THE UNIVERSAL HEALTH CARE IMPERATIVE
by Doug Korty
We know what the problems of US health care are. Forty five million people have no insurance and many millions more have inadequate insurance. Per capita costs are the highest in the world and continuing to rise rapidly. US
ACCESS Over 45 million people are without health insurance and as many people find that their insurance coverage is inadequate due to exceptions, restrictions, denials, deductibles and copays, etc. The Institute of Medicine
COST Total health care costs have gone from 5.1% of GDP in 1960 to 16% in 2006. We currently spend a little over $2 trillion per year on health care, almost $7,000 per person. The average rate of increase in health expenditure since 1960 has been 9.9 percent per year. A large part of costs are for serious illnesses and injuries, approximately 5% of the population account for half of the cost of medical care each year. The healthiest 50% account for only 3 percent of expenditures. One third of expenditures are for the 12% of the population over 65, and 30% of Medicare costs occur in the last year of life. The five most costly conditions are heart disease, mental disorders, pulmonary conditions, cancer, and trauma. Seventeen percent of health care expenses are due to crime -- homicide, rape, assault, robbery, drunk driving, domestic abuse, child abuse—our higher crime rate is one reason that our costs are higher than other countries. Administrative costs in our complex and fragmented health system have been estimated at more than 25% of total costs. Employers have substantial costs administering health insurance benefits; these costs are relatively higher for small employers. Because of these high costs, health care and health insurance are becoming increasingly unaffordable.
Physicians account for less than 10% of healthcare employment and 25% of expenses, but their decisions affect 70-80% of all spending[i]. Physicians control patients' access to medical care--prescriptions, hospital admissions, surgery, diagnostic tests, nursing care, specialists, nursing homes and home health care services. Many physicians tend to overuse high technology and pharmaceuticals rather than simpler methods, which may be as or more effective. Thanks to high-tech imaging, America
QUALITY In 2000, the World Health Organization ranked the quality of health care systems of 191 member countries, the US US has ranked 42nd.and the US
Uncertainty and ignorance are often to blame according to David Eddy, a leading authority on evidence based medicine. “Doctors choose incorrect treatment in a large % of cases.” “Uncertainty, biases, errors, and differences of opinions, motives and values weaken every link in the chain that connects a patient’s actual condition to the selection of a diagnostic test or treatment.” “The Congressional Office of Technology Assessment estimated only 10-20% of practices are supported by randomized controlled trials.”[vii] Excessive treatment has implications for both quality and cost. There is a “massive amount of spending on things that really don't help patients, and even put them at greater risk.”[viii] Jack Wennberg and colleagues have documented the enormous amount of overused care…20% of Medicare spending, $1000 per person. A Midwest Business Group on Health study found that $390 billion a year is being wasted on outmoded and inefficient medical procedures. A recent study found a relationship between overtreatment and specialty care “States with more general practitioners use more effective care and have lower spending, while those with more specialists have higher costs and lower quality.”[ix]
While many patients are overtreated, many are also undertreated The New England Journal of Medicine (NEJM) conducted a large national study that showed patients were receiving an average of only 55% of recommended care across a variety of conditions (according to 439 process-of-care measures). Undertreatment of many conditions often leads to the need for more expensive, often emergency, treatment later. The Institute of Medicine
CONFLICTS OF INTEREST “What was formerly a community based social service has become a vast industry, which like other industries, seeks to maximize its revenues and expand its markets.”[xii] This conflicts with society's need to make health care affordable. “The new "medical-industrial complex"…creates the problems of overuse and fragmentation of services, overemphasis on technology and "cream skimming" and it may also exercise undue influence on national health policy….income maximization is a powerful incentive throughout the entire health system and often creates a conflict between the financial interests of the provider and the health needs of the patient.…many (physicians) now regard their practices as a form of business and engage in activities best described as entrepreneurial….These conflicts of interest now pervade the practice of medicine and they inevitably increase medical expenditures”[xiii]
