Wednesday, September 16, 2009


There is an ongoing discussion whether our healthcare system is or is not the best in the world. Those, who say it is, refer to the fact that thousands of patients from around the world come to the U.S. for treatment. According to the Deloitte Center for Health Solutions, "In 2008, more than 400,000 non-U.S. residents will seek care in the United States and spend almost $5 billion for health services… Most come for a medical or surgical specialty program requiring hospital-based care." No doubt, our leading hospitals and clinics provide high-tech facilities and unmatched professional expertise. At the same time, compared to the other OECD countries on the basic health status indicators, such as life expectancy at birth, premature and infant mortality, as well as on healthcare expenditures per capita, we clearly overpay for mediocre results. Apparently, we are entering the stage of diminishing return in healthcare.

We all agree on the goals of healthcare reform:

  • Covering the uninsured
  • Improving quality of care
  • Cost containment

According to the Economic Policy Institute,
in 2008, 58.5% of Americans were enrolled in an employer-sponsored health insurance plan, 8.9% purchased individual private insurance, 29% had public plan coverage, and 15.4% were uninsured.

In most cases, insurance plans, offered by employers, effectively insulate insureds from medical bills, except for co-pay and deductible, which are usually relatively low. So it comes at no surprise that 75% of policyholders are satisfied with the coverage they have. The problem is though, that rapidly rising costs of insurance for both companies and employees create a vicious cycle. On the one hand, in order to keep budget in check employers try to lower their contribution, cut benefits, or switch to high deductible plans. That makes employer-sponsored insurance even less attractive for younger and healthy employees, who normally pay higher percentage of their salary or wages in premiums than their older co-workers. If they opt-out of the plan the pool becomes smaller and riskier for the insurer and more expensive for the remaining participants. The same happens on a larger scale when some employers stop offering health insurance altogether. "Watered down" benefits increase the ranks of underinsured patients, who pay at least 10% of their income on medical bills, excluding premiums. It seems extremely unlikely that we will be able to extend coverage to the uninsured through individual mandate and subsidies for low-income Americans in the current environment without additional federal spending.

There is a popular perception that a large portion of healthcare expenses, especially, uncompensated for providers, is associated with the use of ED facilities by the uninsured Americans or illegal aliens. In June 2006, though, Health Affairs published an article that links higher use with age, health status and income, rather than with lack of insurance or legal resident status. If its conclusions are correct we can hardly expect any real savings on ED services by covering the uninsured.

What actually makes our healthcare so expensive?

In his testimony to the Senate Committee on Health, Education, Labor and Pensions, Dr. Dean Ornish, President of Preventive Medicine Research Institute, said that "…Heart disease, diabetes, prostate/breast cancer, and obesity account for 75% of health care costs, and yet these are largely preventable and even reversible by an integrative medicine program of comprehensive lifestyle changes." Most of us, unfortunately, find it too hard to change our habits, and instead rely on a "magic pill" that should fix problems our body develops over years of neglect. Actually, few use free or deeply discounted wellness programs and regular screening available through their insurance.

Some studies suggest that our healthcare system has become over-specialized, with primary care being marginalized, largely due to income disparity between specialists and primary care physicians. The Medicare fee schedule, often mimicked by private insurers, favors hi-tech diagnostic and treatment procedures, with little regard to their value or outcomes. The share of capitation payments is down even in primary care, whereas evidence-based payment systems, such as PROMETHEUS, do not seem to be quite ready yet for wide adoption.

The fee-for-service payment model, basically, shifts providers' focus from patient's health to selling more services and does little to promote care coordination and information sharing. The Dartmouth Atlas found no evidence that greater supply of resources and higher utilization improve access to care and its outcomes.

The pharmaceutical industry remains the most active lobbying force in Washington in its bid to prevent the government from obtaining the power to negotiate prescription drug prices under Medicare, maintain the existing inventor's protection regulations for "traditional" pharmaceutical products and make them more stringent for biologics. Despite slowing growth in spending on prescription drugs over the last eight years, which is mostly attributed to wider use of generics, the pharmaceutical sector is still exceptionally profitable. Besides, it may even benefit from the push to control healthcare spending, by replacing advanced surgical procedures with more conservative treatment.

Getting back to our first goal of covering the uninsured, any solution currently discussed requires additional funds, at least, to assist those who cannot afford it now. There is no way around that, but this is what has to be done anyway.

As far as two other goals are concerned, we should shift our focus from treating specific conditions to improving health status of patients. With this in mind, we may need to develop a "health score" or set of measures to gauge the overall physical health of an individual, and which will be based on more than just vital signs. The matrix of indicators could be populated at regular check-ups and hospital admissions and discharges. This would give both the patient and medical team an idea where the body needs attention the most and help work out a treatment plan and targeted wellness program. Measuring outcomes will be easier, but the trick is to get patients to follow the recommendations, especially, when we talk about prevention and chronic disease management in ambulatory settings. The "market way" is to encourage good and penalize bad behavior through cost sharing; with a single payer there could be different incentives. This may work for some of us; others may have to be policed. And, of course, a lot needs to be done to promote healthy living through education and mass media campaigns to make it "cool", at least, to our children.


  1. Hi^^/// Alexander.
    In my sight, US' healthcare system look like good for some riches. If the us government carry out the national healthcare system, they need so much money to organize the system.
    However, I think, developing the healthcare score is not good. Because usually this score is used at insuarance companies. And government is not a profit-making organization. The score's intention is grading people. The national healthcare system's object is maintaining and supervising medical industry and providing medical service to peolpe at no cost or least expense.
    Frankly speaking, I'm an asthmatic so I always get a cold or flu at cold days. If I get a cold of flu, I just go to the clinic and meet my attending physician not GP, he is a respiratory disease specialist. Not required the appointment. Just go to the clinic and wait some minutes. And than, my attending physician diagnose and give me my prescription.
    All required time is at least a half hour and expense is $4 or $5. $2 is my prescription fee and the rest is my medicine. What do you think about that? It is not my case. This expense is a normal medical expense at Korea.
    If you want to know about Korea's national healthcare system, don't hesitate to contact me. Bye^^///

  2. Martha,

    Thank you for your comment. I agree that there is a danger of the “health score” being used by insurance companies to base their premiums off of it for individual plans. But even then it would probably be better than the current denial of coverage for pre-existing conditions. And if you score improves, which largely depends on patient’s choices, you can, hopefully, expect lower premiums. In a single-payer system the “health score” shouldn’t matter for your pocket at all, but help implement the pay-for-performance model for care providers.

    Yes, I would like to learn more about healthcare in Korea. I know New Zealand’s pretty well having lived there for quite some time.