Could a National Health System Work in the United States?

Kristine M. Gebbie

“There are always alternatives.”

—Mr. Spock, Star Trek

“Don’t we have one? Didn’t the president sign health reform on March 23, 2010?” Maybe the best answer is “No, Virginia, he wasn’t Santa Claus.” The reform bill signed in March does make an enormous difference in the flow of money for illness care, and prevention, in the United States. And it does widen the number of individuals who have access to an affordable way to pay. The majority of provisions are financial (Kaiser Family Foundation, 2010):

• Most U.S. citizens and legal residents must purchase health insurance.

• State-based exchanges allow individuals to purchase coverage, with premium and cost-sharing credits available to individuals/families with income between 133% and 400% of the federal poverty level ($18,310 for a family of three in 2009)

• The exchanges allow small businesses to purchase coverage.

• Large employers pay penalties for employees who receive tax credits for health insurance through an exchange, with exceptions for small employers.

• Exclusion of pre-existing conditions has been eliminated.

• Medicaid is expanded to 133% of the federal poverty level.

However, better ways to pay do not create a national system. The use of evidence to push expenditures toward prevention and the least costly alternatives is not required, and the current unconnected array of individually driven professionals, hospitals, clinics, and other components is largely left untouched. While there is some attention to making sure that there are caregivers to respond to the newly insured (e.g., more primary care providers, more funding for community health centers), it is not clear that this new law will do much to assure that care is centered on support of the well to allow them to stay well, rather than centered on reaction to emergencies and crises.

The significant but limited change embodied in the 2010 health reform means that the U.S. has not quite yet ended its isolation as the only economically developed country on the globe that does not assure universal access to health services for its population. It also leaves the U.S. as the country that spends more in both total dollars and per capita dollars than any other nation. For example, between 1970 and 2005, the U.S. had the largest increase (8.3%) of all economically developed countries, reaching 15.3%. The cost per capita ($6401) is more than double the $2922 median for 30 industrialized countries routinely compared by the Organization for Economic Cooperation and Development. Unlike many of these other countries, the U.S. uses public insurance for only 26.2% of the population and is in the top half for only 8of 16 quality measures used for comparison. For example, the U.S. is second in controlling tobacco use, but next to the bottom (16th of 17 countries reporting) in adult hospital admissions for asthma. The U.S. is 12th of 23 countries in screening women over 50 for breast cancer, though 5th in survival rate in women treated for the same. One translation: we may not find breast cancer, but if we do, we treat it well. We are also at the bottom (23rd of 24 countries reporting) in vaccinating children against pertussis. The U.S. has fewer hospital beds (2.7 per 1000 people compared with France’s 3.7 per 1000). In an economic analysis of purchasing power, the U.S. is the most isolated outlier with far more than expected spending and far less than expected successful outcomes (Anderson & Frogner, 2008).

Near universality of access is achieved in other countries through a variety of arrangements, including government-operated care systems, government-managed finance systems, and government-mandated financing. The U.S. has experience with most of these: the Veteran’s Administration system is fully government-operated, as is the care provided our military forces (and their dependents) by the Department of Defense. Medicare is fully government-managed, and one state (Hawaii) has long-mandated insurance coverage of all employees. Massachusetts has recently made a move to require insurance, either through employers or individually purchased. We leave insurance regulation to 50 differing state systems, patch together care for the very poor with Medicaid, managed individually in each state, require many tests of newborns, and forbid use of some money for some purposes (e.g., the ban on federal funding of abortion). Moves toward a universal financing system and universal access to care have been made at several points during the twentieth century, most recently in the 1993-1994 proposal by President Clinton that died without ever coming to a vote in Congress. Advocates were revitalized by the fact that President Obama put this on his priority agenda despite the competing issues of economic disaster and wars and held out hopes that this time would be the time for true health reform. Given the worldwide economic depression that preoccupied his administration, it was not surprising that negotiations narrowed the promise to changes that bring more individuals into the finance system without any serious impacts on the actual delivery of care. The election of a Republican to the seat vacated by the death of Ted Kennedy made passage more complicated, as it ended the 60-vote (filibuster-proof) majority the Democrats had held in the Senate, and it took extremely careful parliamentary and political maneuvering to get the law now in place. Since a fully national system is not yet in law, exploring the potential for such an approach can reveal strengths and weaknesses and begin to answer whether it is possible in the U.S.

Possible Approaches to a National System

The two major approaches to a national system that have been successfully used elsewhere are some form of financing that is universal or a service system that is universally available. For each of these there are at least two structural options.

Universal Payment

Universal payment as a route to a national health system assumes that the lack of access to services is primarily associated with lack of ability to pay and therefore that if funds were available, the services would follow. This discussion of payment will not take up the problematic reality of such an assumption. It is notable, however, that even some people who have financing for care are unable to get access because practitioners are not available for reasons such as geographic maldistribution, professional workforce shortages, or some form of social discrimination (e.g., denial of Medicaid to some immigrants, or provider prejudice regarding sexual orientation).

National Tax.

The simplest form of universal payment would be a national program in which tax funds are used to pay providers for care rendered as needed. The tax could be a special one (such as that currently used to support Medicare for those over 65 or disabled) or some portion of general revenues. The payment from this single national payer could go directly to those providing care (as in the province-based single-payer system of Canada) or could be managed through contracts with fiscal intermediaries (as is now the case for Medicare). If truly universal, there would be little or no administrative burden for enrollment, as everyone would automatically be eligible. There would be a need to negotiate with providers of care for fee levels and methods of reimbursement; a single payer controlling all health dollars would be a formidable bargaining agent for hospitals and clinicians to confront. The fear of such a single agent clearly affects policy decisions, such as the prohibitions on national contracts for lower-cost drugs under the Medicare drug benefit legislated in 2003. This program is to be managed through the usual range of nongovernmental providers, each of which may negotiate with manufacturers for lower prices. However, the most powerful negotiator, the nationwide Medicare program as a whole, is prohibited from negotiating for a single lowest price for all seniors across the country.

Multiple Payers.

Alternately, a universal payment system could be constructed with multiple payers, and this is the model that the new health reform law comes close to. For example, all employers, no matter how small or large, could be required to provide a certain level of health insurance for all employees and their families, with Medicare continuing for those over 65 or disabled and a form of Medicaid used for the unemployed and their families. This less-monolithic system is the heart of the rejected Clinton plan and shares features with that in place, as in Germany. It allows for a range of payment mechanisms, with more room for bargaining and less sense of the government as the overwhelming controller of the purse strings. For a system such as this to work successfully, there would have to be rules governing the components of coverage and dual coverage in families with more than one worker. The employment-based coverage would be financed as it is now, with funds that would otherwise be available for wages or other benefits; coverage for those not in working families would require tax support, as it does now to the extent that they are available. Although this might be more palatable to practitioners or institutions, many employers, especially those with few employees, would find the mandate objectionable.

Universal Care

A more radical approach to a national health system would be to make the actual provision of care universal.

National Health System.

This is the approach begun after World War II in Great Britain when it established the National Health Service. National tax dollars (general or special taxes) are used to pay primary care providers throughout the country for basic health services and to pay specialists and hospitals for their share of needed services. This essentially makes the provision of care a government service, whether the caregivers and hospital staff are put directly on a government payroll or are employed by contract. The managers of the system are obligated to find sources of care for everyone throughout the country; to do so, they might need to make differential fees available to recruit providers—for example, to serve remote areas. This approach also lends itself to careful investment in only as many hospital beds and specialized services as population size and health statistics suggest are needed, with a clear disincentive for continuing the expensive practice of having large numbers of excess beds or competing diagnostic services. It is for this reason that Britain, as most other countries, invests far less in multiple, identical pieces of diagnostic equipment. For example, the United Kingdom has only 5.5 magnetic resonance imaging (MRI) units for each million in the population, compared with the U.S. at 8.2 per million (Anderson & Frogner, 2008). There are many fears, however, that such a system has too many incentives to control cost and not enough incentives to be user-friendly or of high quality.

State-Based System.

Universality could be achieved with similar results but greater flexibility by placing the requirement for access on the states through some combination of funding incentives and penalties. Expecting each state to use its tax authority and funds provided through national tax resources to assure access for everyone would allow each state to employ and deploy its own preferred mix of generalists and specialists, and community-based and hospital-based services. Within a national minimum expectation, states with more income could choose a richer mix of services, but no one would be without access to care. This approach to national minimums and state options on organization and final mix of services is the overall structure for our present Medicaid system. There are risks here, as even states with a relatively high income level could adopt a more miserly approach to access for health and illness services.

For providers of care, either form of a universal care system presents a far more radical change from current realities than a move to assure payment for care for everyone. It is the approach that most surely would push us toward truly evidence-based care and a serious dialogue about the limits of technological intervention in human life span. Such centralized control of purse strings makes it far less likely that individual entrepreneurs or entrepreneurial systems would survive. And it is not clear that the current infusion of private capital into development of pharmaceuticals or equipment would continue, or whether a leveling of incomes across types of providers might prove discouraging to those considering entering a health profession.