The American health-care system suffers from three serious problems: Health-care costs are rising much faster than our incomes. More than 15 percent of the population has neither private nor public insurance. And the high cost of health care can lead to personal bankruptcy, even for families that do have health insurance.
These faults persist despite annual federal government spending of more than $700 billion for Medicare and Medicaid as well as a federal tax subsidy of more than $220 billion for the purchase of employer-provided private health insurance.
There's got to be a better way. And it should not involve the higher government spending and increased regulation that characterize the proposals being discussed in Congress.
A good health insurance system should 1) guarantee that everyone can obtain appropriate care even when the price of that care is very high and 2) prevent the financial hardship or personal bankruptcy that can now result from large medical bills.
Private health insurance today fails to achieve these goals. It is also the primary cause of the rapid rise of health-care costs. Because employer payments for health insurance are tax-deductible for employers but not taxed to the employee, current tax rules encourage most employees to want their compensation to include the very comprehensive "first dollar" insurance that pushes up health-care spending.
A good system should not try to pay all health-care bills. That would lead to excessive demand, wasteful use of expensive technology and, inevitably, rationing in which health-care decisions are taken away from patients and their physicians. Countries that provide health care to all are forced to deny some treatments and diagnostic tests that most Americans have come to expect.
Here's a better alternative. Let's scrap the $220 billion annual health insurance tax subsidy, which is often used to buy the wrong kind of insurance, and use those budget dollars to provide insurance that protects American families from health costs that exceed 15 percent of their income.
Specifically, the government would give each individual or family a voucher that would permit taxpayers to buy a policy from a private insurer that would pay all allowable health costs in excess of 15 percent of the family's income. A typical American family with income of $50,000 would be eligible for a voucher worth about $3,500, the actuarial cost of a policy that would pay all of that family's health bills in excess of $7,500 a year.
The family could give this $3,500 voucher to any insurance company or health maintenance organization, including the provider of the individual's current employer-based insurance plan. Some families would choose the simple option of paying out of pocket for the care up to that 15 percent threshold. Others would want to reduce the maximum potential out-of-pocket cost to less than 15 percent of income and would pay a premium to the insurance company to expand their coverage. Some families might want to use the voucher to pay for membership in a health maintenance organization. Each option would provide a discipline on demand that would help to limit the rise in health-care costs.
My calculations, based on the government's Medical Expenditure Panel Survey, indicate that the budget cost of providing these insurance vouchers could be more than fully financed by ending the exclusion of employer health insurance payments from income and payroll taxes. The net budget savings could be used to subsidize critical types of preventive care. And unlike the proposals before Congress, this approach could leave Medicare and Medicaid as they are today.
Lower-income families would receive the most valuable vouchers because a higher fraction of their health spending would be above 15 percent of their income. The substitution of the voucher for employer-paid insurance would be reflected in higher wages for all.
Two related problems remain. First, how would families find the cash to pay for large medical and hospital bills that fall under the 15 percent limit? While it would be reasonable for a family that earns $50,000 a year to save to be prepared to pay a health bill of, say, $5,000, what if a family without savings is suddenly hit with such a large hospital bill? Second, how would doctors and hospitals be confident that patients with the new high deductibles will pay their bills?
The simplest solution would be for the government to issue a health-care credit card to every family along with the insurance voucher. The credit card would allow the family to charge any medical expenses below the deductible limit, or 15 percent of adjusted gross income. (With its information on card holders, the government is in a good position to be repaid or garnish wages if necessary.) No one would be required to use such a credit card. Individuals could pay cash at the time of care, could use a personal credit card or could arrange credit directly from the provider. But the government-issued credit card would be a back-up to reassure patients and providers that they would always be able to pay.
The combination of the 15 percent of income cap on out-of-pocket health spending and the credit card would solve the three basic problems of America's health-care system. Today's 45 million uninsured would all have coverage. The risk of bankruptcy triggered by large medical bills would be eliminated. And the structure of insurance would no longer be the source of rising health-care costs. All of this would happen without involving the government in the delivery or rationing of health care. It would not increase the national debt or require a rise in tax rates. Now isn't that a better way?
Friday, October 9, 2009
Thursday, October 8, 2009
Reduce the Deficit by Spending $829 Billion. Huh?
According to the new Congressional Budget Office analysis, the Senate Finance Committee’s health care legislation would cost $829 billion to provide insurance coverage to millions of Americans. But over 10 years, it would also reduce federal deficits by $81 billion.
Huh?
Besides providing insurance coverage, the other main goal of the legislation is to slow the steep rise in federal spending on health care, particularly on Medicare, which covers Americans over age 65 and the disabled. The analysis by the nonpartisan budget office shows that the savings generated by slowing Medicare growth, combined with revenue from new taxes, would more than cover the cost of providing health benefits to roughly 29 million people.
Medicare costs vary substantially, per enrollee, from one part of the country to another, and frequently the places where spending is highest, or growing the fastest, are not achieving better outcomes for patients, health care experts say.
“There is a lot of unnecessary care being provided in Medicare,” said Elliott S. Fisher, who helps produce the Dartmouth Atlas of Health Care, which has long tracked regional disparities in medical spending.
Many health economists say that reducing costs in parts of the country with high growth rates in per-patient Medicare expenditures — so they are closer to the national average — could save the nation hundreds of billions of dollars. And they predict that patients would not perceive any reduction in the quality of care they receive.
“Most of the differences across the country in spending are in how much time people spend in the hospital, and then when they are there, how many different doctors they see, how many difference specialists are involved in their care,” Dr. Fisher said.“Nobody thinks that residents of San Diego or San Francisco or other low-growing regions are being denied appropriate referrals to specialists,’’ he said. “They are just not getting unnecessary ones.”
