Unformatted text preview: Professor Kelemen
Social Policy and Politics:
Lessons from Europe Spring 2011
Health Care Policy Outline
Outline Why America needs health care reform
How European countries manage health care /health insurance policy?
Germany UK What the US can learn? Why America needs health care/ Why America needs health care/ health insurance reform? Don’t we have the best health care system in the world? That is what Republican leaders said last year at health care summit.
Well, we do have some of the best doctors and hospitals and most advanced medical procedures & technologies
If you have a very good insurance plan you will generally have access to high quality medical care
But…. Why America needs health reform?
Why America needs health reform? Coverage 47 million Americans (15% of population & 20% of population under 65) don’t have health insurance. Over 20,000 Americans die every year because they lack health insurance (National Academy of Sciences, 2002; Urban Institute 2009). Uninsured people with cancer are 30 to 50% more likely to die of it. Even people who have insurance are often ‘underinsured’ & can face bankruptcy Insurance companies treat coverage as ‘medical losses’ and routinely try to deny care Why America needs health reform?
Why America needs health reform? Cost: US spends far more than any other country on health care (16.5% of GDP) & costs are growing rapidly
Rising health care costs are by far the #1 cause of long term government deficit in US
700,000 personal bankruptcies/ year from health care costs
Wasteful administration: 25 to 30 % of some corporate insurers’ costs go to administration (versus 6 percent for Medicare and 5% or less in many European systems) ‘Job lock’ – people with job related coverage are afraid to leave job. This creates inflexibility in labor market.
Insurers have little incentive to invest in preventive care Why America needs health reform?
Why America needs health reform? Health care costs are the real deficit threat
“If costs per enrollee in Medicare and Medicaid grow at the same rate over the next four decades as they have over the past four, those two programs will increase from 5% of GDP today to 20% by 2050. Despite the attention often paid to Social Security, spending on that program rises much more modestly from 5% to 6% of GDP over the same time period. Over the long run, the deficit impact of every other fiscal policy variable is swamped by the impact of healthcare costs.”
Peter Orszag, OMB director http://online.wsj.com/article/SB12423436594722148
9.html Why America needs health reform?
Why America needs health reform? Quality:
Overall performance: US= 37th (WHO)
Avoidable mortality: US =15th (commonwealth fund
Infant mortality: US=22nd acute myocardial acute myocardial infarction(AMI) 4 models of health care (TR Reid 4 models of health care (TR Reid chapter 2) The Bismarck Model (private insurance, private health providers)
The Beveridge Model: Government run health system, financed by taxes
National Insurance Model (aka Single Payer): government run health insurance, but private doctors/hospitals
Out of Pocket / ‘free market’ model The Bismarck Model: Germany
The Bismarck Model: Germany Key elements:
Employment based coverage, but… Coverage is ‘portable’ – you don’t lose it when you lose your job and you can take it with you to any new job.
When you are unemployed, unemployment system pays premium Private but nonprofit insurers
Individual mandate: everyone must have health insurance
Far more individual choice and real competition than US!
Germany, France, Belgium, Switzerland The Bismarck Model: Germany
The Bismarck Model: Germany Financing: Insurance provided by approx 200 private non
profit Krankenkassen’ (Sickness Funds) Workers split premiums with employers. Each pay about 8% of workers' gross income. Sickness funds negotiate prices with doctors, hospitals, drug companies Wealthy may purchase insurance from forprofit insurers. The Bismarck Model: Germany
The Bismarck Model: Germany NOT GOVERNMENT RUN HEALTHCARE. NOT SOCIALISM.
Private, but regulated, nonprofit insurance: No denial of claims.
Insurers must accept anyone, no exclusion of people with ‘preexisting conditions’
All insurers must offer same basic package, but can supplement it with extras to compete with each other. Private Providers: Doctors, hospitals “It’s sheer nonsense to suggest that Germany, or any of the other countreis using the Bismarck approach, is engaged in governmentrun “socialized medicine”. Reid The Bismarck Model: Germany
The Bismarck Model: Germany High Quality
Freedom of choice (of doctors)
Short waiting times
Very low administrative cost
But relatively high cost (11% of GDP) The Beveridge Model
The Beveridge Model Financing: Government collects tax revenues, pays for health care.
Most hospitals/ clinics are government owned and most doctors work for government
Private insurers offer policies also. Wealthier people often buy these, sometimes employers cover cost.
UK, Sweden, Italy, and US Veterans Administration. The Beveridge Model
The Beveridge Model Impacts/outcomes: Very good on primary & preventive care NHS has an incentive to keep people healthy since they are ‘patients for life’ Doctors get incentive payments to improve patient outcomes Waiting times for elective procedures (but Labour government brought these down by investing more in NHS) Interesting EU angle: EU establishes ‘right’ to patient mobility. People on waiting lists can go to France The Beveridge Model
The Beveridge Model Is there rationing? Yes (but people may buy private insurance).
But there is also rationing in our system. What is the difference?
In our systems, insurance companies ration in order to maximize profit.
