The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care

by T.R. Reid

All the other developed countries on earth have made a different moral decision. All the other countries like us—that is, wealthy, technologically advanced, industrialized democracies—guarantee medical care to anyone who gets sick. Countries that are just as committed as we are to equal opportunity, individual liberty, and the free market have concluded that everybody has a right to health care—and they provide it. One result is that most rich countries have better national health statistics—longer life expectancy, lower infant mortality, better recovery rates from major diseases—than the United States does.Yet all the other rich countries spend far less on health care than the United States does.

But the primary issue for any health care system is a moral one.

created a health care system that leaves millions of our fellow citizens out in the cold. Beyond the issue of coverage, however, the United States also performs below other wealthy countries in matters of cost, quality, and choice.

“socialized medicine” has been a powerful political weapon—even though nobody can quite define what it means. The term was popularized by a public relations firm working for the American Medical Association in 1947 to disparage President Truman’s proposal for a national health care system. It was a label, at the dawn of the cold war, meant to suggest that anybody advocating universal access to health care must be a communist. And the phrase has retained its political power for six decades.

BISMARCK MODEL This system—found in Germany, Japan, Belgium, Switzerland,

Bismarck countries, both health care providers and payers are private entities. The model uses private health insurance plans, usually financed jointly by employers and employees through payroll deduction. Unlike the U.S. health insurance industry, though, Bismarck-type plans are basically charities: They cover everybody, and they don’t make a profit. The doctor’s office is a private business, and many hospitals are privately owned. Although this is a multipayer model (Germany has more than two hundred funds), tight regulation of medical services and fees gives the system much of the cost-control clout that the single-payer Beveridge Model (see below) provides.

medical treatment is a public service,

Beveridge systems, many (sometimes all) hospitals and clinics are owned by the government;

Beveridge Model, or variations on it, include its birthplace, Great Britain, as well as Italy, Spain, and most of Scandinavia.

The Beveridge Model, with government holding almost all the cards, is probably what Americans have in mind when they talk about “socialized medicine.”

two purest examples of the Beveridge Model—or “socialized medicine”—are both found in the Western Hemisphere: Cuba and the U.S. Department of Veterans Affairs.

For most working people under sixty-five, we’re Germany or Japan. In standard Bismarck Model fashion, the worker and the employer share the premiums for a health insurance policy. The insurer picks up most of the tab for treatment, with the patient either making a co-payment or paying a percentage. • For Native Americans, military personnel, and veterans, we’re Britain, or Cuba. The VA and much of the Pentagon’s Tri-Star system involve doctors who are government employees working in government-owned clinics and hospitals. Following the Beveridge Model, Americans in these systems never get a medical bill. The Indian Health Service also provides free care in government clinics. • For those over sixty-five, we’re Canada. U.S. Medicare is essentially a National Health Insurance scheme, with the near-universal participation and the low administrative costs that characterize such systems. Americans with end-stage renal disease, regardless of age, are also covered by Medicare; this group had enough political clout to get what it wanted from Congress, and the “dialysis community” opted for coverage under the government-run NHI system. • For the 45 million uninsured Americans, we’re Cambodia, or Burkina Faso, or rural India. These people have access to medical care if they can pay the bill out of pocket at the time of treatment, or if they’re sick enough to be admitted to the emergency ward at a public hospital, or if they have access to a charity clinic. • And yet we’re like no ot...

How many people go bankrupt because of medical bills? In Britain, zero. In France, zero. In Japan, Germany, the Netherlands, Canada, Switzerland: zero. In the United States, according to a joint study by Harvard Law School and Harvard Medical School, the annual figure is around 700,000.

The number of people under seventy-five who die from curable illness was almost twice as high in the United States as in the countries that do the best on this measure: France, Japan, and Spain.4

The United States is the only developed country that relies on profit-making health insurance companies to pay for essential and elective care.

insurance companies maintain a medical loss ratio of about 80 percent, which is to say that 20 cents of every dollar people pay in premiums for health insurance doesn’t buy any health care.

“recission,” a cruel legal maneuver they employed to cancel the policies of a customer who had a serious accident or contracted a major disease so that the patient, not the insurance company, would get stuck with the bills. And insurers will no longer be able to set an arbitrary limit on payments, another tool they invented to shift medical bills from the insurance company to the patient.12

France, Germany, Japan, etc., people get health insurance as a benefit of employment, but the coverage continues if the job ends. Government pays the premium until the unlucky employee can get back to work. She may not have a job, but she can still afford to take her sick child to the doctor.

prominent health care economist Henry Aaron, of the Brookings Institution, “I look at the U.S. health care program and see an administrative monstrosity, a truly bizarre mélange of thousands of payers with payment systems that differ for no socially beneficial reason, as well as staggeringly complex public systems with mind-boggling administered prices and other rules expressing distinctions that can only be regarded as weird.”14 The administrative monstrosity we have built costs us a lot of money—by far the highest administrative costs of any health care system on earth. The U.S. Government Accountability Office concluded that if the country could get the administrative costs of its medical system down to the Canadian level, the money saved would be enough to pay for health care for all the Americans who are uninsured.

carte vitale—a green plastic credit card with a small gold memory chip in the middle, the central administrative tool of French medicine—became a symbol of what the French have achieved in designing a health care system to treat the nation’s 61 million residents.

France’s system looks like a bargain. France spends about $3,165 per capita each year for a health insurance system that covers everybody; the United States spends more than $7,000 per capita and leaves tens of millions without coverage.

carte vitale—the “vital card,” or the “card of life”—contains the patient’s entire medical record, back to 1998. Embedded in the gold metallic square just left of center is a digital record of every doctor visit, referral, injection, operation, X-ray, diagnostic test, prescription, warning, etc., together with a report on how much the doctor billed for each visit and how much was paid, by the insurance funds and by the patient. Everybody in France over age fifteen has this card—a child’s medical records are maintained on his mother’s card—and it is the secret weapon that makes French medical care so much more efficient than anything Americans are used to.

standard five weeks of vacation per year),

Here, we have freedom to do the medicine we think is right. And the patient, any patient, can get the treatment needed; the insurance, or the social security, will pay for it.

the boon and the bane of France’s health care system. It offers a maximum of free choice among skillful doctors and well-equipped hospitals, with little or no waiting, at bargain-basement prices. It’s a system that enables the French to live longer and healthier lives, with zero risk of financial loss due to illness. But somebody has to pay for all that high-quality, ready-when-you-need-it care—and the patients, so far, have not been willing to do so. As a result, the major health insurance funds are all operating at a deficit, and the costs of the health care system are increasing significantly faster than the economy as a whole.

the basic rule that anybody, regardless of race, income, or occupation, can go to any doctor and get the same treatment as anybody else. Whenever the French talk about health care, they invoke the concept of solidarité, the notion that all French citizens must stick solidly together to help one another in time of need. “The solidarity principle,”

It would be stupid to say that everybody is equal,” she began. “Some are rich and some are poor. Some are beautiful, some aren’t. Some are brilliant, some aren’t. But when we get sick—then, everybody is equal. Everybody must have equal right to the best medical treatment we can provide.”

public welfare, he said, should be viewed as “a program of applied Christianity.”

Bismarck argued that “the greatest burden for the working class is the uncertainty of life. They can never be certain that they will have a job, or that they will have health and the ability to work. We cannot protect a man from all sickness and misfortune. But it is our obligation, as a society, to provide assistance when he encounters these difficulties. . . . A rich society must care for the poor.”

private health insurance plan, funded by payroll withholding, that pays doctors and hospitals directly on a fee-for-service basis—that’s the classic Bismarck Model, and it sounds very much like American-style employer-based medical insurance. But the German version of Bismarck is different in three fundamental ways: 1. First and foremost, the sickness funds are nonprofit entities; they exist to pay people’s medical bills, not to pay dividends to shareholders. Thus, they don’t have the same incentive that the U.S. insurance industry has to limit the people they cover or to deny claims; in fact, the German insurance plans are required to accept all applicants and to pay any claims submitted by a recognized doctor or hospital. They don’t have to pad their premiums to pay for a claims-review bureaucracy or to allow for profit. The result: The sickness funds have about one-third the administrative expenses that are normal in American health insurance. That makes the whole German insurance system much cheaper. 2. While insurance is purchased and paid for through payroll deduction, Germans don’t lose their coverage when they lose their jobs. Government unemployment benefits automatically cover the insurance premium, so the worker has the same insurance coverage while he looks for a new job—no matter how long it takes to find one. 3. Unlike American workers, who are restricted to the limited selection of insurance plans offered by their employers, Germans can sign up with any sick...

universal coverage, and nobody can be turned down because of a preexisting illness.You have the required package of benefits, so the insurer can’t deny a claim for any covered treatment. And then you have this competition to attract more customers.”