“Physicians conflicts of interest...the problem is long standing and systematically impairs medicine…In 1988, a nationwide survey…found that 95% of the hospitals surveyed made use of income guarantees to recruit physicians…. Physicians have a financial stake in 25-80% of ancillary medical facilities….There is compelling evidence that when physicians have a financial interest in ordering services, they recommend them more frequently....A primary care internist can increase his income by a factor of almost three by prescribing a wide but not unreasonable set of tests…use of such tests is so common as to be almost standard practice; yet some clinicians would argue that few of the tests are actually necessary….Doctors who invested in clinical labs provided patients with 45% more services than Medicare beneficiaries in general…. More recently, kickbacks from pharmaceutical firms have been disguised as payments for drug validation studies or marketing studies.”[xiv] Dr. Elliot S. Fisher, a Dartmouth Medical School US
Conflicts of interest extend to politics as well. “The health care industry in the last 15 years contributed $479 million to political campaigns….From 1997 to 2000; the industry spent $734 million lobbying Congress and the executive branch.”[xvii] In addition, many congressmen find lucrative jobs in these industries await them if they were loyal. Clinton
PHYSICIAN PAYMENT Incentives explain a large part of our cost problem. “Fee for service rewards the provision of inappropriate services, the fraudulent upcoding of visits and procedures and the churning of ping pong referrals among specialists.”[xviii] The large degree of uncertainty makes it more possible for physicians to prescribe care that benefits them financially. “Medicare's prospective payment system was evaded through upcoding of secondary diagnoses and unbundling of procedures.”[xix] (and multiple admissions) Financial incentives apply especially to specialists because specialists earn substantially more than general practitioners. We have a surplus of specialists in 37 primary medical specialties and 92 subspecialties; this is an important reason for our high costs. Specialty procedures account for three-fourths of total physician costs.[xx]
Managed care organizations pay physicians on a capitated basis in order to make physicians share in risk. “Capitation rewards the denial of appropriate services, the dumping of the chronically ill, and a narrow scope of practice that refers out every time-consuming patient.”[xxi] Capitation does not provide an incentive for preventive care because payoff is too uncertain and far away; subscribers change plans frequently. However, only 20% of office based physician income came from capitation in 1999.[xxii]
“Payment by salary is associated with the lowest use of tests and referrals and lower number of procedures, longer consultations, more preventive care.”[xxiii] Most professionals in other fields are paid on a salaried basis; the level of pay and promotions being based on measures of their performance. Salaried providers have no incentive for overtreatment but they might be inclined to undertreat patients or to have lower productivity unless there are incentives for quality and productivity. Only a small percentage of physicians are now paid by salary.
MANAGED CARE The major change in health insurance in the last 25 years has been the growth of managed care. “Managed care’s share of the privately insured population went from 5% in 1980 to 95% in 2006….Managed care insurers bargain with providers to get the lowest price possible…about 30% less than fee for service.”[xxiv] Managed care began as a cost containment strategy with a focus on preventive care but has grown into a large for-profit industry focused on cost efficiency and managing care. It has become unpopular with both providers and patients because of its methods; however, it has not been successful in restraining the upward trend in expenditures
About two thirds of HMOs are for-profit…with a strong focus on managing costs rather than care. Most health insurers now practice "medical underwriting", whereby premiums are reassessed on a regular basis, with big increases or disenrollment if covered persons or groups get sick. “More than 80% of managed mental health firms are for-profit; they have a poor record of service and a consistent record of blatant profiteering.”[xxv] “Successful HMOs have achieved profitability primarily by shrewd underwriting, not by arranging more efficient delivery of care.”[xxvi] “Managed care does not allow enough time per visit and discourages expensive care (and referrals)….Managed care encourages the use of many pharmaceuticals vs. more expensive alternatives.”[xxvii] Managed care plans have forbidden physicians from telling patients about treatments not covered by the plan.[xxviii] “What bothers physicians about managed care is the instability and uncertainty of the marketplace, extensive paperwork, loss of professional autonomy and interference of third parties in the physician-patient relationship.”[xxix] For-profit HMO's have higher disenrollment rates, lower patient satisfaction and worse quality of care.[xxx] The fundamental problem with managed care is that medical decisions are significantly influenced by financial criteria. A managed care company has a clear bias toward denying insurance or care or choosing lower cost care.
