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More resources on comparative health systems

Comparative Health Systems: An Introduction

Public Citizen Health Letter


June 2009

As the debate on health reform intensifies, many people wonder what policy wonks are actually talking about when they discuss the possible options. The discussion is often framed in terms of alternatives, with possibilities for combining features of different proposals. At the heart of the choice is the matter of payment, which conditions many other aspects of the plan.

Public Citizen’s Health Research Group has long favored a single-payer plan. Our advocacy on its behalf is rooted on our belief in uniform coverage for all based on the principle of social solidarity and that we cannot afford to waste the $400 billion a year of extra administrative cost imposed by the existence of multiple private health insurers. We consider health care as a social good, a right which should be made available to everyone based on need rather than ability to pay.

The table that follows summarizes the implications of the choice between single-payer and multiple-payers, pointing out the implications of what the ultimate decision will mean in terms of values, eligibility, administrative efficiency, cost controls and delivery of care, among other aspects.

Aspect 

Universal Coverage Under Public Single-Payer Plan

Universal Coverage Based on Multiple Payers (Insurance companies)

Eligibility

Everyone in the U.S. is covered.

Everyone is eligible, but each individual must enroll in a specific plan or be subsidized to enroll in a plan.

Basic value  underlying plan

Health care is a social good and a right.

Health care is a commodity, purchasable on the market.

Scope of Services

Broad array of services.

Depends on individual plan and premium paid, although the state can regulate coverage and mandate a uniform service package.

Control of Costs

Single-payer can exert leverage with all providers, negotiating from a position of strength. Economies of scale can reduce costs. Lack of profits and marketing expenses will lower overhead, thereby reducing administrative costs.

See also Rationing.

Companies exert control over costs by avoiding higher risk patients, pegging price to risk, instituting cost-sharing (deductibles, co-payments) and denying unprofitable services. If state mandates a uniform package and no profits, insurers benefit only from selling supplementary coverage.

Risk-Pooling

Entire population is part of a single risk pool; younger, healthier members of the pool offset those who are older and sicker. Exclusion for pre-existing illness is not allowed.

Each insurer attempts to attract lower risk patients; premiums may vary accordingly. Insurers protect themselves by raising prices to avoid higher risks. State may mandate "guaranteed issue"(accepting all applicants, regardless of risk), uniformity in premiums or adjust for differences in relative risks. Regulation is needed to correction for these market failures.

These methods to prevent or compensate for adverse selection require much data and are expensive to operate.

Administrative Costs

With no profits, no need for marketing, a single package of services and much less complex and contested billing, administrative costs are kept to a minimum.

The sifting and sorting of enrollees, together with marketing expenses and a varied and complicated billing apparatus siphons off a significant portion of revenues from actual health care.

Choice

Consumers would have choice of any provider. Few physicians and hospitals would "opt out" without incurring major loss of income.

Choice would depend on arrangement between purchaser and provider; choice may be among plans rather than between or among health care providers.

Service delivery system

Single-payer could exert leverage to correct current fragmentation and raise quality of care.

No built-in goal to change the present lack of continuity and coherence in care.

Provider payment

Public sector could innovate ways of paying providers, as it has with Medicare. Could bundle services and provide alternatives to fee-for-service care, which is inherently inflationary. Price discrimination would be avoided.

 

Subject to multiple discrete negotiations: insurers pay different fees to different providers for same service; providers bill different insurers different fees for the same service. Price discrimination is rampant. 

Access to Care

State can adopt incentives to deploy resources according to need, and to provide adequate access to primary care.

Subject to market forces. If you live in a poor community, you are likely to have limited providers to choose from. Some adjustment between supply and demand will take place over time.

Focus on preventive care

 

Plan would have an incentive to foster prevention because it would reap the savings later.

Limited incentives to foster prevention because patients change plans. Emphasis is on the short-term.

Rationing

Based on need, and on cost-effectiveness of different treatments.

Based on price and ability to pay: those who cannot afford a service are unable to acquire it.

Utilization Control

Large-scale database would flag trends and identify outliers. Data would indicate patterns of consumption, overuse, service gaps and relations between treatments and diseases they might cause.

Achieved by denying services. No uniform data-collection system.

 

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