Some experts, though, say the legislation still would not do enough to eliminate wasteful spending. And that debate is certain to intensify as health care legislation heads to the floor in both chambers of Congress.
Huh?
Besides providing insurance coverage, the other main goal of the legislation is to slow the steep rise in federal spending on health care, particularly on Medicare, which covers Americans over age 65 and the disabled. The analysis by the nonpartisan budget office shows that the savings generated by slowing Medicare growth, combined with revenue from new taxes, would more than cover the cost of providing health benefits to roughly 29 million people.
Medicare costs vary substantially, per enrollee, from one part of the country to another, and frequently the places where spending is highest, or growing the fastest, are not achieving better outcomes for patients, health care experts say.
“There is a lot of unnecessary care being provided in Medicare,” said Elliott S. Fisher, who helps produce the Dartmouth Atlas of Health Care, which has long tracked regional disparities in medical spending.
Many health economists say that reducing costs in parts of the country with high growth rates in per-patient Medicare expenditures — so they are closer to the national average — could save the nation hundreds of billions of dollars. And they predict that patients would not perceive any reduction in the quality of care they receive.
“Most of the differences across the country in spending are in how much time people spend in the hospital, and then when they are there, how many different doctors they see, how many difference specialists are involved in their care,” Dr. Fisher said.“Nobody thinks that residents of San Diego or San Francisco or other low-growing regions are being denied appropriate referrals to specialists,’’ he said. “They are just not getting unnecessary ones.”
Some experts, though, say the legislation still would not do enough to eliminate wasteful spending. And that debate is certain to intensify as health care legislation heads to the floor in both chambers of Congress.
Tuesday, October 6, 2009
Adding Health Advice to Online Medical Records
The national health care debate right now is all about giving more people affordable access to doctors and hospitals. Yet the vast majority of health care decisions — 80 percent or more, experts say — are really made by individuals, instead of medical professionals, whether choices are about diet and exercise or ways of managing chronic conditions like diabetes and heart disease.
The long-term answer to improving the health of the nation’s population and curbing costs, experts agree, is to help people make smarter decisions day in and day out about their own health. And the most powerful potential tool in the march toward intelligent consumerism in health care may be the Web.
That is why on Tuesday, a start-up company led by Adam Bosworth, former head of the Google Health team, plans to become the newest entrant to the online consumer health business.
Already, surveys show that a majority of adults in America routinely scour the Internet for health information. Doctors joke that the standard second opinion of diagnosis and treatment has become a patient’s Google search, with the results printed out and brought to the doctor’s office.
But the Web is still mainly a vast trove of generalized health information. The ideal, health experts say, would be to combine personal data with health information to deliver tailored health plans for individuals. That is what Mr. Bosworth and his San Francisco-based company, Keas (pronounced KEE-ahs) Inc., mean to do.
Using the Keas system, for example, a person with Type 2 diabetes might receive reminders, advice on diet and exercise, questions and prompts presented on the Web site or delivered by e-mail or text messages — all personalized for the person’s age, gender, weight and other health conditions.
Although success is far from certain, Keas has some big partners, including Google Health and Microsoft HealthVault.
Health technology experts say Keas is at the forefront of the effort to combine advanced Web and database technologies so it can personalize health education. The promise, they say, is a big step forward for online health tools, and could help accelerate their adoption — much as the spreadsheet program helped kick-start the personal computer industry back in the early 1980s.
“This is the next generation of applications for online health care,” said Dr. David C. Kibbe, a health technology expert and senior adviser to the American Academy of Family Physicians, who is also a member of the Keas advisory board.
The Obama administration has drafted its guidelines for producing electronic health records — patient records held by doctors and hospitals — with applications like Keas in mind. To qualify for government subsidies, the electronic records must be able to generate patient education materials that help guide care, and eventually share information with personally controlled health records of the sort offered by Google Health and Microsoft Health Vault.
“The goal is not just health care information, but knowledge about what that means and what action to take,” said Dr. John D. Halamka, chief information officer at the Harvard Medical School, and a member of a federal advisory group on electronic health records. “And that is what Keas, and others in different ways, are really starting to think through.”
Other initial partners of Keas are impressed with its technology. Healthwise, a nonprofit supplier of online health information, has created 15 care plans for Keas so far, including ones on high blood pressure, cholesterol, diabetes, weight management and stress management.
Healthwise provides health content to major managed care companies, insurers and Web portals, including Kaiser Permanente, Aetna, WebMD, Revolution Health, Yahoo, MSN and AOL.
But Keas, said Jim Giuffre, president of Healthwise, has a feature that is distinct from other health services online. “They have developed the technology to make decisions from personalized data,” Mr. Giuffre said. “We think it’s going to help consumers make better health care choices.”
Dr. Alan R. Greene, a clinical professor of pediatrics at the Stanford University School of Medicine, has two children’s care plans on Keas, for ear infections and asthma, and is working on others. Dr. Greene has done projects with WebMD and Yahoo in the past. “But this little start-up has an extremely powerful tool, both personalized and interactive,” he said.
For medical experts, Keas is currently helping them with technical assistance. But the company intends to keep simplifying the tools so that individual physicians or health experts can build their own care plans.
The technical game plan at Keas bears the imprint of Mr. Bosworth’s career. As a senior engineer at Microsoft in the 1990s, he led the design team that created Access, a personal computer database program, introduced in 1992, which enabled nonprogrammers to build databases. Later, Mr. Bosworth focused on Internet software, working on Microsoft’s Internet Explorer browser and then XML, an open technology for tagging text documents on the Web and data sharing between programs.
Database expertise, easy-to-use tools for nonexperts and automated data sharing among Web documents are all essential ingredients in the personalized care plans.
