May 1, 2005

Fulfilling the Promise of American Health Care

The world's best health care can be found in America. Research leadership has dramatically advanced our ability to prevent, diagnose, treat and cure disease. We have outstanding physicians and other health professionals and modern, well-equipped hospitals. But there is a significant downside. Our costs are far higher than any other nation and are mounting at an unacceptably high rate. Total expenditures are expected to exceed $3.1 trillion or nearly 18% of the GDP within 10 years. Employers, who insure more than 150 million Americans, bear much of this financial burden, jeopardizing corporate competitiveness.

Despite this huge investment, almost 16% of Americans are uninsured and millions more are underinsured, including many small-business employees. Racial and ethnic minority groups are overrepresented among the uninsured and have access problems even if insured. The cost of uninsured care is partially defrayed by shifting charges to paying entities—mainly, the larger employers.

Although our investments have produced major health improvements, in my view, this situation is unsustainable. It virtually guarantees that we won't be able to afford the promise of our great medical science, let alone apply it to all Americans.

HOW DID THIS SITUATION ARISE? In the absence of a national plan, employers embraced health insurance decades ago when costs were low as a service to their employees. Government entered the fray with Medicare, insurance for older and certain disabled Americans, and Medicaid, the major safety net program. There was minimum direct personal financial responsibility. Of course people paid indirectly—in lower wages, increased cost of goods and services and taxes.

WHAT CAN BE DONE? There is reason to believe that no overall solution is coming soon. The Clinton Health Plan of 1993 was a political failure. The managed care revolution, which peaked several years later, controlled costs but was largely dismantled in the wake of public and health care industry opposition. Despite mounting concerns, the existing political environment is unlikely to yield a major overhaul. The current approach is to modify, not replace.

Many employers have reduced their costs by sharing them with their employees, through mandatory co-pays, deductibles, co-insurance, health savings accounts and financial incentives to select lower cost providers. Health plans representing the employers and government funding agencies are striving to enhance provider efficiencies. If these methods fail to restrain costs sufficiently or worse, impair health care quality, what is the recourse?

The clarion call for quality improvement is loud. In 2001, the Institute of Medicine set forth six quality principles—health care should be safe, effective, timely, patient-centered, efficient and equitable. Among the recommended strategies are improved methods of quality assessment, application of information technology, an expanded role for nonphysician health professionals in patient care, and a carefully crafted provider pay for performance (PFP) program emphasizing cost-effectiveness. Some health plans have already introduced PFP. These stratagems will surely help.

Nevertheless, overhaul has passionate advocates. Most prominent are those who would adopt a universal plan. The Canadian single payer system has received the most attention. Its cost is low, access is universal and free, employers are not in the health insurance business and health outcomes are as good as or better than in the United States.

Importantly, this—and indeed all foreign systems—has significant disadvantages. I suspect that Americans won't easily accept a far greater government role in health care, significant inconveniences and deferred capital investments in health care facilities and equipment.

However, the clock is ticking. Many principal stakeholders do not support the status quo. Should existing efforts fail to correct the current deficiencies, a uniquely American system is a possibility, replete with built-in strategies to monitor and ensure quality, universal and timely access for all patients with all conditions, sufficient investments to ensure capitalization of our facilities and equipment, avoidance of patient inconvenience and continued attractiveness of health care careers. Employers would be off the hook. A “single payer” might fund health care for the vast majority, perhaps administered by a public/private consortium and financed by multiple tax mechanisms and affordable cost sharing.

Emanuel and Fuchs have proposed an interesting approach to uninsured coverage (E.J. Emanuel, M.D., Ph.D., and V. R. Fuchs, Ph.D., New England Journal of Medicine, 352, 1255-1260, March 24, 2005) emphasizing a voucher system funded by an earmarked value added tax. This proposal is one example of the current wellspring of thoughtful analyses and discourse in health policy. Stay tuned!