In their system, NHS (with assistance of National Institute for Health and Clinical Excellence NICE) ration in effort to use limited resources effectively.
One big difference: in UK when NICE refuses to fund a new drug, that becomes a political issue subject to public debate. In US, when an insurer does that to a person, it is only a personal struggle. National Health Insurance Model / National Health Insurance Model / Single Payer Providers (Doctors/ hospitals) are private
There is one national insurer that everyone pays into.
The insurer then pays medical bills.
Having one insurer helps with cost control. They negotiate lower prices
National insurer may impose waiting lists and/or refuse to cover some expensive/experimental procedures to control costs
Canada, Taiwan, South Korea Out of pocket model
Out of pocket model Very simple. If you have money, you pay doctor to provide care.
Good luck with that. So what do we have?
So what do we have? We don’t have one health care system… we have several
Employer provided health care: sort of like the Bismarck system
Medicare: National Health Insurance model (like Canada)
Military, VA, Indian Health Service: Beveridge Model (like UK)
For the 47 million uninsured, we have ‘out of pocket’ model
Each element of system hopes to deflect costs to other elements of system Do we have a ‘free market’ for health care?
Do we have a ‘free market’ for health care? There is no such thing as a truly ‘free’ market All markets are embedded in systems of law and social norms
Unregulated markets never work for health care. Why?
Health care is not like most products Most people can’t afford catastrophic care if they need it, so they ‘buy’ health care insurance. So you pay up front (insurance premium) but don’t consume service/ find out about its quality till later if/when you need it. A ‘free market’ for health care?
A ‘free market’ for health care? For profit insurers have incentive to avoid signing up people who will need care, to deny claims & to dump people from policies if they turn out to need lots of care. Huge waste of money on administration (up to 30% at some insurers)
The product (health care) is too complicated for most consumers to evaluate… they rely on their doctor to make choices. A ‘free market’ for health care?
A ‘free market’ for health care? Making markets ‘free’ (ie competitive) often requires regulation Example: Antitrust regulation
US health insurers are exempt from antitrust regulation. 90% of insurance markets in top 300 metropolitan areas are ‘highly concentrated’ (Federal Trade Commission)
5 largest providers control 75% of market or more in 34 states, 90% or more in 23 states (General Accounting Office, 2008) Robert Reich, Bust the Health Care Trusts, NYT Feb. 23 2010
http://www.nytimes.com/2010/02/24/opinion/24reich.htm Why is it so hard to reform our Why is it so hard to reform our system? Antigovernment ideology: man at South Carolina Rep. Inglis’ June 2009 town hall on health care : “keep your government hands of my Medicare”
Lobbying by vested interests:
Health care and insurance lobbyists spend over $500 million in 2009 (that we know of) http://prescriptions.blogs.nytimes.com/2010/01/30/proorconlobbyingthrived/?scp=2&sq=health%20care%20lobbying&st=cse A question of values? Or ignorance?
A question of values? Or ignorance? More than 85% of Americans say that health care is a basic human right
“Of all the forms of inequality, injustice in health care is the most shocking and inhumane.” –Martin Luther King, Jr.
George W. Bush 2007, “I mean, people have access to health care in America… After all, you just go to the emergency room.”
Was he intentionally lying or just ignorant? Reagan add for American Medical Reagan add for American Medical Association against Medicare Sarah Palin in Vice Presidential Debate, October 2nd, 2008
“It was Ronald Reagan who said that freedom is always just one generation away from extinction. We don’t pass it to our children in the bloodstream; we have to fight for it and protect it, and then hand it to them so that they shall do the same, or we’re going to find ourselves spending our sunset years telling our children and our children’s children about a time in America, back in the day, when men and women were free.” How Much do doctors make?
How Much do doctors make? United States
United States Life expectancy at birth: 78.1
Health spending as part of GDP: 15.3%
System type: Employeremployee based (54%) and government funding (46%). Government covers all older adults and the disabled (Medicare), the poor (Medicaid), veterans, government employees and Native Americans.
Coverage: 82% of people under 65; 100% of people 65 or over.
Ave. annual perperson spending: Total: $6,402. Breakdown: $2,884 by government; $2,676 for private insurance, with 52% paid by employers, 48% paid by employees; $842 by consumer outofpocket*
Financing: Larger companies selfinsured. Employers and employees share costs. Income taxes fund Medicare, Medicaid and other public programs. Copayments & deductibles highly variable in private system.
Notable features: Leadingedge technology, drugs and facilities. Most patients can choose doctors, hospitals. Biggest challenges: Health access for working poor. Discrepancies in care between rich and poor. Rising costs. Overuse of tests and procedures. Low international rankings on basic health measures, including infant mortality and preventable deaths.
Prescription drug coverage: Of those with insurance, 84% are covered. Most plans require copayments. No government controls on prices or availability.
Doctors: Payments regulated in gov’t programs; insurers set fees; no price controls for uninsured.
