BUPA GLOBAL

US healthcare - have we found the cure?

Barack Obama's plans for reform herald a new era of change for the US health system. Our medical director for Bupa Global, takes a closer look at the proposed changes.

As the most economically powerful country in the world, the US healthcare system should be exemplary. America spends $2.4 trillion on healthcare a year. To give this some perspective, other world powers like India and China spend a mere 15 percent of this annual budget. But more money doesn’t mean better care – the World Health Organisation ranks the US health system 37th in the world. Will the proposed reforms make this so-called “sick system” a health system the US can be proud of?

In a country with no state run healthcare system to speak of, Americans must pay for their own medical costs via medical insurance policies. However, healthcare costs in the US are currently spiralling out of control at an unprecedented rate. Many employers and individuals can no longer afford to pay for insurance. In 2007, almost half of adults in the US were either underinsured or uninsured This growing need is driving reform and the American people hope Barack Obama can provide the solution.

The system today

There are three ways US citizens can be insured – employer-sponsored insurance, individual private cover and government-funded schemes.

Between 2001 and 2007 health insurance premiums have increased by 78 percent. During the same time period, US wages have only increased by 19 percent and inflation by 17 percent. But this rise in premiums hasn’t led to a better level of cover. In fact the opposite is true - people are now getting less for their money. US health insurance providers operate largely independently, which has left the industry open to fraud, abuse and conflict of interests, sometimes resulting in the consumer getting a rough deal. In some states relative monopolies even exist; for example, 90 percent of healthcare coverage in Alabama is provided by one company.

Employers are now in a situation where they are no longer able to offer fully comprehensive health insurance to all employees. In turn individuals are less able to fill the cost-sharing gap of paying contributions to insurance premiums or find the money for deductibles or co-payments. This leaves the average Joe in a limbo of perpetual fear about seeking healthcare, with a propensity to avoid seeking out a doctor until the problem is both clinically and financially more onerous.

In fact, some hypothesise that the problem is so large that healthcare was at the source of the financial crisis. The mortgage defaulters were principally in the Detroit car-manufacturing belt; they defaulted because they had been laid off by their employer; they had been laid off by their employers because the car industry had been brought to its financial knees; and the main cause of financial strain was paying for the ever-increasing insurance premiums the US system encouraged.

Government-paid insurance schemes are also in trouble. These schemes are reserved for those aged 65 and over, people with certain disabilities and chronic conditions and low-income families and their children. The economic crisis is increasing the burden on the government-based schemes as more people become eligible due to rising unemployment. For Medicare, the scheme specifically for those aged 65 and over, this problem is exacerbated by the baby boom generation now on the verge of retirement.

The need for co-ordinated care in the US is clearly an issue too. Chronically ill patients in government-funded schemes see an average of 13 doctors and fill an average of 50 prescriptions each year. Other inefficiencies have been highlighted; for example, 20 percent of adults with a chronic illness have medical tests that are duplicated, compared to only nine percent in the UK. These problems in the system need to be tackled head on.

The major fault is the quantity model on which the system works. The more patients a doctor sees or the more treatments that take place, the higher the doctor or hospital is ranked. This is essentially flawed and has been a key element in the plans for reform. Quality of care can reduce long-term costs and make the US healthcare system reflective of the costs it incurs.

Potential for improvement

The reform aims to give affordable healthcare cover to all Americans. If passed, it will be against the law to reject someone because of a pre-existing condition, their age or gender – as is currently the practice among insurers in an effort to avoid high-risk customers. Also, insurers will no longer be able to revoke cover if someone gets sick, unless their claims are fraudulent.

Obama has outlined plans to have an independent panel of medical experts review and streamline the current system. It’s hoped that this can be done through improved health information technology, more focus on evidence-based medicine practice (possibly including a medicine approval body), co-ordinated care and care management.

There has also been a call to focus on preventive medicine in order to reduce claims. This will include screening (at no extra cost) for breast cancer, bowel cancer and diabetes as part of health insurance plans. Discussions about positive wellbeing and increasing taxes on products such as tobacco, alcohol and sugar-sweetened drinks are also underway.

How this new reform will work isn’t clear yet. It may fall to individuals to arrange their own mandatory cover, with penalties if they’re uninsured. Tax credits and/or subsidies may be offered to help low-income individuals, and government schemes may be extended to cover unemployed people. A new insurance marketplace called the Exchange could allow individuals and small businesses to get competitive pricing on insurance possibly with tax credits if needed. Larger employers may be legally required to provide or help provide insurance for all employees.

It’s hoped this reform will reduce the long-term problem of escalating insurance costs for individuals, the government and businesses. It will also protect people from debt and bankruptcy due to health costs, and aims to ensure quality care for all Americans.

Opposing opinions

Big insurers led by the likes of America’s Health Insurance Plans (AHIP) and Blue Cross Blue Shield Association oppose the idea of a government-run public plan in the form of the Exchange. They claim it will make the government a competitor, regulator and financier, all in one.

Other people are opposed to a “socialised medicine” model. They claim it focuses on a community ideology similar to communism. Objectors have criticised this liberal view in comparison to other healthcare systems around the world, in particular the UK. However, these objectors have been largely dismissed for having archaic and non-progressive political reservations.

The National Health Service (NHS) in the UK works by paying for healthcare through an income-based tax system so healthcare is available to all. It’s a system that provides for many and that the UK couldn’t function without. Republicans, including former vice-presidential candidate Sarah Palin, have been particularly critical of the NHS. Palin has called Obama’s plans “evil” and suggested that governmental “death panels” will decide who gets care and who doesn’t. The US group Conservatives for Patients Rights has also criticised the UK’s National Institute of Health and Clinical Excellence (Nice). Nice decides which medicines get approval for use in the UK. The US government may consider using it as a possible model for their drug approval system.

The future

Obama has plans to finalise the health reform bill this year. But with a weak economy, differing perspectives, concerns on how the reform will pass and budgetary restrictions, it will take time to put in place. It will also take time to move from the current system to a new fully functional model.

Many, including me, see the value of the socialist ethos the Obama administration is introducing. Health inequality, fear to access and lack of provision of healthcare are all at the core of a poor society.

But most importantly, in Obama’s own predictions, unless we tackle the rising cost of healthcare provision in a bold an unerring manner, we will find that the world is a poorer place.

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