At Google, which he joined in 2004, Mr. Bosworth worked on Gmail, Blogger, online spreadsheets and other products. But the company’s leaders knew he was interested in using Internet technology to improve health care. Having studied history at Harvard, Mr. Bosworth is a voracious and eclectic reader and a globe-trotting traveler. (The name “kea” refers to a species of alpine parrot, which he spotted on the South Island of New Zealand).
“I spent 25 years of my life building Lego blocks for computing,” said Mr. Bosworth, 54, adding that the time had come to pursue wider horizons.
His years at Google, Mr. Bosworth said, were good ones, and the work the health team was doing with personal health records was important. Moving people’s data online, where individuals can control it, he said, would be vital to using Internet technology to improve health care — and only big companies like Google and Microsoft can do that.
“But I decided my focus should be on the other side of the equation — what to do with the data,” he said.
So Mr. Bosworth left Google, founded Keas and started hiring people in March 2008. The company has 24 employees, and last December it received venture capital backing from Atlas Ventures and Ignition Partners.
The Keas site requires a user to sign in and fill out a questionnaire. Personal health records from Google Health and Microsoft Health Vault can be automatically fed into the Keas care plans.
Another early partner is Quest Diagnostics, the nation’s largest clinical laboratory company, and, with permission, an individual’s lab data can influence the Keas plans. Users can put in as much or as little personal information as they want. Because Keas works with care providers, like doctors, it is required by law to adhere to all federal rules under the Health Insurance Portability and Accountability Act, or HIPAA, for encrypting and handling information to safeguard the privacy of personal information, Mr. Bosworth said.
The care plans present personalized status reports, as individualized dashboards, showing a person to be in the red, yellow or green bands. Green is good, and care plans make recommendations on how to get there.
Initially, the care plans will be free, but eventually Keas will include subscriptions for plans, probably at a few dollars a month. Keas will take a slice, and pass the rest on to the plan creator — the model used by the Apple’s iPhone applications store.
“We’re still learning, so we’re in no rush to charge,” Mr. Bosworth said. “But the idea is that people will get paid for doing things that are really engaging and useful.”
In the long term, Mr. Bosworth hopes Keas will evolve into a marketplace, where health experts are the sellers, and consumers who want the best personalized advice are the buyers. “I think that’s a pretty big idea,” he said. “If it works, it helps drive consumerism into health care.”
The long-term answer to improving the health of the nation’s population and curbing costs, experts agree, is to help people make smarter decisions day in and day out about their own health. And the most powerful potential tool in the march toward intelligent consumerism in health care may be the Web.
That is why on Tuesday, a start-up company led by Adam Bosworth, former head of the Google Health team, plans to become the newest entrant to the online consumer health business.
Already, surveys show that a majority of adults in America routinely scour the Internet for health information. Doctors joke that the standard second opinion of diagnosis and treatment has become a patient’s Google search, with the results printed out and brought to the doctor’s office.
But the Web is still mainly a vast trove of generalized health information. The ideal, health experts say, would be to combine personal data with health information to deliver tailored health plans for individuals. That is what Mr. Bosworth and his San Francisco-based company, Keas (pronounced KEE-ahs) Inc., mean to do.
Using the Keas system, for example, a person with Type 2 diabetes might receive reminders, advice on diet and exercise, questions and prompts presented on the Web site or delivered by e-mail or text messages — all personalized for the person’s age, gender, weight and other health conditions.
Although success is far from certain, Keas has some big partners, including Google Health and Microsoft HealthVault.
Health technology experts say Keas is at the forefront of the effort to combine advanced Web and database technologies so it can personalize health education. The promise, they say, is a big step forward for online health tools, and could help accelerate their adoption — much as the spreadsheet program helped kick-start the personal computer industry back in the early 1980s.
“This is the next generation of applications for online health care,” said Dr. David C. Kibbe, a health technology expert and senior adviser to the American Academy of Family Physicians, who is also a member of the Keas advisory board.
The Obama administration has drafted its guidelines for producing electronic health records — patient records held by doctors and hospitals — with applications like Keas in mind. To qualify for government subsidies, the electronic records must be able to generate patient education materials that help guide care, and eventually share information with personally controlled health records of the sort offered by Google Health and Microsoft Health Vault.
“The goal is not just health care information, but knowledge about what that means and what action to take,” said Dr. John D. Halamka, chief information officer at the Harvard Medical School, and a member of a federal advisory group on electronic health records. “And that is what Keas, and others in different ways, are really starting to think through.”
Other initial partners of Keas are impressed with its technology. Healthwise, a nonprofit supplier of online health information, has created 15 care plans for Keas so far, including ones on high blood pressure, cholesterol, diabetes, weight management and stress management.
Healthwise provides health content to major managed care companies, insurers and Web portals, including Kaiser Permanente, Aetna, WebMD, Revolution Health, Yahoo, MSN and AOL.
But Keas, said Jim Giuffre, president of Healthwise, has a feature that is distinct from other health services online. “They have developed the technology to make decisions from personalized data,” Mr. Giuffre said. “We think it’s going to help consumers make better health care choices.”
Dr. Alan R. Greene, a clinical professor of pediatrics at the Stanford University School of Medicine, has two children’s care plans on Keas, for ear infections and asthma, and is working on others. Dr. Greene has done projects with WebMD and Yahoo in the past. “But this little start-up has an extremely powerful tool, both personalized and interactive,” he said.
For medical experts, Keas is currently helping them with technical assistance. But the company intends to keep simplifying the tools so that individual physicians or health experts can build their own care plans.
The technical game plan at Keas bears the imprint of Mr. Bosworth’s career. As a senior engineer at Microsoft in the 1990s, he led the design team that created Access, a personal computer database program, introduced in 1992, which enabled nonprogrammers to build databases. Later, Mr. Bosworth focused on Internet software, working on Microsoft’s Internet Explorer browser and then XML, an open technology for tagging text documents on the Web and data sharing between programs.
