Three options between the ACA and Medicare-for-all

      1 Comment on Three options between the ACA and Medicare-for-all

When the topic of “Medicare-for-all” comes up in social media, my mantra has been that there are at least a dozen feasible alternatives, mostly implemented in Europe, on the market spectrum between the current U.S. healthcare system and Medicare-for-all that are worth examining for their adaptability to the American model. In this post I will look at a few, although with the continued rabid opposition from Republicans and many in the insurance industry to any changes at all (indeed to undo some of the best ACA provisions), I will admit that I am getting close to saying “Screw it!” and advocating some form of Medicare-for-all. That said, I will address what I see as some unaddressed problems in Medicare-for-all proposals in a subsequent post.

I have long asserted that there are two primary reasons why Republicans have failed to come up with a feasible alternative to the Affordable Care Act in providing universal health care to the United States. The first is that Obama’s ACA was intentionally based on “the Republican plan” whenever that discussion was allowed to see light, initially through the conservative Heritage Foundation [1] and then in Mitt Romney’s Massachusetts plan, which he subsequently disavowed in one of the great modern examples of political cowardice. [2] Republicans rejected the ACA out of hand because Barack Obama moved right politically to endorse it in a failed attempt to win Republican votes. The second reason is my assertion that the ACA is as far to the political right as one can get in designing a system that just might get the country to near-universal coverage (but instead was knee-capped before that was allowed to happen).

Why not the British or Canadian systems?

I spent some time in my career covered by the British National Health Service, and actually found it a pleasurable experience, but nonetheless I posted back in January some cautionary advice entitled “Here is how to compare U.S. and British healthcare.” My summary advice was Don’t compare them.” There are so many differences in history, delivery, and financial structure that trying to emulate that system is simply a waste of time. You might pick up a few pointers along the way, but it just is not going to happen.

To a lesser extent, the same is true for Canada. Insurance coverage for “normal families” through employers contracting with competing private health insurance companies is deeply embedded in the U.S. system, whether you like it or not. Barack Obama tried to fight the “universal coverage” war, and intentionally decided not to fight the “socialized medicine” war by taking on employer-insurer coverage, even though he still got tagged with that very wrong characterization in the process.

Let’s look, then, at my take on how three other countries address some of the complexities of universal healthcare. I have combined several sources in compiling this list, but if I have characterized any of these systems incorrectly, please let me know via comment, Facebook or Twitter. All three countries are rated near the top as having the best healthcare delivery systems in the world.

Germany

How do you get health insurance? Mostly through your employer (as in the U.S.), who contracts with one of some 1100 private or public “sickness funds,” which are basically insurers and payments administrators. These are mostly non-profit organizations, but you can opt out and purchase private insurance. Most people below an income threshold are automatically enrolled in one of about 130 non-profit plans. Children and the unemployed are covered through a state-administered plan, which we would call a “public option.” Premium costs are split between the employer and the employee, with the employee’s rate capping out at a percentage of income.

How are healthcare providers structured? Most physicians are in private practice and most hospitals are non-profit organizations. Patients are typically very free to select their providers.

How are costs controlled? The insurance plans administered through the sickness funds are heavily standardized in order to take variability of coverage and costs of plan-switching out of the system. This is similar to Medicare “Part B” supplemental plans offered through private insurers in the U.S., where a “Plan A” from one insurer, with its mix of deductibles and co-payments, is identical in coverage to a “Plan A” from another insurer. Reimbursement rates are standardized and maintained by the equivalent of state-level self-governed bodies which include physician, provider, employer and citizen input. Some co-payments are typically required for services in order to lessen over-use of services.

Lessons for the U.S.? Standardized medical plans and state-wide reimbursement recommendation panels can significantly reduce paperwork, billing errors and excessive billings. This also moves insurers more into the category of “customer service” providers smoothing money flow rather than being “deniers of benefits” as often happens in the United States. [3]

Switzerland

How do you get health insurance? All residents are required to obtain private health insurance with the employer typically not involved. Deductibles range from under US$200 to about US$1500, and there is a 10% cost-sharing up to a cap to tamp down on overuse. Basic coverage of policies is identical among companies, and individuals pay a maximum of 8% of income. Insurers cannot make a profit on the basic coverage plans, but they can offer for-profit supplemental plans. Some services, like pregnancy, are free. Premiums must be identical for all persons of the same age and sex in any one region of the country.