DRUGS Due in part to the extensive marketing, there is a great deal of misuse and overuse of expensive drugs in the US US
Marcia Angell criticizes the way drug patents are used to maximize profits: “there are too many ‘me too drugs’ (essentially the same as existing drugs), too few innovations….Patents and marketing rights are too long and elastic….There are many loopholes allowing extensions on patents….Patent examiners get bonuses for number of patents approved, this gives them an incentive to approve drugs.”[xxxiv] Drug companies claim that their high prices are justified by their research expenses. However, marketing was 30% of sales in 1990, R&D was only 14% in 2000. Drug companies benefit greatly from publicly financed research. Drug industry has too much control over clinical research (which evaluates new drugs); researchers are dependent on drug companies for funds. Firms hired by drug companies are doing research and trials; a clear conflict of interest. Academic investigators do not have full participation in design of trials, unimpeded access to data, or the right to publish findings. Drugs are often tested only against placebos rather than against other drugs.[xxxv]
Drug industry campaign contributions and lobbying are huge. Both Congress and the FDA are too influenced by drug industry.[xxxvi] Congress has prohibited Medicare from negotiating prices with drug companies. Medicare Part D costs are much higher because of a specific prohibition to negotiate prices with drug companies as the VA does. A number of the politicians responsible for the Part D legislation were featured on 60 Minutes because they left Congress to become highly paid lobbyists for the drug industry after fighting for this pro-drug industry bill. In 1997 FDA, under pressure from the drug industry, changed the rule on TV and radio ads so that ads could direct consumers to magazines or websites for all side effects rather than presenting them on the air. Drug TV ads increased 40 fold between 1994 and 2000.[xxxvii] The US
Marcia Angell proposes a number of changes: “Make the FDA independent, increase funding, remove incentives to approve user fees….Make patents good for 6 years, starting after clinical trials….Prohibit direct to consumer advertising….Drug company books should be open….Drug prices should be regulated….Advisory committees should not have conflict of interests….Medical schools should have responsibility for teaching professional medical education….Professional associations should be self supporting.”[xxxviii] These reforms would be far more likely and more enforceable with a universal health care system.
IMPROVING QUALITY Data in the current health care system is characterized by fragmentation and incompatibilities. The Institute of Medicine
To improve quality, we need comprehensive data, we need to make guidelines for diagnosis and treatment available and reward providers for high quality and give consumers data on the quality of providers. A comprehensive system could probably only be accomplished within a universal health care system. David Eddy writes that both outcome and process measures can be used for measuring performance: “We prefer to measure health outcomes because that is what people care about….Outcomes are comprehensible, aggregate the effects of all of the things plans do, leave plans free to determine best things to do….process measures (are) frequent, immediate, controllable, rarely confounded….Process measures can steer plans toward activities known to be effective….Using process measures tells plans what their priorities should be.”[xlii] Performance standards need to be comprehensive so that providers don't simply concentrate on the processes that are in particular standards.
Considerable work has been done to develop standards. “AHRQ, Agency for Healthcare Research and Quality has established itself as an honest broker of evidence based treatment standards….National Committee for Quality Assurance (NCQA) has promulgated widely used performance indicators.”[xliii] “The CMS (Centers for Medicare and Medicaid Services) has joined with the AHRQ and the NCQA to produce performance indicators for Medicare and Medicaid managed care plans.”[xliv] The most prominent quality report card, HEDIS, Health Plan Employer Data and Information Set, published annually by the NCQA, reflects the quality of care patients are receiving in health plans that cover 75% of Americans enrolled in managed care.[xlv] HEDIS includes process features and patient satisfaction. The FEHBP, Federal Employees Health Benefits Program and the Veteran's Health Administration have implemented standards.