Database expertise, easy-to-use tools for nonexperts and automated data sharing among Web documents are all essential ingredients in the personalized care plans.
At Google, which he joined in 2004, Mr. Bosworth worked on Gmail, Blogger, online spreadsheets and other products. But the company’s leaders knew he was interested in using Internet technology to improve health care. Having studied history at Harvard, Mr. Bosworth is a voracious and eclectic reader and a globe-trotting traveler. (The name “kea” refers to a species of alpine parrot, which he spotted on the South Island of New Zealand).
“I spent 25 years of my life building Lego blocks for computing,” said Mr. Bosworth, 54, adding that the time had come to pursue wider horizons.
His years at Google, Mr. Bosworth said, were good ones, and the work the health team was doing with personal health records was important. Moving people’s data online, where individuals can control it, he said, would be vital to using Internet technology to improve health care — and only big companies like Google and Microsoft can do that.
“But I decided my focus should be on the other side of the equation — what to do with the data,” he said.
So Mr. Bosworth left Google, founded Keas and started hiring people in March 2008. The company has 24 employees, and last December it received venture capital backing from Atlas Ventures and Ignition Partners.
The Keas site requires a user to sign in and fill out a questionnaire. Personal health records from Google Health and Microsoft Health Vault can be automatically fed into the Keas care plans.
Another early partner is Quest Diagnostics, the nation’s largest clinical laboratory company, and, with permission, an individual’s lab data can influence the Keas plans. Users can put in as much or as little personal information as they want. Because Keas works with care providers, like doctors, it is required by law to adhere to all federal rules under the Health Insurance Portability and Accountability Act, or HIPAA, for encrypting and handling information to safeguard the privacy of personal information, Mr. Bosworth said.
The care plans present personalized status reports, as individualized dashboards, showing a person to be in the red, yellow or green bands. Green is good, and care plans make recommendations on how to get there.
Initially, the care plans will be free, but eventually Keas will include subscriptions for plans, probably at a few dollars a month. Keas will take a slice, and pass the rest on to the plan creator — the model used by the Apple’s iPhone applications store.
“We’re still learning, so we’re in no rush to charge,” Mr. Bosworth said. “But the idea is that people will get paid for doing things that are really engaging and useful.”
In the long term, Mr. Bosworth hopes Keas will evolve into a marketplace, where health experts are the sellers, and consumers who want the best personalized advice are the buyers. “I think that’s a pretty big idea,” he said. “If it works, it helps drive consumerism into health care.”
Monday, October 5, 2009
G.E. Chief Sees India Helping Cut Costs of U.S. Health Care
India will play a significant role in reducing health care costs in the United States as the Asian nation’s health care market expands, General Electric’s chief executive, Jeffrey R. Immelt, predicted here on Friday.
The Indian health care industry is “on the verge of substantial growth,” Mr. Immelt said. Health care products and services developed cheaply here will be exported to Western markets, cutting prices there, he said.
G.E.’s health care business includes diagnostic equipment and services, pharmaceutical research and development and patient monitoring.
The Indian public health care system has historically been overburdened and underfunded, particularly in rural areas. As income levels rise, private clinics and labs are springing up, and governments in some Indian states have begun to increase overall spending on health care.
The health care industry in India is expected to more than double in size from 2008 to 2012, to $75 billion, according to Technopak Advisors, a consulting company. In 2007, Americans spent $2.26 trillion on health care, according to the government.
Mr. Immelt’s comments were made at a news conference related to the restructuring of G.E.’s health care business in India. The company said it was aiming to simplify operations, allowing it to take advantage of the growing market.
GE Healthcare, based in Chalfont St. Giles, England, employs 46,000 people in 100 countries around the world. Revenue from the health care division was $17.3 billion in 2008, less than 10 percent of G.E.’s total.
Many analysts and health care executives say they share Mr. Immelt’s belief that innovations from emerging markets, particularly India, could lead to big changes in the United States health care system. Already, American health care companies are cutting costs by outsourcing services to India like reading X-rays or scheduling nursing visits.
India, rather than China, will be the source for new models and ideas about improving and lowering the cost of American health care because the health care industry in the United States has more in common with India than with China, Mr. Immelt said.
G.E. employs more than 14,500 people in India, in divisions from research and development to back-office functions. But to date, just a tiny fraction the company’s revenue comes from India, about $3 billion of a total $182.5 billion in 2008.
G.E. said it was selling three of its health care units in India — Medical Systems India, Life Sciences and Medical Diagnostics — to its venture with Wipro, the third-largest Indian information technology company.
The 19-year-old venture, Wipro GE Healthcare, already distributes 85 percent of GE Heathcare’s products and services in India, which include ultrasound scanners, fetal monitors and cardiology monitors, as well as the software and servicing associated with those machines.
The restructuring will allow G.E.’s units to “develop products even faster,” Mr. Immelt said, by providing “seamless” operations.
The Indian health care industry is “on the verge of substantial growth,” Mr. Immelt said. Health care products and services developed cheaply here will be exported to Western markets, cutting prices there, he said.
G.E.’s health care business includes diagnostic equipment and services, pharmaceutical research and development and patient monitoring.
The Indian public health care system has historically been overburdened and underfunded, particularly in rural areas. As income levels rise, private clinics and labs are springing up, and governments in some Indian states have begun to increase overall spending on health care.
The health care industry in India is expected to more than double in size from 2008 to 2012, to $75 billion, according to Technopak Advisors, a consulting company. In 2007, Americans spent $2.26 trillion on health care, according to the government.
Mr. Immelt’s comments were made at a news conference related to the restructuring of G.E.’s health care business in India. The company said it was aiming to simplify operations, allowing it to take advantage of the growing market.
