With the upcoming elections, U.S. healthcare and necessary reforms to the system remain a hot topic. The debate of whether healthcare should remain in the private sector or be made entirely public continues to stoke passionate opinions. As a clinician, I strongly believe that healthcare, and its access for all, is a human right, but the MBA student in me realizes medical treatment is a limited and expensive resource. At the end of the day, someone has to pay for it.
Healthcare in the United States is currently divided between the public and private sectors. Health insurance is offered privately, either through personal plans or group health insurance through employers. Privately-funded insurance is a mix between fee-for-service, bundled payments, and capitation. Additionally, some do not have insurance and pay out of pocket, living on a hope that their health maintains and they steer clear of any harmful accidents. On the other end of the spectrum, there are Medicaid, Medicare, and other government programs, such as State Children’s Health Insurance (SCHIP), Military Healthcare, and federal employee health insurance. These programs, paid and maintained by the government, typically cover more vulnerable populations in the US — the elderly, low-income, those with disabilities, and children.
In the United States, health spending is currently ~18 percent of GDP, with $3.65 trillion spent in 2018. On average, the cost is estimated around $11,000 per person. Although, healthcare is considered primarily “private,” the government pays for more than a third of healthcare spending annually, a total of 8 percent of GDP. Ironically, US government spending on healthcare, as a percentage of GDP, is similar to countries with nationalized health insurance, such as the UK, Canada, and Germany. However, while we spend more on healthcare than any other country, our ranking is number 27 out of 34 industrialized countries.
So in which direction will healthcare go in the future? Despite differing political views, the consensus is that reform is necessary and there will likely be more government regulation soon. That being said, I do not believe we will implement a completely nationalized healthcare system in the foreseeable future. We are a consumer-driven society. We like having all treatment options that are FDA approved available to us. Citizens of nationalized healthcare countries are somewhat limited when it comes to expensive treatments. If a national healthcare agency of these countries deems a treatment too expensive, in terms of improvement in “quality-adjusted life years” (QALY), it is not offered.
Basically, QALY attributes a monetary value to a year of healthy life. In the US, that value is ~$150,000. In countries like the UK and Canada, that value is ~$38,000 and ~$50,000, respectively. If pharmaceutical companies in countries with nationalized health insurance programs price their drugs higher than they are valued, as per QALY, they are not offered as treatment. Meanwhile in the US, a nonprofit called the Institute for Clinical and Economic Review (ICER) makes recommendations to pharmaceutical companies as to roughly how much it believes a drug should be priced. The pharmaceutical company can either take the recommendation or disregard it, and health insurance companies will decide whether to cover it or not. While one can argue this makes healthcare too much of a profit-driven business, it does incentivize pharmaceutical companies to invest more in research and development. It is important to note the US has been a world leader in the development of new medicines for over thirty years.
This financial incentive relays into healthcare professions. Not many will dispute that American physicians and nurses are the best paid in the world, driving very capable people into the vocations. How come this does not equate to where we should stand in healthcare rankings? Much of this has to do with disparity in access to care, which should be the focus of healthcare reform. The “Patient Protection and Affordable Care Act of 2010” (ACA), affectionately or unaffectionately (depending on who you are talking to) known as Obamacare, tried to fix this. While the implementation broadened health insurance access to an additional 20 million people, it was not without problems. The average premium cost skyrocketed from 2012 to 2017, with an estimated increase in cost of 32 percent for the participant, causing more people to turn to high-deductible insurance programs, with $2000-3000 deductibles.
Health insurance being more accessible is a moot point if it is unaffordable. It could be argued that private insurance companies need more price competition in order to encourage these companies to lower and maintain prices. At the end of the day, essential health benefits need to be covered, while still offering consumers some choice. It would be idyllic to think that we could have free, nationalized healthcare someday soon, but the truth is passing such legislation through a bipartisan system would be near impossible and reform is needed now.
Photo Credit: https://www.theleader.info/2017/11/22/healthcare-reform-us-left-panel-healthcare-mbas/
