Friday, December 13, 2013

Notes on T.R. Reids' "The Healing of America"

           T.R. Reid - The Healing of America:
A Global Quest for Better, Cheaper, and Fairer Health Care

The book is available at Amazon.

T.R. Reid is a well-known foreign correspondent for the Washington post. He has written highly acclaimed books like “The healing of America” and “United States of Europe”. T.R Reid’s book “The Healing of America” demystifies the health care systems around the world in a simple and didactic way. Circa 2009, Reid suffered from a chronic shoulder pain and was recommended to undergo a total shoulder arthroplasty in the the United States (U.S). In his quest to seek out other treatment options, he traveled to many countries and ended up studying about their ingenious health care systems. Healing of America is a product of a search for the perfect health care system.

The book is valuable in understanding US health care system through a comparative analysis with other healthcare systems around the world. The book incites us to ask valid questions regarding delivery, financing and access to health care in the United States. Reid does not propose any solutions and that in itself is an incisive aspect of the book, as we are trying to find solutions even before defining the problem. Although, the book tries to refrain from providing solutions and leaves the burden of doing so on the reader, if he or she chooses to. Asking the right questions is in itself a good start. There are a couple of recurring themes in the book, like universal health care coverage, cost containment, and healthcare as a right, rather than a privilege. Probably the biggest overarching theme is that better health care systems exist around the world and, without having to reinvent the wheel, we can learn good policy making from other countries.
In the United States, health care financing determines who has access and who doesn’t. People either pay from their pocket or they pay through their insurance. In our case, financing through insurance indirectly increases health expenditure by increasing costs by over utilization of resources. Other countries are able to tackle this problem by good policy making. Reid argues in the book that Americans believe the health care around the world is either rationed or socialized which leaves patients having no choice. This cannot be further from the truth as even the countries offering so called socialized medicine provide patients with free choice of choosing their providers.

The book highlights the fact that better health care systems exist in the world outside the US. It seems like we are awakened to the poor system here when compared to other developed countries. The book also analyses health coverage through health insurance in different countries.  It draws our attention to the fact that none of the developed countries depend on for-profit health insurance sector. It is widely accepted that the health care industry does not work like the other industries for example supplier induces demand and technology driven costs are unique to health care industry.  It also talks about the policies, other countries have in place, to control rising health care costs.

Providing health care expenditure as a percentage of Gross domestic product (GDP) makes for an easy comparison.  The book states that administrative costs in the United States are close to 20% of total health care expenditure. Other countries, like France, manage to keep it below 7%. One basic question which needs to be answered before considering any policy changes is whether we consider health care a right or a privilege of the resourceful? It is a right for the destitute and those above 65 years of age but a privilege for those not falling in these categories.  This type of fragmented and unreliable system allows for people to fall through the cracks and be devoid of health care coverage.

Bismarck Model
Out of the four different models discussed in the book, Reid lays emphasis on the Bismarck model.  The Bismarck model, named after the “iron chancellor”, Otto Von Bismarck of Germany has been adopted by  Germany, Japan, France, Belgium , Switzerland and some countries in Latin America. The Health insurance agencies, called Mutelles’ in France and Krankenkassen in Germany, are strictly nonprofit. Government regulates the prices for insurance plans which are often fixed. They collect funds from the employer and the employee in case of salaried individuals. For the unemployed and indigent population, the government pays their premium. There is a competitive insurance market as the insurance funds compete with each other to get more individuals enrolled. The funds make sure that there are no defaulters in the system and once a premium if forgotten services can only be sought after agreeing to pay the premium within one year. The Japanese version of the Bismarck model is slightly different from the rest. Although there are 3500 insurance funds in Japan as compared to 14 in France and about 200 in Germany, the Citizens in Japan are not given the privilege of choosing the insurance plan of their liking. Large companies have their own plan; some even have their own hospitals like Toyota and Honda.

These countries have universal health care coverage therefore insurance funds cover everybody. In fact, it is illegal to be without insurance. For covering co-pay and for the services not covered in the main insurance programs there are supplemental insurance plans which are funded privately. In France, they are known as Med-gaps which is extra insurance that pays for services like face lifts and life style medicines like Viagra. By allowing the Med-gaps, the government can keep private for profit insurance companies in business. Most Bismarck countries require patients to pay a percentage of treatment fees when seeking medical services. The co-pay is capped at a reasonable amount, so that it does not burden the patient financially. Rationale behind co-pay is to make citizens assume some responsibility and be reminded of the fact that medical services are expensive and should not be misused. In France, even the co-pay is reimbursed at a later date.