The goal is not just to measure performance but to improve quality by making evidence based medicine guidelines easily available to all practitioners and creating incentives for quality. “Evidence Based Medicine is the conscientious, explicit, and judicious use of current best evidence in making decisions…”[xlvi] “The problem is lack of systems, including information systems that reduce error and reinforce best practices.”[xlvii] The Institute of Medicine
UNIVERSAL HEALTH CARE The solution to our problems is to “…replace the present fragmented, inefficient and expensive insurance system with a relatively simplified single payer plan”[xlix]. The plan needs to be well designed, funded adequately and administered competently. Universal care should be done outside of employment. The current system causes job lock and discourages labor mobility, the hiring of older workers and workers with health problems. The cost of insurance discourages hiring and small business formation. Management of an integrated program that would eliminate conflicts of interest, monitor and improve quality and lower costs would be the responsibility of a national health agency. Consumers should control governing boards overseeing reviews, medical protocol and organizational policy, both nationally and locally, since their taxes fund the system. Emanuel and Fuchs suggest “…an earmarked value added tax, administratively efficient and cannot be evaded….Value added taxes can be made more progressive by excluding…items such as food.”[l] The system could also be funded through the income tax. Taxes on alcohol, tobacco, etc. might also be used. Because everyone benefits from the universal system, there should be strong popular support for the taxes. The government is already paying for 2/3 of US health care with Medicare, Medicaid, public workers, tax subsidies, and free care. This is more than Canada
Some have suggested that the Veterans Health Administration could serve as a model for a single payor system. “As a system, the VA outperforms the rest of the health care sector by every conceivable metric, including wait times and, of course, protection from catastrophic medical bills. And it is more cost-effective: for every patient who switched from Medicare to the VA, the taxpayers would save about one-half to two-thirds in medical costs, while the patients themselves would receive demonstrably higher-quality care…health care quality experts also hail it for its exceptional safety record, its use of evidence-based medicine, its health-promotion and wellness programs, and its unparalleled adoption of electronic medical records and other information technologies…it’s the only health care provider in the United States whose cost per patient has been holding steady in recent years…”[li]
However, the use of vouchers would avoid bureaucracy and promote consumer choice and competition between providers. Provider groups would thus be paid on a capitation basis with bonuses for quality while physicians would be salaried. The physician groups could base physician raises and bonuses on quality and productivity. Competition for members between physician groups, including non-profits and for-profits, would encourage higher quality and lower costs. Vouchers would go only to multispecialty physician groups, no insurance companies or other third party payors would be allowed to participate. “Participating plans would have to offer guaranteed enrollment and renewal for the risk adjusted value of the voucher.”[lii] Medicare, Medicaid and FEHBP programs could be eliminated, except for Medicaid nursing home coverage; this would save considerable administrative costs including means testing. Reinsurance could be available for catastrophic cases.
People would be able to easily switch providers; this would increase the incentive to compete by improving quality. Quality data would be made available by the federal health agency. If some areas were without physician groups, the government could develop them. A system based on vouchers would do away with fee-for-service medicine and be less bureaucratic than programs in other countries. “National health insurance programs have tended to leave the organizational structure of the profession intact, with solo practice and fee-for-service payments continuing to dominate Instead they control costs by upstream limits on physician supply and specialization, technology diffusion, capital expenditures, hospital budgets and professional fees.”[liii]
James Robinson has detailed the advantages of multispecialty groups. “The growth and diffusion of the multispecialty medical group, paid prospectively and delegated authority for utilization management, is the most important development in the contemporary organization of medicine….The core philosophical belief of the multispecialty medical group is that coordinated care is better than fragmented interventions….Medical groups offer a balance of competition and cooperation that accommodates the social needs for efficiency, adaptation, and innovation….medical groups open possibilities for informal consultation, evidence-based accountability, and a new professional culture of peer review….(Group practices) promise better clinical coordination, scale economies in administration, advanced computer information systems, aligned incentives for generalists and specialists, partnership with hospital systems and health plans and more committed relationships with patients and purchasers….Medical groups strive for a culture of peer review that contrasts with the clinical autarky of solo practice and accommodates the demand for systematic monitoring of quality.”[liv]
These groups also have dramatic financial advantages. “Large capitated groups diffuse the risk among hundreds or thousands of physicians…capitated multispecialty group practices (have produced)…40% saving in cost, mostly from lower hospital utilization.”[lv] In order to give physicians an incentive for quality care, they could have a significant portion of their pay in the form of bonuses or annual raises based on quality data. The fee-for-service incentive would be eliminated and the physician groups, being capitated, would have an incentive to resist the excessive marketing of drugs and high technology. They would have incentives to provide high quality care due to competition and bonuses based on quality performance indicators.
