Alumni Column – Food For Thought on Universal Healthcare

Bob Smoler '79

While the Iraq war continues to rage on as a hot topic, there is an issue at home that carries enormous implications for every resident in our country: our healthcare delivery system. According to the Centers for Medicare and Medicaid Services (CMS), in 2005, the healthcare spending in the U.S. was approximately two trillion dollars, or 16percent of the gross domestic product. That breaks down to $6,697 per person. This is the highest per capita healthcare spending of all OECD (Organization for Economic Co-Operation and Development) member countries, yet the World Health Organization only ranks the U.S. 37 in overall health system performance. The reality is that all of our spending on healthcare is just not helping us to be as healthy as we can be as a society. The question is, would a universal healthcare plan that covers all U.S. citizens help the United States reduce the cost and improve the quality of care?

One consideration that certainly impacts the cost and quality of care is access to healthcare services. Few of us are paying the average $6,697 for healthcare. According to the Healthcare Cost and Utilization Project, in 2002, about ten percent of the population accounted for almost sixty-four percent of all spending, while the lower fifty percent of the population accounted for only three percent. Clearly, if any of us would be unlucky enough to fall in that top ten percent category, financial ruin could be added to our health worries without some form of help in paying the bills. It is this worry that has given rise to the importance of health insurance. Having adequate health insurance today is the ticket to getting access to quality healthcare without having to spend every last dollar you have in the process.

The U.S. population is insured in a number of different ways. The elderly, the poorest Americans, the children of low income families, veterans, military personnel, Native Americans and others (approximately 27 percent of the population) are covered by a myriad of government programs funded by taxes. If someone doesn’t qualify for a government program, then typically that person receives health insurance through their employer under various plans provided by numerous different health insurers. This accounts for 60 percent of the population. The problem is that health insurance has gotten so expensive for employers that many of them are either requiring their employees to pay an ever increasing percentage of the insurance cost, increasing the amount of healthcare spending the employee is responsible for paying out of their pocket, or both. Many smaller employers are even eliminating insurance coverage all together because they can’t afford it.

If a person can’t get coverage through their employer or they are unemployed, then they can buy an individual insurance policy (nine percent of the population). These policies are extremely expensive and are available only to those individuals who can demonstrate they are healthy at the time they purchase the insurance. If a person has a pre-existing condition, coverage is generally not available. According to the U.S. Census Bureau, the result is that in 2006, 47 million Americans went without health insurance (15 percent of the population), and 89.6 million people under the age of 65 went without insurance at some point during 2006-2007. That means that roughly 90 million Americans (34.7 percent) were forced to “roll the dice” on whether they would get sick and need healthcare that they might not be able to afford. Interestingly, studies show that in countries that have universal health plans, the healthcare system can be run at about half the administrative cost of what the U.S. is paying (3.5 percent of spending versus seven percent), and quality is increased while spending is reduced because increased access to care leads to better coordination of care which in turn leads to less morbidity and mortality. Could this work in America too?

A related issue involves the way healthcare is delivered. Most of the sickest individuals in the U.S. have chronic illnesses like diabetes, cardiovascular (heart) disease, lung disease, cancer, etc. The National Institute for Health treatment guidelines for all these chronic illnesses emphasizes coordinated care, patient education and preventive services as keys to keeping chronic illnesses under control. Unfortunately, our current fee for service system of paying for health care encourages physicians to treat, rather than prevent illness. The more services a doctor or hospital delivers the more money they make regardless of the health of the patient. Also, there is no incentive for providers to invest in systems that would improve coordination of care, like an electronic medical record or patient care managers, because provider reimbursement is not tied to patient outcomes. The result is that our health system is ripe with overutilization. One thought is that a national system that emphasizes coordinated care and rewards patient outcomes might just help us cut out this overutilization while improving health.

Anyway you look at it, the current U.S. health system is the most expensive in the world, while our healthcare outcomes are among the poorest of all industrialized nations. Access to care is limited by a fragmented insurance system that leaves 15 percent of the population uninsured and provider incentives tend toward excessive treatment rather than positive patient outcomes. Whether a universal health care system could address these issues is difficult to say, but it has worked well in many other countries, and perhaps we can design something in the U.S. that fits our need.