Health Reform in the US Part 1: How American Healthcare Works (or not)

Thanks to my friend Faisal for inviting me to contribute to his excellent blog. My name’s Rob Ford, and I’m an academic working at the University of Manchester studying political science and sociology. I’m also an American Politics nut. So given Faisal’s interest in the current health care debate, I’m going to open with a little primer on health care in the US, a strange beast indeed.

In Britain, we all have a right to free health care paid for out of our taxes (specifically, out of national insurance), though we can opt to take out private insurance too if we want to. The doctors are all employees of the state, though they can opt to take on private patients too, and are played a flat wage based on seniority and specialisation. The government makes the decisions about what drugs and treatments to pay for, and how much, and through organisations like the National Institute of Clinical Excellence has proved to be a tough bargainer over drug prices.

Every aspect of this is different in the US. Most Americans do not get any health care free of charge – they have to pay a private insurance company to provide it. However, in most case it is not the individual who pays, but his employer, thanks to a massive government tax break which encourages all large American companies to offer health care benefits to their employees as part of their contract. However, employers are under no obligation to provide this benefit and many can, and do, refuse to insure their staff. Most Americans – probably two thirds – get their insurance through this system, either directly as the wage earner or indirectly through benefits also offered to spouses and kids. The insurance companies, however, are under no obligation to insure all illnesses, and they can (and do) impose charges for treating some diseases or people, or refuse to insure them altogether.

That’s not the end of the story, though. The American government, despite what the right wing Republicans say, is also heavily involved in the system. Two programmes enacted by Lyndon Johnson in the 1960s – Medicare and Medicaid – provide government funded health care to millions of Americans. Medicare gives every American over the age of 65 with free health insurance coverage – a sort of NHS for pensioners. Medicaid provides health insurance for the poor: although the coverage it offers is very limited and probably reaches only 40% of the American poor. On top of this, a more recent programme called S-CHIP provides free health insurance to the children of lower middle class parents too wealthy to qualify for Medicaid but too poor to afford private insurance.

What does all this add up to? A lot of money, for starters. America’s health care system is almost twice as large as any other rich country’s, consuming 16% of GDP. Every sixth dollar spent in America is spent on something connected to healthcare. The cost of providing health care to employees is an enormous burden for many American companies: it was a key factor in the bankruptcy of General Motors and Chrysler.

However, this money is spent very unequally. While wealthy and upper middle class Americans have world class health care, with no expense spared, those at the bottom have limited coverage or no coverage at all. About 15% of the poorest Americans have no health coverage at all. As most people get coverage through their jobs, they risk losing it (for them and their families) if they are made redundant. And if they get ill while in one job, then move to another, their new insurer can refuse to cover them or make them pay a lot more. As a result, health care costs are the number one cause of bankruptcy in America and unemployment is an even more scary and stressful business than it is here. Imagine if losing your job meant you, your wife and your kids can no longer get medical care if you get sick. Nice system, huh?

However, despite this injustice and insecurity , the performance of the US system is not that hot. America doesn’t rate very highly on most health care outcomes, and the mediocre performance they get comes at an enormous cost.

Its a complicated, inefficient, grossly unjust, massively expensive system that has been slowly bankrupting American companies and the American government for decades. Its pretty obvious to everyone that it doesn’t work. So what is Obama trying to do to fix it, and why is he finding it so hard? Tune in next time for the answers...

Obama's Health Care Reform: Is "Socialised Medicine" such a terrible prospect for Americans?

Greetings friends,

Thanks for tuning in once again to my blog (devotees - you know who you are!). OK, so for some reason I have decided to write yet another serious post. God knows, perhaps I am coming down with a bout of swine-flu; better get on the NHS swine-flu hotline and get my order of Tamiflu in! No, actually it's primarily because I am trying to keep my mind active and focussed towards the impending start of my new Masters course. And because whilst I was in the US for three weeks in June this year, I couldn't help but notice that Obama's proposals for US Health Care reform had completely divided the nation, and certainly captured my latent interest. So for anyone reading this you will have to excuse me for crystallising my own thoughts and understanding on this very topical of issues for Americans.

I have recently read some interesting and informative articles on the current US health care debate, notably in Time magazine, and an article written by Philippa Thomas for the BBC. In addition my eldest sister and brother-in-law, whom I recently visited in the States, work in regulatory and pricing & reimbursement at a senior level for a large biotech company in California, respectively. Having had several conversations with them also, I now feel that I am starting to understand the American psyche, and correspondingly, why so many Americans are opposed to the new bill that Obama is proposing at the moment.