How are healthcare providers structured? Providers are a mix of private practice, subsidized private and publicly-owned facilities and physician practices. There is full freedom of choice in selecting providers unless an HMO (health maintenance organization) supplemental plan is selected.

How are costs controlled? While basic coverage is mandated, consumers can select lower-cost plans with higher deductibles, HMOs, and “wellness bonuses.” Reimbursement rates to doctors and facilities are centrally regulated. Inequities caused by pooling of high-risk and low-risk consumers in certain plans, or resulting in age and sex disparities, are balanced out by mandated risk-adjustment cash transfers among plans. Thus, an insurer can specialize on a market and risk niche to find efficiencies, but it is penalized for any excessive profit-taking that results.

Lessons for the U.S.? The Swiss model demonstrates that healthcare can be successfully freed from ties to employment, which relieves employers of a major cost burden. In addition, you can give private insurers freedom to market to different market segments if you implement statistical risk controls to curtail “market skimming.” The system does, however, require a heavy hand by the government in reimbursement rate setting and risk-balancing.

Austria

How do you get health insurance? Austria has an openly two-tiered system, with the first tier being basic coverage extended to everyone through a single government plan, usually paid through an employer payroll deduction. However, voluntary private plans provide greater choice on top of the basics, such as choice of physician and other facilities.

How are healthcare providers structured? Austria has a mix of both state-run, subsidized private “fund hospitals” and privately-run hospitals and clinics. In-patient care has more of an emphasis in Austria as contrasted to more of an out-patient-heavy model in other E.U. countries.

How are costs controlled? The private plans siphon off some of the pricing and access pressure on the basic-tier state plan. While the basic health plan is nationalized, the details are administered by the states in order to better deal with local issues.

Lessons for the U.S.? It is possible to formalize and sustain a two-tiered system as long as the basic level of care in the first tier is of high quality and adequately supported by the government. People with more means will voluntarily pay for shorter wait times and more physician choice.

The tough choices

All sides in the United States debate on healthcare have failed in both researching “what works” and in standing on the tough choices each successful system requires for sustainability and universal coverage. If you are committed to a fully-private insurance model as in Switzerland, you still have to use a heavy governmental hand to control costs at the provider level. And if you totally divorce insurance from employment, as Switzerland has done, then you have to heavily subsidize the private plan premiums to keep them affordable, which makes the Swiss system one of the most expensive.

We do have, with Medicaid to an extent, a version of a two-tiered healthcare delivery and insurance system in the United States, but Austria demonstrates that you need to openly commit to that system and get better universality and buy-in on support of the basic tier in order to make the system work. The private insurance system moves to the edge to support the well-off. The danger comes in the well-off starving the first-tier coverage.

German’s system is, of the three, closest to the current U.S. model. If plans were standardized among insurers in the U.S., and a public option with required universal coverage added, the systems would get even closer. The U.S. would still, however, need to commit to a multi-stakeholder system of reimbursement controls, and would likely need to curtail profit-taking from the most basic private plans in order to keep costs down.

Much of the lost efficiency in the United States system is in the complicated maze of reimbursement, and in the role of the insurers as “deniers of coverage” rather than customer-focused “payment facilitators.” Regardless of the direction of the U.S. healthcare debate, tackling these issues alone could likely provide the most immediate cost improvements.


Notes:

  1. Butler, Stuart. “Laying the Groundwork for Universal Health Care Coverage.” The Heritage Foundation, 10 Mar. 2003.
  2. For my view on the moderate form of Republicanism that Mitt Romney and his niece Ronna Romney McDaniel turned their back on, see my earlier post, “Remembering Lenore and George Romney.”
  3. I once sat on an employee/management committee evaluating competing pitches from healthcare insurers. One who-shall-be-unnamed major insurer touted their ability to “slow-pay” claims in order to keep the cashflow minimized. They were not selected.

1 thought on “Three options between the ACA and Medicare-for-all

  1. Jerome Bigge

    It is possible to create an “optimum health care system” superior to that of any nation on Earth. Such a system combines maximum personal freedom with a great deal of personal choice. In practice the UK’s NHS likely represents maximum economic efficiency. Then add repeal of prescription laws, the use of computer technology to diagnose disease, libertarian repeal of government regulation that mainly serves to enhance the incomes of certain groups at the expense of everyone else and the picture becomes quite clear as to what such a system would look like. And how much it would cost, which appears to be in the 9% of GDP range.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *