[Senate Hearing 113-740]
[From the U.S. Government Publishing Office]
S. Hrg. 113-740
ACCESS AND COST: WHAT THE U.S. HEALTH
CARE SYSTEM CAN LEARN FROM OTHER COUN-
TRIES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON PRIMARY HEALTH AND AGING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
ON
EXAMINING WHAT THE U.S. HEALTH CARE SYSTEM CAN LEARN FROM OTHER
COUNTRIES
__________
MARCH 11, 2014
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.gpo.gov/fdsys/
U.S. GOVERNMENT PUBLISHING OFFICE
87-177 PDF WASHINGTON : 2015
________________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
TOM HARKIN, Iowa, Chairman
BARBARA A. MIKULSKI, Maryland
PATTY MURRAY, Washington
BERNARD SANDERS (I), Vermont
ROBERT P. CASEY, JR., Pennsylvania
KAY R. HAGAN, North Carolina
AL FRANKEN, Minnesota
MICHAEL F. BENNET, Colorado
SHELDON WHITEHOUSE, Rhode Island
TAMMY BALDWIN, Wisconsin
CHRISTOPHER S. MURPHY, Connecticut
ELIZABETH WARREN, Massachusetts
LAMAR ALEXANDER, Tennessee
MICHAEL B. ENZI, Wyoming
RICHARD BURR, North Carolina
JOHNNY ISAKSON, Georgia
RAND PAUL, Kentucky
ORRIN G. HATCH, Utah
PAT ROBERTS, Kansas
LISA MURKOWSKI, Alaska
MARK KIRK, Illinois
TIM SCOTT, South Carolina
Derek Miller, Staff Director
Lauren McFerran, Deputy Staff Director and Chief Counsel
David P. Cleary, Republican Staff Director
______
Subcommittee on Primary Health and Aging
BERNARD SANDERS, (I) Vermont, Chairman
BARBARA A. MIKULSKI, Maryland RICHARD BURR, North Carolina
KAY R. HAGAN, North Carolina PAT ROBERTS, Kansas
SHELDON WHITEHOUSE, Rhode Island LISA MURKOWSKI, Alaska
TAMMY BALDWIN, Wisconsin MICHAEL B. ENZI, Wyoming
CHRISTOPHER S. MURPHY, Connecticut MARK KIRK, Illinois
ELIZABETH WARREN, Massachusetts LAMAR ALEXANDER, Tennessee (ex
TOM HARKIN, Iowa (ex officio) officio)
Sophie Kasimow, Staff Director
Riley Swinehart, Republican Staff Director
(ii)
C O N T E N T S
__________
STATEMENTS
.................................................................
TUESDAY, MARCH 11, 2014
Page
Committee Members
Sanders, Hon. Bernard, Chairman, Subcommittee on Primary Health
and Aging, opening statement................................... 1
Burr, Hon. Richard, a U.S. Senator from the State of North
Carolina, opening statement.................................... 3
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming.. 64
Roberts, Hon. Pat, a U.S. Senator from the State of Kansas....... 65
Murphy, Hon. Christopher, a U.S. Senator from the State of
Connecticut.................................................... 69
Witnesses--Panel I
Cheng, Tsung-Mei, LL.B., M.A., Health Policy Research Analyst,
Woodrow Wilson School of Pubic and International Affairs,
Princeton University, Princeton, NJ............................ 5
Prepared statement........................................... 6
Rodwin, Victor G., Ph.D., MPH, Professor of Health Policy and
Management, Robert F. Wagner School of Public Service, New York
University, New York, NY....................................... 22
Prepared statement........................................... 23
Yeh, Ching-Chuan, M.D., MPH, Former Minister of Health for
Taiwan, Professor, School of Pubic Health, College of Medicine,
Tzu-chi University, Hualien City, Taiwan....................... 30
Prepared statement........................................... 31
Pipes, Sally C., President and CEO, Pacific Research Institute,
San Francisco, CA.............................................. 35
Prepared statement........................................... 36
Martin, Danielle, M.D., MPP, Vice President Medical Affairs and
Health System Solutions, Women's College Hospital, Toronto,
Canada......................................................... 39
Prepared statement........................................... 41
Hogberg, David, Ph.D., Health Care Policy Analyst, National
Center for Public Policy Research, Washington, DC.............. 46
Prepared statement........................................... 48
Kjellberg, Jakob, M.Sc., Professor, Program Director for Health,
KORA-Danish Institute for Local and Regional Government
Research, Copenhagen, Denmark.................................. 52
Prepared statement........................................... 54
(iii)
ACCESS AND COST: WHAT THE U.S. HEALTH CARE SYSTEM CAN LEARN FROM OTHER
COUNTRIES
----------
TUESDAY, MARCH 11, 2014
U.S. Senate,
Subcommittee on Primary Health and Aging,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:02 a.m. in
room SD-430, Dirksen Senate Office Building, Hon. Bernie
Sanders, chairman of the subcommittee, presiding.
Present: Senators Sanders, Murphy, Enzi, Burr, and Roberts.
Opening Statement of Senator Sanders
Senator Sanders. Let us get to work and thank you all very
much for being here. We want to thank C-SPAN for covering this
important hearing. And I especially want to thank our
witnesses, some of whom have traveled from very long distances
from around the world to be with us today, and we very much
appreciate your being here.
The United States has, I think, a very effective form of
Government in the sense that we are a Federalist system, which
means that we have 50 separate States, and it is very common
that one State learns from what another State is doing. So
every day in California, or in North Carolina, or Vermont
somebody is coming up with an idea or a program. It works,
other people steal those ideas, learn from those ideas and that
is, I think, a pretty effective way of going forward.
I do not believe that we utilize that practice as much as
we should internationally. The United States is not the only
country on earth. There are other countries that are doing very
positive, interesting things, and we should be learning from
them. And, in a sense, that is what this hearing is about. It
is to see what we can learn from other countries around the
world in terms of healthcare.
In my view, in fact, we have a whole lot to learn because
at the end of the day, the United States spends far more per
capita on healthcare. We spend almost twice as much per person
on healthcare, and yet, we have many millions of people who are
uninsured and our healthcare outcomes, compared to many other
countries, are not particularly good, and that is my starting
premise. Why is that? And what can we learn from other
countries who, in many ways, are doing better than we can?
Let me start off with just a couple of basic facts about
the American healthcare system. While it is absolutely true
that some Americans, often those with a lot of money, receive
some of the best cutting-edge healthcare in the world, it is
also true that for millions of low- and moderate-income
Americans, they have little or no access to even the most basic
healthcare services.
Later on, I think maybe as part of the questions or
answers, we are going to show a photograph that many of you
have seen, in Virginia, or California, people lining up in
fields to get basic healthcare or to get their teeth, rotted
teeth extracted; a photograph that would remind you of a Third
World country.
The reality is that today, the United States is the only
major country on earth that does not guarantee healthcare as a
right. And that is a basic, philosophical debate that we have
to have. Should all Americans, regardless of their income, have
access to healthcare as a right or not? The United States is
the only Nation in the industrialized world that says, ``No,
you are not entitled to healthcare as a right.''
In 2012, more than 15 percent of our population, nearly 48
million Americans, were uninsured, but that is only half the
story. Because many people who had insurance also had high
deductibles and high copayments, and those payments created
situations where people hesitated to go to the doctor when they
should. Not to mention other people leaving the hospital deeply
in debt and going bankrupt. Is that something that we are proud
of?
Here is another important point to be made. We talk about
rationing and so forth. Of course, in the United States,
healthcare is rationed, but it is rationed by ability to pay,
by income. According to a Harvard study published in the
American Journal of Public Health in 2009 and ``Health
Affairs'' in 2014, some 45,000 Americans die every year because
of a lack of access to healthcare.
I have talked to doctors--I do not know if my colleagues in
their States have talked to doctors--I have talked to doctors
who say, ``Yes, people walk in the door and they are now
terminally ill.'' And the doctor said, ``Why did you not come
in here 6 months ago? Why did you not come here a year ago?''
And people say, ``Well, I did not have any health insurance. I
did not want any charity. I thought I would get better.'' So,
we are losing some 45,000 people a year because they do not get
to a doctor when they should.
There are, furthermore, communities around this country. I
know Senator Roberts of Kansas mentioned this in a hearing we
had a while back, where there are no doctors, there are towns
in Kansas, no doctors in the area at all. People do not have
access to basic primary care.
Now, despite all of that, the United States, as I mentioned
a moment ago, spends almost twice as much per capita on
healthcare as does any other country. We are spending about 18
percent of our gross domestic product on healthcare compared to
11 to 12 percent in France, Germany, Denmark, and Canada; 9
percent in the UK, Australia, and Norway; and less than 8
percent in Taiwan and Israel. We are going to hear a
representative from Taiwan in a few minutes.
In terms of efficiency, are we an efficient system?
Compared to the huge amount of money that we are spending, are
we getting good value? In August 2013, Bloomberg, a respected
business source, ranked the U.S. healthcare system 46th of 48
countries based on efficiency.
Now, what about outcomes? If I am spending $100,000 on a
car and somebody is spending $20,000 on a car, we would assume
that my car runs better. I am getting better value; I am
getting value for what I pay for. Well, the United States pays
almost twice as much per person for healthcare, but in terms of
our healthcare outcomes, we do not do particularly well
compared to other countries around the world.
Among OECD countries, the United States ranks 26th in terms
of life expectancy. Residents of Italy, Spain, France,
Australia, Israel, Norway, and the list goes on, will live 2 to
3 years longer than Americans. So in terms of our outcomes,
they are not particularly good.
What about prescription drugs? Clearly, when we go to the
doctors, very often the therapy is medicine. I recall talking
to a doctor in northern Vermont who told me that about 25
percent of the patients that she sees, and whom she writes
prescriptions for, are unable to fill those prescriptions
because they are just too expensive. The fact of the matter is,
the pharmaceutical industry in this country earns huge profits
and charges our people the highest prices in the world for
prescription drugs.
There is a lot more to be said, but let me end my remarks
with those comments, and I look forward to hearing the
testimony of our esteemed panelists.
Senator Burr.
Opening Statement of Senator Burr
Senator Burr. Thank you, Mr. Chairman and thank you for
calling this hearing.
I truly thank our witnesses today for their knowledge and
for their willingness to be here to share with us their
information.
In about 2 weeks, our Nation will mark the fourth
anniversary of the enactment of the Affordable Care Act, better
known to most as Obamacare. Today's hearing will inform what
direction we will next take healthcare in America by examining
access to care and costs associated with healthcare systems
overseas.
As we examine single-payer systems in other countries and
what we can learn from their experiences, it seems fitting that
we also take stock of where things stand in the American
healthcare system today. At the time Obamacare was being
debated in this very committee, I warned that it was the wrong
direction for our country. Healthcare was broken before
Obamacare, but 4 years later, the American people are
experiencing firsthand how the new law has made things worse.
That is why Americans view the law unfavorably, and that is why
they are understandably wary of still more Government
involvement in healthcare.
The President promised that if you like your plan, you get
to keep it under Obamacare. The Federal Government mandates
that Americans buy healthcare coverage, and not just any
coverage, but the coverage the Federal Government says is good
enough. Sadly, millions of Americans have lost their healthcare
plans, health plans they liked and wanted to keep, despite the
promises and continued delays of the Administration.
Obamacare expanded Medicaid, an unsustainable health
entitlement program in which 40 percent of physicians, on
average, do not even agree to see Medicaid patients. I believe
the experiences of other countries will reinforce what many
Medicaid patients already know: their coverage does not always
translate into timely access to care.
Today's hearing will also examine cost. While the President
promised that Obamacare would bring down premiums by $2,500,
premiums have actually gone up by an average of 41 percent in
the individual market due to the law's mandates.
So how does Obamacare attempt to control cost? For
starters, it established the Independent Payment Advisory
Board, or IPAB, an unelected, unaccountable board of 15
bureaucrats empowered to make cuts to the Medicare program most
likely in the form of cuts to doctors, which will impact,
again, seniors' access to care.
Today's hearing will be informative as to the direction we
take healthcare in this country. Will we repeal Obamacare and
replace it with reforms that lower healthcare cost, put our
Nation's entitlement programs on a sustainable path, and
empower patients in their healthcare purchasing and
decisionmaking to find the plans that best meet their
individual needs? Or, will we continue on the current course of
unprecedented Government involvement in healthcare and
unsustainable costs?
What do we have to learn from a single-payer system
overseas and what have other countries' reforms meant for their
patients? What would such a course mean for our Nation standing
as a global leader in medical innovation and for American
patients seeking access to quality, and affordable coverage,
and care that meets their individual healthcare needs?
I do want to thank Chairman Sanders for holding this
hearing, because it will inform many of us on these important
questions. I think today's hearing represents an important
admission that Obamacare is not working, that such an admission
takes place within the very committee that the Act was written
and is a huge step, and I commend the committee for taking it.
I look forward to hearing from our witnesses today and
continuing to work with my colleagues to advance patient-
centered reforms that will actually lower healthcare costs and
increase access to quality, affordable healthcare.
I thank the Chair.
Senator Sanders. Thank you, Senator Burr.
Senator Enzi, did you want to make a statement. OK. Thank
you.
We have seven very knowledgeable panelists and we look
forward to their testimony. We are going to ask you to keep
your remarks to 5 minutes, and then we will followup with some
questions.
Our first witness is Mei Cheng, a Health Policy Research
Analyst at the Woodrow Wilson School of Public and
International Affairs at Princeton University. Ms. Cheng is an
advisor to the China National Health Development Research
Center, and we very much appreciate her being with us today.
Please speak right into that microphone so everyone can hear
you.
STATEMENT OF TSUNG-MEI CHENG, LL.B., M.A., HEALTH POLICY
RESEARCH ANALYST, WOODROW WILSON SCHOOL OF PUBLIC AND
INTERNATIONAL AFFAIRS, PRINCETON UNIVERSITY, PRINCETON, NJ
Ms. Cheng. Good morning, Mr. Chairman, Senator Sanders,
Ranking Member Burr, and Senator Enzi.
My name is Tsung-Mei Cheng. I am the Health Policy Research
Analyst at the Woodrow Wilson School of Public and
International Affairs, Princeton University. Thank you for
inviting me to testify.
I have been asked to give an overview of single-payer
systems, and I here distill my written testimony into a few
salient points.
An overarching point made in my testimony is that single-
payer systems are not the same as socialized medicine or
socialism, as is so often assumed in this country. In
socialized medicine, Government owns and operates the
healthcare delivery system and finances it. The health system
Americans reserve for their military veterans, for example, the
VA System is purely socialized medicine.
Single-payer systems typically are just social insurance
like the Social Security System. Under social health insurance,
the Government merely organizes the financing of healthcare,
but the healthcare delivery system typically is private and can
include for-profit entities. Medicare, for example, is social
insurance, but not socialized medicine.
The main characteristics of single-payer systems are the
following. They are ideal platforms for equity in access to
healthcare because everyone has the same insurance coverage,
and providers are paid the same fees regardless of the social
economic status of the patient.
Single-payer systems typically are financed on the basis of
ability to pay rather than on the basis of health status of the
insured. Single-payer systems typically give patients free
choice of doctors and hospitals. In single-payer systems,
providers of care do not compete on price, but they must
compete on quality of care including patient satisfaction.
In a single-payer health insurance system, health insurance
is not tied to a job. Instead, it is fully portable from job to
job. When people lose their job and enter retirement, that does
not go away, therefore, there is no job lock in these systems
over health insurance.
Because all funds to providers of healthcare in a single-
payer system flow from one payer, it is relatively easy to
control total health spending in such systems. The
international data I cite in my written testimony makes that
clear.
Now, some single-payer systems, like UK and Canada, may put
constraints on the physical capacity of their health system
like the number of hospitals and MRI scanners as part of their
effort to control total health spending including waste created
by excess capacity. This constraint may lead to rationing by
the queue.
The alternative to rationing by such administrative
measures is rationing by price and ability to pay, something
that we see in the U.S. healthcare system. To assume that
healthcare is not rationed in the United States is not
supported by the data.
A single-payer system is an ideal platform for modern IT
with common nomenclature, all billing can be done
electronically, and it yields enormous savings in
administrative costs. And because such an IT system
conveniently captures data and information on all healthcare
conventions, these systems provide a data base that can know
spending in real time, as in the case of Taiwan, and it is a
base for use for quality measurement, monitoring, and
improvement.
Public satisfaction about single-payer systems is generally
high. Denmark, for example, is ranked the No. 2 highest in the
European Union in consumer satisfaction. In Taiwan, public
satisfaction is also very high with a National Health Insurance
program ranging in the 70 to 80 percent. In Canada, a 2013
international survey of 11 countries found that 42 percent of
Canadians surveyed said that their healthcare system works well
and need only minor changes compared to just 25 percent of
Americans who said that. Seventy-five percent of Americans said
the American healthcare system needs fundamental changes or
completely rebuilt. And last, survey research has shown that
single-payer Medicare is very popular in the United States.
A final point is that every health system has its flaws,
which can be highlighted with anecdotes. Therefore, there is
now a risk of medical tourism worldwide. For example, Canadians
come to the United States for healthcare, but it also is true
that Americans go to Canada, Mexico, Thailand, and Taiwan for
lower cost healthcare.
Thank you very much.
[The prepared statement of Ms. Cheng follows:]
Prepared Statement of Tsung-Mei Cheng, LL.B., M.A.
My name is Tsung-Mei Cheng. I am Health Policy Research Analyst at
the Woodrow Wilson School of Public and International Affairs,
Princeton University, Princeton, NJ.
My research has focused on cross-national comparisons of health
systems and health policy, mainly in East Asia, including the single
payer health system of Taiwan, health reforms in China and Taiwan,
health technology assessment and comparativeness effectiveness
research, health care quality, financing and payment reform, including
the application of evidence-based clinical guidelines and clinical
pathways for improving efficiency in emerging market health systems.
My sincere thanks to you, Mr. Chairman, and your colleagues for
inviting me to testify before this committee on what the U.S. health
care system can learn from other countries. In health policy, other
countries have for years taken lessons from the United States in their
efforts to reform their health care systems. The DRG payment system by
which Medicare pays hospitals for inpatient care, for example, has been
copied around the world. So it seems only fair that we Americans also
import some lessons from abroad.
Today's hearing is focused on ``international single payer health
system models that provide universal coverage of health care.'' I will
tailor my remarks according to the three sub-themes the committee
wishes to explore, namely:
Primary care access in single payer systems,
Health care costs in single payer systems, and
Cross-country comparisons of health outcomes
Before proceeding with the committee's agenda in more detail,
however, I would like to provide the committee with a summary of my
main points:
1. If equity and social solidarity in access to health care and
financing health care were fundamental goals of a health care system,
the single payer system provides an ideal platform for achieving these
goals.
2. Single-payer systems typically are financed by general or
payroll taxes in a way that tailors the individual's or family's
contribution to health-care financing to their ability to pay, rather
than to their health status, which until this year has long been the
practice in the individual health insurance market in the United
States. (Table 1).
3. These systems protect individual households from financial ruin
due to medical bills.
4. Single-payer health systems typically afford patients free
choice of health-care provider, albeit at the expense of not having a
freedom of choice among different health insurers. Remarkably, in the
U.S. households have some freedom of choice of health insurers--to the
extent their employer offers them choice--but most Americans are
confined to networks of providers for their insurance policy. In other
words, Americans appear to have traded freedom of choice among
providers for the sake of choice among insurers.
5. In single-payer systems ``money follows the patient.'' Therefore
providers of health care must and do compete for patients on the basis
of quality and patient satisfaction, but not price.
6. In a single payer health insurance system, health insurance is
fully portable from job to job and into unemployment status and
retirement. The ``job-lock'' phenomenon prevalent in the United States
is unknown in those systems, contributing to labor-market efficiency.
7. Because all funds to providers of health care in a single-payer
system flow from one payer, it is relatively easy to control total
health spending in such systems (Table 4). Indeed, total national
health spending as a percent of GDP in countries with single-payer
systems is lower than it tends to be in non-single-payer health
systems. This does not mean providers are left without a voice.
Provider inputs are part of the formal negotiations over health-care
budgets.
8. For the most part, single-payer systems achieve their cost
control by virtue of the monopsonistic market power they enjoy vis-a-
vis providers of health care. It is a countervailing power that the
highly fragmented U.S. health-insurance system lacks vis-a-vis
providers (see Table 5).
9. As part of their effort to control total health spending,
however, and to avoid the waste of excess capacity that easily develops
in health care, some single-payer systems (the UK and Canada) put
constraints on the physical capacity of their health system (number of
inpatients beds, MRI scanners, etc). That approach can lead to
rationing by the queue. The alternative to rationing by such
administrative devices, of course, is rationing by price and ability to
pay, an approach used by design or by default in the United States (see
Section C, ``Waiting Lines'' of my statement and Table 2). Rationing by
price or by non-price mechanism are just alternative forms of
rationing.
10. A single-payer system is an ideal platform for a uniform
electronic health information system of the sort, for example, used by
our Veterans Administration health system (a single-payer system in its
own right). There is a common nomenclature which enables 100 percent
electronic billing and claims processing, thus yielding significant
savings in administrative costs.
11. Because they conveniently capture information on all health-
care transactions, single-payer systems provide a database that can be
used for quality measurement, monitoring and improvement, and also for
more basic research on what drives health spending and what clinical
treatments works and does not work in health care. It enables evidence-
based medicine and the tracking of efficacy and safety of new drugs and
devices once they are introduced after approval by government based on
results of clinical trials.
a. a taxonomy of different national health systems \1\
There is some uncertainty on what is actually meant by a ``single
payer'' system, so I shall begin my testimony with a brief taxonomy of
health systems used around the world. That taxonomy has two dimensions:
---------------------------------------------------------------------------
\1\ Tsung-Mei Cheng and Uwe Reinhardt, ``Perspective on the Role of
the Private Sector In Meeting Health Care Needs,'' in Benedict
Clements, David Cody and Sanjeev Gupta, eds. The Economics of Public
Health Care Reform in Advanced and Emerging Economies. International
Monetary Fund. Washington, DC. (2012): 69-98.
(a) Organization of the financing of health care, and
(b) Organization of the production and delivery of health care to
patients.
Table 1 illustrates these dimensions.
Table 1.--A Taxonomy of Health Systems
----------------------------------------------------------------------------------------------------------------
Financing and health insurance
---------------------------------------------------
Social insurance Private insurance
(Ability-to-pay (Actuarially fair No Health
Ownership of providers financing) financing) Insurance
---------------------------------------- (Out-of-
Single Multiple Non- For- pocket)
payer payers profit profit
----------------------------------------------------------------------------------------------------------------
Government.................................................. A D G J M
Private, but non-profit..................................... B E H K N
Private, and commercial..................................... C F I L O
----------------------------------------------------------------------------------------------------------------
Source: Tsung-Mei Cheng and Uwe Reinhardt, ``Perspective on the Role of the Private Sector In Meeting Health
Care Needs,'' in Benedict Clements, David Cody and Sanjeev Gupta, eds. The Economics of Public Health Care
Reform in Advanced and Emerging Economies. International Monetary Fund. Washington, DC. (2012): 69-98.
National Health Service (Socialized Medicine): Cell A in Table 1
represents the purest form of single-payer health systems. In these
systems government funds and organizes both the financing of health
care and owns and operates the facilities producing health care.
Physicians and other professionals in these systems are government
employees. One thinks here of the inpatient sector of the British
National Health Service (NHS), although outpatient services there are
delivered by self-employed general practitioners. The health systems of
Italy, Spain and the Nordic countries in Europe also fall into cell A,
as does the Hong Kong Hospital Authority (a legacy of British
colonialism). Most remarkably, although one commonly finds ``socialized
medicine'' condemned in this country as second rate, Americans have
reserved the purest form of socialized medicine for their military
veterans, namely, the Veterans Administration health system.
Single-Payer Social Health Insurance: Cells A, B and C jointly
represent single payer health systems in which government owns and
operates a single health-insurance system for all citizens (or a
designated group of citizens, such as the elderly), but purchases
health care from a mixed delivery system that may include government-
owned facilities (e.g., municipal hospitals and neighborhood health
clinics), privately owned not-for-profit facilities or privately owned,
for-profit facilities.
Canada's provincial health insurance systems are a clear example of
these single-payer systems, as is Taiwan's National health Insurance
(NHI) system. In the United States, the traditional, fee-for-service
Medicare program is a national single-payer system. The state-based
traditional Medicaid systems fall into this category as well.
Multiple-Payer Social Health Insurance: Cells D, E and F jointly
represent so-called multiple-payer social health insurance systems. In
those systems health insurance is financed either at the nexus of the
payroll, by premium contributions calculated as a flat percentage of
the individual employee's gross wages (e.g., Germany, and, in part, the
Netherlands) or on per capita premiums (Switzerland and, in part, The
Netherlands). The health insurance system itself, however, is in the
hands of multiple carriers who compete with one another for patients--
for example, the German not-for-profits sickness funds or commercial
insurance companies in Switzerland that may, however, not earn profits
on individuals insured under the country's social insurance systems
(but can earn profits on covering supplementary services not in the
socialized benefit package).
A unique type of multi-payer social insurance is called ``all-payer
systems''. Germany and Switzerland are examples. In these systems,
regional associations of health insurers (e.g., Germany's sickness
funds) formally negotiate with counter-associations of providers common
fee schedules that then apply to all insurers and providers in the
region--hence the name ``all-payer system.'' The negotiations are
subject to oversight by the relevant governments which may set an
overall global budget for the negotiations. If the negotiating parties
cannot agree on fees, the government imposes compulsory arbitration. In
effect, these systems are close cousins of single payer systems. In the
United States the State of Maryland has long operated such a system for
hospitals.
In the United States, the Medicare Advantage system and the
Medicaid Managed Care system fall into cells D, E and F as well. Here
government collects the financing from households via taxation but
delegates the process of purchasing health care from providers of care,
claims processing and even negotiations over fees to private for-profit
or not-for-profit insurance carriers.
Private Health Insurance: Cells G to L jointly represents a broad
category of systems that are not social insurance but contains a wide
range of alternative arrangements.
The purest form of private insurance until December 2013--that is,
before the Affordable Care Act (ACA) took effect on January 1, 2014--
have been for-profit or not-for-profit insurers selling health
insurance to individuals. They based the premium charged the individual
on that individual's health status, that is, on the expected health
spending required by that individual. It is called ``actuarially fair
pricing'' or ``medical underwriting.'' Effective January 1, 2014,
medical underwriting is no longer permitted in the individual market.
Premiums there are now ``community rated,'' that is, independent of the
individual's health status. (Age or smoking habits, however, can still
be factored into the premium).
The most widely sold private health insurance in the United States,
however, is employment-based insurance sold as group policies to
business firms of all sizes. This approach in effect represents a
combination of actuarially fair pricing and social insurance.
The premiums for the group policies sold to an individual firm
covering all of that firm's employees are ``experience rated,'' that
is, they are based on the actuarially expected cost of that firm's
group of employees. Other things being equal, firms with large
proportions of older employees will pay a higher premium than a similar
firm with more young employees.
Within the firm, however, each employee's contribution toward the
premium for the firm's group policy is independent of that employee's
health status, that is, it is community-rated.
In a sense then, one can think of each firm's employment-based
health insurance system as a form of private social health insurance.
Under the ACA, the group policies sold to small employers also will
be community-rated over all firms in a market area, to protect
individual small firms from the high premiums that can obtain when
several of a small group of employees are sick.
Uninsurance: Finally, cells M, N, and O represents health systems
without health insurance. The bulk of the population of low-income,
developing countries tends to fall into those cells. In the United
States, close to 50 million individuals fall into these cells.
A take-away from this brief survey is that, while most countries'
health systems tend to fall neatly into a few cells of Table 1, one
finds Americans in literally all cells in the table. We have purely
socialized medicine (the VA health system), single-payer systems with
mixed private delivery of care (Medicare, Medicaid), multiple-payer
social insurance (Medicare Advantage, Medicaid Managed Care), a whole
range of private health insurance arrangements, and millions of
uninsured like in a developing nation. It follows that there really is
no ``United States health system.'' What we have is a pastiche of
different systems.
The Exchanges Under the ACA: Under the ACA, the system of health
insurance sold on the state-based health insurance exchanges (some
federally run, some organized by the States) represents a highly
complex mixture of social insurance and private financing, depending on
the income level of the insured. It does not fit neatly into Table 1.
For very poor applicants it is basically social insurance purchased
from commercial insurers or Medicaid, for applicants with income above
400 percent of the Federal poverty line it is purely privately financed
commercial insurance.
b. the role of social ethics
Different countries in both the developed world and emerging
markets use different combinations of the cells in Table 1 to finance
and deliver health care. In the chapter co-authored with Princeton
economist Uwe Reinhardt, we made the observation that how a nation
decides on what combination of health care financing and delivery to go
with for that nation's health care system depends very much on the
social ethic held by that nation's citizenry.\2\
---------------------------------------------------------------------------
\2\ Tsung-Mei Cheng and Uwe Reinhardt, ``Perspective on the Role of
the Private Sector In Meeting Health Care Needs,'' in Benedict
Clements, David Cody and Sanjeev Gupta, eds. The Economics of Public
Health Care Reform in Advanced and Emerging Economies. International
Monetary Fund. Washington, DC. (2012): 69-98.
---------------------------------------------------------------------------
Health Care as a Social Good: As we note in the above cited paper,
the political consensus in many countries supports a strict Principle
of Social Solidarity.
Under that principle, health care is viewed as a social good that--
like public elementary and secondary education and, in many countries,
even tertiary education--is to be available to all in need on equal
terms and is to be financed strictly on the basis of ability to pay for
health insurance and, thus, health care.
These countries usually do not rely heavily on cost sharing by
patients at the time health care is delivered, as that might let
ability to pay intrude upon the delivery of health care and impair
access to care. That view is comfortable only with a strictly
egalitarian health system.
Canada and Taiwan espouse this pure form of egalitarianism in their
health insurance systems.
Health Care as a Private Consumption Good: At the other extreme is
the view that health care, like food, shelter and clothing, is just
another basic private consumer good of which people with low ability to
pay might be granted a bare-bones package through public subsidies, but
whose clinical quality and the amenities accompanying the delivery of
care can be allowed to vary by ability to pay for superior care. That
view is comfortable with a multiple-tiered health care system.
Many Americans, although by no means at all, seem to lean toward
that view, although it would be rare to find a politician openly
espouse the idea that the quality of health care and its amenities
(e.g., the speed at which access to care is obtained) should be made to
vary by ability to pay.
Compromises: In between these two extremes are systems that obey
the Principle of Social Solidarity for the majority of the population
(usually around 90 percent), but do allow a small minority of higher-
income people to remain outside the system for the majority and opt for
some other, private arrangement. One finds these systems in Europe
(e.g., the UK and Germany).
c. access to primary health care under the single-payer approach
Universal Access and Egalitarian Treatments for Patients: Single-
payer systems are an ideal platform of implementing a social ethic
according to which all citizens who need health care should have access
on equal terms to whatever health-care resources are available.
Because these systems operate with common, uniform fee schedules
that apply across the board to all relevant providers, society signals
to the providers of health care through these fees that society assigns
to the provider's services the same value, regardless of the socio-
economic status of the patients. This is in contrast sharply with the
U.S. system, under which the fees or prices paid the providers of
health care can vary substantially by the socio-economic or demographic
characteristics of the patient. Physicians, for example, receive in
many States the economic signal from society that their time and skill
are valued less if applied to a patient covered by Medicaid than the
time and skill applied to a commercially insured patient. That
physicians receive and clearly understand that signal can be inferred
from the fact that so many of them refuse to accept Medicaid patients
altogether.\3\ One must wonder whether lawmakers really wish to imply
with the relatively low Medicaid fees that poor people should receive
less care, and perhaps lesser quality care.
---------------------------------------------------------------------------
\3\ Sandra L. Decker, ``In 2011 Nearly One-Third of Physicians Said
They Would Not Accept New Medicaid Patients, But Rising Fees May
Help,'' Health Affairs 31(6) August 2012: 1673-79.
---------------------------------------------------------------------------
Patient Free Choice of Providers: With the exception of government-
run health systems, such as the United States. VA health system,
single-payer systems (e.g., Canada and Taiwan) or all-payer systems
(e.g., Germany) with which I am familiar afford citizens completely
free choice of provider of health care when illness strikes.
Neither Canada nor Taiwan has the gate-keeper system like in the
UK's NHS where patients must first see their general practitioner (GP)
who will refer them to specialists if needed. Canadians have no
restrictions on choice of physicians or hospitals, in contrast to
neighboring United States where Americans are often restricted in their
choice of physicians and hospitals which depended on the particular
health insurance policies or plans they have.\4\
---------------------------------------------------------------------------
\4\ Barbara Starfield, ``Reinventing Primary Care: Lessons From
Canada for The United States.'' Health Affairs, 29(5) (2010): 1032.
---------------------------------------------------------------------------
Patients in Taiwan also have complete freedom to choose (often
``shop'' for) their providers. Any of Taiwan's 23.3 million residents
enrolled in the NHI (99.9 percent) may access any of the more than
19,000 health care providers to receive care. The NHI also reimburses
medical expenses for treatments received on an emergency basis
overseas.
By contrast, a remarkable feature of U.S. health care is that for
the sake of choice among health insurance carriers, Americans have
bargained away a good deal of their freedom of choice of providers. In
general they are limited to the providers in the network of providers
that contracts with the particular insurance carrier chosen by the
patient, or patients must pay considerable more out-of-pocket for going
outside the networks which, incidentally, are reported becoming
narrower over time, especially under policies sold on the exchanges
under the ACA, but also now in Medicare Advantage plans. I know from
personal experience that citizens of other nations often are puzzled
why Americans have been content to make this tradeoff.
Waiting Lists: Single-payer systems are structured to be able to
control the flow of money into health-care systems. On the plus side,
it enables these systems to control better the level and growth rates
of health-care spending per capita. On the downside is the danger that
the system may be underfunded, which means in this context that fewer
real health-care resources (health professionals, inpatient capacity,
imaging capacity, and so on) is put in place than the citizenry might
wish and--and this is crucial--is also willing to pay for. There then
might develop queues to certain of the available resources, and these
queues need to be managed by criteria of medical urgency. Sometimes
this process is called ``evidence-based management of queues.''
Critics of the British and Canadian health systems, for example,
commonly take rationing by queues--especially for imaging services and
certain high tech procedures--as their main focus, although the late
Barbara Starfield, an American pediatrician and highly distinguished
figure in health policy analysis had noted in an article published in
2010 that on average waiting times for high-tech diagnostic services
using magnetic resonance imaging (MRI) actually are relatively short in
Canada.\5\ In Taiwan's single-payer system, patients enjoy easy access
to care. Eighty-five percent of patients can reach a hospital or clinic
in less than 30 minutes, and for 83 percent of patients wait time is
less than 30 minutes before being seen by a doctor.\6\ I visited a
private ENT clinic in Taipei in 2013 and stayed for 2 hours and
personally observed this to be the case.
---------------------------------------------------------------------------
\5\ Barbara Starfield, ``Reinventing Primary Care: Lessons From
Canada for The United States.'' Health Affairs, 29(5) (2010): 1032.
\6\ Tsung-Mei Cheng, ``Lessons From Taiwan's National Health
Insurance: A Conversation with Taiwan's Health Minister Ching-Chuan
Yeh,'' Health Affairs (28)4: July/August 2009:1035-44.
---------------------------------------------------------------------------
Defenders of single-payer systems, such as Canada's, point out that
elimination of all queuing for health care implies widespread excess
capacity and thus is wasteful. They also point out that it might
trigger the phenomenon of supplier-induced demand, that is, the
recommendation by health professionals and delivery of services with
little or no medical necessity for the sake of revenue. It can be
harmful to patients.
The Medicare Prospective Advisory Commission (Medpac) of Congress,
for example, has come to the conclusion that MRI scans are excessively
used in the United States.\7\ As the Medpac noted in its report of June
2011:
---------------------------------------------------------------------------
\7\ Marilyn Weber Serafini and Mary Agnes Carey, ``Medicare panel
urges crackdown on excessive MRIs.'' (2011) Available at http://
www.mcclatchydc.com/2011/06/15/115864/Medicare-panel-urges-
crackdown.html (Viewed March 5, 2014).
A significant proportion of noncardiac imaging studies may
also be inappropriate. For example, one study found that nearly
30 percent of Medicare beneficiaries with uncomplicated low-
back pain received an imaging service within 28 days, even
though imaging is rarely indicated for this condition in the
absence of specific complications or co-morbidities (Pham et
al. 2009). According to data on CMS's Hospital Compare Web
site, one-third of Medicare beneficiaries with low-back pain
who were given an MRI of the lumbar spine in hospital
outpatient departments in 2008 did not receive more
conservative therapy first, as is recommended by the American
College of Radiology and the Agency for Healthcare Research and
Quality (Centers for Medicare & Medicaid Services 2011c).
Overuse of MRI scans for low-back pain carries the risk of
false-positive findings, increased costs for the Medicare
program and beneficiaries, and the potential to induce a
cascade of additional procedures, such as surgery (Baras and
Baker 2009, Centers for Medicare & Medicaid Services 2011c). A
recent analysis of orders from primary care physicians for
outpatient, nonemergency CT and MRI scans at a large urban
hospital found that 26 percent did not meet appropriateness
criteria developed by a radiology benefit management program
(Lehnert and Bree 2010). Inappropriate orders included CT for
chronic headache, spine MRI for acute back pain, and knee and
shoulder MRI for osteoarthritis.\8\
---------------------------------------------------------------------------
\8\ Medicare Payment Advisory Commission, Report to the Congress:
Medicare and the Health Care Delivery System (June 2011), Chapter 2:
36. Available at http://www.medpac.gov/documents/jun11_entirereport.pdf
(Viewed March 5, 2011).
The December 2010 issue of Health Affairs also featured a number of
articles focused on the problem of overuse of imaging services in the
United States.\9\
---------------------------------------------------------------------------
\9\ See, for example, Bruce J. Hillman and Jeff Goldsmith,
``Imaging: The Self-referral Boom and the Ongoing Search for Effective
Policies to Contain it,'' Health Affairs, 29(12) December 2010:2231-6.
---------------------------------------------------------------------------
Rationing of Health Care: There is great confusion in the debate on
health policy over the concept of ``rationing'' of health care.
Some people believe that ``rationing'' happens only if government
is involved in allocating scare resources. The implication is that
rationing can be avoided by letting free markets allocate scarce
resources. In a market-based system, however, scarce resources also
must somehow be allocated in the face of possible excess demand. It is
done in markets through rationing by price and ability to pay.
In other words, an individual may be denied access to a health care
resource either by queuing or some other administrative arrangement, or
he or she may be denied access to health care for want of ability to
pay for it. As Reinhardt puts it in his ``Keeping Health Care Afloat:
The United States Versus Canada,''\10\
---------------------------------------------------------------------------
\10\ Uwe E. Reinhardt, ``Keeping Health Care Afloat: The United
States versus Canada,'' The Milken Institute Review, Second Quarter
2007: 43. Available at http://www.pnhp.org/sites/default/files/MILKEN-
REVIEW-CANADA-vs-US.pdf (Viewed March 5, 2014).
I don't buy the argument that government-run single-payer
health systems are inherently less efficient than market-
oriented health systems. In the end, each nation must decide
which style of rationing--by the queue or by price and ability
to pay--is most compatible with its culture. Mantras about the
virtues of markets are no substitute for serious ethical
---------------------------------------------------------------------------
conviction.
This point about styles of rationing health care is illustrated in
Table 2 with cross-national survey data collected by the Commonwealth
Fund. The Fund annually surveys large samples of patients or providers
of health care in a number of different countries, with identical
survey instruments.
As is shown in the top three rows of Table 2, individuals in the
single-payer Canadian health insurance systems did experience longer
wait times to see a specialist than did Americans, although only
slightly longer wait times to see a primary-care physician or nurse.
Thirty-five percent of Canadians waited less than a month for elective
surgery, versus 68 percent in the United States; and while 25 percent
of Canadian respondents waited 4 months or more for elective surgery,
only 7 percent of American respondents reported waiting that long.
Interestingly, access to health care in Germany--a multiple payer
social insurance system that is actually a close cousin of a single-
payer system--appear to have superior access to health care than the
United States.
On the other hand, as the last four rows of Table 2 show, many more
Americans than Canadians or citizens in Germany and the UK are priced
out of health care through rationing by price and ability to pay. For
example, 58 percent of uninsured Americans reported not to have seen a
physician when sick or did not get recommended care because of cost,
contradicting assertions that the uninsured in the United States do not
have problems accessing health care. Even insured Americans have such
access problems because of cost, most probably because their insurance
coverage is shallow, has high deductibles or upper limits on coverage.
Thus, 21 percent of insured Americans reported not to have seen a
doctor when sick or gotten recommended care because of cost. By
comparison, only 8 percent of Canadian respondents, 10 percent of
German and 4 percent of British respondents reported such problems.
The degree to which some Americans are rationed out of health care
by price and ability to pay can also be inferred from research
published in 2008 by Jack Hadley et al.\11\ Using data on the actual
use of health care retrieved from a large sample of Americans in the
well-known Medical Expenditure Survey Panel (MEPS), and adjusting
statistically for the age, health status and other socio-economic and
demographic characteristics of the individuals in the survey, the
authors found that relative to individuals who are uninsured partly
during the year, similar individuals with private health insurance for
the full year used on average 70 percent more health care than did the
uninsured. Relative to individuals who are uninsured for the full year,
individuals with full-year private insurance used on average 118
percent more health care than did the uninsured.
---------------------------------------------------------------------------
\11\ Jack Hadley, John Holahan, Teresa Toughlin and Dawn Miller,
``Covering the Uninsured in 2008: Current Costs, Sources of Payment,
And Incremental Costs,'' Health Affairs 27(5) August 2008: w399-w415.
Available at http://content.healthaffairs.org/content/27/5/w399.full
.pdf+html?sid=7874cbba-4463-4e2b-837e-028fd6519cbc.
---------------------------------------------------------------------------
In short, in the face of the available empirical evidence on
health-care utilization by the uninsured, the argument that Americans
without health insurance or with only shallow health insurance are not
rationed out of health care is simply incredible.
Table 2.--Comparative Data On Access For Selected OECD Countries, 2010 and 2013
----------------------------------------------------------------------------------------------------------------
Percent of adults who responded
--------------------------------------------------
United States
United --------------------
Canada Germany Kingdom Insured
all year Uninsured
----------------------------------------------------------------------------------------------------------------
Saw a doctor or nurse last time they needed care:
same or next day........................................... 41 76 52 53 36
waited 6 or more days...................................... 33 15 16 21 40
Waited to see a specialist:
less than 4 weeks.......................................... 39 72 80 77 70
2 months or more........................................... 29 10 7 5 10
Wait time for needed elective surgery in past 2 years, 2010
survey:
less than 1 month.......................................... 35 78 59 68 68
4 months or more........................................... 25 0 21 7 7
In the past year:
Did not see doctor when sick or did not get recommended 8 10 4 21 58
care because of cost......................................
Did not fill RX or skipped doses because of cost........... 8 9 2 15 36
Had other cost-related access problems..................... 13 15 4 27 63
Had serious problems paying or was unable to pay medical 7 7 1 15 42
bills.....................................................
----------------------------------------------------------------------------------------------------------------
Source: Cathy Schoen, Robin Osborne, David Squires and Michelle M. Doty, ``Access, Affordability, and Insurance
Complexity are often worse in the United States Compared to 10 other Countries, Health Affairs 32(12):2205-15.
The rationing of health care in the United States is troubling in
light of the fact that the United States spends over twice as much per
capita on health care than do most other health systems in the
developed world, Canada included (see Table 3). According to OECD data,
for example, in 2011 the United States spent $8,508 per capita (17.7
percent of GDP) on health care and Canada $4,522 (11.2 percent of GDP),
or 53 percent of the U.S. level, both figures in comparable purchasing
power parity (PPP) dollars.\12\
---------------------------------------------------------------------------
\12\ Based on OECD Health Statistics 2013.
---------------------------------------------------------------------------
Asked in an interview with a writer of the Journal of the American
Medical Association (JAMA) what he thought of ``other countries health
plans, such as Canada's,'' Princeton economist Uwe Reinhardt had this
to say on the issue of wait times in health care:
Canada has queues some of which are unduly long, although
Canadians will tell you that not having any queues requires
substantial, wasteful excess capacity. On the other hand, they
spend only half as much per capita on health care as we do.
What I would tell the Canadians is, how about you spend 65
percent of what we Americans spend and then you'd have nirvana.
You wouldn't have many queues and you'd have all of the care
and resources you'd need, and you could do it with 65 percent
because you don't blow so much on administration and all of the
other ugly things in our health system.\13\
---------------------------------------------------------------------------
\13\ Tracy Hampton, ``Uwe Reinhardt, Ph.D., Assessing U.S. Health
Insurance Coverage,'' Journal of the American Medical Association
(JAMA) 297(10) March 14, 2007: 1049.
Delivery System Capacity: Table 3 provides data on health systems
capacity in selected OECD countries and Taiwan. It is seen that imaging
capacity is high in the United States relative to other OECD countries
as is frequency of use, although Japan has even more imaging capacity
in place than does the U.S. Prices per scan in Japan, however, are much
lower than those in the United States. In purchasing power party
dollars, Japan spends only 38 percent as much per capita on health care
($3,213 or 9.6 percent of GDP) than does the United States ($8,508 or
17.7 percent of GDP).\14\
---------------------------------------------------------------------------
\14\ OECD Health Statistics 2013.
---------------------------------------------------------------------------
It can be seen that both Taiwan and Canada have physician-
population ratios comparable to the United States (2.48 for Taiwan, 2.4
for Canada, and 2.5 for United States per 1,000 population,
respectively); but that Taiwan has the lowest nurse-population ratio
(5.75 per 1,000 population compared to both Canada and the United
States (9.3 for Canada and 11.1 for United States per 1,000 population,
respectively). In terms of beds, Taiwan has almost twice the number of
beds as Canada and almost 40 percent more beds than the United States
(4.28 for Taiwan, 2.4 for Canada, and 3.1 for United States,
respectively).
Table 3.--Delivery System Capacity In Select OECD Countries and Taiwan (2011)
----------------------------------------------------------------------------------------------------------------
United United OECD
Canada Kingdom France Germany Japan States Ave. Taiwan
----------------------------------------------------------------------------------------------------------------
Physician/1000 population....... 2.4 2.8 3.3 3.8 2.2 2.5 3.2 2.48
Nurse/1000 population........... 9.3 8.6 8.7 11.4 10 11.1 8.7 5.75
Hospital beds/1000 pop.......... 2.8 3 6.4 8.3 13.4 3.1 4.8 4.28
MRI units/1 m. pop.............. 8.5 5.9 10.8 22.6 46.9 31.5 13.2 NA
CT scanners/1000 pop............ 14.6 8.9 12.5 18.3 101.3 40.9 23.2 NA
Doctor consultation/capita...... 7.4 5 6.8 9.7 13.1 4.1 6.6 15.3
MRI exams/1000 pop.............. 49.8 41.4 67.5 95.2 NA 102.7 48.3 39.1
CT exams/1000 pop............... 127 77.5 154.5 117.1 NA 273.8 128.2 110
(2013)
Ave. length of stay (days)...... 7.7 7.4 5.7 9.5 18.2 4.8 7.5 10
C-section/1000 live births...... 261.1 237.5 202.3 308.9 NA 313.6 267.2 360*
----------------------------------------------------------------------------------------------------------------
Source: OECD Health Data 2013. http://stats.oecd.org/Index.aspx?DataSetCode=HEALTH_REAC.
Data for Taiwan based on Republic of China Health Statistical Trends 2011.
Ministry of Health and Welfare, The Executive Yuan, R.O.C. (in Chinese).
* Taiwan-C-section rate: average of 380 performed at primary care clinics and 340 performed as inpatient.
d. controlling health-care spending
Spending: Table 4 presents data on health spending per capita in
purchasing power parity dollars for selected OECD countries and Taiwan
in 2011. I have already noted earlier the significantly higher spending
on health care in the United States.
Table 4.--NHE As Percent of GDP and Per Capita US$ PPP For Selected OECD Countries and Taiwan (2011 Unless Otherwise Indicated)
--------------------------------------------------------------------------------------------------------------------------------------------------------
United United OECD
Canada Kingdom Denmark France Germany Japan Korea Australia Sweden States Ave Taiwan
--------------------------------------------------------------------------------------------------------------------------------------------------------
11.2............................................... 9.4 10.9 11.6 11.0 9.6 7.5 8.9 9.5 17.7 9.3 6.5
(2010) (2012) (2010)
4522............................................... 3406 4448 4118 4495 3213 2199 3800 3925 8505 3322 2186
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: OECD Health Statistics-2013. Data for Taiwan from Tsung-Mei Cheng, ``Taiwan Province of China's Experience with Universal Health Care
Coverage,'' in Benedict Clements, David Cody and Sanjeev Gupta, eds. The Economics of Public Health Care Reform in Advanced and Emerging Economies.
International Monetary Fund. Washington, DC. (2012): 255.
Prices: Although Americans are known to use more of some high-cost,
high-tech services than do citizens in other countries--e.g., CT or MRI
scans or some types of heart surgery--overall Americans actually use
fewer real health care resources than do citizens in other countries.
Americans see physicians less frequently, have fewer hospital
admissions and days per admission and generally consume fewer
prescription drugs. The main driver of the huge spending variance
appears to be the much higher prices Americans pay for health-care
products and services. As Anderson, Reinhardt, Hussey and Petrosyan
(2003) reported in their much cited paper ``It's the Prices, Stupid:
Why the United States Is So Different from Other Countries'', higher
health spending but lower use of health services adds up to much higher
prices in the United States than in any other OECD country.\15\
---------------------------------------------------------------------------
\15\ Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey and
Varduhi Petrosyan, ``It's the Prices Stupid: Why the United States is
So Different from Other Countries,'' Health Affairs 22(3) 2003:89-105.
---------------------------------------------------------------------------
The much higher prices of health care in the United States also
have been documented by Laugesen and Glied (2011) \16\ as well as New
York Times' staff reporter Elizabeth Rosenthal in her articles ``The
$2.7 Trillion Medical Bill,''\17\ and ``American Way of Birth,
Costliest in the World.'' \18\
---------------------------------------------------------------------------
\16\ Miriam J. Laugesen and Sherry A. Glied, ``Higher Fees Paid to
U.S. Physicians Drive Higher Health Spending for Physician Services
Compared to Other Countries,'' Health Affairs 30(9) 2011: 1647-56.
\17\ Elizabeth Rosenthal, ``The $2.7 Trillion Medical Bill,'' The
New York Times. June 1, 2013. Available at http://www.nytimes.com/2013/
06/02/health/colonoscopies-explain-why-us-leads-the-world-in-health-
expenditures.html (Viewed March 5, 2014).
\18\ Elizabeth Rosenthal, ``American Way of Birth, Costliest in the
World,'' The New York Times. June 30, 2013. Available at http://
www.nytimes.com/2013/07/01/health/american-way-of-birth-costliest-in-
the-world.html?pagewanted=all&_r=0 (Viewed March 5, 2014).
---------------------------------------------------------------------------
In bargaining with the providers of health care over the prices of
health-care products and services--either formally or informally
through the political process--single payer systems can act as what
economists call ``monopsonies,'' that is, single buyers. It is well-
known in economic theory that monosponists can extract the lowest
prices from suppliers of any good or service. Consequently, and other
things being equal, one would expect health spending per capita in
single-payer systems to be lower than they will be under a system in
which payers have less market power.
By contrast, in the United States, the payment side consists of a
highly fragmented health insurance system in which each insurer has
relatively weak market power vis-a-vis providers in a given market
area. That circumstance shifts market power from the payments side of
the health care system to the provider's side which can explain at
least part of the higher prices Americans pay for health care.
Table 5 gives a general impression of the impact of market power
\19\ on the prices of health care. The data come from an annual survey
conducted by the International Federation of Health Plans--this one for
2011. The Canadian data are for the provincial single-payer system of
the Province of Nova Scotia only. Several points stand out in the
table.
---------------------------------------------------------------------------
\19\ In regard to relative market power, see Uwe E. Reinhardt,
``Divide et Impera: Protecting the Growth of Health Care Incomes
(Expenditures,'' Health Economics 21 2012:41-54. Published online in
Wiley Online Library (wileyonlinelibrary.com).
---------------------------------------------------------------------------
First, average prices in the United States, are significantly
higher than elsewhere for all the procedures shown in the table. It is
also for the many other procedures for which the Federation collected
prices.
Second, there is a remarkably wide range of prices for the same
procedure in the United States. For example, the total price for
physician and hospital care combined for a normal delivery varied in
2011 from $6,993 (75 percent of the average U.S. price) to $15,239 at
the 95th percentile (164 percent of the U.S. average). For other
procedures the price range is even higher. For a CT head scan, for
example, the range is from a low of $95 to a high of $1,545.
Third, as Table 4 shows, single-payer Canadian prices are anywhere
from 24 percent to 61 percent of the average U.S. prices for the same
procedures, in spite of the geographic closeness of that system to the
United States.
Fourth, although prescription drugs are sold in a global market,
Americans tend to pay substantially higher prices for these products
than do patients or their insurers in many other parts of the world. It
is probably also so for medical devices.
Table 5.--Cross-National Comparison of Prices Paid by Private Health Plans for Selected Procedures or Products
2011
----------------------------------------------------------------------------------------------------------------
United States
---------------------------------
Canada France Germany Switzerland 95th
Low Average Percentile
----------------------------------------------------------------------------------------------------------------
CT Scan: Head................... $122 $141 $272 $319 $95 $510 $1,545
As percent of U.S. average.... 24% 28% 53% 63% 19% 100% 303%
MRI Scan........................ N.A. $281 $599 $903 $503 $1,080 $2,758
As percent of U.S. average.... N.A. 26% 55% 84% 47% 100% 255%
Normal Delivery (a)............. $3,195 $2,536 $2,157 $8,495 $6,993 $9,280 $15,239
As percent of U.S. average.... 34% 27% 23% 92% 75% 100% 164%
Appendectomy (a)................ $5,606 $3,164 $3,093 $5,840 $7,756 $13,003 $27,797
As percent of U.S. average.... 43% 24% 24% 45% 60% 100% 214%
Coronary Bypass Surgery (a)..... $40,954 $16,140 $16,578 $25,486 $42,951 $67,583 $138,050
As percent of U.S. average.... 61% 24% 25% 38% 64% 100% 204%
Angioplasty (a)................. $10,060 $5,857 $6,189 $12,212 $15,627 $26,254 $57,374
As percent of U.S. average.... 38% 22% 24% 47% 60% 100% 219%
Hip replacement (a)............. $16,945 11,353 11,418 17,521 23,535 $38,017 $80,374
As percent of U.S. average.... 45% 30% 30% 46% 62% 100% 211%
Nexium.......................... $36 $23 $56 $69 $176 $193 $357
As percent of U.S. average.... 19% 12% 29% 36% 91% 100% 185%
Plavix.......................... $74 $49 $109 $61 $160 $163 $172
As percent of U.S. average.... 45% 30% 67% 37% 98% 100% 106%
Lipitor......................... $44 $37 $74 $81 $95 $119 $138
As percent of U.S. average.... 37% 31% 62% 68% 80% 100% 1 6%
----------------------------------------------------------------------------------------------------------------
(a) Physician and Hospital fees combined.
Source: International Federation of Health Plans, 2011 Price Comparisons--Medical and Hospital fees by Country.
The issue of relative market power in health care, of course,
reminds one of the late Rufus Miles' famous law: ``Where you stand
depends on where you sit.'' \20\
---------------------------------------------------------------------------
\20\ Rufus E. Miles, ``The Origin and Meaning of Miles' Law,''
Public Administration Review, September/October 1978: 399-403.
Available at http://www.jstor.org/stable/pdfplus/975497.pdf
?acceptTC=true&acceptTC=true&jpdConfirm=true (Viewed March 4, 2014).
---------------------------------------------------------------------------
The prices paid for health care distribute income from payers
(ultimately, individuals and families) to the providers of health care.
The distribution of income in general--and in health care in
particular--is an intensely ideological issue. My point here is not to
explore that contentious issue, but merely to note that by their very
structure, single-payer health systems generally can better control
health spending per capita for a given set of health care services and
products than can any system other than possibly a national health
service (cell A in Table 1).
Administrative Costs: The relative market power in a health care,
however, is not the only factor driving relative prices.
Single payer systems are ideal platforms for the smart application
of electronic health information systems. They, along with a common
nomenclature and coming fee schedules yield significant savings in the
administrative overhead of a health system. Administrative cost in
Taiwan's NHI, for example, is 1.6 percent of the total NHI expenditure
in 2012,\21\ although there are, of course, additional administrative
expenses on the provider side. Administrative expenses in earlier years
had been even lower, ranging from 1.1-1.5 percent of total NHI
spending.\22\
---------------------------------------------------------------------------
\21\ National Health Insurance Administration, National Health
Insurance in Taiwan 2012-13 Annual Report, Ministry of Health and
Welfare, Executive Yuan, R.O.C. 27.
\22\ Personal communications with officials at Taiwan's Ministry of
Health and Welfare and NHI Administration officials over several years.
---------------------------------------------------------------------------
The low administrative costs typically associated with single payer
systems stand in sharp contrast to the high administrative costs in the
U.S. multi-payer private health insurance market. An Institute of
Medicine (IOM) report released in September 2012 put the total waste
inherent in the U.S. health care system at $750 billion (close to 31
percent of total health spending of $2.5 trillion in 2009). Of that
total, roughly $190 billion was estimated to be wasted on excess
administrative costs in 2009.\23\ The IOM report identified six major
areas of waste in the U.S. health care system and excess administrative
costs is the second highest among the six, after $201 billion annually
wasted on unnecessary services.\24\
---------------------------------------------------------------------------
\23\ National Research Council. Best Care at Lower Cost: The Path
to Continuously Learning Health Care in America. Washington, DC: The
National Academies Press, 2013.
\24\ Ibid.
---------------------------------------------------------------------------
In their ``Medical Spending Differences in the United States and
Canada: The Role of Prices, Procedures, and Administrative Expenses,''
\25\ Pozen and Cutler examined differences in health spending between
the United States and Canada. In their words, they say,
---------------------------------------------------------------------------
\25\ Alexis Pozen and David Cutler, Medical Spending Differences in
the United States and Canada: The Role of Prices, Procedures, and
Administrative Expenses,'' Inquiry 47(2): Summer 2010: 124-34.
``we found that administrative costs accounted for the
greatest proportion (39 percent) of spending differences
between the United States and Canada, followed by prices and
---------------------------------------------------------------------------
medical care provision.''
That figure, however, does not include the costs patients incur in
contending with our complex health insurance system.
In their paper ``U.S. Physician Practices Spend Nearly Four Times
as Much Money Interacting with Health Plans and Payers Than Do Their
Canadian Counterparts,'' \26\ Morra and Nicholson, et al. report the
following results:
---------------------------------------------------------------------------
\26\ Dante Morra, Sean Nicholson, Wendy Levinson, et al. ``U.S.
Physician Practices Spend Nearly Four Times as Much Money Interacting
with Health Plans and Payers Than Do Their Canadian Counterparts,''
Health Affairs 30(8) August 2011:1443-50.
Mean Dollar Value of Hours Spent Per Physician Per Year on
Administrative Costs
------------------------------------------------------------------------
Canada
costs with
U.S.
Personnel United salaries
States and U.S.
specialty
mix
------------------------------------------------------------------------
Physicians...................................... $17,775 $9,616
Nurses.......................................... $23,478 $2,302
Clerical Staff.................................. $37,010 $9,603
Senior Administrators........................... $4,712 $684
-----------------------
Overall Total................................. $82,975 $22,205
------------------------------------------------------------------------
D. Morra, S. Nicholson, W. Levinson, et al. ``U.S. Physician Practices
Spend Nearly Four Times as Much Money Interacting With Health Plans
and Payers Than Do Their Canadian Counterparts.'' Health Affairs, Aug.
2011.
In their key findings, the authors note that very little time was
spent by medical practices submitting quality data in either the United
States or Canada.
Earlier, in 2005, Kahn, Kronick, Kreger and Gans \27\ estimated
that overall just ``billing and insurance-related (BIR)'' functions
represents 20 percent to 22 percent of privately insured health
spending in California's acute care settings.
---------------------------------------------------------------------------
\27\ James G. Kahn, Richard Kronick, Mary Kreger and David N. Gans,
``The Cost Of Health Insurance Administration In California: Estimates
For Insurers, Physicians, And Hospitals,'' Health Affairs 24(6) 2005:
1629-39.
---------------------------------------------------------------------------
Other Factors Driving U.S. Prices: The income aspirations of U.S.
physicians are likely to be informed by what ambitious and bright young
Americans can earn elsewhere in our economy--especially in finance,
law, management consulting and lobbying. The incomes available in these
other professions, easily accessible to individuals capable of
succeeding in medical school, undoubtedly set a floor to the incomes of
U.S. physicians, that is, their fees. Economists view them as the
opportunity costs of entering medical practice. American physicians
undoubtedly seek to reduce some of these opportunity costs.
Furthermore, U.S. physicians graduate from medical school with
debts averaging close to $200,000. The amortization of that debt has to
come out of the physicians' incomes.
Malpractice premiums and settlements in the United States are
significantly higher than they are elsewhere. These expenses, too, are
recouped through commensurately higher prices.
e. cross-country comparisons of health outcomes
In January 2013 the Institute of Medicine (IOM) issued a report
entitled U.S. Health in International Perspectives: Shorter Lives,
Poorer Health. In the summary, the IOM noted:
The United States is among the wealthiest nations in the
world, but it is far from the healthiest. For many years,
Americans have been dying at younger ages than people in almost
all other high-income countries. This health disadvantage
prevails even though the United States spends far more per
person on health care than any other nation. To gain a better
understanding of this problem, the NIH asked the National
Research Council and the IOM to investigate potential reasons
for the U.S. health disadvantage and to assess its larger
implications.
The IOM was quick to add, however, that:
No single factor can fully explain the U.S. health
disadvantage. It likely has multiple causes and involves some
combination of inadequate health care, unhealthy behaviors,
adverse economic and social conditions, and environmental
factors, as well as public policies and social values that
shape those conditions. Without action to reverse current
trends, the health of Americans will probably continue to fall
behind that of people in other high-income countries. The
tragedy is not that the United States is losing a contest with
other countries, but that Americans are dying and suffering
from illness and injury at rates that are demonstrably
unnecessary.
Regular Metrics of Population Health Status: This is an important
caveat. An individual's health status is the product of a highly
complex process, including that person's experience in utero,\28\
nutrition and education in early childhood and health behavior during
childhood, adolescence and adulthood. Cross-national research on
average population-based health statistics--such as age-adjusted
mortality rates, infant mortality and maternal death rates and
disability and morbidity--health of populations suggest that health-
care per se actually is not the dominant factor in driving these
statistics. Education and per capita income are more important factors.
They in turn are correlated with life style choices and the physical
environment in which people live, national and local public health
policies, and the personal stress they bear.
---------------------------------------------------------------------------
\28\ Douglas Almond and Janet Currie, ``Killing me softly: The
fetal origin hyposthesis,'' Journal of Economic Perspectives, 25(3)
Summer 2011: 153-72.
---------------------------------------------------------------------------
To illustrate, the decline in life expectancy of almost 6 years
among Russian males in the period immediately following the collapse of
the Soviet Union in December 1991 to 1994 was attributable to a great
extent the seismic disruption in the social order and the traumatic
impact it visited upon the people of the new Russia, especially Russian
men who took to binge drinking on an unprecedented scale, resulting in
countless premature deaths. Making things worse was the drastic
deterioration of the Russian health care system that accompanied the
fall of the Soviet Union, and bad environmental pollution at the same
time. According to a paper by a demographer at Canada's McMaster
University, the Russian Federation ``experienced a surge in death rates
of almost 40 percent since 1992 . . . The fall of the Soviet Union in
1991 brought with it many social, political, and economic changes that
continue to affect Russia to this day.'' \29\ Another paper in the
Journal of the American Medical Association (JAMA) reported a rise in
age-adjusted mortality in Russia by almost 33 percent in the period
1990-94.\30\ Pulling apart the effect of the deteriorating Soviet
health care system from the general demise of its economy would be
challenging.
---------------------------------------------------------------------------
\29\ Christopher Hoeppler. ``Russian Demographics: The Role of the
Collapse of the Soviet Union.'' URJHS Volume 10. McMaster University,
Canada. Available at http://www.kon.org/urc/v10/hoeppler.html.
\30\ Notzon FC,\1\ Komarov YM, Ermakov SP, Sempos CT, Marks JS,
Sempos EV. ``Causes of declining life expectancy in Russia.'' JAMA 1998
Mar 11:279(10):793-800.
---------------------------------------------------------------------------
As the PowerPoint slide, taken from the Web site of the U.S.
Centers for Disease Control (CDC) shows, there has been a growing
incidence of obesity and diabetes in the United States over time, most
heavily pronounced in a number of southeastern States.
Perhaps some of the growth in obesity and the associated diabetes
could have been prevented through better access to primary care. But it
is reasonable to argue that much of that growth has been beyond the
influence of health care proper.
Unfortunately, most of the health-status data by which different
nations are compared tend to be those not significantly driven by
health care per se, and there are also methodological issues regarding
the definitions and use of metrics. For example, it is known that
teenage mothers are more likely to have premature birth and low-weight
babies, who have a higher risk of neonatal deaths and that the United
States have a large proportion of babies born to young single mothers.
The authors in an article published by the American Enterprise
Institute state that,
``if the United States have the same distribution of
gestational ages as Sweden, its recorded infant mortality rate
would drop it by 33 percent,''
and argue that lifestyle and socioeconomic factors affect the high rate
of infant mortality in the United States and that,
``it is inappropriate, however, to conclude that the root
cause is the U.S. health care system rather than societal
factors in a dynamic heterogeneous society.'' \31\
---------------------------------------------------------------------------
\31\ H.E. Frech, Stephen T. Parente, John Hoff, U.S. health care: A
reality check on cross-country comparisons. American Entereprise
Institute, July 11, 2012.
Mortality Amendable to Medical Intervention: Ideally in cross
national comparisons of health outcomes one would like to see studies
that measure outcomes from medical interventions directly, with careful
statistical control for other confounding variables. But such studies
are rare. The only papers of which I am aware are those using what is
called ``amenable mortality'' or ``avoidable mortality.''
The concept of ``amenable mortality'' refers to deaths that are
potentially avoidable/preventable if timely and effective health care
were available. It is used widely in recent decades as one indicator by
which to measure the performance of a health system. According to the
2012 IOM report, Best Care at Lower Cost: The Path to Continuously
Learning Health Care in America, 75,000 deaths might have been
prevented in the United States if States delivered higher quality
care.\32\
---------------------------------------------------------------------------
\32\ National Reserach Council, Best Care at Lower Cost: The Path
to Continuously Learning Health Care in America. Washington, DC: The
National Academies Press, 2013.
---------------------------------------------------------------------------
In 2011, the OECD published a working paper entitled ``Mortality
Amenable to Health Care in 31 OECD Countries: Estimates and
Methodological Issues'' which contained the display below (Figure
1).\33\
---------------------------------------------------------------------------
\33\ Gay, J.G., et al. (2011), ``Mortality Amenable to Health Care
in 31 OECD Countries: Estimates and Methodological Issues'', OECD
Health Working Papers, No. 55, OECD Publishing. Available at http://
dx.doi.org/10.1787/5kgj35f9f8s2-en.
Figure 1 exhibits two estimates of amenable mortality rates, one
developed from the list reported by Nolte and McKee \34\ and the other
by Tobias and Yeh.
---------------------------------------------------------------------------
\34\ Ellen Nolte and C. Martin McKee, ``In Amenable Mortality--
Deaths Avoidable Through Health Care--Progress In The US Lags That Of
Three European Countries,'' Health Affairs 31(9) September 2012: 2114-
22.
---------------------------------------------------------------------------
As the list shows, on this metric the U.S. health system does not
fare particularly well (24th among 31 countries and below the OECD
average), and worse than Canada (11th among 31 countries and well above
the OECD average), Germany (16th among 31 countries) and also above the
OECD average and the UK (19th among 31 countries and above the OECD
average). According to Nolte and McKee's study (p. 2120):
A recent comparison of factors underlying differences in
mortality rates from the leading amenable causes of death in
the United States and the United Kingdom showed that many
Americans failed to obtain recommended treatment for common
chronic conditions and to secure regular affordable
treatment.\32\ Those Americans who were treated according to
best practices achieved outcomes similar to those of their
European counterparts. Factors associated with receiving
appropriate care in the United States included being treated
within the Department of Veterans Affairs and having adequate
insurance.
The VA system is, as noted earlier, a government-run single payer
system with a widely acclaimed health information system, sophisticated
quality measurement tools and integrated health care. As Elisabeth
McGlynn, a leading expert on measuring quality in health care in the
United States and the quality of health care in the VA health system
\35\ has noted:
---------------------------------------------------------------------------
\35\ Steven Mr. Asch, Elizabeth A. McGlynn, Mary M. Hogan, et al.,
Comparison of Quality of Care for Patients in the Veterans Health
Administration and Patients in a National Sample,'' Annals of Internal
Medicine 141, 2004: 938-45. Available at http://www.nadcp.org/sites/
default/files/nadcp/Asch%20et%20al%20AnnalsIntMedQuality_0.pdf.
``You're much better off in the VA than in a lot of the rest
of the U.S. health-care system,'' she said. ``You've got a
fighting chance there's going to be some organized, thoughtful,
evidence-based response to dealing effectively with the health
problem that somebody brings to them.'' \36\
---------------------------------------------------------------------------
\36\ Kristen Gerencher, ``For quality, it's hard to top veterans'
health care,'' The Wall Street Journal Market Watch, June 2, 2010.
Available at http://www.marketwatch.com/story/its-hard-to-top-veterans-
health-care-2010-06-02.
---------------------------------------------------------------------------
f. conclusion
Ultimately, the question of what kind of health system would be in
the best interest of Americans has to be resolved by them through their
political representatives.
Citizens in most nations in the industrialized world have long
enjoyed universal, stable and fully portable health insurance that is
not lost with the job or in retirement. Not all of them use a single-
payer approach to reach that goal. They use a variety of different
approaches.
But single payer systems have shown themselves to be effective in
achieving universal access to health care without breaking either the
Nation's treasury or those of individual households.
In conclusion, I would mention that I have been intrigued by the
views of former Secretary of State and Chairman of the Joint Chief of
Staff and Four Star General Colin Powell on what he believes America
should do about its health-care system going forward.
As told by Alex Lazar of ABC News in his ``Colin Powell Pitches
Single Payer Health Care in U.S.'' (December 9, 2013),\37\ Powell told
an audience about a woman named Anne, who was his firewood supplier,
faced a healthcare scare of her own. Anne had asked Powell to help pay
for her healthcare bills, as her insurance didn't cover an MRI she
needed as a prerequisite to being treated for a growth in her brain. In
addition, Powell's wife Alma recently suffered from three aneurysms and
an artery blockage. As Lazar quotes Powell:
\37\ Alex Lazar, ``Colin Powell Pitches Single-Payer Health Care in
US,'' abcNEWS. December 9, 2013. http://abcnews.go.com/blogs/politics/
2013/12/colin-powell-pitches-universal-health
care-in-us/.
After these two events, of Alma and Anne, I've been thinking,
why is it like this? . . .
I am not an expert in health care, or Obamacare, or the
Affordable Care Act, or whatever you choose to describe it, but
I do know this: I have benefited from that kind of universal
health care in my 55 years of public life. . . .
We are a wealthy enough country with the capacity to make
sure that every one of our fellow citizens has access to
quality health care . . . (Let's show) the rest of the world
what our democratic system is all about and how we take care of
all of our citizens. . . .
I think universal health care is one of the things we should
really be focused on, and I hope that will happen,'' said
Powell. ''Whether it's Obamacare, or son of Obamacare, I don't
care. As long as we get it done. . . .
And I don't see why we can't do what Europe is doing, what
Canada is doing, what Korea is doing, what all these other
places are doing.
Canada, South Korea, and numerous countries in Europe, of course,
are single payer systems.
Senator Sanders. Thank you Ms. Cheng.
We are going to go now to Dr. Rodwin. Victor G. Rodwin is a
Professor of Health Policy and Management at New York
University's Wagner School of Public Service. He has worked his
entire career on studying healthcare systems abroad with a
special focus on France. Professor Rodwin held the Fulbright-
Tocqueville Distinguished Chair at the University of Paris-
Orsay in 2010.
Dr. Rodwin, thanks very much for being with us.
STATEMENT OF VICTOR G. RODWIN, Ph.D., MPH, PROFESSOR OF HEALTH
POLICY AND MANAGEMENT, ROBERT F. WAGNER SCHOOL OF PUBLIC
SERVICE, NEW YORK UNIVERSITY, NEW YORK, NY
Mr. Rodwin. Thank you, Senator Sanders and distinguished
members of the committee. Good morning to all of you watching
on C-SPAN.
My name is Victor Rodwin. I will speak on the French
healthcare system. That system is a model of national health
insurance that provides healthcare coverage to all legal
residents residing in France. It is not, I repeat, it is not an
example of socialized medicine like Cuba. It is also not a
national health service as in the United Kingdom. It is also
not an instance of a government-run health system like our
excellent Veterans Health Administration.
France's national health insurance, in contrast, is an
example of public social security and private healthcare
financing combined with a diverse public-private mix in the
provision of healthcare services.
The French healthcare system reflects three political
values embraced by Americans. Liberalism in the sense of giving
patients free choice of any doctor or any hospital they care to
go to, with no networks, no restrictions.
Second, pluralism. Everybody has a diverse choice. They can
go to fee for service solo practitioners, they can go to group
practices, they can go to outpatient health centers, they can
go to emergency rooms, they can go to public hospitals, private
hospitals, outpatient consultations with specialists in public
hospitals.
A third value is solidarity in the sense of having those
with greater wealth and better health finance services for
those who are less well-off and in poorer health.
Now, in terms of population health, the French outdo us--
and I am embarrassed to say that as an American--hands down.
Look at any indicator you like, life expectancy at birth, they
do better than we do. Infant mortality, they do better than we
do. Female life expectancy at 65, they outlive us. Female life
expectancy at 80 or male life expectancy at 80 years of age
where medical care matters, they outdo us. Disability-adjusted
life expectancy, which takes into account measures of
disability, they outdo us. Years of life lost, we have more
years of life lost. This is not a Republican or Democratic
debate. These are the facts.
But that is not the way to judge a healthcare system
entirely. Surely, a healthcare system reflects these
indicators, but not just the healthcare system. My colleagues
at NYU would still say that we have the best healthcare system
in the world in spite of these indicators. They would argue
that these indicators reflect other things for which they
assume no responsibility: social services, inequality of
income, family policies, which are very strong in France,
maternal and child health programs, all of which are factors
which explain why they have better population health than we
do.
So we have to look at other indicators, and one important
indicator of health system performance is called avoidable
mortality. That is, in a good healthcare system, women should
not die in childbirth, people should not die of tuberculosis,
people should not die of ischemic heart disease, people should
not die of cancers that can be cured. And when we look at that,
I am embarrassed to say, that we come out in the United States
as 19, and the French come out as No. 1. I repeat, No. 1.
That is a fact that cannot be ignored. It must be
addressed. It was written up in ``Health Affairs,'' a reputable
journal. It was confirmed with different measures by the OECD
and it has not received, in my judgment, sufficient discussion.
Another indicator of how well a system is doing, and a
theme of this subcommittee that I know is dear to Chairman
Sanders, is access to primary care. You can talk about primary
care until you are blue in the face, but let us look at the
consequences of whether you receive primary care or not in
different healthcare systems.
We have a very established measure of primary care access.
It is very direct. If people end up in the hospital for
conditions for which you should not have exacerbations, if you
have access to primary care, that is called ``avoidable
hospitalization.'' And on that criterion, avoidable
hospitalization, the rates of avoidable hospitalization are
twice as high in the United States as they are in France. That
is an unfortunate statistic from the point of view of an
American, but that is the way it is.
Lessons that we can draw. I believe that health systems
cannot be transplanted from one country to another, but we can
talk about some issues and I will just tick them off. I will go
over 30 seconds, if you will allow me, Mr. Chairman.
In France, there is no choice of insurance plan. Everybody
is in the same plan for the standardized benefits, but there is
a complete choice of hospital or doctor.
In France, all insurers, and there are more than one, pay
the same price according to nationally set rates. You do not
have a lower price for Medicaid, a higher price for Medicare,
an even higher price for commercials.
In France, there are no physician gatekeepers. Everybody
can go where they like. No one is telling them what network
they can or cannot go in. They do not have to call their
insurance company to get authorization.
In France, there is extensive co-insurance, small, but
there is a voluntary----
Senator Sanders. We are going to have learn more about
France in a few minutes.
[The prepared statement of Mr. Rodwin follows:]
Prepared Statement of Victor G. Rodwin, Ph.D., MPH
Chairman Sanders, Senator Burr, and distinguished members of the
committee, thank you for the invitation to testify on what the United
States can learn from France's health care system.
My name is Victor Rodwin. I am a professor at New York University's
Wagner School of Public Service. I have worked my whole career on
studying health care systems abroad, and have a special interest in
France given my family background and bilingualism. I was honored to
hold the Fulbright-Tocqueville Distinguished Chair at the University of
Paris-Orsay during the spring semester of 2010, and was on sabbatical
leave, in Paris, studying French health policy just 2 years ago.
The French health care system is a model of national health
insurance (NHI) that provides health care coverage to all legal
residents.\1\ It is not an example of socialized medicine, e.g., Cuba.
It is not an example of a national health service, as in the United
Kingdom; nor is it an instance of a government-run health care system
like our Veterans Health Administration. French NHI, in contrast, is an
example of public, social security and private health care financing,
combined with a public-private mix in the provision of health care
services.
The French health care system reflects three political values
embraced by Americans:
1. Liberalism, in the sense of giving patients free choice of
doctors and hospitals;
2. Pluralism, in offering diverse health care delivery options
ranging from private fee-for-service practice, health centers and
outpatient hospital consultations for ambulatory care; and a range of
public, non-profit and for-profit hospitals; and
3. Solidarity, in the sense of having those with greater wealth and
better health finance services for those who are less well-off and in
poorer health.
There are, of course, important differences in the degree to which
these values have influenced the financing and organization of our
respective health systems. Also, France has a unitary, more centralized
parliamentary democracy than our Federal system known for its strong
separation of powers and fragmentation of decisionmaking.
Despite these differences, the French health care system is worthy
of attention by health policymakers, worldwide, for three reasons.
First, France is among those countries that enjoy the highest levels of
population health among wealthy nations. Second, France ranks #1 among
OECD nations on an important indicator of health system performance--
avoidable mortality. Third, the French have easy access to primary
health care, as well as specialty services, at half the per capita cost
(Table 1) of what we spend in the United States.
population health status
Health systems are often compared and ranked, based on their
population's health status. Insofar as access to public health services
and medical care can significantly improve a population's health, this
is a good starting point in evaluating a health system.
Whether one compares life expectancy at birth, life expectancy at
65 years, infant mortality rates, or disability-adjusted life
expectancy at birth, France performs better than the United States
(Table 1). France is also noted for having the highest longevity for
women, after Japan. These indicators, however, are not sufficient to
assess the system's performance because they reflect many other
important determinants of health, e.g., poverty rates (Figs. 1-3);
other socio-economic disparities; maternal and child health programs;
work and family policies; and nutrition. Although the United States
spends more on health care, as a share of GDP, than any other nation,
France spends a significantly higher share of its GDP on social service
programs, particularly family support and employment training programs
(Fig. 4). There is good evidence to suggest that France's government
spending on these programs contributes to its impressive population
health status.
health system performance
France's claim to fame with respect to health system performance is
its top ranking among wealthy OECD nations, based on its success in
averting deaths from a range of curable cancers, pneumonia, ischemic
heart disease, maternal deaths in childbirth, and a host of other
causes of mortality considered to be ``amenable to health care
interventions.'' Avoidable mortality (AM) attempts to capture the
extent to which deaths under the age of 75 years would not have
occurred had the population benefited from access to effective disease
prevention programs, primary care, as well as specialty services.
Based on a comparison of avoidable mortality among 19 OECD nations,
France has the lowest rate (ranks #1) and the United States has the
highest rate (ranks #19).\2\ Moreover, between 1999-2007, the
percentage decline in AM in France (27.7 percent) was higher than in
the United States (18.5 percent).\3\ Based on these findings, Nolte and
McKee estimate that if the United States were to achieve levels of AM
of the three top-performing countries (France, Japan and Australia),
about 101,000 deaths could be avoided.
An exclusive focus on AM does not allow one to disentangle the
consequences of poor access to disease prevention versus primary or
specialty health care services. Thus, it is useful to consider other
indicators that capture the consequences of barriers in access to
primary and specialty care.\4\ Together with my colleagues, Michael
Gusmano (Hastings Center) and Daniel Weisz (International Longevity
Center-USA), we have compared France and the United States along two
other dimensions of health care access. The first is well-established--
hospital discharges for ambulatory care sensitive conditions (ACSC). It
measures hospitalizations for exacerbations of conditions (e.g.,
asthma, diabetes, and hypertension) that are less costly and less
painful to treat in community-based medical settings.\5\ The second
indicator is less well known. It concerns access to specialized cardiac
care for those patients who require revascularization--coronary artery
bypass surgery or angioplasty.
We have found that the rate of ACSC in the United States is almost
twice that of France, whether one examines national-level data or
compares New York City and Paris. This demonstrates that access to
primary care is significantly worse in the United States than in
France, leading to many more hospitalizations that could be avoided if
we improve our health care system.\6\ With respect to cardiac services,
contrary to conventional views that the United States makes available
greater access to life-saving medical technologies than other nations,
we found that after adjusting for the fact that the French have less
heart disease than Americans, our use of revascularization is not as
high--neither for adults (35-64 years) nor for older persons (65+).\7\
This supports the claim that the French health care system provides
relatively easy access to specialized health care services.
Along with access to primary and specialty care, there is another
important dimension of health system performance that merits
attention--satisfaction with the health care system as reported in
comparative surveys not only of the adult population, but also by
chronically ill patients and physicians. Comparisons across Europe
place France among those nations with the highest rates of consumer
satisfaction.\8\ In June 2008, Harris Interactive, France 24 and the
International Tribune collaborated on a survey that placed France at
the top with 55 percent of respondents ``satisfied'' in contrast to the
28 percent in the United States.\9\
Results of the 2008 Commonwealth Fund International Survey of
Sicker Adults are consistent with these positive views of the French
health system.\10\ For example, with regard to ``overall health
system'' assessments, sicker French patients (41 percent), along with
their Dutch counterparts (42 percent), had among the highest rates of
those who felt that ``only minor changes (were) needed.'' Comparable
rates for the United States were considerably lower--20 percent).
Beyond measuring satisfaction, a number of other questions in the
Commonwealth Fund Survey provide further evidence that the French have
far easier access to health care than their American counterparts. For
example, on the question of medical homes--``do you have a doctor you
usually see''--99 percent of sicker adults, in France, answered ``yes''
in contrast to 82 percent in the United States. Finally, the percent of
sicker adults with out-of-pocket expenses over $1,000, in the past
year, was among the lowest in France (5 percent), compared to 41
percent in the United States.
One can safely conclude that the French are generally more
satisfied with the overall structure of their health care system than
Americans. Indeed, health care reform campaigns, in France, typically
assume that the main goal is to preserve the existing system and avert
any changes that would make it resemble that in the United States or
the United Kingdom.\11\ French policymakers assume that their NHI
system is a realistic compromise between Britain's national health
service, which they believe requires too much rationing and offers
insufficient choice, and the mosaic of subsystems in the United States,
which they consider socially irresponsible because of the large share
of the population that remains uninsured, under-insured or even forced
to declare bankruptcy after a serious episode of illness.
lessons from the french health system
Health systems cannot be transplanted from one country to another;
nor should they be. Looking abroad, at best, can inform policy debates
at home. Beyond France's impressive population health status and health
care system performance, there are some distinctive features of the
system that raise important questions for health policy, in general.
Assuming we really want to provide all of our population with access to
quality health services, while also keeping expenditures under better
control, I propose to highlight six of these features because they will
likely contribute to our discussion about what the U.S. health care
system can learn from other countries.
1. There is no choice of insurance plan for the standardized
benefits: The French health system differs from most other European
health systems in its strong resistance to the most recent wave of
reform efforts that have sought to introduce a dose of competition and
market forces within a social context that maintains its commitment to
national solidarity.\12\ In France, American nostrums of unleashing
market forces under the banner of ``consumer-directed health care,''
and selective contracting by private health insurers, have gained
little traction.\13\ French NHI does not allow a choice among health-
insurance plans for the essential benefits covered under the program.
Nor does it allow local health-insurance funds to engage in selective
contracts with ``preferred providers.'' As under our Medicare Program,
all French residents covered under NHI are entitled to seek care from
the 99 percent of French physicians and hospitals that accept NHI. The
competition occurs among health care providers, not among the small
number of insurers to which beneficiaries are assigned based on their
occupation.
2. All insurers reimburse providers according to nationally set
rates: Much like Maryland's all-payer system, in France, all insurers
pay the same price for hospital services. Likewise, all physicians
receive the same reimbursement under a national fee schedule that is
negotiated every year. Approximately one-quarter of all physicians (12
percent of general practitioners) have opted for what is called
``sector 2'' and are entitled balance bill their patients, i.e., to set
fees above the national fee schedule. In these cases, physicians lose
their own health insurance benefits and must pay for their own
insurance like all others who are self-employed. Health centers and
public hospital outpatient departments (where the most prestigious
specialists work) may only charge patients the national rates.
3. There are no physician gate-keepers: Like our Medicare Program,
French NHI allows patients the freedom to consult general
practitioners, specialists and hospitals of their own choosing. There
are no restricted networks, no concept of out-of-network surcharges.
Beginning in 2005, policymakers have imposed a soft gatekeeping system
by requiring French residents to sign up with a primary care doctor
(medecin traitant). It is still easy, however, conditional on a
slightly higher co-insurance payment, to have direct access to a
specialist without a referral.\14\
4. There is extensive co-insurance and voluntary health insurance
coverage: As in the United States, in France, co-insurance (the so-
called ticket moderateur) remains a component of the reimbursement
system. Almost 90 percent of the population have the equivalent of
Medigap insurance in the United States, which offers a wide range of
insurance products covering portions of co-insurance, extra-billing and
supplementary benefits beyond the basic plan (mainly dental and
optometry services). Most of the remaining population has free
voluntary health insurance provided by the NHI fund or the government.
5. Sicker patients have better insurance coverage: In contrast to
Medicare and private insurance in the United States, where severe
illness usually results in increasing out-of-pocket costs, in France,
when patients become severely ill, their health insurance coverage
improves. Although co-insurance and direct payment is symbolically an
important part of French NHI, patients are exempted from both when: (1)
expenditures exceed approximately $100 per month; (2) hospital stays
exceed 30 days; (3) patients suffer from serious, debilitating or
chronic illness (e.g., cancer, heart disease, diabetes . . .); or (4)
patient income is below a minimum ceiling thereby qualifying them for
exemption from co-insurance payments.
6. Parliament sets annual health care expenditure targets: All of
the features noted above operate within a system in which Parliament
approves an annual health care expenditure target for the coming year.
This includes spending targets for specific components of health care
(hospitals, community-based physician services and other sub-sectors).
If hospitals and physicians exceed their targets by billing for higher
than the projected volume of services, prices are negotiated downward
the following year.
Table 1.--Basic Indicators: France and the United States (2011-12)
------------------------------------------------------------------------
France United States
------------------------------------------------------------------------
Demographic and economic
characteristics:
Total population.................. 65,327,700 313,914,000
Percent of population > 65 yr of 17.1 13.2
age (2011).......................
Gross domestic product (GDP) per 39,901.4 49,685.6
capita ($).......................
Health care system:
Heath care expenditures as percent 11.2 17.0
of GDP...........................
Per capita health expenditures in 8,175 4,028.7
$PPPs............................
Public expenditures on health as 8.7 8.3
percent of GDP...................
Practicing physicians per 10,000 33.2 26
population.......................
Physician consultations per capita 6.8 4.1\1\
Acute care bed--days per 1,000 900\1\ 700\4\
population.......................
Acute care beds per 1,000 3.43 2.56\2\
population.......................
Health status:
Infant deaths per 1,000 live 3.9\1\ 6.2\2\
births...........................
Maternal deaths per 100,000 live 8.9\2\ 12.7\5\
births...........................
Life expectancy at birth.......... 82.2 78.7\2\
Female life expectancy at 65 yrs.. 23.8\3\ 20.3\2\
Male life expectancy at 65 yrs.... 19.3\3\ 17.7\2\
Female life expectancy at 80 yrs 11.8 9.7\2\
of age...........................
Male life expectancy at 80 yrs of 9.2 8.2\2\
age..............................
Disability-adjusted life 73.1\3\ 70.0\3\
expectancy at birth..............
Years of life lost per 100,000 3,500\1\ 4,629\2\
population due to death before 70
yrs of age.......................
------------------------------------------------------------------------
\1\ Data are for 2009.
\2\ Data are for 2010.
\3\ Data are for 1999.
\4\ Data are for 2001.
\5\ Data are for 2007.
Note: Table assembled by Christine Lai, based on data from the
Organization for Economic Cooperation and Development (OECD).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
References
1. Rodwin, V. and contributors, Universal Health Insurance in
France: How Sustainable? Essays on the French Health Care System.
Washington, DC: Embassy of France, 2006; Chevreul K, et al., France:
Health System Review. Health Systems in Transition, 2010; 12(6): 1-291;
Tabuteau, D. and Rodwin, V. A la sante de l'Oncle Sam. Paris: Jacob-
Duvernet, 2010.
2. Nolte, E. and M. McKee. Measuring the Health of Nations:
Updating an Earlier Analysis. Health Affairs. 2008; 27(1):58-70.
3. Nolte, E. and M. McKee. In Amenable Mortality--Deaths Avoidable
through Health Care--Progress in U.S. Lags that of 3 European
Countries. Health Affairs. 2012; 31(9):2114-22.
4. Gusmano, M., Rodwin, V. and Weisz, D. Health Care in World
Cities. Baltimore. Johns Hopkins U. Press, 2010.
5. Millman, M. (ed.). Access to Health Care in America. Committee
on Monitoring Access to Personal Health Care Services, Institute of
Medicine. Washington, DC: National Academy Press; 1993; The Agency for
Healthcare Research and Quality (AHRQ) currently devotes part of its
efforts to tracking access to primary care by examining rates of ACSC.
Likewise, the Commonwealth Fund monitors ACSC as a measure of access
across States.
6. Gusmano, M. Rodwin, VG and Weisz, D. ``Beyond `US' and `Them'
'': Access Dimensions of Health System Performance in the U.S., France,
Germany and England.'' International Journal of Health Services (44)3,
2014; Gusmano, M. Rodwin, V. and Weisz, D. Hospitalization for
Ambulatory-Care Sensitive Conditions (ACSC) in Ile de France: A view
from across the Atlantic. Revue Francaise des Affaires Sociales (3),
2013.
7. Gusmano, MK, Das, D., Rodwin, VG and Weisz, D. A New Approach to
the Comparative Analysis of Health Systems: Invasive Treatment for
Heart Disease in the U.S. France and their two World Cities. Health
Economics, Policy and Law. (2): 73-92. 2007.
8. Countries Which Europeans Admire for Their Systems of
Government, Quality of Life, Environment, Economies and Health Care
Systems, 2007, HI Europe, (Available at: http://www.prnewswire.com/cgi-
bin/stories.pl?ACCT=104&STORY=/www/story/06-29-2004/
0002202084&EDATE=#).
9. Harris Interactive /France 24/International Herald Tribune
survey, June 2, 2008. See Harris Interactive News Room--Western
European and U.S. Adults Tear Down this Health Care System!
10. Schoen, C. et al. In Chronic Condition: Experiences of Patients
with Complex Needs in Eight Countries. Health Affairs. Doi.10.1377,
2008.
11. Rodwin, V. The Health Care System Under French National Health
Insurance: Lessons for Health Reform in the United States. American
Journal of Public Health, January (93)1; 2003.
12. Oliver, A., Mossialos, E., and Maynard, A., eds. Analysing the
Impact of Health System Changes in the EU Member States. Special Issue
of Health Economics (14) 51, September 2005.
13. Le Pen, C. and Rodwin, VG. Health Care Reform in France: The
Birth of State-Led Managed Care. New England J. of Medicine.
351(2):2259-62.
14. Dourgnon, P. and Naiditch, M. The preferred doctor scheme: A
political reading of a French experiment of gatekeeping. Health Policy
94. 2010: 129-34.
Senator Sanders. Senator Murphy, did you want to make a
brief opening remark? No? OK.
Let us go to Dr. Yeh, if I am pronouncing your name
correctly. Forgive me if I am not. Dr. Yeh is a professor at
the School of Public Health, Tzu-Chi University in Taiwan, and
we very much appreciate your being with us today. Just speak
closely into that microphone and tell us a little bit about
what goes on in Taiwan.
STATEMENT OF CHING-CHUAN YEH, M.D., MPH, FORMER MINISTER OF
HEALTH FOR TAIWAN, PROFESSOR, SCHOOL OF PUBLIC HEALTH, COLLEGE
OF MEDICINE, TZU-CHI UNIVERSITY, HUALIEN CITY, TAIWAN
Dr. Yeh. Chairman Sanders, Senators, and distinguished
members of the committee.
Thank you for inviting me to testify here. My name is
Ching-Chuan Yeh. I am the professor at the Tzu-Chi University,
but I was the founding chief of our National Health Insurance
Administration in 1995 to 1998. That is 19 years ago, and I was
the Minister of Health in Taiwan.
Taiwan established the universal national health insurance
in 1995. Currently, 99.6 percent of population enrolls in this
program. The other 0.4 percent is they have citizenship, but
stay abroad; they are not covered.
Taiwan's NHI program is a single-payer system and has a
large single risk pool. Before that, we had 12 different social
programs, strong and weak programs, and we merge into one
single pool. That enabled us to have cross-subsidization among
the rich and poor, the well and the sick.
Studies show that the premium contribution compared to the
health resources utilized are favorable to the low and middle-
low income.
Having a single-payer system is the main reason for our
efficient services, and also how at the low prices of our
healthcare we can achieve. We have a private, not-for-profit
delivery system and very highly competitive providers enable us
to have efficient service.
We contract 100 percent of the hospital in Taiwan, and 93.5
percent of the private practitioner ensure if they have the
car, they can go anywhere, any hospital, any private
practitioner to seek their advice. And that is a level that is
very easy and equal access to the system.
And single insurance administration have the benefit of
very low administrative cost, which is only 1.15 percent of the
total NHI spending. And people enjoy complete free choice of
provider, and providers in Taiwan must be mindful of their
patient's demand to stay competitive. Our satisfaction rate
after 2 years of the implementation, it is always between 70 to
80 percent.
We have a national fee schedule, uniform fee schedule. So
because the hospital and the provider can only compete on
quality instead of price competition, and patients who carry
their insurance card, can go to any provider if they are not
satisfied with their quality of services. Basically, there are
no waiting lists at all, except for a few well-known medical
institutes or well-known doctors. And rationing is stopped by
provider competition and efficiency of our services.
In 2012, our life expectancy, our infant mortality, our
maternal mortality, and the sum of initial indicators, were
much better than United States. Although we spend only one-
sixth of the U.S. dollar, if PPP adjusted, it is one-fourth of
the U.S. dollar we spend. But we are doing better than the
United States.
The last thing I wish to mention is our IT system, our
Health Information System. Everyone has this card and the last
six visits are recorded in this card, but actually, all our
providers submit their data.
We are on the way to develop a cross-system EMR. And we
expect to accomplish a lifelong e-record for everyone in the
next few years.
I think my time is up. Thank you.
[The prepared statement of Dr. Yeh follows:]
Prepared Statement of Ching-chuan Yeh, M.D., MPH
universal coverage
Taiwan established universal national health insurance in 1995,
bringing nearly 40 percent (about 9 million) uninsured under the
umbrella of national health insurance (NHI). Before that, there were 12
different social health insurance and health service programs covering
a population of 12 million. Currently, 99.6 percent of the population,
about 23 million people, is enrolled in the NHI program. Taiwan is the
only country in the last 30 years to reach universal coverage and a
single payer system at the same time. Nineteen years of experience with
national health insurance have produced important results that other
countries might find of interest.
equity
Taiwan has been one of the most egalitarian health systems in the
industrialized world. Access to health care is an inalienable right in
our constitution. Residents living in remote mountainous areas and
offshore islands, and the poor, the disabled, the aged get pretty much
the same access and health care as anyone else. A single-payer system
has a single risk pool, since everyone is mandated to enroll. This
enables cross-subsidization among diverse groups with not only
different socioeconomic status but also different health status.
Studies show that the premium contribution compared to the health
resources utilized are favorable to the low and middle-low income
classes. Of course, this is the nature of a social health insurance
program. Also, health care costs are much lower compared to most OECD
[Organization for Economic Cooperation and Development] countries.
National health spending grew from the pre-NHI 3-year average of 4.87
percent of gross domestic product (GDP) to only 6.62 percent in 2012.
transition period
By the end of 1995, 10 months after NHI launched, only 92.3 percent
of our population enrolled in the new program, and increased to 96.0
percent in 1996. In 2002, it finally reached 98 percent, the target we
set in the planning stage. And now, 99.6 percent of our citizens
covered by the NHI.
For the first 2 years, the percentage of health expenditure to GDP
increased rapidly from 4.87 percent to 5.36 percent, then stabilized
and gradually increased from 5.36 percent in 1996 to 6.62 percent in
2012.
The general public has been very satisfied with the NHI--although
in the first half year of inception, satisfaction rates were as low as
25-40 percent, but by the end of the first year they rose to 60
percent, and after the end of the second year, they have always been
between 70 and 80 percent up to the present.
single-payer system
Having a single-payer system is the main reason for our efficient
services and also the low prices for health care we can achieve.
Private delivery and highly competitive providers enable us to have
efficient health services. The NHI Administration's contract with all
of the hospitals and most of the private practitioners enable the
insured to have an easy and equal access to health services. In
addition, the single payer wields monopsonistic power in procuring
services and products--hence low prices for health care.
A single insurance administration also has the benefit of a very
low administrative cost, which was only 1.15 percent of total NHI
spending in 2012. Although there is no choice of insurers, people enjoy
complete free choice of providers. The latter compels the providers to
be competitive and efficient. Doctors and hospitals must achieve very
high productivity to survive. Providers in Taiwan must be mindful of
patients' demands to stay competitive, and they do compete for
patients. The NHI Administration set a uniform national fee schedule
for all the providers. Price competition is limited to those services
not covered by the NHI program. It is quality competition in nature,
not price competition; but it certainly is competition.
Furthermore, the administration of the single-payer system is
simple, as there is only one set of rules for everyone, whether it is
regarding claim forms, clinical protocols, quality indicators, fee
schedule, etc. The administration costs of hospitals and other
providers are also much lower than those of a multi-insurer system.
nhi benefits
NHI benefits are comprehensive: inpatient and outpatient care,
drugs, dental care, traditional Chinese medicine, kidney dialysis,
organ transplantation, etc. Dental prosthesis, dentures, cranes,
wheelchairs, eyeglasses, cosmetic surgery, special nurses, long-term
care, nursing home, etc. are not in the benefits list. Patients have to
pay minimum co-payments either in hospitalization or outpatient
services. The co-payment rates range from 5-20 percent for different
services, and the average actual co-payment rate is 8 percent of the
health costs because of the waiver scheme for serious illness, such as
cancer, major operations, rare diseases, etc.
Patients stay in a single room and room with two beds must pay an
extra room charge. About 60-75 percent of hospital beds are 3 and more
beds in one room that are free of any room charge.
On average, hospitals received 80-85 percent of their revenues from
the NHI Administration. The other 15-20 percent is from co-payments and
other non-benefits health services.
public satisfaction
The NHI is the most successful public policy in Taiwan. The general
public has been very satisfied with the NHI. One reason for the high
satisfaction is that premium and co-payment rates are low. The premium
rate is 4.91 percent of the payroll income, and total national health
spending is only 6.62 percent of GDP, of which the NHI itself is 4
percent of GDP.
Easy accessibility is another reason. NHI Administration contracts
with 100 percent of hospitals and 93.5 percent of private practitioners
in Taiwan (most of the non-contract practitioners are dentists, doctors
of Chinese medicine and aged doctors). Free choice of providers is the
key to the easy and equal access of health care.
Patients can carry the equivalent of cash as represented by their
insurance cards to any provider of care, not just to a smaller network
of providers, as under the U.S. private insurance system. Basically,
there are no waiting list at all except for a few well-known medical
centers and well-known doctors.
health performance and service quality
Some critics say at such low fees we must beget problems with our
service quality. However, our life expectancy is comparable to that of
the developed world. In 2012, it was 79.4 years old; for males 76.1,
and for females 83.0. Taiwan's infant mortality rate is as low as 3.7
per thousand, maternal mortality was between 5.0 to 8.5 per 100,000 in
the years from 2005 to 2012. Both of these rates are comparable to the
developed world.
Before NHI, life expectancy increased 1.8 years from 1986 to 1996,
and after NHI, it improved 2.9 years from 1996 to 2006. Studies show
that life expectancy improved more for low-ranked health classes.
As for the clinical service performance, cervical cancer mortality
drop 60 percent since NHI was launched. Stage-specific cancer survival
rates are similar to developed countries, but this is not true with
regard to the overall 5 years' survival for colon, breast, lung and
oral cancer. That is due to the lack of preventive services and
screening, not to the fact that our treatment is inferior. Fortunately,
since 2009, the Ministry of Health has designated a special sum from
the tobacco health tax revenue solely for screening of three major
cancers in Taiwan: colon, oral, and breast. Of course, another part of
the budget is designated for an antismoking campaign.
As for the survival after organ transplantation, we sometimes do
better than the United States. For example, because we do more liver
transplantation in Taiwan, we have much better outcomes than does the
United States. Heart and kidney transplantation results are also
comparable to the United States. But since we rarely do lung or heart-
lung transplants, our outcomes are much worse. Survival of the end
stage renal failure is also comparable to OECD countries.
premium increase
In its 19-year history, the NHI Administration only raised the
premium rate two times: from 4.25 percent (of the payroll) to 4.55
percent in 2002, and to 4.91 percent in 2012. The Ministry of Health
started a tobacco health tax in 2000 that gives NHI an additional 2
percent of the total NHI revenue. In the year 2006 and 2009, the
Ministry of Health raised the tobacco health tax again to yield more
extra revenue (about 6 percent of total revenue now) for the NHI.
Before 2012, the premium collection was based on payroll income
alone. In the year 2013, NHI Administration added another 2 percent of
the non-payroll income to the premium base for the NHI as an additional
source of funding. That is another 6 percent of the total revenue of
NHI.
collection of premiums
The NHI's total premium revenue comes from three sources:
government (36 percent), which will not default on premiums; employers
(26 percent); and the public (38 percent). The NHI Administration is
good at collecting premiums from the public. When people don't pay
premiums on time, they send notices to them immediately. Our citizens
are quite law-abiding, so the compliance rate is very high. The ``bad
debt rate'' is just around 0.9 percent in 2011.
The government pays 100 percent of the premiums for low-income
households--currently 1 percent of the population--and extends
interest-free loans to the near-poor--2 percent of the population.
Since 2009, the Ministry of Health has raised the tobacco tax from the
NT$10 per pack to NT$20 per pack and has used part of the cigarette
health tax revenue as a subsidy for the near-poor.
sectorial global budgets
Taiwan has used sectorial global budgets to control health spending
successfully. Health policy experts generally believe that such an
approach can be useful in the short run, to break an upward trend in
health spending. But with more than 15 years of practice, Taiwan has
confirmed that the global budget approach is not as bad as people
imagine. We have five sectorial global budgets under one big overall
global budget for the whole system: hospital, primary care, dental,
traditional Chinese medicine, and kidney dialysis. Our hospital global
budget includes hospital outpatient ambulatory care, and that part is
almost 50 percent of the total cost of any hospital. So far this system
has worked, even if not perfectly. Shifting patients from inpatient to
outpatient care is effortless because both are under the same hospital
global budget.
new drug adoption
Taiwan spends roughly 25 percent of the NHI budget on drugs.
However, multinational pharmaceutical companies often allege that
prices paid by the NHI are too low. However, the NHI introduces 40 to
50 new drugs every year. So spending for new drugs per total NHI
expenditure continues to rise. About 1 percentage of the 3-5 percent
annual growth in spending of the NHI is for new drugs. Indeed, there
are some delays in coverage for new drugs and new technologies.
Adoption of new technology, including drugs, is often delayed by 2 to 5
years after adoption by the United States.
pay for performance
We have five Pay for Performance (P4P) programs using the disease
management approach--diabetes, breast cancer, asthma, tuberculosis, and
hypertension; other programs are based on fee-for-service or case
payment. Diabetes management and tuberculosis control are relatively
successful because there are good indicators to measure outcomes. For
example, there is HbA1c for diabetes. Breast cancer P4P is considered
so-so up to this point. There is no evidence as yet that P4P for asthma
has made a big impact. Overall, however, the budget impact of these
initiatives is still small. We need to take a much more aggressive
approach to disease management. For that we need to overhaul our
payment system, which is still largely based on fee-for-service payment
to providers.
health it
The NHI Administration issues every insured a credit card--size IC
card for accessing health care. As all providers in Taiwan submit
claims electronically based on the patient records they keep, we can do
very detailed profiling of both patients and providers. All the data in
our health IT system can be linked, so that we can analyze any data we
choose to know about patients, their utilization, providers, and so on.
We have complete profiles on utilization by patients' income level,
geographic location, number of visits, number of hospitalizations, etc.
Thus, we are able to monitor our health system almost in real time.
At present, most hospitals have electronic medical records (EMRs)
within their facilities. We are on the way to develop cross-system
EMRs, and expect to accomplish this in the next few years. As there is
a single insurer, one single standard has already been set up. We can
go to a complete life-time e-record system within a few years.
An imaging switching center using a Picture Archiving and
Communication System [PACS] already functioned for years. All imaging
done by the providers is electronically transferable within the entire
Taiwan health system. Telemedicine for mountainous aboriginal
communities and off-shore islands is a routine practice now.
Our policy decisions usually are based on quantitative evidence
generated by our IT system. Taiwan invested heavily up front on health
IT, and we have reaped the benefits of our powerful IT system ever
since. The savings our IT system has generated have paid for the setup
cost of that system many times over.
key to the successful implementation
First, we have a team of competent technocrats and dedicated
leaders who can devise sound policy and then implement it. Second, in
the initial stage, we had a reasonably stable political system. Third,
we have a physical infrastructure capable of delivering on health
policy. Fourth, we set up a good health IT system at the very
beginning, to have the data capacity as a basis for policymaking.
In addition, our country established NHI during a good economic
period. It should be noted that there are associated cost increases in
the initial few years in establishment of national health insurance.
Fortunately, Taiwan had good economic growth for many years prior to
and after the NHI was launched; so we were able to absorb the cost
increases associated with its establishment.
Senator Sanders. Thank you very much.
Senator Roberts, did you want to make a brief opening
remark?
Senator Roberts. No, sir. In the interest of time, I do
have a question of the witnesses, but I will wait.
Senator Sanders. OK. We will get to that.
Senator Roberts. Thank you, Mr. Chairman.
Senator Sanders. Thank you very much.
Senator Burr, I think you have a panelist you want to
introduce.
Senator Burr. Thank you, Mr. Chairman, and I thank my
colleagues.
I have the pleasure of introducing to you today, Ms. Sally
Pipes, president, CEO, and Taube Fellow in Health Care Studies
at the Pacific Research Institute in San Francisco, CA. Sally,
thanks for joining us today, to explore what we might learn
from other countries around the world to improve our healthcare
system here at home.
As a native Canadian and naturalized American, Ms. Pipes
has a unique understanding of how single-payer systems actually
operate. Congratulations on becoming an American citizen. We
are pleased to welcome you and look forward to hearing about
your personal experiences and professional analysis of single-
payer systems.
The microphone is yours, Sally.
STATEMENT OF SALLY C. PIPES, PRESIDENT AND CEO, PACIFIC
RESEARCH INSTITUTE, SAN FRANCISCO, CA
Ms. Pipes. Thank you, Chairman Sanders and Ranking Member
Burr for inviting me to testify today.
I am Sally Pipes, president of the Pacific Research
Institute, a think tank based in San Francisco that is
dedicated to advancing opportunity for all through market-based
solutions.
I am going to focus my remarks today on Canada's single-
payer Medicare-for-all system, a system with which I am
extremely familiar, as I am, as Senator Burr said, a native of
Canada.
Many healthcare reform advocates point to Canada as a
shining example of advantages of a State-run single-payer
system. Canada is, in fact, one of only a handful of countries
with a bona fide single-payer system. Government officials set
the budget for what can be spent on healthcare every year.
Provinces administer their own insurance programs with
additional funding from the Federal Government. Private
insurance is outlawed in many Provinces. This is the sort of
system that many are calling for here in the United States.
They want to abolish private insurance and leave Government as
the sole source of health coverage. But the Canadian system is
one that would not be suitable for America.
Officials severely restrict patient access to care, and
those restrictions saddle patients and their families with
massive monetary and nonmonetary costs. Or to frame this in
terms of the title of this hearing, if you are looking for
lessons from healthcare systems abroad, Canada shows us exactly
what not to do.
Let us start with wait times. In order to keep a lid on
healthcare costs, Canadian officials have to ration care.
According to Canada's Fraser Institute, the average Canadian
has to wait over 18 weeks from seeing a primary care doctor to
getting treatment by a specialist. And wait times are only
growing. The 18-week delay today plaguing Canadians is 91
percent higher than it was in 1993. At any given time, 17
percent of the Canadian population, 5 million out of 35
million, are on a waiting list to get primary care.
There is also a severe shortage of essential medical
equipment. For instance, Canada ranks 14th out of 23 OECD
countries in MRI machines per million people with an average
wait time at just over 8 weeks.
These lengthy waits have profound consequences not just for
patients who are suffering, but the rest of society. When
people are not treated in a timely fashion, their conditions
worsen and their health deteriorates. Their productivity drops,
and they may have to stop work entirely, and they often end up
requiring significantly more expensive and extensive
treatments, which are costly for the entire system.
One estimate from the Centre for Spatial Economics found
that wait times for just four key procedures, MRI scan, and
surgeries for joint replacement, cataracts, and coronary artery
bypass grafts cost Canadian patients $14.8 billion every year
in excess medical costs and lost productivity.
Once Canadian patients finally receive medical treatment,
it is far from free. About 68 cents out of every dollar in
Government revenue goes to healthcare spending. But the typical
Canadian family spends about $11,300 in taxes every year just
to finance the public system.
Technically, every Canadian has access to needed healthcare
services. In 2005, Madam Chief Justice Beverly McLaughlin of
the Canadian Supreme Court ruled in favor of overturning the
ban on private health coverage in Quebec. She wrote that,
``Access to a waiting list is not access to healthcare.''
Those Canadians who can afford to opt out, often come to
the United States, about 42,000 Canadians come every year to
this country to pay out-of-pocket. Danny Williams, former
Premier of Newfoundland in 2010, flew to Florida for heart
valve surgery. When questioned by the press about that
decision, he said,
``It is my heart. It is my health. It is my choice. I
did not sign away the right to get the best possible
healthcare for myself when I entered politics.''
Brian Day, an orthopedic surgeon who runs an illegal clinic
in Vancouver said, ``A person can get a hip replacement for
their dog in less than a week. For a Canadian, it is over 2
years.''
My own mother died from colon cancer because she had to
wait. She could not get a colonoscopy. When she had lost 35
pounds 4 months later, she entered the hospital, had a
colonoscopy, died 2 weeks later from metastasized colon cancer.
How much longer could we have had my mother if she had had
prompt treatment?
There is an example in the United States of a single-payer
system. It is the VA, and there is a lot of dissatisfaction
with waiting lists. I think this is no way for us to run a
healthcare system, a single-payer system. We need a new way to
inject genuine market competition and choice into our
healthcare system. We need to scale back top-down controls by
Government.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. Pipes follows:]
Prepared Statement of Sally C. Pipes
Thank you, Chairman Sanders and Ranking Member Burr, for
inviting me to testify today. I am Sally C. Pipes, the
president, CEO, and Taube Fellow in Health Care Studies at the
Pacific Research Institute, a non-profit think tank based in
San Francisco that's dedicated to advancing opportunity for all
people through free-market policy solutions.
I'm going to focus my remarks on Canada's single-payer,
``Medicare-for-All'' system--a system with which I am
intimately familiar, as a native of Canada.
Many healthcare reform advocates, political pundits, and
policymakers point to Canada as a shining example of the
advantages of a State-run, single-payer healthcare system.
Canada is, in fact, one of only a handful of countries with
a bona fide single-payer system. Government officials set the
total budget for what can be spent on health care every year.
Provinces and territories administer their own insurance
programs, with additional funding from the Federal
Government.\1\ Private insurance is outlawed in several
provinces.\2\
---------------------------------------------------------------------------
\1\ http://www.commonwealthfund.org/ /media/Files/Publications/
Fund%20Report/2013/Nov/
1717_Thomson_intl_profiles_hlt_care_sys_2013_v2.pdf.
\2\ http://www.theglobeandmail.com/life/health-and-fitness/whos-
fighting-for-private-health-insurance-in-canada/article4568340/.
---------------------------------------------------------------------------
This is the sort of system that many are calling for here
in the United States. They want to abolish private insurance
and leave government as the sole source of health coverage.
But the Canadian system is one that would not be suitable
for America. Officials severely restrict patient access to
care. And those restrictions saddle patients and their families
with massive monetary and non-monetary costs. Or, to frame this
in the terms of the title of this hearing: If you're looking
for lessons from healthcare systems abroad, Canada shows us
exactly what not to do.
Let's start with wait times. In order to keep a lid on
healthcare costs, Canadian officials have to ration care. And
when the government rations any product, including health care,
the inevitable result is scarcity.
The average Canadian must withstand a lag between his
initial request for medical services and his actual treatment
that the typical American patient would find totally
unacceptable.
According to the Canada-based Fraser Institute, the average
Canadian patient has to wait over 18 weeks between referral
from a general practitioner--the equivalent of a primary-care
doctor here--and elective treatment from a specialist.\3\
---------------------------------------------------------------------------
\3\ https://www.fraserinstitute.org/uploadedFiles/fraser-ca/
Content/research-news/research/publications/waiting-your-turn-2013.pdf.
---------------------------------------------------------------------------
Let me repeat that: Right now, the average Canadian getting
an elective medical service has to wait 4\1/2\ months between
being recommended for treatment by their primary care physician
and actually receiving it.
``Elective treatment'' doesn't mean Botox or a tummy tuck.
We're talking about the likes of orthopaedic surgery and
neurosurgery.
And wait times are only growing longer. The average lag
period has been on a steady upward trajectory in recent years.
The 18-week delay plaguing Canadians today is 91 percent longer
than the average wait time in 1993.\4\
---------------------------------------------------------------------------
\4\ https://www.fraserinstitute.org/research-news/news/
display.aspx?id=19709.
---------------------------------------------------------------------------
This problem isn't confined to specialty care. At any given
time, about 17 percent of the Canadian population--roughly 5
million people out of a total population of 35.1 million--is
waiting to gain access to a primary care doctor.\5\
---------------------------------------------------------------------------
\5\ Sally notes.
---------------------------------------------------------------------------
There's also a severe shortage of essential medical
equipment. For instance, Canada ranks 14th among 22 OECD
countries in MRI machines per million people,\6\ with an
average wait time to use one at just over 8 weeks.\7\ And it
ranks a dismal 16th of 23 OECD countries in CT scanners per
million people,\8\ with an average wait time over 3.6 weeks.\9\
---------------------------------------------------------------------------
\6\ http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/
research-news/research/publications/value-for-money-from-health-
insurance-systems-2012.pdf.
\7\ https://www.fraserinstitute.org/uploadedFiles/fraser-ca/
Content/research-news/research/publications/waiting-your-turn-2013.pdf.
\8\ http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/
research-news/research/publications/value-for-money-from-health-
insurance-systems-2012.pdf.
\9\ https://www.fraserinstitute.org/uploadedFiles/fraser-ca/
Content/research-news/research/publications/waiting-your-turn-2013.pdf.
---------------------------------------------------------------------------
These lengthy waits have profound consequences not just for
patients who are suffering but for the rest of society. When
people aren't treated in a timely fashion, their conditions
worsen and their health deteriorates. Their productivity drops,
or they have to stop working entirely. And they often end up
requiring significantly more expensive and extensive
treatments, which are costly for the overall healthcare system.
One estimate from the Center for Spatial Economics found
that wait times for just four key procedures--MRI scans and
surgeries for joint replacement, cataracts, and coronary artery
bypass grafts--cost Canadian patients $14.8 billion every year
in excess medical costs and lost productivity.\10\
---------------------------------------------------------------------------
\10\ https://www.fraserinstitute.org/research-news/news/
display.aspx?id=20470.
---------------------------------------------------------------------------
Once Canadian patients finally receive medical treatment,
it's far from ``free.'' The Canadian government heavily taxes
its citizens to pay for their single-payer system. About 68
cents out of every dollar in government revenue goes to
covering healthcare costs.\11\
---------------------------------------------------------------------------
\11\ https://www.fraserinstitute.org/research-news/news/
display.aspx?id=19709.
---------------------------------------------------------------------------
Yes, patients may only have to pay a nominal fee at the
time services are rendered. But the typical Canadian family
pays about $11,300 in taxes every year just to finance the
public health insurance system.\12\
---------------------------------------------------------------------------
\12\ https://www.fraserinstitute.org/research-news/news/
display.aspx?id=19709.
---------------------------------------------------------------------------
And that price is going up. The Fraser Institute estimates
that over the last decade, the healthcare tax burden for the
average Canadian family has increased one-and-a-half times
faster than the average income.\13\
---------------------------------------------------------------------------
\13\ https://www.fraserinstitute.org/research-news/news/
display.aspx?id=20232.
---------------------------------------------------------------------------
That's unsustainable.
Technically, every Canadian has access to needed healthcare
services. But, in reality, long waits and the scarcity of
medical technologies leave many untreated. What good is
government-provided insurance if you have to wait months to be
treated for a severe condition?
In 2005, Madam Chief Justice Beverly McLachlin of the
Canadian Supreme Court made precisely that point in a ruling
overturning the ban on private health coverage in Quebec.
Justice McLachlin wrote that ``access to a waiting list is not
access to health care.'' \14\
---------------------------------------------------------------------------
\14\ http://www.globalhealthrights.org/wp-content/uploads/2013/02/
SC-2005-Chaoulli-v.-Quebec-Attorney-General.pdf.
---------------------------------------------------------------------------
That's exactly right. Her colleague at the time, Madam
Justice Marie DesChamps, who retired in 2012, went even
further: ``The idea of a single payer system without waiting
lists is an oxymoron.''
Those Canadians who can afford to do so have simply opted
out of their healthcare system. An enormous number jump the
queue for care in their native land and travel to the United
States to receive medical attention. In 2012, over 42,000
Canadians crossed the border to get treated.\15\
---------------------------------------------------------------------------
\15\ http://www.fraserinstitute.org/uploadedFiles/fraser-ca/
Content/research-news/research/articles/leaving-canada-for-medical-
care-2012.pdf.
---------------------------------------------------------------------------
Not coincidentally, many of these line-jumpers are part of
Canada's political elite. The Canadian healthcare system may be
good enough for their constituents, but it's apparently not
good enough for them.
In 2010, the premier of Newfoundland, Danny Williams, flew
to Florida for heart valve surgery. When questioned about the
decision, he said, ``This was my heart, my choice and my
health. I did not sign away my right to get the best possible
health care for myself when I entered politics.'' \16\
---------------------------------------------------------------------------
\16\ http://voices.washingtonpost.com/checkup/2010/02/
canadian_premier_has_heart_sur
.html.
---------------------------------------------------------------------------
Millions of ordinary Canadians would surely love to have
that option.
Canadian Member of Parliament Belinda Stronach spent her
career vigorously opposing any privatization of the national
health system. But when she was diagnosed with breast cancer in
2007, she flew to Los Angeles for surgery--and paid the bill
out-of-pocket.\17\
---------------------------------------------------------------------------
\17\ http://news.nationalpost.com/2012/11/02/healing-with-dignity-
belinda-stronach-aims-to-highlight-breast-cancer-surgery-option-
unavailable-to-canadian-women/.
---------------------------------------------------------------------------
And wait times aren't unique to Canada. Other government-
dominated healthcare systems suffer from them, too. A recent
survey from Britain's Daily Mail shows that one in every three
British citizens can't get a same-day appointment with their
primary care doctor. One in five fail to get a consultation
within 7 days.\18\
---------------------------------------------------------------------------
\18\ http://www.dailymail.co.uk/news/article-2570597/Three-week-
wait-doctor-Millions-patients-denied-prompt-appointment-GP.html.
---------------------------------------------------------------------------
Canadians are getting fed up. They know their system isn't
all it's cracked up to be. Indeed, Anne Doig, former head of
the Canadian Medical Association, has called the system
``sick'' and ``imploding.'' \19\ Dr. Brian Day, an orthopedic
surgeon in Vancouver who runs the private but illegal Cambie
Clinic, pointedly quipped to the New York Times that Canada is
a country where a dog can get a hip replacement in less than a
week, but his owner would have to wait 2 years.\20\
---------------------------------------------------------------------------
\19\ http://www.youtube.com/watch?v=igI5wFIA3ss.
\20\ http://www.nytimes.com/2006/08/23/world/americas/
23canada.html.
---------------------------------------------------------------------------
I've seen the failures of Canada's system firsthand.
A few years ago, my mother suffered from severe stomach
pain and suspected that she might have colon cancer. Her
primary-care doctor ruled out that possibility following an X-
ray. When she asked about getting a colonoscopy, she was told
that she was too old; there were too many younger people with
serious symptoms who were already on a 6-month waiting list for
the test.
Within 4 months, she had begun hemorrhaging and lost 35
pounds. After 2 days in the emergency room and two in a
``transit lounge,'' she finally got a colonoscopy. Sure enough,
she had colon cancer. She died 2 weeks later.
Who knows how much more time we could have had with her, if
her doctor had been committed to treating her cancer early on?
Here in the United States, there are some limited, Canada-
style single-payer experiments underway. The Veterans
Administration's health system is the most notable.
But the VA system suffers from exactly the same costly
problems as the Canadian one. Hundreds of thousands of veterans
are currently waiting to see a doctor for a disability
determination.\21\ Patients seeking acute mental health
services still suffer weeks-long waits.\22\ And according to
CNN, at least 19 veterans have died because of treatment delays
in VA hospitals.\23\
---------------------------------------------------------------------------
\21\ http://news.medill.northwestern.edu/chicago/
news.aspx?id=228642.
\22\ http://www.usatoday.com/story/news/nation/2013/11/04/veterans-
mental-health-treatment/3169763/.
\23\ http://www.coburn.senate.gov/public//
index.cfm?a=Files.Serve&File_id=6b44c3eb-fc40-493c-ab42-a91274c8e3d0.
---------------------------------------------------------------------------
I urge the committee to resist calls to bring America
closer to a single-payer system. Canada shows us what's in
store if we follow its lead: rationing, long waits, poor
quality of care, dangerous scarcities of vital medical
technologies, and unsustainable costs.
That's no way to run a healthcare system.
Instead, we need a renewed focus on injecting genuine
market competition and choice into the health system. We need
to scale back top-down controls on treatment. And doctors need
to be empowered to customize care to individual patients.
Thank you for your time. I look forward to answering your
questions.
Senator Sanders. Thank you very much, Ms. Pipes.
It turns out we have another Canadian with us as well. Our
fifth witness is Dr. Danielle Martin, a primary care family
physician actively involved in practice at Women's College
Hospital in Toronto, Canada where she also holds an
administrative leadership position as vice president of Medical
Affairs and Health System Solutions.
Dr. Martin, thank you very much for being with us.
STATEMENT OF DANIELLE MARTIN, M.D., MPP, VICE PRESIDENT MEDICAL
AFFAIRS AND HEALTH SYSTEM SOLUTIONS, WOMEN'S COLLEGE HOSPITAL,
TORONTO, CANADA
Dr. Martin. Chairman Sanders, Ranking Member Burr,
distinguished committee members.
Thank you for inviting me to address you today.
My name is Danielle Martin. As a practicing physician and
vice president, Medical Affairs and Health System Solutions at
Women's College Hospital, I have daily, firsthand experience
with the Canadian single-payer system. In addition to my
clinical training, I also hold a Master's in Public Policy from
the University of Toronto where I am currently an assistant
professor.
I do not presume to claim today that the Canadian system is
perfect or that we do not face significant challenges. The
evidence is clear that those challenges do not stem from the
single-payer nature of our system; quite the contrary. Working
within a public insurance structure helps us to better tackle
many of the challenges shared by all developed nations in
healthcare, including rising costs, variations in quality, and
inequities of access.
I would like to highlight for you today three major
benefits of the Canadian single-payer model. The first is
equity. Poll after poll has demonstrated a strong consensus
among Canadians that access to healthcare should be based on
need, not ability to pay. While, of course, we continue to
struggle with inequity on other fronts, it is worth emphasizing
that at substantially lower cost than in the United States, all
Canadians have insurance that covers doctor and hospital care.
We do not have uninsured residents. We do not have
different qualities of insurance depending on a person's
employment. We do not have an industry working to try to carve
out different niches of the risk pool. This is a very important
accomplishment and as we watch the debate unfold in the United
States as to how to address the challenges you face, we are
reminded daily of its significance.
One of the big challenges in a multi-payer system is the
question of how to achieve policy reform with so many players
in the game. In a single-payer framework, if Government and
providers identify a significant challenge in the healthcare
system, they can work together at the bargaining table to align
financial incentives to advance their shared policy objectives.
An example upon which I elaborate in my written submission
is the way in which Ontario's Government and physicians have
worked together to increase the number of medical students
choosing primary care as a career and choosing to work in
rural, underserviced communities.
Finally, one cannot speak about single-payer without
addressing the issue of administrative costs. It has been
estimated that if U.S. administrative costs were curtailed to
the level of those in my home Province of Ontario, the total
estimated savings here would be $27.6 billion per year.
Indeed, overall as you have heard, we spend a much lower
proportion of our GDP on healthcare in Canada, 11.2 percent as
compared to your 17.9 percent. And importantly, this is not at
the expense of quality. Canadians enjoy the same or better
health outcomes as Americans, both at the level of life
expectancy and infant mortality, as you have heard, and when we
look at outcomes for a range of acute and chronic illnesses. In
fact, a recent scientific systematic review found that Canada
achieved health outcomes that are at least equal to those in
the United States at two-thirds of the cost across a very wide
range of diagnoses.
The issue of wait times is very widely covered, I note, in
the American media. When it comes to urgent and emergent care,
Canadians are not waiting substantially longer than our peers
in other countries, including the United States. Unfortunately,
it is true that that has not been the case for elective medical
care such as non-urgent diagnostic imaging and elective
surgeries. A great deal of work is underway to address this
challenge and, indeed, waits have been decreasing over the last
decade for a variety of elective medical procedures.
It is important to note that moving away from a single-
payer model would likely exacerbate our wait time challenge
rather than alleviating it by drawing critical health human
resources out of the public system. This is borne out by
international evidence from other jurisdictions such as
Australia.
The Canadian system is proof that public healthcare
insurance need not be provided federally in order to achieve
the benefits of the single-payer model. In Canada, each
Province provides public healthcare insurance to its residents
with minimum standards set at the Federal level.
Furthermore, moving to single-payer insurance, as you have
heard, does not necessarily mean moving to the direct provision
of healthcare services by Government or socialized medicine.
Although our provincial health insurance plans in Canada are
financed publicly, almost all healthcare services are delivered
by private entities. This includes our hospitals, which are
mostly independent, not-for-profit entities and also our
providers, most notably physicians who are not employees of the
State, but rather independent contractors who happen to bill a
public insurance plan for their services.
I want to reiterate my thanks to the committee for giving
me the opportunity to present to you today. I look forward to
your questions and engaging in dialog.
[The prepared statement of Dr. Martin follows:]
Prepared Statement of Danielle Martin, M.D., MPP
Chairman Sanders, Ranking Member Burr, distinguished members of the
HELP Committee, and my fellow panelists, I deeply appreciate the
opportunity to come before you today to discuss the common challenges
faced by the health systems of the United States and Canada, and to
shed light on some policy solutions offered by a comparative
examination of both.
My name is Dr. Danielle Martin. I am a primary care family
physician working in the Family Practice Health Centre at Women's
College Hospital, an ambulatory care hospital located in downtown
Toronto, Ontario. I have practiced family medicine in Canada for 9
years in a variety of settings, including remote rural communities as
well as in the heart of our biggest city. My practice has included
office-based comprehensive care family medicine, obstetrics, minor
surgical procedures, and rural emergency and inpatient medicine. I also
serve in an administrative leadership position at Women's College
Hospital as vice president of Medical Affairs and Health System
Solutions. Women's College is a unique organization--a hospital without
inpatient beds that focuses on advancing the health of women, improving
ambulatory care for people living with complex chronic conditions, and
health system solutions. Being an outpatient hospital means that we
deliver treatments, diagnostic procedures and perform complex surgeries
for patients who do not require overnight stays.
In addition to my clinical training I also hold a Masters in Public
Policy from the University of Toronto where I am currently an assistant
professor in the Department of Family and Community Medicine and in the
Institute of Health Policy, Management and Evaluation at the Dalla Lana
School of Public Health.
Prior to becoming a physician I worked in health care policy and
have held a wide variety of leadership roles throughout my clinical
training and practice. From 2005 to 2011 I was privileged to sit on the
Health Council of Canada, the national organization responsible for
monitoring progress on health care reform across Canada and reporting
to the public.
My longstanding interest in promoting a Canadian health system that
is equitable, sustainable, and that delivers quality care led me in
2006 to help found Canadian Doctors for Medicare, a national advocacy
group dedicated to strengthening our public system. I continue to sit
on the board of directors of CDM.
My writings on our health system have appeared in a variety of
peer-reviewed publications including the Canadian Medical Association
Journal, Canadian Family Physician, and Healthcare Papers. I have also
published articles and op-eds on health care in major Canadian
newspapers such as the National Post, Globe and Mail, Toronto Star and
I am regularly cited as an expert in news reports related to health
reform and the Canadian health system. I continue to speak and write
about the future of health care in Canada.
Health system thinkers face many of the same health policy
challenges and share many of the same goals regardless of the disparate
systems in which we work. It is my strongly held belief that we have
much to learn from each other. In the brief time available to me this
morning, I hope to help you understand how and why we have developed
and maintained a single payer health care system in Canada, and what I
think American policymakers can learn from our experience.
To that end, I will begin by providing some background on the
structural elements of the Canadian single payer system that I think
are especially relevant to the American context. I will also outline
the advantages the single payer structure affords us as we tackle the
significant challenges we face: namely, the ability to ensure equity of
access to services; the ability to control administrative costs; and
the ability to jointly pursue shared policy goals in a coordinated
manner. Finally, I will speak briefly on the issue of access to care in
the Canadian system, a topic which I know frequently receives media
attention in American markets.
the canadian single payer system: key elements
I do not presume to claim that the Canadian system is perfect or
that we do not face difficult systemic challenges. However I will put
forth the argument that our challenges do not stem from the single
payer nature of our system, nor are they insurmountable within that
essential structure. Quite the contrary, working within a single payer
insurance structure helps us to better address and tackle many of the
health care challenges shared by all developed nations, including
rising costs, variation in quality, and inequities of access.
1. Health insurance is provided at the level of the provinces
Although media coverage on both sides of the border often talks
about the ``Canadian'' health care system as a single monolithic
entity, it will be of interest to the committee to learn that in fact
the Canadian system is actually 13 separate provincial and territorial
systems, each quite independent from the other, in large measure
because the Canadian constitution clearly puts most health care matters
in provincial jurisdiction. We have learned, as I think you are also
experiencing, that different provinces have different appetites and
needs when it comes to public health care insurance and what, or more
to the point who, it should cover. Our system finds its origin in
reform in a single province that gained popularity and caught on over
decades across the country.
Prior to the 1940s, access to health care in Canada was based on
the ability to pay--and quite often, losing one's health meant losing
the farm. In 1947, the Province of Saskatchewan introduced a public
insurance plan to pay for hospital services. In 1962, at roughly the
same time the United States was beginning to debate the creation of the
Medicare and Medicaid programs, Saskatchewan extended public insurance
to cover physician services as well. Public insurance became popular
very quickly and other Provinces soon followed suit with similar
reforms.
As the committee is now aware, the Canadian single payer health
system is actually a consortium of 13 systems (one for each province
and territory) that together provides coverage for all Canadians. That
is, each province mostly controls the provision of health insurance,
with minimum standards set at the Federal level. These standards do not
speak to the details of health service provision; rather, they dictate
that in order to receive Federal funding support, health insurance
plans within the provinces must be: (1) Universal, (2) Accessible, (3)
Comprehensive, (4) Portable and (5) Publicly administered.\1\ Beyond a
Federal requirement that insurance plans must provide coverage for
medically necessary physician and hospital services, the provinces and
territories enjoy quite a lot of flexibility in determining the
``basket of services'' covered.
2. Insurance is public, but health services delivery is private
When discussing health system structures, it is critical to
distinguish between who pays for services and who delivers them.
Contrary to what many Americans may believe, Canada does not have
``socialized medicine'' in the strict sense, since in spite of being
paid for through public insurance, almost all services are delivered by
private entities. This includes not only our hospitals, which are
mostly independent private not-for-profit entities, but also our
providers, most notably physicians, who are not employees of the State.
In Canada medically necessary physician services are covered by
provincial insurance for which all residents are eligible, but
physicians are independent contractors. Speaking as a practicing family
doctor, this is a key feature of our system well worth highlighting;
and given the current structures in American health care I think it is
of some salience to your deliberations.
benefits of the single payer insurance model in the canadian context
It is my view that the single payer structure of our provincial
health insurance systems, while far from a panacea for all that ails
us, is the best possible structure within which to address our
challenges. Single payer promotes equity of access to services; it
enables coordinated pursuit of shared health policy goals; and it
allows us to deliver quality care at far lower costs than those seen in
the United States. I will address each of these benefits in turn.
1. Equity
Poll after poll has demonstrated the enduring popularity of the
single payer model among Canadians.\2\ When asked what features of our
system are most salient, Canadians from all walks of life answer that
it is this aspect of our system that gives them particular pride. There
is a strong consensus across Canada that access to health care should
be based on need rather than the ability to pay.\3\ This is a
fundamental principle of our system, and pooling risk by having
everyone in the system makes it possible. While of course we continue
to struggle with inequity across other aspects of health care, we do
not have significant equity problems with respect to insurance. We do
not have uninsured or underinsured residents. We do not have different
qualities of insurance depending on a person's employment. We do not
have an industry working to try to carve out different niches within
the risk pool. At substantially lower cost than in the United States,
all Canadians have health insurance and need rather than wealth is what
drives access to care. This is a very significant accomplishment and as
we watch the debate unfold in the United States as to how to address
the challenges you face, we are reminded of its significance daily.
2. Achieving consensus policy goals
One of the big challenges in a multi-payer system is the question
of how to achieve policy reform with so many players in the game. In a
single payer framework there is a place where the providers and
insurers can go to address challenges together, namely the bargaining
table. This is as beneficial to providers as it is to insurers since it
affords all groups a policy lever beyond legislation or self-regulation
that is open and accountable. If government and providers identify a
significant challenge in the health system that needs to be addressed,
they can work together to try to align financial incentives to advance
those shared policy objectives.
For example, across the political spectrum and between countries
with disparate health systems, there is a shared consensus among both
government and physicians that the provision of quality primary care
should be a key policy goal. The evidence on the importance of primary
care as a determinant of population health is widespread from the work
of Barbara Starfield and others.\4\ We all want to see a well-developed
primary care system and enough primary care physicians to serve the
needs of the population. But it has been difficult over the last
several decades to convince medical students to choose primary care
when the compensation has lagged behind that of our specialist
colleagues and the greatest needs are in remote or underserved urban
areas. Single payer allows for a consolidated voice at the bargaining
table to have this conversation. Without jeopardizing physician
autonomy, Canadian provincial governments have been able to work with
the provincial medical associations to negotiate aligning financial
incentives to promote primary care--from higher compensation for
primary care doctors to programs that help reduce medical school loans
for young doctors who choose to work in underserved areas.\5\
Furthermore, this system affords the patient a voice at the table
through their democratically elected representatives. This stands in
contrast to a multi-payer private system where private insurance
companies are not accountable to their enrollees but rather to their
shareholders.
3. Lower administrative costs
On a practical level, having one payer for health services requires
a far smaller administrative footprint than that under a multi-payer
system. Canadian doctors save time on paperwork and Canada's overall
administrative spending is far lower than our neighbor to the south. In
fact, a comparative study published in Health Affairs found that if
U.S. physicians were to curtail administrative costs to the level of
those in my home province of Ontario, the total estimated savings would
be $27.6 billion per year.\6\ Looking at overall costs, a 2003 study
found that after exclusions, administration accounted for 31.0 percent
of health care expenditures in the United States and 16.7 percent of
health care expenditures in Canada.\7\ Even this figure can be
deceptive, as the Canadian system includes private supplemental health
insurance that often covers services that are not covered by the public
plans. Total administrative costs include those for private plans, but
when only the public single payer insurance program is considered, the
overhead shrinks to just 1.3 percent.\8\
The far lower administrative costs in the Canadian system are one
factor in explaining our relatively lower overall costs. Canada's
spending on health care as of 2011 is 11.2 percent of GDP placing it
roughly within the middle of the pack of similarly developed countries,
compared to the United States' 17.9 percent.\9\ One key factor in this
disparity is the distinction between the mix of multiple private, for-
profit insurance companies which work alongside a patchwork of public
providers in the United States in contrast to the Canadian system which
relies mostly on public financing and not-for-profit deliver. It is not
the distinctly Canadian system that produces these savings so much as
the underlying principle of publicly accountable universal health care,
a principle shared by all OECD countries excluding the United
States.\10\
access and quality in the canadian model
A concern has been raised that cost savings, though laudable, are
indicative of poorer quality of care, whether in terms of health
outcomes or in access to care. On both points, this concern is
unfounded. First, Canadians enjoy the same or better outcomes of
healthcare as Americans. We see this in terms of overall health
outcomes such as life expectancy and infant mortality,\11\ though as
others have pointed out these outcomes are tied to larger social
determinants of health and are not necessarily a proxy for
understanding the outputs of a health system.
When we turn to outcomes that are more directly attributable to
provision of health care services we see the same pattern of equal or
better outcomes for Canadians.\12\ And a recent systematic review of
Canada's single payer system found that Canada achieved health outcomes
that are at least equal to those in the United States at two-thirds the
cost.\13\ Examples of comparative health outcomes between Canada and
the States may be found in the Appendix to this testimony.
addressing wait lists
While socio-economic barriers to care regrettably exist in both
countries, access to health insurance is unencumbered in Canada
regardless of income. But what of wait lists for care? When it comes to
urgent, necessary care, Canadians are not waiting substantially longer
than our peers in other countries, including the United States.
However, unfortunately this has not been the case for elective medical
care, particularly diagnostic imaging, non-urgent specialist
appointments and elective surgeries such as cataract surgery, and hip
and knee replacement. In response to this challenge we have seen
governments doing much work to reduce wait times in the past decade.
The key to success has been to change the way that we deliver service,
for example, through single common wait lists rather multiple queues.
It is also important to bear in mind that Americans also face the
problem of wait times to see specialists. Of the 40 percent of
Americans who report difficulties in seeing a specialist, 40 percent
cite long waiting times, 31 percent cite a denied referral, and 17
percent say they cannot afford private insurance.\14\ The Canadian
system, which allows patients to see specialists on referral as well as
directly, and in which private insurance is not tied to the ability to
pay, does not burden patients with either of these problems.
One proposal that absolutely has not shown success has been to move
from a public system such as the one in Canada to a two-tiered system
where patients with the means are able to jump the queue. A study
conducted before and after the move from single-payer to multi-payer
insurance in Australia found that median waiting times were inversely
related to the proportion of public patients.\15\ In other words, in
those parts of the country where there was more privately insured care,
waits in the public system were longer. Why was this the case? Because
our health human resources are not infinite, and the doctors, nurses
and others providing care have to come from somewhere. The drain on the
public system from doctors exiting to the private sector creates longer
waiting lists in public healthcare. Instead, our focus should be on
reducing wait times in a way that is equitable for all. That has been
the imperative of the reforms in Canada, and while the battle is not
yet over, it is in my view an exemplary example of how Canadian health
policy thinkers work to improve our system while upholding our values.
conclusion
I want to reiterate my thanks to this committee and to Chairman
Sanders and Ranking Member Burr for giving me the opportunity to
present this testimony today. It is truly an honor to exchange ideas
about health system solutions on both sides of the border. I look
forward to answering your questions and engaging in dialog, as well as
learning from my fellow presenters.
Appendix: Comparative Health Outcomes, Canada and United States
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: OECD Health Statistics 2013, www.oecd.org/health/health-
systems/oecdhealthdata.htm.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: OECD Health Statistics 2013, www.oecd.org/health/health-
systems/oecdhealthdata.htm.
Endnotes
1. Canada Health Act (R.S.C., 1985, c. C-6) http://laws-
lois.justice.gc.ca/eng/acts/C-6/FullText.html.
2. A November 2012 ACS-Leger Marketing web panel of 2,200 Canadians
found that Universal Health Care topped the list when it came to
overall importance of sources of Canadian pride, with 95 percent of
respondents deeming it important, and with the highest proportion of
respondents citing Universal Health Care as ``very important'' relative
to other Canadian institutions or sources of pride: http://www.acs-
aec.ca/pdf/polls/Pride%20in%20Canadian%20Symbols%20and%20Institu-
tions.ppt. And in a 2004 national program of the Canadian Broadcast
Corporation (CBC), Canadians chose Tommy Douglas, the father of
Medicare, as the Greatest Canadian of All Time, beating out other
popular nominees such as Terry Fox: http://www.cbc.ca/archives/
categories/arts-entertainment/media/media-general/and-the-greatest-
canadian-of-all-time-is.html.
3. See Canadian Nurses Association. http://www.cna-nurses.ca/CNA/
documents/pdf/publications/Social_Justice_2010_e.pdf. Ottawa, 2010, and
also Commission on the Future of Health Care in Canada's ``Building on
Values: The Future of Health Care in Canada'' 2002 Report by
Commissioner Roy Romanow, which states at the outset that ``Canadians
have been clear that they still strongly support the core values on
which our health system is premised--equity, fairness and solidarity.
These values are tied to their understanding of citizenship.'' (p. xvi)
4. See Starfield B, ``New Paradigms for Quality in Primary Care.''
British Journal of General Practice, April 2001.
5. For examples see http://www.health.gov.on.ca/en/pro/programs/
northern
health/nrrr.aspx. and http://actionplan.gc.ca/en/news/government-
canada-announces-student-loan-forgiveness-family doctors-and-nurses-
rural.
6. Morra D, Nicholson S, Levinson W, Gans DN, Hammons T, Casalino
LP, ``US Physician Practices versus Canadians: Spending Nearly Four
Times as Much Money Interacting with Payers.'' Health Affairs.
2011;30(8):1443-50.
7. Costs of Health Care Administration in the United States and
Canada Steffie Woolhandler, M.D., M.P.H., Terry Campbell, M.H.A., and
David U. Himmelstein, M.D.N., Engl J Med 2003; 349:768-75 August 21,
2003 DOI: 10.1056/NEJMsa022033 http://www.nejm.org/doi/full/10.1056/
NEJMsa022033.
8. Costs of Health Care Administration in the United States and
Canada Steffie Woolhandler, M.D., M.P.H., Terry Campbell, M.H.A., and
David U. Himmelstein, M.D.N., Engl J Med 2003; 349:768-75 August 21,
2003 DOI: 10.1056/NEJMsa022033 http://www.nejm.org/doi/full/10.1056/
NEJMsa022033.
9. See OECD World Bank Health Indicators, http://
data.worldbank.org/indicator/SH.XPD.TOTL.ZS.
10. Starfield B. ``Reinventing Primary Care: Lessons from Canada
for the United States.'' Health Affairs. 29, No. 5 (2010) 1030-36.
11. See OECD World Bank Health Indicators, http://
data.worldbank.org/indicator/SH.XPD.TOTL.ZS.
12. Coleman MP, et al. ``Cancer Survival in Five Continents: A
Worldwide Population-based study (CONCORD). The Lancet Oncology.'' 2008
Aug; 9(8): 730-56. Canada ranked near the top of the 31 countries
studied with an estimated 5-year survival rate of 82.5 percent, well
above the European average of 57.1 percent and trailing and only
slightly lower than the U.S. rate.
13. Guyatt G, et al., ``A Systematic Review of Studies Comparing
Health Outcomes in Canada and the United States.'' Open Medicine, April
18, 2007. Volt. 1 (1), PP. 27-36.
14. Ross JS, Detsky AS. Health care choices and decisions in the
United States and Canada. JAMA. 2009;302(16):1803-4 cited in Starfield
B. ``Reinventing Primary Care: Lessons from Canada for the United
States.'' Health Affairs. 29, No. 5 (2010) 1030-36.
15. Duckett. (2005). Australian Health Review 29. 87.
Senator Sanders. Dr. Martin, thank you very much.
Senator Burr, do you want to introduce your other guest?
Senator Burr. Thank you, Mr. Chairman.
I would like to introduce my colleague Dr. David Hogberg,
who is the Health Care Policy Analyst at the National Center
for Public Policy Research here in Washington, DC.
Dr. Hogberg, thank you for joining us today. I look forward
to your testimony and thoughts as we examine the lessons
learned from other abroad countries in order to strengthen our
own healthcare system here at home.
The microphone is yours.
STATEMENT OF DAVID HOGBERG, Ph.D., HEALTH CARE POLICY ANALYST,
NATIONAL CENTER FOR PUBLIC POLICY RESEARCH, WASHINGTON, DC
Mr. Hogberg. Chairman Sanders, Ranking Member Burr, members
of the committee.
Thank you for this opportunity to testify before you. My
name is David Hogberg, and I am a Health Care Policy Analyst
for the National Center for Public Policy Research.
I think the most important lesson we can learn from other
nations is that we should avoid putting more and more of our
healthcare system under the control of politicians. Most
politicians want to get reelected and that fact will have a
substantial impact on healthcare policy.
Groups that have political clout, that can influence a
politician's reelection chances, are more likely to get good
treatment under Government-run healthcare systems. Groups that
lack such clout are more likely to be neglected by politicians
and receive inferior care.
People who are very ill usually lack such political clout.
First, the very sick are relatively few in number, which means
they amount to a very limited number of voters, too limited to
have much impact on elections.
Second, they are too sick to engage in the type of
political activities such as organizing, protesting, and so
forth that can bring about change in healthcare policy.
Ultimately, under a Government system, those with the most
medical needs are those most likely to have difficulty getting
the care they need.
Both Denmark and France provide good examples of this. The
healthcare system in Denmark could be best described as single-
payer with the Government financing over 85 percent of
healthcare expenditures. Healthcare in Denmark is largely free
at the point of consumption. This has consequences for how
healthcare resources are allocated. If patients pay nothing at
the point of consumption, then patients will overuse
healthcare, putting strain on Government budgets. Healthcare
must be rationed in another manner and like most systems that
are single-payer, Denmark rations by using wait times for
treatment of serious conditions.
For example, Danes must wait a median of 48 days to get a
herniated disc repaired, 57 days for a knee replacement, and 81
days for cataract treatment.
Under the national standard for cancer treatment in
Denmark, a patient should not wait more than 28 days between
the time he sees a physician for diagnosis to the time of
treatment. However, a 2010 study found that less than half of
Danish patients diagnosed with head or neck cancer were treated
within that national standard. This can have serious
consequences for patients. A meta-analysis found that for every
month treatment is delayed for head or neck cancer, the
probability that the cancer will recur increases by about 3.7
percent.
Now, looking to the French system, the healthcare system in
France is financed heavily through the Government, yet also has
an extensive market of private insurance that covers copayments
and services the Government does not cover. When a patient
visits a physician in France, he must pay the cost directly. He
is then reimbursed by the Government and the private insurer.
The patient must cover any costs that are not reimbursed.
The method of payment and the extensive system of private
finance is what allows France to avoid using wait times to
ration care. However, the healthcare portion of France's budget
has been running a deficit since 1988. As a result, the
healthcare system in France has used other methods to ration
care.
One rationing method is limiting investment in new medical
technology. Among industrialized nations, France has one of the
lowest number of CT scanners, PET scanners, and MRI machines
per million population.
Rationing pharmaceuticals is another method. In brief, the
French Government often refuses to pay for drugs that are
incremental improvements over existing drugs. Such rationing
has consequences. According to one study, only about one-
quarter to one-third of Alzheimer's patients in France are
receiving state-of-the-art medication.
Rationing technology and medication or using waiting times
falls hardest on people with serious illnesses. Yet, these
methods persist because they are politically tolerable. In
general, they do not cause trouble for politicians, since the
people affected seldom are a significant political force.
In summary, I think the chief benefit of an examination of
other nations' healthcare systems is to discover what policies
we should avoid.
That said, it would be far more productive if we, instead,
studied other markets rather than other nations. That would
include other markets for insurance, such as life, homeowners,
and auto insurance, and other markets for other vital products
such as food and clothing. There you will find markets in which
Government tax policy has not distorted the purchase of goods,
where tax policy and regulation have not resulted in a three-
tiered system of insurance, and where consumers are not
prohibited from buying goods and services out of State. As a
result, these markets reduce the cost of goods and services
while also improving quality. It is in these markets that we
should look for guidance in reforming the U.S. healthcare
system.
Thank you very much.
[The prepared statement of Mr. Hogberg follows:]
Prepared Statement of David Hogberg, Ph.D.
Chairman Sanders, Ranking Member Burr, members of the committee,
thank you for this opportunity to testify before you. My name is David
Hogberg and I am a health care policy analyst for the National Center
for Public Policy Research. The National Center for Public Policy
Research, founded in 1982, is a non-partisan, free-market, independent
conservative think-tank.
Let me begin by stating that nothing I say today should be
construed as a defense of the entire U.S. health care system. While our
system has many beneficial aspects, both the system prior to Obamacare
and the system we have now are best described as being too encumbered
by government interference. Reform should move our health care system
in a free-market direction.
That said, I think the best lessons we can take from other nations
is what NOT to do to our health care system. The most important lesson
is that we should avoid putting more and more of our health care system
under the control of politicians. Politicians, like everyone else, face
a system of incentives and constraints. Specifically, most politicians
want to get re-elected and that will have a substantial impact on
health care policy. Groups that have political clout, that can
influence a politician's reelection chances, are more likely to get
good treatment under government-run health care systems. Groups that
lack such clout are more likely to be neglected by politicians and
receive inferior care.
Unfortunately, people who are quite sick--those who need an
operation or cancer treatment or have a serious chronic condition--
usually lack such political clout. First, the very sick are relatively
few in number, which means they amount to a very limited number of
voters, too limited to have much impact on elections. Second, they are
too sick to engage in the type of political activities such as
organizing, protesting, etc., that can bring about change in health
care policy. Furthermore, they may be completely unaware of how
government health care policy has affected their plight, in which case
they will not feel a need to vote or organize to change health care
policy. Ultimately, under a government system, those with the most
medical need are the most likely to have difficulty getting the care
they need.
Both Denmark and France provide good examples of this.
denmark
The Danish health care system is changing. What was once best
described as a single-payer system is beginning to see private
insurance play a much larger role. Every citizen of Denmark is
guaranteed access to publicly financed insurance, but Mia Holstein, a
senior consultant at the Danish think-tank CEPOS, noted that close to
52 percent of Danes now have some form of private insurance. Until
recently, though, over 85 percent of health care expenditures were
publicly financed while less than 15 percent came from private
sources.\1\
Health care in Denmark is largely ``free'' at the point of
consumption. This has consequences for how health care resources are
allocated. If patients pay nothing at the point of consumption--if
health care resources aren't rationed by price--then patients will
overuse health care, putting strain on government budgets. Health care
must be rationed in another manner, and like most systems that are
single-payer, Denmark rations by using wait times for the treatment of
serious conditions.
For example, Danes must wait an average of 48 days to get a
herniated disc repaired, 57 days for a knee replacement and 81 days for
cataracts treatment.\2\ Data on cancer treatment shows there is a mean
wait time of 3 weeks to receive surgery and just under a 3-week wait to
receive radiation treatment from the time a patient is diagnosed.\3\
This does not include the time a patient must wait from when he first
sees the doctor to when he is referred to an examination--data for that
does not appear to exist for Denmark.
Table 1.--Wait Times for Surgery in Denmark, 2012
------------------------------------------------------------------------
Mean
wait
Procedure in
days
------------------------------------------------------------------------
Hernia.......................................................... 55
Prostate........................................................ 65
Hip Replacement................................................. 49
Knee Replacement................................................ 57
Herniated Disc.................................................. 48
Cataracts....................................................... 81
------------------------------------------------------------------------
Source: Statems Serum Institut.
The national standard in Denmark for cancer treatment is about 28
days--that is, not more than 4 weeks should elapse between the time a
patient presents to the physician for diagnosis to the time of
treatment. However, a 2010 study in the European Journal of Cancer
found that less than half of Danish patients diagnosed with head or
neck cancer were treated within that national standard.\4\ This can
have serious consequences for patients. A recent meta-analysis found
that for every month treatment is delayed for head and neck cancer the
probability that the cancer will recur after treatment increases by 3.7
percent.\5\
In an attempt to alleviate wait times, the Danish government in
2002 passed a waiting time ``guarantee'' allowing patients who were not
given treatment at a public hospital within 2 months of referral to
seek treatment at a private hospital in Denmark or at hospitals abroad.
In 2007, it was shortened to 1 month. In 2009, 60,000 Danish patients
made use of this waiting time guarantee.\6\
Wait times have plagued Denmark's system for decades. The reason
they persist is that they are politically tolerable. Those who suffer
due to wait times each year is relatively small, not enough to have any
impact on election day. Making matters worse, according to Mia Holstein
of CEPOS, is that most Danes don't connect the wait times to the
single-payer system. When forced to wait for treatment, they are more
likely to blame the doctor or the hospital, not the single-payer system
that is the root of the problem.
france
The French health care system is financed heavily through the
government, yet also has an extensive market of private insurance. The
government funds about 77 percent of health care expenditures while the
other 23 percent comes from private sources.\7\ About 90 percent of the
population is enrolled in private insurance.\8\
Private insurance pays for a multitude of costs in France including
the copayments the government requires for many services and for health
care expenses the government does not cover. It also covers the fees
that physicians can charge their patients above the government set
rates, something that many physicians do. In Paris, for example, about
80 percent of physicians charge more than the government rate.\9\
When a patient visits a physician, he or she must pay the cost
directly. He or she is then reimbursed by the government and the
private insurer. The patients must cover any cost that is not
reimbursed. The method of payment and the extensive system of private
finance is what allows France to avoid using wait times to ration care.
However, health care costs have long strained government finances--
the health care portion of France's budget has been running a deficit
since 1988.\10\ As a result, the government in France has used other
methods to ration care.
One rationing method is limiting capital investment. More
specifically, the French system fails to invest in new medical
technology. The number of CT scanners, PET scanners and magnetic
resonance imagining machines per million people is one of the lowest
among industrialized nations.\11\
Table 2.--Medical Technology Per Million Population, 2011
------------------------------------------------------------------------
United OECD
Denmark France States avg.
------------------------------------------------------------------------
CT scanners..................... 29.3 12.5 40.9 28.6
PET scanners.................... 5.6* 1.1 4.7 2.4
MRIs............................ 15.4* 7.5 31.5** 16.2
------------------------------------------------------------------------
Source: OECD.
*2009.
**2010.
Rationing pharmaceuticals is another method. The government does
this in two ways. Under the first the government withholds approval of
new drugs that are only an ``incremental innovation'' over existing
drugs.\12\ The second is the de-listing of such drugs that are already
on the government formulary.\13\ Patients who use such drugs will not
be reimbursed for their cost.
Incremental innovations come in many forms, such as new drugs to
treat depression that have fewer side effects than existing drugs,
beta-blockers that reduce blood pressure by more selectively targeting
the causes or turning a drug from an injectable form to one that can be
taken in pill form such as the cancer drug Glivec. Such rationing has
consequences. According to one study, only about one quarter to one-
third of Alzheimer's patients in France are receiving state-of-the-art
medication.\14\
These rationing methods fall hardest on people with serious
illnesses since they are the ones most likely to benefit from new
technology or incremental improvements in pharmaceuticals. Yet these
are also methods that, in general, do not cause trouble for
politicians, since the people affected seldom are a significant
political force.
costs
There are three lessons that can be learned about costs by
examining recent data on health care expenditures as a percentage of
gross domestic product. The first is that Denmark, would probably yield
few insights into controlling costs. While Denmark spend less on health
care than we do, their rate of growth has exceeded ours since 2003.
Table 3.--Health Care Expenditures As Percent of GDP, 2003-11
------------------------------------------------------------------------
United OECD
Denmark France States avg.
------------------------------------------------------------------------
Total
2003.......................... 9.1 10.4 15.0 9.2
2011.......................... 10.5 11.2 17.0 10.0
Increase...................... 14.6% 7.5% 13.1% 10.4%
Government
2003.......................... 7.7 8.2 6.7 6.3
2011.......................... 8.9 8.7 8.3 7.3
Increase...................... 15.8% 5.6% 23.2% 13.7%
Private
2003.......................... 1.5 2.2 8.3 2.6
2011.......................... 1.6 2.6 8.7 2.7
2Increase..................... 8.7% 14.8% 5.0% 5.0%
------------------------------------------------------------------------
Source: OECD.
Second, expanding government control over our health care system is
not a solution to controlling costs. Since 2003, government
expenditures on health care in the United States have grown faster than
not only the countries we are examining today but even the average
growth rate among major countries in the Organization of Economic
Cooperation and Development.\15\
Third, while France appears to have a better record of controlling
costs than we do, it may be doing so by using methods that the United
Sates has already tried and rejected. Since 2005, the French government
has embarked on a delivery system dubbed ``coordinated care pathways''
(CCP). CCP entails using primary-care physicians as ``gatekeepers.'' A
patient must first see his or her primary-care physician and get that
physician's approval before seeking treatment from a specialist.
Patients who do not comply with this system receive lower
reimbursements from the government.\16\
Private insurance in France is following suit. Insurers have
introduced plans known as ``responsible contracts'' that require
patients to seek care within an approved network of physicians and
other providers. Insurers will not cover the copayments for patients
who do not adhere to the approved network.\17\
The United Sates has already been down this road during our great
experiment with managed care during the late 1980s and early 1990s.
During that time employers switched their coverage to health
maintenance organization plans that hold down costs by using
restrictive networks and employing primary-care physicians as
gatekeepers. In the process, the term ``HMO'' became a dirty word as
Americans chaffed under the restrictions of these plans. Ultimately,
employers switched to different types of plans as employees rejected
the lack of choice offered by HMOs. At their height in 1996, HMOs
covered about 31 percent of employees. By 2013, they covered only 14
percent.\18\
conclusion
In summary, I think the chief benefit of an examination of other
nations' health care system is to discover what policies we should
avoid.
That said, it would be far more productive if we instead studied
other markets rather than other nations. That would include other
markets for insurance--such as life, homeowners, and auto insurance--
and other markets for other vital products and services such as food
and clothing. There you will find markets in which government tax
policy hasn't distorted the purchase of goods, where tax policy and
regulation have not resulted in a three-tiered system of insurance, and
where consumers are not prohibited from buying products and services
out of State. As a result, these markets reduce the cost of goods and
services while also improving quality. It is in these markets that we
should look for guidance in reforming the U.S. health care system.
Endnotes
1. Thompson, Sarah. ``International Profiles of Health Care
Systems, 2013,'' The Commonwealth Fund, November 2013.
2. ``Gennemsnitlig erfaret ventetid til udvalgte operationer,''
Statens Serm Institut, at http://www.ssi.dk/Sundhedsdataogit/
Dataformidling/Sundhedsdata/
Ventetid/ /media/Indhold/DK%20%20dansk/Sundhedsdata%20og%20it/NSF/
Dataformidling/Sundhedsdata/Ventetid/Erfaret%20ventetid%20til%2017%20
udvalgte%20operationer%20januar%202010juli%202010%20afsluttet.ashx
(March 5, 2014).
3. ``Waiting Time Policies in the Health Sector: What Works?''
Organization for Economic Cooperation and Development, 2012, Figure 6.1
Expected and experienced waiting times for various treatments, Denmark,
1998-2011, at http://dx.doi.org/10.1787/888932754065 (March 5, 2014).
4. Lyhne, N.M, Christensen, A., Alanin, M.C., Brunn, M.T., Jung,
T.H., Bruhn, M.A., Jespersen, J.B.B., Kristensen, C.A., Anderson, E.,
Godballe, C., Buchwald, C., Bundgaard, T., Johansen, J., Lambertston,
K., Primdahl, H., Toustrup, K., Sorensen, J.A., Overgaard, J., and
Grau, C. ``Waiting times for diagnosis and treatment of head and neck
cancer in Denmark in 2010 compared to 1992 and 2002,'' The European
Journal of Cancer, Volt. 49, No. 7, May 2013.
5. Chen, Zheng, King, Will, Pearcey, Robert, Mackillop, William J.
``The Relationship between the waiting time for radiotherapy and
clinical outcomes: A systematic review of the literature,''
Radiotherapy and Oncology, Volt. 87, No. 1, December 2007.
6. Penderson, K.M., Bech, M., Vrangbaek, K. ``The Danish Health
Care System: An Analysis of Strengths, Weaknesses, Opportunities, and
Threats,'' The Consensus Report, The Copenhagen Consensus Center, 2014,
p. 38.
7. Organization for Economic Cooperation and Development, ``Health
Data 2013,'' at http://stats.oecd.org/
index.aspx?DataSetCode=HEALTH_STAT (March 5, 2014).
8. Greene, David, Irvine, Benedict, Clarke, Emily, Bidgood, Elliot.
``Healthcare Systems: France,'' Civitas. 2013.
9. Tanner, Michael. ``The Grass is Not Always Greener: A Look at
National Health Care Systems Around the World,'' Cato Institute, Policy
Analysis, No. 613, March 18, 2008.
10. Petkantchin, Valentin. ``Economic Note.'' Institut Economiq
Molinari, March 2007.
11. Organization for Economic Cooperation and Development, ``Health
Data 2013.''
12. Petkantchin, Valentin. ``The gradual innovation, victim of cost
containment of health,'' Institut Economiq Molinari, May 9, 2012.
13. Petkantchin, Valentin. ``Beaucratic Drug-Delisting: The French
Example,'' Institut Economiq Molinari, February 22, 2007.
14. Schoffski, Oliver. ``Impediments to the Diffusion of Innovative
Medicines in Europe,'' PharmoEconomics, Volt. 22, No. 2, October 2004.
15. Countries included in OECD average: Australia, Austria, Canada,
Denmark, Finland, France, Greece, Iceland, Ireland, Israel, Italy,
Japan, Korea, Netherland, New Zealand, Portugal, Spain, Switzerland,
Turkey, United Kingdom, United States.
16. Naldltch, Michel, and Dourgnon, Paul. ``The preferred doctor
scheme: A political reading of a French Experiment of Gate-keeping.''
Working Paper, No. 22, Irdes. March 2009.
17. Greene, David, Irvine, Benedict, Clarke, Emily, Bidgood,
Elliot. ``Healthcare Systems: France,'' Civitas. 2013.
18. Claxton, Gatry, Rae, Matthew, Panchal, Nirmita, Damico,
Anthony, Bostick, Nathan, Kenward, Kevin, Whitmore, Heidi. ``Employer
Health Benefits: 2013 Annual Survey,'' Kaiser Family Foundation &
Health Research and Educational Trust, August 20, 2013, p. 4.
Senator Sanders. Thank you very much, Dr. Hogberg.
Our last, but not least, witness is Jakob Kjellberg. Mr.
Kjellberg is a professor and program director for Health at
KORA, the Danish Institute for Local and Regional Government
Research. Mr. Kjellberg, thank you very much for being with us.
STATEMENT OF JAKOB KJELLBERG, M.SC., PROFESSOR, PROGRAM
DIRECTOR FOR HEALTH, KORA-DANISH INSTITUTE FOR LOCAL AND
REGIONAL GOVERNMENT RESEARCH, COPENHAGEN, DENMARK
Mr. Kjellberg. Thank you, Chairman Sanders, Ranking Member
Burr and members of the committee.
I would like to thank you for the opportunity to
participate in this hearing.
I have been asked to give an overview of the Danish
healthcare system. The Danish healthcare system is an example
of a health system providing comprehensive and universal
coverage for all patients. No patients may be denied services
on the basis of income, employment status, age, or health
status.
Most patients in Denmark are listed with a GP of their
choice. All visits to the GP are free and the use of all
specialized health services is free with a referral from the
GP. Patients can also choose Group 2 health insurance and
access specialist treatment directly, but the Group 2 patient
will face a co-payment for visits to GP and specialists
practicing outside the hospitals. Only about 1 percent of the
population have chosen Group 2 health insurance, and people are
generally quite satisfied with the GP system.
If referred to a hospital treatment, patient may choose
among all public hospitals offering the relevant treatment. All
hospital treatment is free including all hospital drugs.
Patients may all choose among private hospitals in Denmark or
hospitals abroad if the waiting time exceeds 1 or 2 months,
depending on the severity of the condition. Many patients
prefer to stay with the local hospital where the median wait
cannot be longer than the waiting time guarantee, but it is a
choice.
If cancer is suspected, we now offer 2 week waiting time
guarantee for examination and treatment. It had previously been
a problem as you mentioned.
To finance the healthcare system, the State collects the
necessary revenue through general taxation. The State funds the
regions on the basis of objective criteria. This ensures equal
opportunities for the regions across the country. The
simplicity of the financing structure also keeps the
administrative costs low. Only 4.53 percent of the total health
spending is used by administration.
The public sector finances about 85 percent of the chosen
health expenditure. The 15 percent private expenditure maybe
covers out-of-pocket payments for private sector
pharmaceuticals, dentistry, and optical services like glasses
and contact lenses. About half of the population has
supplemental health insurance to cover the out-of-pocket
payments.
Now also, other supplements to health insurances where you
can access healthcare quicker than the 4-month is 1-month or 2-
month waiting time guarantee or free access to
physiotherapists, but the supplementary health insurance covers
less than 1 percent of the total healthcare budget, but it is a
choice.
The health status in Denmark can generally be characterized
as good. Surveys show that 85 percent of the population
perceives their own health status as excellent or very good.
The life expectancy is, on average, 80.1 years. Historic high
smoking rates are typically blamed for the relatively low life
expectancy in Denmark compared to the other Nordic countries,
not the system or the health system.
The European Consumer Powerhouse ranks all the European
health care systems and here, the Danish healthcare system
ranked second in Europe. Denmark scores especially high on
patient rights, range, and reach of services provided, and
information. Denmark scores relatively low in prevention and
health outcome disciplines.
Health expenditure in Denmark is slightly above OECD
average when you look at statistics. However, Denmark has a
practice of reporting certain expenses for social care as
health expenditures. If these costs are reported in line with
the practice used in most other countries, the Danish health
expenditure is significantly below OECD average.
To sum up, the Danish healthcare system is an example of a
transparent healthcare system that provides comprehensive and
universal coverage, and high level of patient satisfaction. The
simplicity of the system keeps the low cost and makes it easier
for the patient to access healthcare.
I would be happy to answer any questions you might have.
Thank you for the attention.
[The prepared statement of Mr. Kjellberg follows:]
Prepared Statement of Jakob Kjellberg, M.Sc.
summary
The Danish health care system provides easily accessible,
comprehensive and universal coverage for all citizens. The system is
known as a ``single-payer'' system, in which funding for medically
necessary care is provided by the regional governments through taxes--
with guidance and some funding from the State and municipalities.
Patients are free to choose among providers, and GPs serve as
gatekeepers to specialist care.
The strengths of the Danish single-payer system can be summarized
as follows:
The system is simple and very easy to use.
All citizens have access to care; no one may be denied
services on the basis of income, age, health or employment status.
Benefits are the same for all citizens.
Administrative costs are minimal as providers and insurers
have no need to market themselves.
The regional governments are able to set and enforce
overall budgetary limits.
Physician fee schedules are negotiated with the nation
medical associations and are binding.
Co-payments are capped for pharmaceuticals and there are
no co-payments for generals practice, out-patient care or inpatient
care.
A maximum 30-day waiting time guarantee is enforced for
most elective surgery.
Patient satisfaction is very high--Consumer Powerhouse
ranks the Danish health care system second in Europe.
______
the structure of the danish health care sector
The Danish health care sector has three political and
administrative levels: the State, the regions and the municipalities
(national, regional and local levels). The health care service is
organized in such a way that responsibility for services provided by
the health service lies with the lowest possible administrative level.
In practice, this means that basic services, such as home nursing or
non-specialized physical rehabilitation, are the responsibility of the
municipalities, while more specialized care is taken care of by the
regional level.
the municipalities
The 98 municipalities are local administrative bodies run by
democratically elected municipal councils. The municipalities have a
number of tasks, and health care merely represents one of these. In the
health field, the municipalities are responsible for home nursing,
public health care, school health service, child dental treatment,
prevention and rehabilitation. The municipalities are also responsible
for most of the social services, for example nursing homes with care
facilities and associated care staff for the elderly.
the regions
Efficient provision of high-quality hospital services requires a
larger population than the average municipality, and this
responsibility thus lies with the five regions. The regions run and own
most of the hospitals. The regions are also responsible for the
practice sector, including contracting with for instance general
practitioners and private practice physiotherapists. The regions
organize the health service for their citizens according to regional
wishes and available facilities. Thus, the individual regions can
adjust services within the financial and national legal limits. The
regions are run by regional councils that are democratically elected.
the state
The role of the State in health care provision is first and
foremost to initiate, coordinate and advise. One of the main tasks is
to establish the goals for a national health policy. The Ministry of
Health and Prevention, in its capacity of principal health authority,
is responsible for legislation on health care. This includes
legislation on health provision, personnel, hospitals and pharmacies,
medicinal products, vaccination, pregnancy health care, child health
care and patients' rights.
the health care system
The Danish health care system can be divided into two sectors:
Primary health care; and
The hospital sector.
The primary health care sector deals with general health problems
and its services are available to all. Long-term nursing care, home
care and preventive programs are organized by the municipalities. About
25 percent of the elderly around the age of 65 receive long-term care
services at home, and 5 percent receive long-term care in
institutions.\1\ There is no co-payment for home care but income-
dependent co-payment for long-term care in institutions. The hospital
sector deals with medical conditions requiring more specialized
treatment, equipment and intensive care.
---------------------------------------------------------------------------
\1\ Source: Prof. Tina Rostgaard.
---------------------------------------------------------------------------
In the health care service, the general practitioners act as
``gate-keepers'' with regard to hospital and specialist treatment. This
means that patients usually start by consulting their general
practitioner. It is normally necessary to be referred by a general
practitioner to a hospital for medical examination and treatment,
except in cases of an accident or acute illness. In such cases, all
residents have direct access to all hospitals.
Denmark had 3.5 practising physicians per 1,000 population in 2009,
higher than the OECD average of 3.1. Patients contact their general
practitioner on average 6,6 times a year. Including other practicing
specialist the primary sector handles approximately 90 percent of all
patient contacts. The primary sector spends about 25 percent of the
total health budget including primary sector pharmaceuticals. The
number of hospital beds in Denmark is 3.5 per 1,000 population,
significantly lower than the OECD average (4.8 beds). The average
length of stay in 2013 was 3.1 days. Table 1 provides an overview of
the activity and spending in the regional health sector.
---------------------------------------------------------------------------
\2\ Source: Ministry of Health and Prevention. Sundhedsvaesenet i
nationalt perspektiv, 2010.
Table 1.--Number of contacts and regional spending (2009 data) \2\
------------------------------------------------------------------------
Regional
Visits spending
Regional Health Care 1,000 Per 1,000 mil
contacts capita DKK
per year (percent)
------------------------------------------------------------------------
GP contacts............................ 37,105 6.6 8.0 (8.3)
Practicing Specialists Doctors......... 5,028 0.9 3.0 (3.1)
Other practicing specialists........... 21,800 3.9 2.8 (2.9)
Primary sector pharmaceutical.......... n.a. n.a. 6.9 (7.2)
Somatic discharges..................... 1,257 0.2
Somatic outpatient visits.............. 6,600 1.2
Psychiatric discharges................. 46 0.01 )75.5
(78.5)
Psychiatric outpatient visits.......... 792 0.14
--------------------------------
Total................................ 72,628 12,969 96.3 (100)
------------------------------------------------------------------------
financing of the danish health care system
The Danish health care system is based on the principle of free and
equal access for all citizens. Thus, the vast majority of health
services in Denmark are free of charge for the users. In 2011, total
health care expenditure in Denmark constituted 10.9 percent of GDP,
which places Denmark above the OECD average of 10.6 percent of GPD.
However, a new report questions these figures, since Denmark has a
practice of reporting certain expenses for social care (such as nursing
homes with care staff) to the OECD \3\ as health care expenses. If
these social care expenses are subtracted in line with the reporting
practice used by most other countries, the Danish expenditure on health
care drops from No. 7 out of 34 OECD countries to No. 19.\4\
---------------------------------------------------------------------------
\3\ Source: OECD Health Data 2013.
\4\ Source: Magasinet Regio, De Danske Sundhedsudgifter ligger
lavt, marts 2014.
---------------------------------------------------------------------------
In 2012, the public expenditure constituted 85 percent of the total
health expenditure, and private expenditure the remaining 15
percent.\5\ Private health care expenditure mainly covers out-of-pocket
expenditure for pharmaceuticals and dentistry.
---------------------------------------------------------------------------
\5\ Source: OECD Health Data 2013.
---------------------------------------------------------------------------
The majority of regional and local health care expenditures are
financed by tax on income, VAT, etc. collected by the national
government.
The regional health care services are financed by three kinds of
subsidies: A block grant from the State (78 percent), a State activity-
related subsidy (2 percent) and a local activity-related contribution
(20 percent).\6\ In order to give the regions equal opportunities to
provide health care services, the subsidy is distributed by a number of
objective criteria that reflect expenditure needs (e.g., demography and
social structure). Furthermore, part of the State financing of the
regions is a State activity-related subsidy. The purpose of this is to
encourage the regions to increase the activity level in hospitals.
---------------------------------------------------------------------------
\6\ Source: Ministry of health and prevention.
---------------------------------------------------------------------------
The municipalities also contribute to financing of the regional
health care. The purpose of the local contributions is to encourage the
municipalities to initiate efficient preventive measures for their
citizens with regard to health issues.
The administrative cost of the Danish health care system
constitutes 4.3 percent of the total spending.\7\
---------------------------------------------------------------------------
\7\ Source: Danish Regions.
---------------------------------------------------------------------------
the hospital sector
The hospital sector is the responsibility of the five regions. The
regions are to provide free hospital treatment for the residents of the
region and emergency treatment for persons who are temporarily
resident. The obligation to provide citizens with hospital treatment is
normally fulfilled by the individual region's own hospitals.
The Ministry of Health and Prevention (through the National Board
of Health) contributes to health care planning in the form of guidance
and regulation regarding the definitions of basic and specialized
treatments and functions in the hospital services. It also regulates
how different forms of treatment should be organized, including
coordination of the different levels of treatment.
The regions are required to make agreements among themselves
regarding the use of highly specialized departments, in order to
provide patients equal access to necessary specialized treatment
irrespective of which region they live in. Furthermore, the regions
may, upon authorization from the National Board of Health, refer
patients to highly specialized treatment abroad, paid for by the State.
The regions can also refer patients to approved hospitals abroad and
pay for the services themselves. These options are primarily used for
treatment of rare conditions or for highly specialized treatment that
cannot be offered in a relatively small country like Denmark.
free choice of hospitals
Since January 1, 1993, citizens in need of hospital treatment have
been free to choose, within certain limits, in which hospital they wish
to be treated. Citizens may choose among all public hospitals offering
basic treatment and a number of smaller, specialist hospitals owned by
associations, which have agreements with the regions. If following a
medical evaluation a citizen is judged to be in need of specialist
treatment, he/she has a further choice between hospital departments in
Denmark offering treatment on the same specialized level. Citizens may
choose among private hospitals or clinics in Denmark or abroad, if the
waiting time for treatment exceeds 1 or 2 months (depending on
condition), and if the chosen hospital has an agreement with the
region's association regarding treatment.
primary health care services
All residents in Denmark are entitled to public health care
benefits in kind. Citizens do not pay any special contributions to this
scheme, as it is financed through taxes. The Regions administer both
the public hospitals and the primary health care scheme, whereas local
administration of the primary health care service lies with the
municipalities.
All general practitioners, specialists, dentists, physiotherapists,
chiropractors etc. are licensed by the State. The public health care
scheme subsidizes treatment for persons. This treatment is provided by
general practitioners, specialists etc. who have made collective
agreements with the public health care scheme. The Regions' Board for
Wages and Tariffs enters into collective agreements with the
organizations that represent the various professions. The tariffs are
binding and are typically renegotiated every second year.
general practitioners
Any person who is entitled to public health care benefits can
choose between being covered in Group 1 or Group 2. Persons covered in
Group 1 have to register with a specific general practitioner, and
persons in Group 2 have the right, but not the obligation, to register
with a specific general practitioner of their choice. Persons in Group
2 may visit any specialist without visiting a general practitioner
first. All Danes can freely choose their general practitioner, who is
obliged to take on all new patients. If too many patients wish to be
assigned to the same practitioner, he/she can temporally stop accepting
new patients on the list.
Persons covered in Group 1 have the right to free medical services
from their general practitioner or specialist. Persons insured under
Group 2 have to pay part of the cost of medical help from a general
practitioner or specialist. The subsidy to persons insured under Group
2 corresponds to the cost of similar medical help from a specialist for
persons in Group 1. About 98 percent of the Danish residents belong to
Group 1.
dentists
All residents in Denmark are free to choose their own dentist.
There are approximately 4,600 authorized dentists. Around 2,500
dentists are included in the collective agreement with the public
health care scheme.\8\ The majority of the costs for dental treatments
for adults are paid for by the users themselves as out-of-pocket
payments. However, the public health care scheme pays a minor subsidy
per visit for preventive and other dentistry treatments. Reference from
a general practitioner is not required. Children under the age of 18
receive free dental care. Furthermore, there are special arrangements,
with limited user payment, for those who have difficulties using the
ordinary public dentistry services due to low mobility or mental or
physical disability.
---------------------------------------------------------------------------
\8\ Source: Ministeriet for Sundhed og Forebyggelse, Health Care in
Denmark, 2008, ISBN: 978-87-7601-237-3.
---------------------------------------------------------------------------
physiotherapists
There are approximately 2,100 physiotherapists.\9\ The public
health care scheme pays part of physiotherapy treatment, but persons
with serious physical disabilities are entitled to physiotherapy free
of charge. The treatment is only subsidized if prescribed by a general
practitioner.
---------------------------------------------------------------------------
\9\ Source: Ministeriet for Sundhed og Forebyggelse, Health Care in
Denmark, 2008, ISBN: 978-87-7601-237-3.
---------------------------------------------------------------------------
home nursing
The municipalities must provide home nursing free of charge, when
it is prescribed by a general practitioner. Moreover, the
municipalities are obliged to provide all necessary appliances free of
charge. Home nursing provides treatment and nursing at home for people
who are temporarily, chronically or terminally ill.
medicine
Most medicine is sold by pharmacies which are authorized by the
State. The Ministry of Health and Prevention decides the number of
pharmacies and where they may be situated. General reimbursement is
granted for the costs of medicinal products which have been authorized
for reimbursement by the Danish Medicines Agency. In general,
reimbursement is granted for medicinal products which have a certain
and valuable therapeutic effect when used on a well-defined indication.
Furthermore, the price of a given medicinal product must be
proportionate to the effect of the product.
The reimbursement will be calculated on the basis of the price of
the cheapest medicinal product among the different products with the
same effect and the same active ingredients. The pharmacy is obligated
to give patients the cheapest product. Chronically ill patients can be
included in a special reimbursement scheme with a yearly ceiling of DKK
3,600 (US$ 600) by the Danish Medicines Agency. Otherwise the patient
pays 15 percent of the cost above the yearly ceiling. All
pharmaceuticals prescribed as part of specialized hospital treatment
are provided free of charge to the patient.
quality and patient safety
The Danish Institute for Quality and Accreditation in Healthcare
and the National Indicator Project has been established to create
Danish standards and indicators and to conduct the accreditation of
Danish health care.
Data generated through the Danish Quality Model is made available
to health professionals and the general public. The results are
available on the integrated web portal for health matters in Denmark
www.sundhed.dk, serving both professionals and the general public. On
the web portal citizens can view their own medical record (treatment at
hospitals) and the prescription medication they have purchased, using
their personal digital signature.
Every second year, the Danish Regions and the Ministry of Health
and Prevention conduct a survey of patients' experiences in hospitals.
The objective of the survey is to compare patient experiences at
hospital level and at medical specialties level. The survey includes
questions on, for instance, clinical services, patient safety, patient
and staff member continuity, co-involvement and communication,
information, course of treatment, discharge, inter-sectorial
cooperation, physical surroundings, waiting time and free hospital
choice.
The surveys generally show that the patients' overall impression of
the hospitalization process is positive. They also identify areas in
which the patients see a potential for improvement.
A national reporting system for adverse events was established in
2004. The reporting system aims to collect, analyze and communicate
knowledge of adverse events, in order to reduce the number of adverse
events in the health care system. Patients and relatives can report
adverse events, and all health care professionals are required by law
to report any adverse events they become aware of in connection with
health care services.
Patients can seek compensation for injuries caused by examination
or treatment in hospitals or by authorized health care professionals in
private practice through the Patient Insurance Scheme. According to the
Act on the Right to Complain and Receive Compensation within the Health
Service, compensation will be granted in the following situations: If
it can be assumed that an experienced specialist would have acted
differently in the given circumstances, thereby avoiding the injury; if
the injury is due to the malfunction or failure of technical
instruments; if the injury might have been avoided using another
available and just as effective treatment technique or method; or if
the injury occurred as the result of examination or treatment in the
form of infections or other complications that were more extensive than
the patient should reasonably have to endure. Patients may also receive
compensation for injuries caused by medicinal products.
health outcomes
In an international perspective, health status in Denmark can
generally be characterized as good. Surveys show that Danish citizens
continue to consider their own health as being good. In a questionnaire
survey from 2010, 85 percent of the population perceives their own
health status as ``excellent'' or ``very good''.\10\
---------------------------------------------------------------------------
\10\ Source: Sundhedsprofil2010.
---------------------------------------------------------------------------
The Danish life expectancy is rising again after a period of
stagnation in the 1980s. Since the mid-1990s, the Danish life
expectancy has been improving and at an average of 80.1 years is in
line with the OECD average. Life expectancy for women is 82.1 years,
compared with 78.1 for men.\11\ Historically high smoking rates and
high alcohol consumption are typically blamed for the relatively low
life expectancy.
---------------------------------------------------------------------------
\11\ Source: OECD Health Data 2013.
---------------------------------------------------------------------------
The proportion of regular smokers among adults has shown a marked
decline over the past 25 years in most OECD countries. In Denmark, the
percentage of adults who report that they smoke every day has decreased
by almost two-thirds, from 46.5 percent in 1985 to 17 percent in 2013.
Smoking rates among adults in Denmark is now slightly below the OECD
average (20.9 percent in 2011). At the same time, obesity rates have
increased in recent decades in all OECD countries. In Denmark, the
obesity rate among adults was 13.4 percent in 2010, up from 9.5 percent
in 2000. The average for the OECD countries was 15.0 percent.\12\
---------------------------------------------------------------------------
\12\ Source: OECD Health Data 2013 and Sundhedsprofil2013.
---------------------------------------------------------------------------
The Euro Health Consumer Index (EHCI) ranks 35 national European
health care systems on 48 indicators, covering six areas that are
essential to health consumers: Patients' rights and information,
Accessibility of treatment (waiting times), Medical outcomes, Range and
reach of services provided, and Pharmaceuticals and Prevention. In 2013
Denmark, was ranked second among the 38 countries. Denmark scores
especially high on patient rights, information and range and reach of
services provided. Denmark scores relatively low in the prevention and
health outcomes sub-disciplines.\13\
---------------------------------------------------------------------------
\13\ Health Consumer Powerhouse, Euro Health Consumer Index 2013,
ISBN 978-91-980687-2-6.
Senator Sanders. Thank you very much, Mr. Kjellberg.
Now, we will begin with questions and comments. Let me
begin by asking all of our distinguished panelists a very
simple question.
In the United States today, we are the only Nation in the
industrialized world that does not guarantee people healthcare
as a right. And we still have, although the numbers have gone
down since the Affordable Care Act, but we still have many,
many millions of people who have no health insurance at all,
others have high copayments or deductibles.
So let me ask all of the panelists a very simple question.
Should healthcare be a right of all people regardless of
income? Yes, no, maybe.
Ms. Cheng, should healthcare be a right of all people?
Ms. Cheng. I think it should because it is a sign, an
expression of a civil society.
Senator Sanders. OK. I am going to ask for brief answers.
Dr. Yeh.
Dr. Yeh. Yes, access to healthcare regardless of the job,
the income is an inalienable right in our constitution.
Senator Sanders. OK. Ms. Pipes.
Ms. Pipes. No, we are entitled to life, liberty, and the
pursuit of happiness. How do you determine which right is worth
more? Do we have a right to housing, a right to food, a right
to healthcare? How do you measure which is the appropriate
level? So, no.
Senator Sanders. OK. Thank you.
Dr. Martin.
Dr. Martin. Yes, access to healthcare is a human right, and
I know that the vast majority of Canadians in poll after poll
feel the same way.
Senator Sanders. Mr. Kjellberg.
Mr. Kjellberg. Yes, I believe that access to healthcare
should be a right.
Senator Sanders. Dr. Hogberg.
Mr. Hogberg. Yes, I think it should be a right in the
classical, liberal notion of rights. That Government should not
interfere. Congress should make no law and so forth. So yes,
everyone should have the right to healthcare in that sense.
Senator Sanders. Dr. Rodwin.
Mr. Rodwin. We have a right for healthcare in the United
States for emergency care. I believe that should be extended to
primary care as well.
Senator Sanders. Let me stay on that point, maybe get to
Dr. Hogberg. You indicated that you thought healthcare should
be a right, but Government should not be involved in that
process. Does that suggest that you would do away with the
Government-run Medicare program?
Mr. Hogberg. It is a moot point.
Senator Sanders. No, it is not.
Mr. Hogberg. It is a very moot point because seniors vote
at a very, very high rate and we are not getting rid of
Medicare. It is an academic question.
Senator Sanders. But I am asking you as an academic.
Seniors, do. I think you are right. It is a popular program,
but if you say Government should not be involved in healthcare,
and Medicare is a Government healthcare program. In your
judgment, in the best of all possible worlds, should the
Government, should we vote to get rid of Medicare? Some people
think we should. What do you think?
Mr. Hogberg. I think it is a moot point. It is here to
stay.
Senator Sanders. Well, I think you did not answer my
question.
Ms. Pipes, I would like to ask you that question.
Ms. Pipes. I believe that we are not going to get rid of
Medicare. Medicare is a program for our seniors. I think we do
have severe problems. The Medicare trustees have said that
Medicare will be bankrupt by 2024 at a cost of over $1
trillion.
Senator Sanders. I just wanted to ask you a simple
question.
Ms. Pipes. It should be----
Senator Sanders. Medicare is a Government-run program.
Ms. Pipes. Right.
Senator Sanders. As Dr. Hogberg indicated, I think it is a
popular program. We could disagree. We have disagreements. My
question is should, in your judgment, we abolish this
Government-run Medicare program?
Ms. Pipes. Not entirely. Medicare should be there for those
people who truly need it. The problem is----
Senator Sanders. Truly need it, but not as it is right now.
Ms. Pipes. Because a lot of people are wealthy, can afford
care, and they are----
Senator Sanders. Well, not a lot of people are wealthy.
Ms. Pipes. They are putting a lot of cost pressure on the
system.
Senator Sanders. All right.
Ms. Pipes. Paul Ryan----
Senator Sanders. Let me ask----
Ms. Pipes. I mean, Congressman Ryan, I think, has some very
good ideas----
Senator Sanders. Right. And he would transform Medicare
into a voucher program.
Dr. Rodwin, let me ask you a question. Despite the fact
that our healthcare outcomes are not particularly good in terms
of infant mortality, in terms of life expectancy, the United
States ends up spending almost twice as much money per person
on healthcare as any other Nation. Why is that? And we will
give Senator Burr additional time as well.
Dr. Rodwin, why is that?
Mr. Rodwin. We spend more, Senator Sanders, for several
reasons. First, our prices are higher than all other wealthy
OECD nations.
Senator Sanders. All right. If a woman has a birth in this
country compared to France, how much more does it cost? Give me
some examples.
Mr. Rodwin. It can cost different prices here depending on
who insures you. It can range from $5,000 to $27,000; the
figures are in the excellent paper by Mei Cheng from OECD for
all to see. So price is one very, very important phenomenon.
Prices of drugs, prices of----
Senator Sanders. How do drugs prices compare in the United
States compared to other countries?
Mr. Rodwin. In the aggregate, they are much higher. Much,
much higher.
Senator Sanders. Why is that?
Mr. Rodwin. Why is that?
Senator Sanders. Yes.
Mr. Rodwin. Because we have no price control.
Senator Sanders. So if I need a cancer drug in the United
States, why is it much more expensive here than it is in Canada
or in France?
Mr. Rodwin. In Canada and in France, you have regulated
prices for these drugs and people have access to them.
Senator Sanders. But that interferes with the free-market
system. Is that a good idea?
Mr. Rodwin. Of course, it is a good idea. The free-market
system does not exist anywhere in healthcare. I challenge
anyone to give me one example of a free-market system that is
operational and works. That is a fine idea in theory, but I
challenge anyone to give me one, one concrete example. All the
evidence suggests that it does not work.
Senator Sander. OK. Senator Burr.
Senator Burr. Dr. Martin, in your testimony, you note that
Canadian doctors exiting the public system for the private
sector has had the effect of increasing waiting lists for
patients seeking public healthcare.
Why are doctors exiting the public system in Canada?
Dr. Martin. Thank you for your question, Senator.
If I did not express myself in a way to make myself
understood, I apologize. There are no doctors exiting the
public system in Canada. In fact, we see a net influx of
physicians from the United States into the Canadian system over
the last number of years.
What I did say was that the solution to the wait time
challenge that we have in Canada, which we do have a difficult
time with waits for elective medical procedures, does not lie
in moving away from our single-payer system toward a multi-
payer system, and that is borne out by the experience of
Australia. Australia used to have a single-payer system and in
the 1990s moved to a multiple payer system where private
insurance was permitted.
A very well-known study by Duckett, et al., tracked what
took place in terms of wait times in Australia as the multi-
payer system was put in place. And what they found was in those
areas of Australia where private insurance was being taken up
and utilized, waits in the public system became longer.
Senator Burr. What do you say to an elected official who
goes to Florida, and not the Canadian system, to have a heart
valve replaced?
Dr. Martin. It is actually interesting because, in fact,
the people who are the pioneers of that particular surgery,
which Premier Williams had, and had the best outcomes in the
world for that surgery are in Toronto at the Peter Munk Cardiac
Center just down the street from where I work.
So what I say is that sometimes people have a perception
and I believe that, actually, this is fueled in part by media
discourse that going to where you pay more for something that
that necessarily makes it better. But it is not actually borne
out by the evidence on outcomes for that cardiac surgery or any
other.
Senator Burr. Well, one would believe the American people
prefer their system because they know consciously they pay
more. No, I think it is because they judge quality and they
judge innovation.
Ms. Pipes, in your testimony you noted that more than
42,000 Canadians come to the United States each year for
healthcare.
Why is that?