GE Healthcare, based in Chalfont St. Giles, England, employs 46,000 people in 100 countries around the world. Revenue from the health care division was $17.3 billion in 2008, less than 10 percent of G.E.’s total.
Many analysts and health care executives say they share Mr. Immelt’s belief that innovations from emerging markets, particularly India, could lead to big changes in the United States health care system. Already, American health care companies are cutting costs by outsourcing services to India like reading X-rays or scheduling nursing visits.
India, rather than China, will be the source for new models and ideas about improving and lowering the cost of American health care because the health care industry in the United States has more in common with India than with China, Mr. Immelt said.
G.E. employs more than 14,500 people in India, in divisions from research and development to back-office functions. But to date, just a tiny fraction the company’s revenue comes from India, about $3 billion of a total $182.5 billion in 2008.
G.E. said it was selling three of its health care units in India — Medical Systems India, Life Sciences and Medical Diagnostics — to its venture with Wipro, the third-largest Indian information technology company.
The 19-year-old venture, Wipro GE Healthcare, already distributes 85 percent of GE Heathcare’s products and services in India, which include ultrasound scanners, fetal monitors and cardiology monitors, as well as the software and servicing associated with those machines.
The restructuring will allow G.E.’s units to “develop products even faster,” Mr. Immelt said, by providing “seamless” operations.
Friday, October 2, 2009
Swiss Health Care Thrives Without Public Option
Like every other country in Europe, Switzerland guarantees health care for all its citizens. But the system here does not remotely resemble the model of bureaucratic, socialized medicine often cited by opponents of universal coverage in the United States.
Swiss private insurers are required to offer coverage to all citizens, regardless of age or medical history. And those people, in turn, are obligated to buy health insurance.
That is why many academics who have studied the Swiss health care system have pointed to this Alpine nation of about 7.5 million as a model that delivers much of what Washington is aiming to accomplish — without the contentious option of a government-run health insurance plan.
In Congress, the Senate Finance Committee is dealing with legislation proposed by its chairman, Max Baucus, Democrat of Montana, which would require nearly all Americans to buy health insurance, but stops short of the government-run insurance option that is still strongly supported by liberal Democrats.
Two amendments that would have added a public option to the Baucus bill were voted down on Tuesday. But another Senate bill, like the House versions, calls for a public insurance option.
By many measures, the Swiss are healthier than Americans, and surveys indicate that Swiss people are generally happy with their system. Switzerland, moreover, provides high-quality care at costs well below what the United States spends per person. Swiss insurance companies offer the mandatory basic plan on a not-for-profit basis, although they are permitted to earn a profit on supplemental plans.
And yet, as a potential model for the United States, the Swiss health care system involves some important trade-offs that American consumers, insurers and health care providers might find hard to swallow.
The Swiss government does not “ration care” — that populist bogeyman in the American debate — but it does keep down overall spending by regulating drug prices and fees for lab tests and medical devices. It also requires patients to share some costs — at a higher level than in the United States — so they have an incentive to avoid unnecessary treatments. And some doctors grumble that cost controls are making it harder these days for a physician to make a franc.
The Swiss government also provides direct cash subsidies to people if health insurance equals more than 8 percent of personal income, and about 35 to 40 percent of households get some form of subsidy. In some cases, employers contribute part of the insurance premium, but, unlike in the United States, they do not receive a tax break for it. (All the health care proposals in Congress would provide a subsidy to moderate-income Americans.)
Unlike the United States, where the Medicare program for the elderly costs taxpayers about $500 billion a year, Switzerland has no special break for older Swiss people beyond the general subsidy.
“Switzerland’s health care system is different from virtually every other country in the world,” said Regina Herzlinger, a Harvard Business School professor who has studied the Swiss approach extensively.
“What I like about it is that it’s got universal coverage, it’s customer driven, and there are no intermediaries shopping on people’s behalf,” she added. “And there’s no waiting lists or rationing.”
Since being made mandatory in 1996, the Swiss system has become a popular model for experts seeking alternatives to government-run health care. Indeed, it has attracted some unlikely American admirers, like Bill O’Reilly, the Fox News talk show host. And it has lured some members of Congress on fact-finding trips here to seek ideas for overhauling the United States system.
The Swiss approach is also popular with patients like Frieda Burgstaller, 72, who says she likes the freedom of choice and access that the private system provides. “If the doctor says it has to be done, it’s done,” said Mrs. Burgstaller. “You don’t wait. And it’s covered.”
While many patients seem content, the burdens fall more heavily on doctors, especially general practitioners and pediatricians.
Dr. Gerlinde Schurter, Mrs. Burgstaller’s physician, says she feels squeezed by government regulators and insurance companies that have fought to hold down costs — most recently with a 15 percent cut in lab fees that forced her five-member group to lay off its principal technician.
Dr. Schurter also fears a so-called blue letter, a warning from an insurance company that she is prescribing too many drugs or expensive procedures.
If doctors cannot justify their treatments, they can be forced to repay insurers for a portion of the medical services prescribed. And while prescriptions are covered, the government has insisted that consumers fork over a 20 percent co-payment if they want brand-name drugs, rather than 10 percent for generics.
Similarly, the government health office also lowered reimbursements across the board for medical devices in 2006.
These are among the reasons health care costs consume 10.8 percent of gross domestic product in Switzerland, compared with 16 percent in the United States, the highest level of spending among industrial countries, according to the Organization for Economic Cooperation and Development.
Still, along with lower costs and the freedom to choose doctors come bigger bills for individual patients. On average, out-of-pocket payments come to $1,350 annually. That is the highest among the 30 countries tracked by the O.E.C.D. and well above the $890 average for the United States, which comes in second.