Third party payors do create incentives for over use of care but deductibles and copays ration care by income and force patients to make choices about the need for care, which they are frequently not competent to make. High deductibles discourage preventive care and early care, this raises costs in long run. The new system would not have deductibles or copays but would provide extensive education for members about health and medical care. Public health and health promotion would be priorities, they have a great potential for lowering costs and improving health. Public health measures, including sanitation have made the most significant contributions to health historically. Annual exams, vaccinations, encouraging diet and exercise, improving transportation and workplace safety are effective preventive measures. Tobacco, alcohol, automobile accidents, STDs, poor nutrition, and obesity are responsible for over 60% of medical care costs in the US
Opponents of universal care argue: 1) Government programs tend to be bureaucratic (the voucher system would not be) “American physicians (already) experience great bureaucratic supervision from public and private insurance plans and greater interference with the day-to-day practice of medicine.”[lvii] 2) The program would eliminate a right to privacy between doctors and patients (there has been a great deal of privacy lost in the current private system, mostly because of private insurance companies. The national system could coordinate privacy safeguards) 3) Increased waiting times for non-emergency situations would result (not if the system was adequately funded) 4) Poorer quality of care (comprehensive monitoring and incentives for quality would prevent this) 5) Reduced opportunities and pay would reduce the supply of doctors (the system should be adequately funded and doctors fairly paid.) 6) job losses and bankruptcies of insurance companies would occur (capital could be purchased and some jobs would be created in new organizations. The government could create programs to re employ dislocated workers.)
The advantages: “Only single payer maximizes the desired virtues of 1)equitable financing, 2)simplicity of administration and 3)rational bureaucratic control.”[lviii] Benefits would include: 4)reduced economic costs from a healthier population….5)better treatment of chronic health conditions….6)a reduction in the severity of epidemics by quicker and better organized treatment….7)better preventive care and earlier detection….8)A centralized database ….9)Much less administrative work for doctors.[lix]
The prospects for UHC seem clouded. “The forces actively opposed to it are strong, are well organized and have a clear sense of what they do not want….The forces actively in favor are weak, disorganized, and frequently at odds.”[lx] “…not a single health care reform initiative has ever come to a vote on the floor of either chamber of Congress.”[lxi] However, over the last 60 years, many public opinion polls have shown a majority of Americans favor UHC. In August 2003, Pew found Americans favoring, by 67 percent to 26 percent, the U.S. US
Our health care problems have reached the point where it is imperative that we find a real solution, not the bureaucratic and inadequate solutions offered by leading politicians. Of course, the extensive influence of money on politics first needs to be completely and effectively reformed if we want to stop the medical industrial complex from writing our health care legislation. This would help to focus our attention on all of our major problems and conflicts of interest and to improve every aspect of our political system and society.
SOURCES: The works of Marcia Angell, David M. Eddy,
Victor R. Fuchs, Arnold Relman, James C. Robinson and Marc A. Rodwin have been
particularly valuable.
[i] Capi
[ii] Long
[iii] RobC
[iv] FucH
[v] Coy
[vi] Long
[vii] E2, E7, E6
[viii] E2
[ix] Baic
[x] Long
[xi] Cutl
[xii] RodM
[xiii] Rel
[xiv] RodM
[xv] Long
[xvi] RodM
[xvii] Barl
[xviii] Rob
[xix] RobC
[xx] RobC
[xxi] Rob
[xxii] TerC
[xxiii] Gos
[xxiv] Cutl
[xxv] GeyC
[xxvi] FucW
[xxvii] Cutl
[xxviii] Holl
[xxix] Holl
[xxx] GeyC
[xxxi] Barl
[xxxii] Ang
[xxxiii] Ang
[xxxiv] Ang
[xxxv] Ang
[xxxvi] Ang
[xxxvii] Abr
[xxxviii] Ang
[xxxix] Rel
[xl] Sid
[xli] CoyIT
[xlii] E1
[xliii] E3
[xliv] Coy
[xlv] EpsP
[xlvi] E9
[xlvii] E3
[xlviii] E7, E1, E9
[xlix] Rel
[l] Ema
[li] Long
[lii] Ema
[liii] RobC
[liv] RobC
[lv] Till
[lvi] Bak
[lvii] FucN
[lviii] Fein
[lix] Wikipedia, Universal Health Care
[lx] FucN
[lxi] Mor
Ang = Angell, Marcia, The Truth About the Drug Companies: How They Deceive Us and What to Do About It, Random House, 2005
Abr = Abramson, John, Overdosed America
Baic = Baicker, Katherine and Amitabh Chandra, Medicare Spending, The Physician Workforce, and Beneficiaries Quality of Care, Medicare Quality, 4/7/04
Bak = David W. Baker, MD, et.al. Health Literacy and Mortality Among Elderly Persons, Arch Intern Med. 2007;167:1503-1509.