On a national level, Germany offers universal care through private insurance that is available to everybody.

The Japanese system, in short, provides care to every resident of Japan, for minimal fees, with no waiting lists—and excellent results. This is a good deal for the people of Japan, and they take advantage of it, flocking to clinics and hospitals. To an American, it seems natural that this formula—heavy demand by an aging population, with almost no rationing of care—would add up to a huge national medical bill. But when it comes to costs, Japan has turned the predictable formula upside down. Despite universal coverage and prodigious consumption, Japan spends a lot less for health care than most of the developed nations; with costs running at about 8 percent of GDP, it spends about half as much as the United States.

if your goal is to provide quality care for everybody at a reasonable cost (which is not a bad goal for any health system), then the Japanese model could be a good one to follow.

If you don’t have an insurance plan, you’ll be assigned to one run by your local city government. If you don’t pay the premium—about 1 percent of the population fails to pay—you’ll get regular dunning letters from the insurance company. But if you get sick, you’re required to pay all the back premiums you have missed (up to one year’s worth) before the insurance company will pay your bill. The

In Japan, the government—specifically, the Ministry of Health and Welfare—does the negotiating with providers. The result of this negotiation is a single Fee Schedule that applies to every doctor, clinic,

fact, the secret to Japan’s low health care costs is simple:The system shafts doctors and hospitals, paying some of the lowest fees on earth for medical treatment.

1. We will welcome you with a smiling face, warm sympathy, and soft language. 2. As Dr. Kitasato, our founder, often said:We know our patients are worried. We want to give them a sense of assurance about their health. 3. We will do all in our power to protect your privacy and dignity. 4. Preserving your life and health is the reason this hospital exists.

British National Health Service, the system that Beveridge designed and Bevan muscled into existence sixty years ago, is dedicated to the proposition that nobody should ever have to pay a medical bill.

the NHS, there is no insurance premium to pay, no co-payment, no fee at all, whether you drop by the GP’s office with a cold or receive a quadruple bypass from the nation’s top cardiac surgeon.

Nine out of ten Britons get all their health care from the NHS. People

The Brits do pay for medical care, of course. They pay through a network of taxes that would make Americans cringe; the sales tax in the UK is 17.5 percent on anything you buy, while income and social security taxes are higher than America’s in every income bracket.

As Beveridge planned it, health care would be free to all at the doctor’s office or hospital; payment would come not from medical fees or insurance companies but through general taxation.

(Today, private care constitutes about 3 percent of British medicine.)

July 5, 1948, the National Health Service opened its doors,

general practitioners, who have a powerful gatekeeping role.

the GPs are independent businesspeople, not government employees. But most of them have only one source of payment: the NHS. A general practitioner is paid by a system known as capitation—that is, she gets a set fee for each person registered with her practice. This creates a clear economic incentive for the doctor to practice preventive medicine—another proven money-saver for any health care system.

The American physicians Thomas S. Bodenheimer and Kevin Grumbach studied the medical literature about NHS queues and summarized it this way: Primary and preventive care are not rationed, and average waiting times to see a GP are probably no longer than for similar appointments in many parts of the United States. Even some high-tech services (e.g., radiation therapy for cancer and bone marrow transplantation) are performed at the same rates as in the United States. But waiting times to see consultants for non-urgent problems may be substantial, and 38% of patients wait more than four months for elective surgeries.6

St. Mary’s on Praed Street was the place where Sir Alexander Fleming discovered penicillin in 1928; it

“The NHS don’t think PSA is a proper indicator of cancer,” he said. “It is not really accurate for disease of the prostate. So it is not considered cost-effective.”To me, of course, this test would be considered extremely effective if it spotted a cancer in my body early enough to be treated. The determining factor, though, is not the individual’s need to cover every base but NICE’s concern to provide cost-effective medical care to an entire population.