Then there are the hefty prices of the insurance policies themselves, which can top 14,000 Swiss francs a year for a family of four in Zurich, or about $13,600. That is roughly comparable to the national average annual premium for a family policy under employer-sponsored group plans in the United States, but in high-cost American cities the figure can be much higher.
Direct comparisons are hard to make, however, because in the American system, employers and employees share the cost of premiums, which are also exempt from individual and corporate income taxes.
Nevertheless, Swiss citizens relish the lack of bureaucracy, especially compared with systems in Britain and Germany, even if their doctors grumble.
As in the United States, practitioners typically are paid on a fee-for-service basis, rather than on salary. But they make less than their American counterparts. According to the O.E.C.D., specialists in Switzerland earn three times more than the nation’s average wage, compared with 5.6 times for American specialists. General practitioners in Switzerland make 2.7 times more than the average wage, versus 3.7 in the United States.
That is partly because the Swiss health insurers are not shy about using their muscle with physicians.
Pius Gyger, director of health economics and health policy at Helsana, the country’s biggest insurer, cannot suppress a smile when asked about the effectiveness of the so-called blue letters.
“If there’s something strange, we knock at the doctor’s door,” he said. “For doctors, it’s an incentive to treat economically, but often perceived as a threat.”
He estimates that only about 3 percent of doctors get the letters and that fewer than 1 percent actually have to return money. Still, Mr. Gyger said, “it’s an easy exercise for us and it has an effect.”
Despite pressure on general practitioners, hospital physicians like Edouard Battegay at the University of Zurich say universal coverage also lowers costs by reducing emergency room visits.
Indeed, his E.R. is as quiet and efficient as a Swiss watch, and he still expresses amazement at what he saw when he worked briefly in Seattle.
“I’ve seen things in the U.S. that I’ve never seen here; it was a state of disaster,” he said. “Chronic disease management is better here. If you don’t treat hypertension, you treat strokes. Not treating patients is expensive.”
And even Dr. Schurter — who says her income has been flat for the last five years — praises the virtues of the Swiss system for patients struck by catastrophe.
When her daughter was found to have leukemia seven years ago, “I never worried for a second how and if she’d get treatment and if it would be paid for,” she said. “All was granted as naturally as the air we breathe.”
Swiss private insurers are required to offer coverage to all citizens, regardless of age or medical history. And those people, in turn, are obligated to buy health insurance.
That is why many academics who have studied the Swiss health care system have pointed to this Alpine nation of about 7.5 million as a model that delivers much of what Washington is aiming to accomplish — without the contentious option of a government-run health insurance plan.
In Congress, the Senate Finance Committee is dealing with legislation proposed by its chairman, Max Baucus, Democrat of Montana, which would require nearly all Americans to buy health insurance, but stops short of the government-run insurance option that is still strongly supported by liberal Democrats.
Two amendments that would have added a public option to the Baucus bill were voted down on Tuesday. But another Senate bill, like the House versions, calls for a public insurance option.
By many measures, the Swiss are healthier than Americans, and surveys indicate that Swiss people are generally happy with their system. Switzerland, moreover, provides high-quality care at costs well below what the United States spends per person. Swiss insurance companies offer the mandatory basic plan on a not-for-profit basis, although they are permitted to earn a profit on supplemental plans.
And yet, as a potential model for the United States, the Swiss health care system involves some important trade-offs that American consumers, insurers and health care providers might find hard to swallow.
The Swiss government does not “ration care” — that populist bogeyman in the American debate — but it does keep down overall spending by regulating drug prices and fees for lab tests and medical devices. It also requires patients to share some costs — at a higher level than in the United States — so they have an incentive to avoid unnecessary treatments. And some doctors grumble that cost controls are making it harder these days for a physician to make a franc.
The Swiss government also provides direct cash subsidies to people if health insurance equals more than 8 percent of personal income, and about 35 to 40 percent of households get some form of subsidy. In some cases, employers contribute part of the insurance premium, but, unlike in the United States, they do not receive a tax break for it. (All the health care proposals in Congress would provide a subsidy to moderate-income Americans.)
Unlike the United States, where the Medicare program for the elderly costs taxpayers about $500 billion a year, Switzerland has no special break for older Swiss people beyond the general subsidy.
“Switzerland’s health care system is different from virtually every other country in the world,” said Regina Herzlinger, a Harvard Business School professor who has studied the Swiss approach extensively.
“What I like about it is that it’s got universal coverage, it’s customer driven, and there are no intermediaries shopping on people’s behalf,” she added. “And there’s no waiting lists or rationing.”
Since being made mandatory in 1996, the Swiss system has become a popular model for experts seeking alternatives to government-run health care. Indeed, it has attracted some unlikely American admirers, like Bill O’Reilly, the Fox News talk show host. And it has lured some members of Congress on fact-finding trips here to seek ideas for overhauling the United States system.
The Swiss approach is also popular with patients like Frieda Burgstaller, 72, who says she likes the freedom of choice and access that the private system provides. “If the doctor says it has to be done, it’s done,” said Mrs. Burgstaller. “You don’t wait. And it’s covered.”
While many patients seem content, the burdens fall more heavily on doctors, especially general practitioners and pediatricians.
Dr. Gerlinde Schurter, Mrs. Burgstaller’s physician, says she feels squeezed by government regulators and insurance companies that have fought to hold down costs — most recently with a 15 percent cut in lab fees that forced her five-member group to lay off its principal technician.
Dr. Schurter also fears a so-called blue letter, a warning from an insurance company that she is prescribing too many drugs or expensive procedures.
If doctors cannot justify their treatments, they can be forced to repay insurers for a portion of the medical services prescribed. And while prescriptions are covered, the government has insisted that consumers fork over a 20 percent co-payment if they want brand-name drugs, rather than 10 percent for generics.
Similarly, the government health office also lowered reimbursements across the board for medical devices in 2006.
