care is one of the things we should really be focused on, and I hope that will happen," said Powell. "Whether it's Obamacare, or son of Obamacare, I don't care. As long as we get it done. ...
And I don't see why we can't do what
n1
n2
n3
n4
n5
n6
n7
n8
n9 See, for example,
n10
n11
n12 Based on OECD Health Statistics 2013.
n13
n14 OECD Health Statistics 2013.
n15
n16
n17
n18
n19 In regard to relative market power, see
n20
n21
n22 Personal communications with officials at
n23
n24 Ibid.
n25
n26
n27
n28
n29
n30 Notzon FC1, Komarov YM, Ermakov SP, Sempos CT, Marks JS, Sempos EV. "Causes of declining life expectancy in
n31
n32
n33 Gay, J. G. et al. (2011), "Mortality Amenable to Health Care in 31 OECD Countries: Estimates and Methodological Issues", OECD Health Working Papers, No. 55,
n34
n35 Steven Mr. Asch,
n36
n37
Read this original document at: http://www.help.senate.gov/imo/media/doc/Cheng.pdf
Copyright: | (c) 2010 Federal Information & News Dispatch, Inc. |
Wordcount: | 9546 |
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News