Barl = Barlett, Donald L. and James B Steele, Critical Condition: How Health Care in America
Capi = Capitation and the Principles of Physician Compensation, British Columbia
Coy = Coye, Molly Joel, No Toyotas in Health Care: Why Medical Care Has Not Evolved to Meet Patients Needs, Health Affairs, vol 20 no 6
CoyIT = Coye, Molly Joel and William S. Bernstein, Improving America's Health Care System By Investing in Information Technology, Health Affairs, July/August 2003
Cutl = Cutler, David M., Your Money or Your Life, Oxford University
E1 = Eddy, David M., Performance Measurement: Problems and Solutions, Health Affairs, July/August 1998
E2 = Eddy, David M. (about), Medical Guesswork, Business Week, May 29, 2006
E3 = Eddy, David M., Paying for Performance: Medicare Should Lead, Health Affairs, Nov/Dec 2003
E6 = Eddy, David M. and John Billings, The Quality of Medical Evidence: Implications for Quality of Care, Health Affairs, Spring 1988
E7 = Eddy, David M., Variations in Physician Practice: The Role of Uncertainty, Health Affairs, no. 1 2005
E9 = Eddy, David, Evidence-Based Medicine: A Unified Approach, Health Affairs Jan/Feb 2005
Ema = Emanuel, Ezekiel J. and Victor R. Fuchs, Health Care Vouchers--A Proposal for Universal Coverage, New England Journal of Medicine, March 24, 2005
EpsP = Epstein, Arnold M. et.al. Paying Physicians for High Quality Care NEJM 1-22-04
Fein = Richmond
Fol = Folland, Sherman
FucN = Fuchs, Victor R., National Health Insurance Revisited, Health Affairs, Winter 1991
FucW = Fuchs, Victor R., What's Ahead for Health Insurance in the United States NEJM 6-6-02
GeyC = Geyman, John P., The Corporate Transformation of Medicine and Its Impact on Costs and Access to Care
Gos = Gosden, T. et.al., How Should We Pay Doctors? A systematic review of salary payments and their effect on doctor behavior
Holl = Holleman, Warren Lee et.al., Continuity of Care, Informed Consent, and Fiduciary Responsibility in For Profit Managed Care Systems, Arch Fam Med 2000;9:21-25
Long = Phillip Longman, The Washington Monthly | May 2007, Misdiagnosed Why All the Money in the World Won’t Fix What’s Wrong with America
Mor = Morone, James A. and Lawrence R. Jacobs, review of Healthy, Wealthy, and Fair: Health Care and the Good Society, NEJM 10-27-05
Phe = Phelps, Charles E., Health Economics, Addison-Wesley, 1997
Rel = Relman, Arnold, A Second Opinion, Public Affairs, 2007
Rob = Robinson, James C., Theory and Practice in the Design of Physician Payment, Milbank Quarterly, 2001
RobC = Robinson, James C., The Corporate Practice of Medicine: Competition and Innovation in Health Care, Univ California
RodM = Rodwin, Marc A., Medicine, Money & Morals: Physicians' Conflicts of Interest, Oxford
Sid = Sidorov, Jaan, It Ain't Necessarily So: The Electronic Health Record and the Unlikely Prospect of Reducing Health Care Costs, Health Affairs, July/August 2006
TerC = Terry, Ken, Capitation on the Rise, Medical Economics, Dec 6, 1999
Till = Tillinghast, Stanley J., Competiton through physician managed care: the case for capitated Multispecialty group practices, Intl Journal for Quality in Health Care, 1998, vol 10 no 5