Hospitals: Payments regulated in gov’t programs; insurers set fees; no price controls for uninsured. Great Britain
Great Britain Life expectancy at birth: 79
Health spending as part of GDP: 8.3%
System type: Taxfunded, governmentrun. Coverage: Universal coverage. All citizens and legal residents. Average annual perperson spending: Total: $2,723. Breakdown: $2,371 by government; $352 on supplemental private insurance, OTC drugs, direct payments to doctors.
Financing: 95% of funding comes from taxes; 5% comes from user charges, such as co
payments for prescription drugs.
Notable features: "Socialized" medicine. Government directly pays doctor and hospital fees. Patients do not receive bills for National Health Service care. The National Institute for Health and Clinical Excellence advises which highcost treatments should be covered.
Biggest challenges: Government doesn't cover care that it deems costineffective and some cosmetic surgery. Maintaining a steady source of government funding in the face of increasingly expensive treatments and drugs.
Prescription drug coverage: Half of England's population receives drugs for free, based on exceptions for age, disability and pregnancy. Copayments for the rest in England. Wales and Scotland have abolished all copayments.
Doctors: Most paid by government through salary or fees; some doctors accept private insurance or fees directly from patients.
Hospitals: Paid by government, some funding from private insurers. France
France Life expectancy at birth: 80.3
Health spending as part of GDP: 11.1% System type: Universal coverage. Employmentbased system, with supplemental private insurance.
Coverage: 100% Average annual perperson spending: Total: $3,374. Breakdown: $2,693 by government, $448 on private insurance, $233 consumer outofpocket* Financing: Employers pay equivalent of 13.1% of employee's salary to the national health insurance program. Employees pay 0.75% of salary. Income taxes also helps provide universal coverage for retirees, unemployed, disabled and the poor. 87% also have supplemental insurance from private forprofit insurers, which they purchase or is paid for by employer.
Notable features: The national system pays 100 percent of costs for people with one of 30 longterm conditions, including diabetes and cancer. Broad choice in doctors and specialists. Strong pre and postnatal care, strong cancer case management.
Biggest challenges: Controlling costs, improving efficiency. Govt cutting number of acute hospital beds and promoting computerized medical records. Shifting some doctor duties to nurses. Prescription drug coverage: Drug effectiveness determines patient's copay: 0% for most costeffective drugs; sliding scale of 35%, 65% and 100% for drugs with more limited therapeutic value. More generics since 2006, new copays as of 2008.
Doctors: Government negotiates fees with doctor unions. Most are in feebased private practice. Hospitals: Government sets rates for most hospitals. Netherlands
Netherlands Life expectancy at birth: 79.4
Health spending as part of GDP: 9.2%
System type: Universal coverage. Employeremployee based system, some private financing. Coverage: Universal coverage. 98.5% all citizens and legal residents. Average annual perperson spending: Total: $3,580. Breakdown: $1,733 by government; $1,614 on private insurance; $223 consumer outofpocket*
Financing: A 7.2% tax on salaries, up to a maximum of $3,798 per year. Employers often pay twothirds of that tax. Half of the tax goes into risk equalization fund to compensate insurers with highrisk subscribers. Adults under 65 also pay annual premiums averaging $1,614 to a private insurer of their choice. Government subsidizes seniors, disabled and the poor. Government covers costs for children under 18. Notable features: Blend of private health insurance companies and government regulation. Consumers have wide choice of private insurers who can't deny coverage, but can decide who provides care and how much. Strong primary and afterhours care.
Biggest challenges: Controlling costs. Prescription drug coverage: Covered by private insurance, though extent, cost and quality depend on subscriber's policy.
Doctors: Insurers negotiate rates. Twothirds of primary care doctors in feebased private practice. Most specialists based at hospitals and paid by salary. Hospitals: Marketbased rates negotiated with insurers. Germany
Germany Life expectancy at birth: 79
Health spending as part of GDP: 10.7%
System type: Universal coverage. Mostly employeremployee based (88%).
Coverage: 99.8 % all citizens and legal residents Average annual perperson spending: Total: $3,673 Breakdown: $2,518 on mandatory employmentbased coverage, nonprofit insurance; $259 on forprofit insurance; $349 by government; and $547 consumer outofpocket*.
Financing: Workers split premiums with employers, with each paying about 8% of workers' gross income to nonprofit "sickness funds." Those earning over $75,000 may purchase insurance from forprofit insurers. Notable features: Comprehensive coverage including basic dental and longterm care. Short waits usually less than a month for elective surgery. New programs provide extra attention to diabetes and other chronic illnesses.
Biggest challenges: Large/ growing aged population, high costs, high rate of specialist visits.
Prescription drug coverage: Full coverage with small copayments. Federal panel controls prices and an expert committee decides which new treatments should be covered.
Doctors: Regional groups of officebased doctors negotiate with insurers over annual budgets. Hospitalbased doctors, including most specialists, are salaried. Hospitals: Insurers negotiate with hospitals over annual budgets. ...
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- Spring '11
- Government, Netherlands, private insurance