These are among the reasons health care costs consume 10.8 percent of gross domestic product in Switzerland, compared with 16 percent in the United States, the highest level of spending among industrial countries, according to the Organization for Economic Cooperation and Development.
Still, along with lower costs and the freedom to choose doctors come bigger bills for individual patients. On average, out-of-pocket payments come to $1,350 annually. That is the highest among the 30 countries tracked by the O.E.C.D. and well above the $890 average for the United States, which comes in second.
Then there are the hefty prices of the insurance policies themselves, which can top 14,000 Swiss francs a year for a family of four in Zurich, or about $13,600. That is roughly comparable to the national average annual premium for a family policy under employer-sponsored group plans in the United States, but in high-cost American cities the figure can be much higher.
Direct comparisons are hard to make, however, because in the American system, employers and employees share the cost of premiums, which are also exempt from individual and corporate income taxes.
Nevertheless, Swiss citizens relish the lack of bureaucracy, especially compared with systems in Britain and Germany, even if their doctors grumble.
As in the United States, practitioners typically are paid on a fee-for-service basis, rather than on salary. But they make less than their American counterparts. According to the O.E.C.D., specialists in Switzerland earn three times more than the nation’s average wage, compared with 5.6 times for American specialists. General practitioners in Switzerland make 2.7 times more than the average wage, versus 3.7 in the United States.
That is partly because the Swiss health insurers are not shy about using their muscle with physicians.
Pius Gyger, director of health economics and health policy at Helsana, the country’s biggest insurer, cannot suppress a smile when asked about the effectiveness of the so-called blue letters.
“If there’s something strange, we knock at the doctor’s door,” he said. “For doctors, it’s an incentive to treat economically, but often perceived as a threat.”
He estimates that only about 3 percent of doctors get the letters and that fewer than 1 percent actually have to return money. Still, Mr. Gyger said, “it’s an easy exercise for us and it has an effect.”
Despite pressure on general practitioners, hospital physicians like Edouard Battegay at the University of Zurich say universal coverage also lowers costs by reducing emergency room visits.
Indeed, his E.R. is as quiet and efficient as a Swiss watch, and he still expresses amazement at what he saw when he worked briefly in Seattle.
“I’ve seen things in the U.S. that I’ve never seen here; it was a state of disaster,” he said. “Chronic disease management is better here. If you don’t treat hypertension, you treat strokes. Not treating patients is expensive.”
And even Dr. Schurter — who says her income has been flat for the last five years — praises the virtues of the Swiss system for patients struck by catastrophe.
When her daughter was found to have leukemia seven years ago, “I never worried for a second how and if she’d get treatment and if it would be paid for,” she said. “All was granted as naturally as the air we breathe.”
Thursday, October 1, 2009
80 percent agreement on health care? No way that's true
WASHINGTON — President Barack Obama has said this repeatedly: Members of Congress agree on "about 80 percent of what needs to be done" to overhaul America's health care system.
Democratic congressional leaders have echoed that claim, using it to underscore that overhauling America's health care system is within their grasp.
No one, however, can offer specifics about what that 80 percent entails, other than to say that everyone agrees on key principles. A lot of lawmakers scoff at the figure, particularly since Democrats disagree sharply on two central elements: Whether to create a government-run health-insurance plan, and how to pay for all the changes under discussion.
"I don't know what that number means. I have no idea how you'd calculate something like that," said Sen. Kent Conrad, D-N.D., a senior member of the Senate Finance Committee. On Wednesday that panel labored through another round of bill drafting. It hopes to finish its work later this week, but final congressional action on the legislation is still probably months _and lots of tense votes and debates — away.
Conrad's view has bipartisan support.
"I don't see it," said Sen. George Voinovich of Ohio, a centrist Republican whom Democrats often woo.
"Most of the 80 percent doesn't involve money," quipped Finance Committee member Sen. Orrin Hatch, R-Utah.
Nevertheless, "80 percent" has become Washington-speak for legislative progress on Obama's major 2009 domestic initiative.
Obama regularly cites the number.
"There is agreement in this chamber on about 80 percent of what needs to be done, putting us closer to the goal of reform that we have ever been," he told a joint session of Congress on Sept. 9. Eleven days later, he told CNN that "basically we've got 80 percent agreement."
White House spokesman Robert Gibbs tried Wednesday to explain what Obama meant:
"I think it represents a confluence by many involved in the health care reform debate on agreement as to how we get affordable, accessible insurance for 30 million Americans that don't have it, how we get important insurance reforms and how we cut costs for millions of Americans that are fortunate to have health insurance."
However, it was noted, no health care measure today would get 80 percent support in Congress.
"The 80 percent number wasn't to be used in any scenario," Gibbs replied.
Yet the 80 percent mantra has become Democratic gospel.
After meeting with Obama on Sept. 8, Senate Majority Leader Harry Reid, D-Nev., even went one better, declaring: "We think we're up to 90 percent of things there are agreed upon."
A few days later, House Speaker Nancy Pelosi, D-Calif., told reporters that of the bills approved so far by four congressional committees, "we're at least 80, 85 percent in harmony. We have to resolve the remaining pieces of it. That is very much within range."
Asked to clarify what those percentages mean, Reid spokesman Jim Manley said, "There is no list, but the House and Senate are getting closer to action."
Pelosi spokesman Nadeam Elshami said that the figure represents agreement among Democrats and includes accords on barring companies from rejecting people with pre-existing conditions, creating an insurance exchange or marketplace, helping lower income people get coverage, and increasing Medicare prescription drug benefits for seniors.
To be sure, lawmakers do agree on certain principles.
"They agree everyone should have access to affordable coverage and the market should be reformed," said Elizabeth Carpenter, associate policy director of the New America Foundation's Health Policy Center, a liberal research group.