So it appears that right now Obama is lobbying America's doctors, including what was apparently a rather blunt message at the annual conference of the American Medical Association (AMA). During this speech he made it clear that the AMA will bear much of the responsibility for reining in the huge cost of American health care. Currently, the system operates on a "fee-for-service" basis meaning that doctors receive a fee for each service they provide such as an office visit, test, procedure, or other health care service. Ultimately this means that the system is based on quantity, not quality, and it is my understanding that many Americans perceive more contact time with doctors and hospitals with a "better" standard of health care. However, as much as I have canonised doctors in the past (my father was a successful GP), it does appear that the model in the US "has taken the pursuit of medicine from a profession - a calling - to a business", as Obama put it. Essentially, like everything else in America, what should perhaps be a sacrosanct profession in one sense has been commoditised as a consequence of free-market economics. And surely this just ain't right. Right?

There are now apparently 47 million Americans with absolutely no health care insurance and a further 25 million with sub-standard insurance. That's roughy a quarter of the entire population of the United States. Quite simply, this statistic shocks me and (NHS) jibes aside, I am rather proud to be a citizen of a country with a "socialised" form of health care, as the Americans put it. Surely that is a mark of a truly civilised country, which takes responsibility for ALL of its citizens, and does not deny a significant proportion of its people access to vital health care! Do not get me wrong, I am not fundamentally opposed to free-market liberalism but am willing to pay higher taxes if it means that the old lady next door can get her hip replaced courtesy of the NHS.

I have also been rather interested to read articles on "Comparative Effectiveness" (CE) in the States. Essentially there is talk of developing some sort of regulatory body like the National Institute of Health & Clinical Excellence (NICE) like we have over here. Indeed, I read a rather informative Time article which went into some great depth highlighting the differentials in costs at the most prestigious teaching hospitals in the United States. The salient point was made with regards to the "Mayo Clinic" in Minnesota, which appeared to have siginicantly lower costs per patient (cannot remember any precise numbers) but essentially the same outcomes. Clearly this sort of data shows that quality health care CAN be provided for less. Indeed perhaps we should all look at the Mayo Clinic as an exemplary model.

I think perhaps America's fear of socialised medicine is incredibly deep rooted; in 1948 Truman's plans for health care reform faltered in the face of cynicism about "Russian-style communism". More recently, in 1994, the health care initiative sponsored by the then First Lady Hillary Clinton was by all accounts, an abject disaster. "The American Dream" seems to be a double-edged sword: on the one hand, it is possible to achieve anything if you put your back into it, but on the other, you better hope that life doesn't deal you a bad hand, because as sure as hell no one else is going to pick you up. That, in a nutshell, is the philosophy behind capitalism. I think (I have been listening to Professor Michael Sandel's Reith Lectures recently...).

America spends roughly 16% of its GDP on health care (double the average spending of OECD nations), roughly one sixth of GDP. This is big business. The American libertarian thinker, Michael Cannon, who heads health policy analysis ay Washington's Cato Institute thinks that big reform is needed - but reform that puts financial power into the hands of the individual consumers, not another vast government bureaucracy. He estimates that it will cost around $2tn to cover all of America's uninsured over the next 10 years. A staggering figure. This will clearly create a burden on various stakeholders: doctors and hospitals will probably be tasked with providing more with less funding, thereby bringing the debate of comparative effectiveness right to the fore. The burden might also fall on workers, if salaries fall as employers are required to provide broader health insurance. The burden might also fall on taxpayers, facing more or higher taxes. Ultimately, to make universal health care work, everyone is going to have to sacrifice. As Michael Cannon puts it, what the government is really doing now is "trying to find the path of least resistance".

To me, America seems to be an incredibly greedy, selfish and divided country. On the one hand you have the wealthy who can afford full, private health insurance and college fees, thus ensuring that they propagate good health, education and ultimately wealth. On the other hand, clearly an underclass who are barely literate, uninsured and with no hope of ever breaking their cycle of poverty. Now I am not saying that the situation here in the UK (and Europe) is perfect, but right now I would rather live in a country where it is perhaps more difficult to achieve affluence, but at least people can live in the comforting knowledge that there is at least a socialised health care safety blanket called the NHS. God bless it, and all its failings. Perhaps we should stop grumbling and be thankful for what we have. Now I've just gotta get my hand on some of that Tamiflu...

Thank you for reading.

Currently listening to a rather lovely deep and chilled live mix entitled "Lipse" by my old friend, Max Cooper.

Peace,

F.