Ms. Pipes. Because they find that they are on a waiting
list in Canada for too long a period, and they feel that their
health is at stake. So a lot of people in Canada come to the
United States for MRI's, CT scans.
There are many examples in the media of people like Brian
McCreith, who came to the United States because he was told by
his primary care doctor that he might have a brain tumor, but
the wait for an MRI was very long. He spent $1,000, came to the
United States, paid-out-of-pocket.
You will see advertisements in Canadian newspapers for
MRI's, for neurosurgery.
Senator Burr. It is a pretty fertile ground to market in.
Ms. Pipes. Right.
Senator Burr. Dr. Martin, in your testimony, you state that
the focus should be on reducing waiting times in a way that is
equitable for all. What length of time do you consider to be
equitable when waiting for care?
Dr. Martin. Well, in fact, the Wait Time Alliance in
Canada, sir, has established benchmarks across a variety of
different diagnoses for what is a reasonable period to wait.
And what we have found is that actually working within the
single-payer system, we can reorganize things.
I waited more than 30 minutes at the security line to get
into this building today, and when I arrived in the lobby, I
noticed across the hall, that there was a second entry point
with no lineup whatsoever. Sometimes it is not actually about
the amount of resources that you have, but rather, about how
you organize people in order to use your queues most
effectively. And that is what we are working to do because we
believe that when you try to address wait times, you should do
it in a way that benefits everyone, not just people who can
afford to pay.
Senator Burr. On average, how many Canadian patients on a
waiting list die each year? Do you know?
Dr. Martin. I do not, sir, but I know that there are 45,000
in America who die waiting because they do not have insurance
at all.
Senator Burr. Let me go back to Dr. Rodwin's statement. The
American system has access to healthcare for everybody. It is
called the emergency room. Now, we do not admit that clearly
because we are lobbying for a particular angle, but every
American can access healthcare. They can access primary care.
And Dr. Rodwin, I would agree with you that we ought to
make sure that there is a medical home for practically
everybody we can place. We do not do it in Medicaid. We should.
States should adopt it because primary care is an absolute
necessity to wellness.
But Mr. Kjellberg, how many Danish citizens have
supplemental health insurance policies and why has that number
been increasing in recent years?
Mr. Kjellberg. About half the population got co-payment
insurance, and that have increased dramatically over the last
year because the family were included, the children were
included and that brought up the numbers quite significantly.
But the number for policyholders have not really changed much.
Senator Burr. But half the population has supplemental
insurance.
Mr. Kjellberg. Co-payment insurance, and then many people
in the labor market also as part of a benefit package are
offered health insurance. So you can have faster access to
elective care.
Senator Burr. So they can actually buy their way to faster
access.
Mr. Kjellberg. Oh, you can buy that. There are private
hospitals you can buy any hospital services in Denmark.
Senator Burr. So they have options. They have choices.
Mr. Kjellberg. They have choice, yes.
Senator Burr. Dr. Rodwin, in your testimony, you note that
Parliament sets healthcare expenditure targets each year. If a
hospital or a physician exceeds their target expenditure by
billing for higher than projected volume of services, prices
are negotiated downward for the following year.
Beyond volume or utilization of services, are there quality
metrics that the French use to determine reimbursement for
physicians or other providers in order to incentivize quality
care for patients? For example, measuring health outcomes to
ensure patients are receiving quality care.
Mr. Rodwin. This is a science that is not well-developed,
neither in our country nor in France, but they are working on
this very question, which is very timely right now. That is,
the negotiations focus, certainly on volume, but now there is a
program called EFAC which will remunerate physicians. That is
actually already in place if they follow certain standards of
preventive care.
Senator Burr. But they are penalized if they bill at a
higher rate 1 year, they are penalized in the next year by a
reduction in reimbursement.
Mr. Rodwin. No. Every year, sir, there is a negotiation to
set these rates, and if the volume goes up, then the following
year the price--that is the practice. It is the volume for
health performance standard.
Senator Burr. Thank you, doctor.
Thank you, Mr. Chairman.
Senator Sanders. Senator Enzi.
Statement of Senator Enzi
Senator Enzi. Thank you, Mr. Chairman.
I want to thank the distinguished panel for all of the
information that they have provided. It is a little different
than a session that Senator Kennedy and I held several years
ago.
But first of all, I want to thank Ms. Pipes for being here.
She wrote a book in 2010 that predicted what was going to
happen with our healthcare system as it is now. And then more
recently, she has written something called ``The Cure for
Obamacare,'' and it is not even copyrighted, but it is an
outstanding book on what we could do to repair the damage that
has been done to our present system. And I thank you for your
effort on that and hope I can get a few more people to read
them.
I mentioned Senator Kennedy and I. When I was the Chairman
and he was the Ranking Member, we went to a system called a
roundtable and this is very similar except that at a
roundtable, we had, 8 to 10 people and they were all
practitioners of some sort in the healthcare area, rather than
people who are studying the healthcare system.
He and I would come up with the questions for the panel as
well as total agreement on who should serve on it, as opposed
to the way we do panels now, which is the Chairman gets to pick
everybody, you know, four-fifths of every panel and the Ranking
Member gets to pick another one or two, and then we all come
and beat up on the witnesses. So at a roundtable, the Senators
really did not speak much.
One of the questions we asked is, will universal single pay
healthcare work in America? And the first person was an
engineer for hospitals and he was not sure. But the other
practitioners all said, ``America will not settle for universal
single pay healthcare.''
At the end of that hearing, that roundtable, Senator
Kennedy came to me and he said, ``I guess we had better take a
look at some of the things you have suggested like small
business health plans, and being able to sell across State
lines,'' and things like that.
And I think one of the things that this panel points out,
most of you are talking about countries whose population is,
and size in some cases, is relative to our States, each State.
And in the United States, each State has healthcare plans and
they do it differently. And as the chairman mentioned, some of
them have good ideas and those spread to others.
But what will work in Canada with a smaller population, or
Denmark with a smaller population, or a France with a smaller
population might not work in the United States especially under
the form of government that we have.
I am pretty sure that the Affordable Healthcare initiative
was designed to fail. That was predicted by Senator Gramm about
15 years ago, and he thought that they would come up with a
system that would fail, and then we could go to universal
single pay healthcare.
I think that would have worked, except for one thing. The
debacle with the design of the exchange reminded people in
America what happens when our Federal Government tries to
handle everything for this vast United States with one plan.
And, of course, we are working on the Homeland Security
committee too, and we are trying to work with another one of
those government agencies that is called the Post Office, and
that is another example that people use of what might happen if
we went to universal single pay healthcare.
I have been to some countries that have a lot of population
like India and they are very proud of their system. I asked how
that system took care of that vast of a population and they
said, ``Well, our doctors see 200 patients a day.'' I do not
think our doctors see 200 patients a day, and would not take
that quick of action.
The question of Medicare that was asked earlier, if people
were given another option, I think they would go with another
option. Too many people in America right now that are seniors,
at least know somebody that tried to see a doctor, and the
doctor said, ``I am not seeing any Medicare patients.'' So
Medicare is not the best example of how to get healthcare in
America.
And I have almost used up my time without asking a
question. I am the accountant on the panel. In fact, I am one
of three accountants in the U.S. Senate, so the questions that
I have are really kind of technical and get down to some of the
costs.
Thank you, Mr. Chairman.
Senator Sanders. Thank you very much, Senator Enzi.
Senator Roberts.
Statement of Senator Roberts
Senator Roberts. Well, I too, want to thank the panel and
thank you, Mr. Chairman, for holding this hearing.
It seems to me that the entire question here has been
summed up by the Chairman, does the Government--if we have a
Government guarantee of healthcare as a right--he posed that
question.
And then with questions, Senator Enzi and Senator Burr have
pointed out is it a right to a waiting list? Actually, I think
that is the statement by Ms. Pipes. And Ms. Pipes, my deep
regrets for the loss of your mother. How long did she have to
wait?
Ms. Pipes. She went to her primary care doctor, a general
practitioner, we call them, in June and she was admitted to
Vancouver General Hospital, which is one of the largest
hospitals in Canada in late November.
Senator Roberts. Late November, and then you lost her after
2 weeks. Did you say that you could get a hip replacement for a
dog in a week, but you could not get a hip replacement for an
individual for X-number of weeks?
Ms. Pipes. Yes. The wait for orthopedics is one of the
longest waits in Canada, and my friend, Dr. Brian Day, who is
an orthopedic surgeon in Vancouver, made that statement to
``The New York Times''.
Dr. Day, who runs the Cambie Clinic is being sued by the
British Columbia Government for operating a clinic which is
considered illegal in British Columbia. But the interesting
thing is, he told me the other day, the Government keeps
postponing the case. And I think it is because his practice is
so busy with people getting hip replacements and knee
replacements, that they are afraid of the backlash that will
happen because of that.
Senator Roberts. I have legislation that I call the Four
Rationers Repeal bill. I am not going to get into the four
rationing boards, IPAB, CER, et cetera, etc., to address some
of my concerns about the Government controls and where we are
with the Affordable Healthcare Act. I am trying to get ahead of
that curve.
By the way, I do not know, Dr. Martin, does Prime Minister
Harper change the rules and delay implementation of the system
every week like we see going on with the Affordable Healthcare
Act?
Dr. Martin. I am not sure that you want me to answer that
question, sir. I do not completely understand what you are
saying.
Senator Roberts. Well, I am saying that the Prime Minister
of Canada, I do not think changes the National Healthcare Act
that you have in place, which I think is basically a first step
toward single-payer, and I think that was the intent of it.
The President of the United States has changed the
healthcare law. About every Friday we have what we call a
regulation dump. OK? A consortium of unions indicated that they
would like a big change in the Affordable Healthcare Act. He is
going to have a carve out for them.
On the other side of the fence, 27 members of the Finance
Committee, some on this committee, wrote to Marilyn Tavenner,
the Head of the Centers of Medicare and Medicaid Services to
say, ``Whoa. Do not change the Medicare D program that we have
in this country,'' a very popular program, under budget, used
by a great number of our senior citizens. And if we had not
written a letter and if there had not been a real backlash from
the people to save Medicare Part D, it would not have happened.
So we are just sort of riding this thing as we go along,
except, the President does not come to us and asked us to help
him do that with each individual change. I am just wondering
what are the problems you have up in Canada, who makes the
change if, in fact, there needs to be a change.
Dr. Martin. Well, I suppose the answer to your question
comes in two parts.
The first is an acknowledgement, I think, of what Senator
Enzi was saying earlier on which is that like the United
States, Canada is a huge country and our health insurance is
actually not provided at the national or Federal level. It is
provided at the Provincial level or the equivalent of your
States.
And so, the notion that something can begin in one sub-
national jurisdiction and then spread is, in fact, exactly how
we came to have 13 separate single-payer systems in the 13
Provinces and territories of Canada. And so, the first part of
the answer to your question is, no, we do not see those kinds
of changes being made to healthcare legislation at the national
level.
But the second part of the answer to your question is that
it is widely known in Canada that the public commitment to our
single-payer Medicare system is so strong that for a prime
minister of any political stripe to try to alter that and
undermine it in any way would be political suicide.
Senator Roberts. OK. I got your message.
Dr. Hogberg, you mentioned the fact we ought to keep the
politicians out and we have just had two changes, Medicare Part
D and then also a carve out for the unions. Is that an example
of what we are talking about? And 33 other changes, by the way,
and that is the last count that I have.
Mr. Hogberg. There are very good examples of how groups
that have political clout can keep changes from happening that
they do not want to see. Unions and seniors certainly have
plenty of clout up here on Capitol Hill.
Would you mind if I were to just take a second to talk
about some of the outcome measures here?
Senator Roberts. I am already over time, 23 seconds.
Mr. Hogberg. OK.
Senator Roberts. I will ask the permission of the chairman
if that would be possible.
Senator Sanders. Take another 30 seconds.
Senator Roberts. All right. Thank you, sir. You got 30
seconds.
Mr. Hogberg. Yes. First of all, with regard to life
expectancy and infant mortality, using those as measures to
tell you something about a healthcare system, is a bit like
using batting average and on-base percentage to tell you
something about football.
Life expectancy and infant mortality, there are so many
factors that go into those outcomes that are not related to the
healthcare system, that the healthcare system has no control
over, that they are really not good measures for telling you
the quality of a healthcare system.
One other problem is that many of these measures are not
measured the same from country to country. Infant mortality
being the----
Senator Roberts. I thank you for that. The Chairman has
already hit the gavel.
My main question is access to care and denial of that care,
and what other alternative a person has with a single-payer
system.
Senator Sanders. OK. Senator, we are going to have another
round of questions. We have a great panel. I think they are
good questions.
Let me pick up on a point that Dr. Martin raised, because I
was going to ask the same question. I live 1 hour away from the
Canadian border. Canadians watch American television. Canadians
are very familiar with our political system, probably know more
about politics in America than most Americans know.
Is your Prime Minister a socialist?
Dr. Martin. No, sir. Our Prime Minister is quite
conservative. He is the leader----
Senator Sanders. Conservative.
Dr. Martin. Yes, he is.
Senator Sanders. So obviously, as a conservative, he wants
to implement the American healthcare system that the Canadians
are very aware of. I gather that was probably the first thing
he did when he took power. Is that right?
Dr. Martin. Not exactly.
Senator Sanders. Why not?
Dr. Martin. Support for single-payer Medicare in Canada
goes across all political stripes.
Quite famously, we had the leader of the most rightwing
party in the Canadian Federal debate on television hold up a
sign in the middle of the debate on which he had written in
marker, ``No Two-Tier,'' as a means of trying to reassure the
Canadian public that, if elected, he would not dismantle the
healthcare system.
Senator Sanders. In other words, you have a nation
bordering on the United States, two nations that are probably
as close together in so many respects as any two nations in the
world, a conservative prime minister, and yet there is no
effort to move to an American healthcare system.
I would say to my colleagues there is not a better example
of maybe how people feel about two systems. They know the
American system. They have a conservative prime minister. They
can move in our direction, but for whatever reason, and I think
sensible reasons, they understand that a system that guarantees
healthcare to all of their people in a cost-effective way is
the way that they want to stay.
Ms. Pipes, let me ask you that question. Why do the
Canadians not come to the American healthcare system?
Ms. Pipes. As I mentioned in my testimony, about 42,000
Canadians every year come to the United States and pay out-of-
pocket for----
Senator Sanders. That was not my question.
Ms. Pipes. No, I just wanted to make that point first.
Second, the Canadian Government and the Provinces who
administer the Canadian healthcare system, this started in
1974. A lot of people in Canada have no idea of an alternative
system.
Senator Sanders. Oh, my goodness. They live an hour away
from me in Burlington, VT. They watch American television. They
read American newspapers. They have no idea of what goes on in
the United States of America? That is a little bit hard for me
to believe.
Ms. Pipes. Also I would say that Canadian people are very,
very nice people. They are not impatient like Americans.
[Laughter.]
My mother said to me, ``I hope you are not becoming an
impatient American.'' I am an impatient American. Americans do
not want to wait.
Senator Sanders. I think the answer is pretty clear. The
Canadians have seen the American system. They prefer their own.
Now, I wanted to say a word about access and waiting lists.
Senator Roberts raised that issue and Senator Burr did.
I want to focus on that picture over there. I know it is
hard to believe, and I mean this quite seriously. This is the
United States of America. This is not a Third World developing
country. This is a town called Wise, VA and I do not mean to
pick on Virginia, because I think the same story can be told
all over America.
So when we talk about access, what we are looking at here
is that a number of times a year, people, working class people
who have no health insurance at all, are given free healthcare,
episodic care, volunteer doctors very kindly come and in a day,
thousands of people line up because this is the healthcare they
get. This takes place in a field in Wise, VA. I think it is a
stadium in Los Angeles where something similar takes place.
Now, if this is the kind of healthcare that we are proud of
in the United States of America, well, some of us have some
strong disagreements about that.
Mr. Rodwin, I want to get back to another point which, to
me, is very important. It is, and I would like Dr. Martin to
comment on this as well, and maybe Dr. Yeh, and Ms. Cheng. To
get good healthcare, you need medicine, very often. If I go
into a French hospital, I leave the hospital, and I am sick,
how much does my medicine cost?
Mr. Rodwin. Under French national health insurance, there
are very high levels of pharmaceutical coverage.
Senator Sanders. Meaning what? My medicine is free or
virtually free?
Mr. Rodwin. Virtually free, 90 percent, 80 percent, 70
percent.
Senator Sanders. Dr. Martin.
Mr. Rodwin. Those prescription drugs that are cut, are cut
because they are ineffective.
Senator Sanders. OK. Dr. Martin.
Dr. Martin. So interestingly, this is an area where we made
a mistake in the design of our single-payer program in Canada.
At the time that Medicare, Canadian Medicare was designed in
the 1950s and 1960s, medication was not a really big part of
the way that we treated disease and medicines were left out of
coverage.
So the single-payer program in Canada does not include
medications and as a result, 1 in 10 Canadians today fails to
fill a prescription or take their medicine as prescribed
because of concerns about cost.
Senator Sanders. Thank you. Mr. Kjellberg, what about
prescription drugs in Denmark?
Mr. Kjellberg. All medicines used at hospital are free of
charge, and if prescription drugs are needed, you have a
maximum co-payment a year of about $600.
Senator Sanders. OK. Dr. Yeh, in Taiwan, how much do
prescription drugs cost?
Dr. Yeh. It is covered by the NHI, but patient has to pay
some co-payment up to a ceiling of about 10 U.S. dollars
Senator Sanders. Ten U.S. dollars?
Dr. Yeh. Up to 10 U.S. dollars and each year, the ceiling
including hospitalization, the ceiling will be one-thousand
U.S. dollars.
Senator Sanders. Ms. Cheng, what is your view on
prescription drugs?
Ms. Cheng. Prescription drug use in the United States, in
fact, is low compared to total health spending. Relatively
speaking in Europe as well as in Taiwan, the percent of moneys
spent on drugs, in terms of total health spending, is a much
higher percentage.
Example, in the French system, it is roughly 25 percent; in
Taiwan, 25 percent of total health spending is on drugs. So
they have much greater access to drugs. That is No. 1.
No. 2, the reason why the drug price----
Senator Sanders. I apologize. My time has gone over.
Senator Murphy has joined us. Senator Murphy, do you have
some questions you wanted to ask?
Statement of Senator Murphy
Senator Murphy. Yes, thank you very much, Mr. Chairman.
Thank you for this hearing and to all of the witnesses. I am
sorry. I had to step out for a few moments.
I guess I just have one broad question for the panel,
because I think it has come up in some of the testimony,
especially, I think, from Ms. Pipes and Dr. Martin. I am always
fascinated by this intersection between convenience and
quality. And the extent to which metrics like wait times often
do not automatically translate into differences in outcomes.
Often, they do. I mean, there are some services in which if you
do not get it right away, it is going to have a pretty severe
consequence on your health and on the amount of money you are
going to spend later on.
But there are parts of this country, for instance, that
have enormous convenience. That you cannot drive more than a
couple of miles outside your door without finding an MRI
machine or a dialysis center. There is healthcare all around
you. And yet, that does not seem to be adding to quality. That
seems to be adding to convenience.
Similarly, I hear all of the stories from Canada that Ms.
Pipes talked about in terms of wait times. And yet, when we
sort of look at all the underlying data, it tells us that, in
the end, a lot of the diseases where you have wait times that
might cause you to question the system, the outcomes in Canada
are fundamentally better than they are in the United States
from heart disease to cancer. So that is not to say that we
should not look at issues of convenience, and issues of wait
times, and your proximity either spatially or temporally to
services.
But I am specifically kind of asking Dr. Martin and Ms.
Pipes to talk about this, but maybe asking others on the panel
who have thoughts about this with your experiences to talk
about how in other countries where there may be less easy
access to health services, not as much healthcare as we have in
the United States. We have tons of it. As to whether that
actually has a true relation all the time to the outcomes that
we get.
Dr. Martin, I would be happy to have you start.
Dr. Martin. Thank you. It is a really thoughtful question,
and I guess I might reframe it slightly by saying that what you
refer to as ``convenience,'' I would refer to as ``patient
experience.''
When we talk about quality in healthcare, the so-called
Triple Aim coined by Don Berwick of the IHI here, the notion of
quality having three dimensions. One is population health
outcome on which single-payer countries like Canada fair, in
fact, quite well.
Another aspect of the Triple Aim is cost per capita, and
the third is patient experience. And, of course, patient
experience is important. I said that I was not here to be an
apologist for every single thing about the Canadian healthcare
system. We are working very hard on reducing wait times for
elective surgeries because we believe that patient experience
matters.
But, you are right, that our outcomes are very good. And I
think it is critically important for the committee to
understand that single-payer does not equal wait times. We
heard our colleagues from Taiwan tell us quite clearly that
they have a single-payer system with virtually no wait times,
with 99.6 percent coverage of the entire population.
Of course we should consider all aspects of the Triple Aim
when we talk about quality, but we should avoid oversimplifying
the message and equating a single-payer model with wait times.
That simply is not the case.
Senator Murphy. Ms. Pipes.
Ms. Pipes. Well, Madam Justice Marie Deschamps, who retired
from the Canadian Supreme Court in 2012, in that hearing in
2005 said, ``The idea of a single-payer healthcare system
without waiting lists is an oxymoron.'' So I just want to make
that point and the Canadian Supreme Court is not a conservative
court by any stretch of the imagination.
I think you have to----
Senator Murphy. But you just said, do you dispute the
characterization of the Taiwan system?
Ms. Pipes. Well, the United States, I think as Senator Burr
said, we have 350 million people here. We have such a diverse,
we do not have a homogenous society, which is much more typical
in many other countries around the world.
I did want to make a point about life expectancy, and the
WHO, the World Health Organization, often says the United
States ranks 37th out of 190 countries. As Professor Steven
Woolf, who was the lead author in the Institute of Medicine's
study, which was really based on life expectancy and infant
mortality rate, said, ``Life expectancy and other noted health
outcomes are determined by much more than healthcare.'' And
here in America, when you look at our lifestyle choices, we
have a huge obesity problem. We have homicides and car accident
deaths at a much higher per capita rate than any country in the
world.
So when you look at the number for 5-year survival rates on
cancer, based on the work done by ``Lancet Oncology,'' the
United States ranks No. 1 in the world on 13 of the 16 most
popular cancers. So you have to be careful when you are doing
statistics that you are comparing apples to apples.
Senator Murphy. OK. Thank you very much. My time is
expired, Mr. Chairman.
Senator Sanders. Senator Burr.
Senator Burr. Thank you, Mr. Chairman. Let me say, before I
ask the second round of questions, there has been a lot of
reference to Medicare and single-payer system.
Let me just remind everybody, Medicare for a working
lifetime, I pay into a system to finance part. There is a
Government share. When I become a senior, and I go and get Part
B coverage, which is the physician's side, I pay a premium for
that. When I go to get drug coverage, I pay a premium for that.
You cannot look at Medicare and say, ``This is like the single-
payer system in Taiwan,'' where the Government picks up the
entire tab.
Now, healthcare is not free. We all know that. It comes out
of general taxes, but there is a difference for seniors in
America that they are personally invested into a system and
they even have choices. They can choose a Medicare Advantage,
which is a private sector coverage, at least they could before
Obamacare, and now, that is getting knocked out. And they can
choose, as a senior, to buy medigap insurance so they can buy
their way out of skin in the game.
The one thing that I heard is that everybody, except for
possibly Taiwan, has some degree of co-pay. France does, Canada
does not but they do as it relates to drugs because they are on
their own for drugs.
What I want to talk about is drugs because Ms. Cheng, Dr.
Yeh, our friend from Taiwan, said in his testimony that
patients in Taiwan can experience delays in coverage for new
drugs and new technologies from 2 to 5 years from adoption of
the United States in that.
Ms. Cheng, you touched on prescription drug prices in your
testimony. Almost all countries enjoy the benefits of America's
medical research and development, but developed countries do
not pay their fair share for the immense expense involved in
the development of innovative and lifesaving therapies. These
countries are free-riders on the United States by enacting
price controls on drugs and devices.
How would sharing more of the financial burden that comes
with research and development of lifesaving drugs and devices
affect comparison between the United States and the countries
we are discussing today?
That is for you, Ms. Cheng.
Ms. Cheng. Thank you for this question. First of all, yes,
the United States does fund a whole lot of R&D in
pharmaceutical and other device innovations. But in so doing,
we are also helping to make the American healthcare system that
much more expensive; in fact, so expensive that we are pricing
people out of healthcare altogether--so in terms of R&D, in
single-payer systems.
I think the governments of these systems can set aside
specific R&D funds to help with R&D for innovations.
Senator Burr. Ms. Cheng, in the U.S. system, when we
shifted from exclusively doing bypass surgery for heart
blockage----
Ms. Cheng. Right.
Senator Burr. And we went to catheterization because
innovation allowed us, or technology allowed us to do
catheterization.
Do you consider that to be a cost savings to the United
States or the expense of a new innovation?
Ms. Cheng. If it is done on the right patients at the right
time, yes, it is a cost saving innovation and application of
that innovation.
However, I think with the U.S. healthcare, there is a very
serious issue, which has not been addressed, which is overuse
of services.
Senator Burr. Is that the risk of letting the American
people choose healthcare and having a marketplace, versus
having Government dictate what, where, when, and how much?
Ms. Cheng. It is not a matter of letting people decide in
the marketplace where to go or what to choose what you have.
Senator Burr. We over prescribe grossly pharmaceuticals in
the United States. Why? Because the American patient has the
right to go in and ask their doctor, and because of our
liability exposure, the doctor feels compelled to write the
script in the United States. I would tell you that is a lot of
the healthcare, a lot of the drug costs.
Ms. Cheng. Right.
Senator Burr. Let me just move----
Ms. Cheng. May I just say this?
Senator Burr. Yes, ma'am.
Ms. Cheng. In an Institute of Medicine book, in fact, I
brought it, it says that this overuse of everything--services,
devices, drugs--it causes waste in the American health system.
According to this Institute of Medicine book, about one-third
of U.S. healthcare is waste and $750 billion a year, and of
that, unnecessary services account for $210 billion of the $750
billion.
Senator Burr. I would not disagree with the conclusion of
that.
I have one last question, Mr. Chairman, and it is to Dr.
Hogberg. In contrast to what I have just talked about with Ms.
Cheng, price controls overseas do not reward innovation.
If the United States were to follow the price control
model, what would happen to patients' access to innovative
treatments here in America as well as overseas?
Mr. Hogberg. In the long run, you would see less access to
new, innovative drugs. It would be that simple.
Senator Burr. So if, in fact, we eliminated innovation, in
many cases that innovation, which takes somebody out of a
hospital setting and puts them in an outpatient facility, they
are treated. They no longer have the risk of infection because
of inpatient. They no longer have the days in the hospital.
That has not only been beneficial to the cost in healthcare, it
is actually beneficial to the quality of the outcome.
Mr. Hogberg. Well, sure. Frank Lichtenberg has looked at
this extensively, and he has estimated that for about every
dollar we put into pharmaceuticals, you save well over $3 in
hospital costs by avoiding hospitalizations.
The price controls can have one of two impacts. If you have
a price control that is lower than the market price, you will
see a shortage. If it is above the market price, you will see a
surplus. That is what you are going to end up with: a system of
price controls.
Senator Burr. I thank you. I thank our witnesses.
I would ask the Chairman for unanimous consent to allow us
to submit questions to all the witnesses for the purposes of
the record.
Senator Sanders. Absolutely.
Let me thank all of you for being here. I want to
apologize. I would like to stay for another round of
questioning, but we have votes that are taking place right now.
So I think this has been a very thoughtful and vigorous
discussion, and I appreciate all of you very much for being
here. Thank you.
This hearing is adjourned.
[Whereupon, at 11:40 a.m., the hearing was adjourned.]
[all]