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Feature

Universal healthcare in the US? Not yet, but probably soon

Posted on: 27 Feb 09

Summary

With President Obama’s proposed plan to reform the US healthcare system, this will be the closest the US has gotten to universal health coverage. We provide a snapshot of the Obama healthcare plan and highlight some of the criticisms it has received from health economists.

With President Obama’s proposed plan to reform the US healthcare system, this will be the closest the US has gotten to universal health coverage. We provide a snapshot of the Obama healthcare plan and highlight some of the criticisms it has received from health economists.


The Obama plan mandates affordable, accessible health coverage for every person and attempts to control healthcare spending. To achieve the former, the Obama plan eliminates the concept of “pre-existing conditions.” Every American can purchase health insurance regardless of current medical conditions or previous medical history, by choosing from any of the following options:



  • For low-income earners, expansion of Medicaid and subsidies to purchase insurance for those who do not qualify for Medicaid

  • “Pay or play” mandates requiring larger businesses to provide meaningful health insurance to their employees or pay a tax; small businesses would be exempt from this mandate and smaller firms would receive tax credits to help pay for health insurance (“small(er)” has not yet been defined)

  • Comprehensive public health insurance modelled after the plan currently available to all federal employees

  • For individuals who choose (or are forced) to buy personal insurance, the creation of a National Health Insurance Exchange, in which heavily-regulated private policies would be offered at group rates

  • Expansion of the State Children’s Health Insurance Program (SCHIP) to cover all children.


The Obama plan will seek to reduce costs by:



  • Focusing on preventive medicine and requiring the use of proven disease management programs

  • Improving health technology (namely, requiring use of standardised electronic medical records)

  • Creating an independent organisation for assessing and comparing cost-effectiveness of drugs, devices, and diagnostic tests, modelled after the National Centre for Clinical Health and Excellence (NICE) in the UK.

  • Easy access to primary care, with a focus on coordinated team care

  • Payment systems that reward health outcomes rather than volume of services provided.


Several health economists have criticised the Obama plan. Among their criticisms, from an economics point of view:



  • What exactly will this new healthcare system cost? Some have suggested $2 trillion over 10 years.

  • The tax rate on businesses that do not participate is undefined – if its too low companies would have every incentive to cash out of the plans they offer and pay the tax instead.

  • As noted by Victor R. Fuchs, PhD1, every dollar spent on healthcare – no matter how inefficiently – is used to provide income to tens of thousands of people providing health insurance or healthcare (ie, telephone and computer operators, claims payers, insurance sales people, actuaries, benefit managers, consultants, etc). Can this already dire economy absorb those job losses? 

  • Ultimately, the US government will control all healthcare, because, as noted by the WSJ editors, federal officials will run “not only the new plan but also the ‘market’ in which it ‘competes’ with private programs – like playing both umpire and one of the teams on the field.”


From the healthcare point of view, the Obama plan may create more problems than it solves:



  • Payment based on outcomes depends in large part on adherent patients. Like merit-based pay for teachers, this can be unfair to those professionals who do their best but are at the mercy of a small fraction of irresponsible people that they serve.

  • With the cost-effectiveness agency, will providers and insurers incorporate the assessments into everyday practice?

  • This plan, which eases the US into universal coverage by working with the current system, does not eliminate the paperwork and bureaucratic headaches for doctors already dealing with multiple insurance plans.

  • Perhaps most frustrating, as expressed by Joseph R. Antos, PhD2, “[Obama’s] plan would reorganize the health-insurance market but not change the basic financial incentives in the system that drive up spending.”


The US Congress will determine how much of his plan is implemented; only time will tell if it is successful.

 

Rx Communications

Last updated on: 27/08/2010 11:40:18

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