Karen Ignagni, the president and chief executive officer at America's Health Insurance Plans, listed specific areas of agreement: Requiring everyone to seek coverage, increasing the safety net by providing help for lower-income people, and making changes in the insurance market.
However, Carpenter noted: "Where there's not agreement is on the choices necessary to solve the problem."
Democrats are split over whether to back the public option, a government-run insurance plan, or instead to encourage co-ops -- nonprofit consumer-run companies that would provide coverage. Most Republicans oppose both ideas.
And wide divisions still split Democrats about where to find revenue, with Republicans flatly opposed to the leading proposals. House Democratic leaders prefer imposing income tax surcharges on wealthier taxpayers, while Finance Committee Democrats are eyeing a 40 percent excise tax on high-end insurance policies.
Committee votes have rarely reflected an 80 percent majority on anything major. The House Energy and Commerce Committee approved health care legislation this summer by 31-28. The Senate Finance Committee this week rejected two efforts to include a public option, by 15-8 and 13-10.
Other flashpoints remain, notably on abortion, Medicare and other hot topics. These aren't small details; there are wide gaps on each, lawmakers concede.
Maybe that's why, when pressed, Democratic leaders edge back from the 80 percent claim. On Tuesday, House Majority Leader Steny Hoyer, D-Md., cited comments on health care recently by Republican Whip Eric Cantor of Virginia, and saw little common ground.
"It did not appear to me to leap off the page that we agree with 80 percent of what has been proposed," Hoyer concluded.
Democratic congressional leaders have echoed that claim, using it to underscore that overhauling America's health care system is within their grasp.
No one, however, can offer specifics about what that 80 percent entails, other than to say that everyone agrees on key principles. A lot of lawmakers scoff at the figure, particularly since Democrats disagree sharply on two central elements: Whether to create a government-run health-insurance plan, and how to pay for all the changes under discussion.
"I don't know what that number means. I have no idea how you'd calculate something like that," said Sen. Kent Conrad, D-N.D., a senior member of the Senate Finance Committee. On Wednesday that panel labored through another round of bill drafting. It hopes to finish its work later this week, but final congressional action on the legislation is still probably months _and lots of tense votes and debates — away.
Conrad's view has bipartisan support.
"I don't see it," said Sen. George Voinovich of Ohio, a centrist Republican whom Democrats often woo.
"Most of the 80 percent doesn't involve money," quipped Finance Committee member Sen. Orrin Hatch, R-Utah.
Nevertheless, "80 percent" has become Washington-speak for legislative progress on Obama's major 2009 domestic initiative.
Obama regularly cites the number.
"There is agreement in this chamber on about 80 percent of what needs to be done, putting us closer to the goal of reform that we have ever been," he told a joint session of Congress on Sept. 9. Eleven days later, he told CNN that "basically we've got 80 percent agreement."
White House spokesman Robert Gibbs tried Wednesday to explain what Obama meant:
"I think it represents a confluence by many involved in the health care reform debate on agreement as to how we get affordable, accessible insurance for 30 million Americans that don't have it, how we get important insurance reforms and how we cut costs for millions of Americans that are fortunate to have health insurance."
However, it was noted, no health care measure today would get 80 percent support in Congress.
"The 80 percent number wasn't to be used in any scenario," Gibbs replied.
Yet the 80 percent mantra has become Democratic gospel.
After meeting with Obama on Sept. 8, Senate Majority Leader Harry Reid, D-Nev., even went one better, declaring: "We think we're up to 90 percent of things there are agreed upon."
A few days later, House Speaker Nancy Pelosi, D-Calif., told reporters that of the bills approved so far by four congressional committees, "we're at least 80, 85 percent in harmony. We have to resolve the remaining pieces of it. That is very much within range."
Asked to clarify what those percentages mean, Reid spokesman Jim Manley said, "There is no list, but the House and Senate are getting closer to action."
Pelosi spokesman Nadeam Elshami said that the figure represents agreement among Democrats and includes accords on barring companies from rejecting people with pre-existing conditions, creating an insurance exchange or marketplace, helping lower income people get coverage, and increasing Medicare prescription drug benefits for seniors.
To be sure, lawmakers do agree on certain principles.
"They agree everyone should have access to affordable coverage and the market should be reformed," said Elizabeth Carpenter, associate policy director of the New America Foundation's Health Policy Center, a liberal research group.
Karen Ignagni, the president and chief executive officer at America's Health Insurance Plans, listed specific areas of agreement: Requiring everyone to seek coverage, increasing the safety net by providing help for lower-income people, and making changes in the insurance market.
However, Carpenter noted: "Where there's not agreement is on the choices necessary to solve the problem."
Democrats are split over whether to back the public option, a government-run insurance plan, or instead to encourage co-ops -- nonprofit consumer-run companies that would provide coverage. Most Republicans oppose both ideas.
And wide divisions still split Democrats about where to find revenue, with Republicans flatly opposed to the leading proposals. House Democratic leaders prefer imposing income tax surcharges on wealthier taxpayers, while Finance Committee Democrats are eyeing a 40 percent excise tax on high-end insurance policies.
Committee votes have rarely reflected an 80 percent majority on anything major. The House Energy and Commerce Committee approved health care legislation this summer by 31-28. The Senate Finance Committee this week rejected two efforts to include a public option, by 15-8 and 13-10.
Other flashpoints remain, notably on abortion, Medicare and other hot topics. These aren't small details; there are wide gaps on each, lawmakers concede.
Maybe that's why, when pressed, Democratic leaders edge back from the 80 percent claim. On Tuesday, House Majority Leader Steny Hoyer, D-Md., cited comments on health care recently by Republican Whip Eric Cantor of Virginia, and saw little common ground.
"It did not appear to me to leap off the page that we agree with 80 percent of what has been proposed," Hoyer concluded.
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