Most Bismarck Countries let citizens choose their health care provider. This means that there is no gate keeping or terms like; in network, out network or even a need for referral from general practitioner. Although due to rising health care costs around the world the system now encourages preliminary visits, to a general practitioner before seeing a specialist, by reimbursing an extra 10 percent of their co-pay. Doctors and hospitals are private entities and are paid according to the services rendered. The Bismarck model of Health care delivery is based on a shared value of solidarity which is a belief that everyone should be treated equally when they are sick. This is reflected in the fact that the insurance funds do not discriminate and never deny claims. Also, delay in reimbursement is illegal. Patients are reimbursed in a month and doctors in a week.

Even though it is entirely a different model from the Unites States with plenty differences three main differences clearly stand out. First, being the nonprofit nature of the Insurance agencies which allows for reduced health care delivery costs. Second, is the universal coverage where no one is left out. Government goes to the extent of covering the unemployed. This reduces the indirect costs of eventually treating the uninsured in the emergency rooms. Third, patients often have freedom to choose their preferred provider.  In Germany, the rich also have freedom to opt out of nonprofit insurance funds and buy their own private insurance.

The countries that have adopted the Bismarck model of health care delivery are facing problems that are ingenious to the system. With the rising health care costs due to improved technology and advances in science, it is becoming difficult for them to keep health care expenditure low. Even though France enjoys favorable health indices ranking in the World Health Organization reports, the physicians in France aren’t sharing the benefits.  Their salaries are often lower than the average physician salaries in the developed world. Doctors are part of the Labor Union which negotiates their salary with the government. They often demonstrate their distress by going on strikes. Japanese physicians and hospitals are severely underfunded.  Even though their medical school tuition is paid for by the local government, it is not enough to keep the discontent of the health care providers low which often surfaces as nationwide protest marches and demonstrations. As a result, in Japan, physicians are forced to make extra income from vending machines and parking lots in their clinics. As side effect of rigid cost control policy is that it saves money at the expense of doctors and hospitals. In Germany insurance funds negotiate reimbursements with doctors, and in Japan the government negotiates with doctors. Clearly, the doctors do not have much negotiating power in both circumstances.

As discussed, one of the most striking features of this model of healthcare delivery is its ability to reduce administrative and bureaucratic costs while keeping the freedom of choice.  They are able to achieve that partly by encouraging clinics to provide medical services without any “frills”. This minimalistic approach has also led to increased transparency as physicians and hospitals often display a detailed price list in clinics. This drastically reduces time and money wasted in negotiating for affordable prices. The system does not encourage false malpractice suits and even though doctors buy malpractice insurance, they are inexpensive especially when compared to the United States. In France, average malpractice insurance premium for a year is roughly equal to what the physicians in United States pay in a week. Germany and France spend approximately 11percent of GDP on healthcare. Japan spends close to eight percent of its GDP on healthcare and even that is dropping. In a drive to curtail costs, these countries adopted electronic health record systems and integrated software systems early. German citizens are required to carry a digital health records swipe card called Die elecktrinischen gesundheitskarte. The French system encourages the use of a similar card called Carde vitale.

A common myth about the Bismarck model is that there is rationing, but this cannot be further from the truth. The Japanese are avid users of health services, for example visits the doctor’s clinic average about 14.5 times a year as compared to five times a year in United States. Japanese physicians are twice more likely to order Computed Tomography (CT) Scans and three times more likely to order Magnetic Resonance Imaging (MRI) than United State. Clearly, they favor the use of modern technology.  In Germany the Benefits covered under insurance plans are generous- they often cover visits to spas and pay for health club memberships. In short United States spends a lot and gets too little whereas countries like Japan get a lot by spending too little.

Out of pocket
            160 out of 200 countries in the world do not have an effective healthcare system and people are required to pay for medical services out of their pocket. In this type of arrangement the resourceful can get health services, but the poor are left without receiving any medical attention. They often succumb to serious consequences of easily treatable diseases. In countries like Cambodia, the out of pocket expenses can run as high as 91 percent of the total healthcare expenditure. Most countries in Africa, for example Nigeria the health care expenditure is as low as one percent of their entire GDP. Of this one percent a major portion goes to treating major epidemics like HIV-AIDS.

In India, most of the healthcare budget is allocated to finance health care services provided to government employees who often live in cities. This leaves more than 750 million people, mainly villagers, without access to any healthcare services. To add to the plight, there is a lack of intelligent policy making. For example excise taxes on drugs and equipment are similar to excise taxes on other industrial goods. Without having made a distinct exception for them, the governments levy heavy import duty and taxes on drugs, even on pills that are donated for free. It is rather preposterous that Nigeria puts import duties on donated mosquito nets.

Some countries have taken a turn for the worse. China is a perfect example of what not to do when formulating health care policies.  Under the Mao regime, from year 1952 to 1983, China witnessed a radical increase in average life expectancy of 38 years to 60 years. The pandemic of bird flu depicted how the preventive medicine has crumbled in the 21st century China.  It has been found that there is a positive co-relation between per capita income and average life expectancy. There exists one exception to this rule that is the country of Cuba. Cuba manages to spend nearly 6 percent of its GDP on health care, providing universal coverage to everyone. Third world countries have human resources aplenty and cheap medical education. With good policies and implementation it is not impossible for them to overcome the disparities in healthcare delivery and learn from countries like Cuba.

National Health Insurance Model
National health insurance is the healthcare delivery model in operation in countries like Canada, Taiwan, and South Korea. This system was brought to existence in 1944 by Thomas Clement Douglas who was the governor of Saskatchewan province in Canada. His own childhood experiences with knee surgery became his inspiration for a comprehensive healthcare system that provides universal coverage. He appointed an academician Henry Sigerist of John Hopkins University. Sigerist formulated policies required to bring about the new healthcare system in stages. Instead, Douglas introduced the new system in the entire province at once, covering all sections of the population. Luckily it worked. Later he named it Medicare. Following his experiences in the Saskatchewan district, the government at Ottawa signed it for the whole country. Years later, Taiwan took inspiration from it and so did South Korea.

Canada has a thirteen payer system which includes ten provinces and three territories. Some provinces pay 100 percent for the health care services rendered whereas others require small co-pay at the time of treatment. As compared to its neighbor, United States, Canada spends only eight percent of its GDP on health care but it has better health indices for its population. The federal government of Canada provides funding through general taxes and also sets rules and regulations that govern the health care delivery. All provinces have to follow the general rules in order to receive financial aid. Since there is public administration in health care, it is on a not for profit basis. Nobody can buy the services covered under Medicare. Use of private dollars to seek Medicare services is considered illegal. Doctors are bound by Medicare rules as those billing Medicare cannot engage in private practice.

The hallmark of the system is Comprehensiveness as the government pays for all medically necessary services. Another striking feature of Canadian Health care system is its Universality. The system makes sure that everyone is covered at all times and everywhere, which brings us to discuss another unique feature which is Portability.  The insurance travels with the insurance holder from one province to another, in some cases even during travel abroad.  The last ingenious feature of the National Health Insurance model is the Accessibility, as the physicians cannot deny treatment to anyone and must treat everyone according to their scope of practice. The health care costs are much cheaper as the National Health Insurance, being the only player in the system, is easily able to negotiate drug prices with pharmaceutical companies. The critics of the system point out the long wait times for patients, but Canadians don’t seem to mind it as they rate their system highly.

Beveridge model
Countries like United Kingdom, Italy, Spain, Cuba, and Scandinavian States have a system which is known as the Beveridge model around the world. It was introduced in Great Britain by William Beveridge, and was implemented by a statesman Nye Bevan. The hallmark feature of this system is that citizens do not receive any bill for health care services they received thorough the system. The government pays for all healthcare expenditure from the general taxes. As a result, the taxes in these countries are often higher than the rest of the world. To discourage waste and unnecessary use of healthcare services there is a strict cost control mechanism in place. The government can and often does deny expensive treatment or diagnostic tests if they do not offer an acceptable value on their costs.

In line with reducing expenditure, there is minimal paperwork and the administrative costs are kept low. The system allows for private insurance companies, but only a few (three percent) bother with them. Besides, with a million full time staffers National Health Services (NHS) is the biggest employer, and therefore highly popular. The government owns thousands of hospitals but the Physicians (also known as General practitioners or GPs) are independent business people and receive a fee from the NHS. The role of GP in UK is very important. They act as gate keepers to the specialty services.  In turn they are reimbursed generously by the government for the services rendered and they also receive a set fee for every patient enrolment. They have an incentive to practice preventive medicine and to keep the patient out of their clinic (better known as surgery). They often give a complete physical exam to patients on every visit. It’s not uncommon for GPs in UK to earn twice as more than the primary care physicians in United States.

The draw back for such a system is that there is some sort of rationing and although the citizens are free to choose their provider, they are not free to choose their preferred treatment options. Long waiting times has also been cited as a major drawback of the system, as 38 percent patients have to wait for more than four months for an elective surgical procedure.  National Institute for health and care excellence (NICE) is an organization devoted to research and analyze various Index of quality indicators. Clearly, the system encourages paying for the results.

The book gives the basics of health care systems in other countries with facts, brief history and figures. In my understanding from the book, to reduce health care delivery costs, guild like opposition to cheaper yet equally effective treatments should be battled. The book encourages us to borrow a good policy idea even if it has a foreign lineage. It disproves the arguments around alleged socialized medicine. It explains the different health care delivery models in an unbiased way, as it also throws some light on the problems with the healthcare systems around the world. For e.g. Britain's NHS would not pay for the arthroplasty unless he was in acute pain, but as his Indian experience proved, he didn't even need the operation. In the end, Reid learned that there is no such thing as a perfect health system and all the current health care systems around the world are constantly changing and improving. We must also embrace the opportunity for change.

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