The United States health system: transition towards universal coverage

Eurohealth SYSTEMS AND POLICIES Eurohealth incorporating Euro Observer — Vol.19 | No.3 | 2013 41 THE UNITED STATES HEALTH SYSTEM: TRANSITION TOWARDS UNIVERSAL COVERAGE By: Thomas Rice, Pauline Rosenau, Lynn Y. Unruh, Andrew J. Barnes, Richard B. Saltman and Ewout van Ginneken Summary: The United States health system is facing major challenges. Some resemble those in Europe, most notably, procuring sustainable financing. Some, however, are unique to the US – for example, seeking coverage for 50 million uninsured individuals. Currently, the United States is engaged in the most significant health reform since its introduction of Medicare in the 1960s, with the goal of providing insurance coverage for the vast majority of Americans. As a result, it is facing a period of enormous potential change. This short article provides a review of the US health system’s ongoing reforms, and concludes with an outlook for the future. Keywords: Health Insurance, Health System, Health Reforms, United States Thomas Rice is Professor of Health Policy and Management at the Fielding School of Public Health, University of California, Los Angeles, USA; Pauline Rosenau is Professor of Management, Policy and Community Health at the School of Public Health, Health Science Center, University of Texas-Houston, USA; Lynn Y. Unruh is Professor of Health Services Administration in the Department of Health Management and Informatics at the University of Central Florida, Orlando, USA; Andrew J. Barnes is Assistant Professor of Healthcare Policy and Research in the Virginia Commonwealth University School of Medicine, Richmond, USA; Richard B. Saltman is Professor of Health Policy and Management at the Rollins School of Public Health, Emory University, Atlanta, USA; Ewout van Ginneken is a Senior Researcher in the Department of Health Care Management at the Berlin University of Technology, Germany. Email: trice@ucla.edu Introduction One factor that sets the United States apart from its European counterparts is more limited government regulation. The country has a federal system with substantial authority delegated to the 50 states. Historically, there has been a strong reluctance towards engaging in central planning or control either at federal or state level. The US health care system has developed largely through the private sector although federal spending is substantial for those subgroups covered by government. Spending per capita is more than 50% higher than the second-highest country, Norway. From an international perspective a varied picture of population health persists. Very good quality and outcome indicators for some diseases (e.g., certain cancers) alternate with poor ones (e.g., asthma). The country has low smoking rates but the most obese population in the world. 1 Multiple systems The US health care system can be thought of as multiple systems that only sometimes operate in collaboration. The Federal government funds and manages Medicare, an insurance programme that provides coverage for seniors and some of the disabled. It also partly funds Medicaid, a programme that provides health coverage for some of the poor and near poor. States fund and manage many public health functions, regulate and pay part of the cost of Medicaid, and set the rules for those health insurance policies that are not covered by self-insured employer plans. Public or private entities may regulate quality, access and costs and there is relatively little coordinated system-level planning in comparison to other countries. The private sector led the development of the health insurance system in the early 1930s until the arrival of Medicare and Medicaid in the mid-1960s, which now ➤ #EHFG2013 Workshop 6: Transatlantic lessons: What can the US and Europe learn from each other? Eurohealth SYSTEMS AND POLICIES Eurohealth incorporating Euro Observer — Vol.19 | No.3 | 2013 42 accounts for about half of health spending. Both public and private payers purchase health care services from providers subject to regulations imposed by federal, state and local governments as well as by private regulatory organisations. Fragmented insurance schemes Public sources constitute 48% of total health care expenditures, private third-party payers fund 40%, with the remaining 12% being paid by individuals out-of-pocket. 1 Even though the proportion of public and private spending on health care is roughly comparable, only a minority (30%) of the United States’ population is covered by the public financing system because these programmes (mostly Medicare and Medicaid) cover more vulnerable and costlier individuals. The majority of Americans (54%) receive their coverage from private health insurance, predominantly through their employer. These take the form of Preferred Provider Organisations (PPOs), which contract with a network of providers, making it possible to seek care outside the network, albeit at a higher out-of-pocket price; and Health Maintenance Organisations (HMOs), which provide health care services on a prepaid basis through a network of providers. In 2012, among insured employees, 56% were in PPOs and only 25% in HMOs or similar plans. 1 ‘‘ One in six Americans is uninsuredOne in six Americans (approximately 17% of the population) is uninsured. Even among those with coverage, high out-of-pocket (OOP) costs can be a barrier to receiving timely care and medications. One estimate is that medical costs are responsible for over 60% of personal bankruptcies in the country. 2 OOP payments per capita are ranked near the top of other high income countries. 3 1 Hospital bed trends and medical technology Since the 1970s there has been an increase in ambulatory facilities, such as physician and dentist offices and ambulatory surgical centres, and a decrease in institutional settings such as hospitals and nursing homes. The proportion of hospital beds has fallen and is among the lowest among high-income countries; yet average occupancy rates remain low, primarily due to a dramatic decrease in inpatient length- of-stay. The United States uses relatively more medical technologies such as MRIs and CT scanners than in comparable countries, but the average age of its physical infrastructure, such as hospital buildings, is slightly increasing. Health care professionals Employment of physicians, chiropractors, nurses, physician assistants and all types of therapists has increased since 1990. Particularly high increases in the employment of physician assistants and therapists over the last three decades (and moderate increases in nurses) may indicate increasing reliance on these professionals for primary health care. On the other hand, employment of dentists, optometrists and pharmacists has decreased slightly in this period. Relative to comparable countries, the United States is around the median in physician supply but has more concentration among specialists. 4 Its nurse supply is also high. Licensing and certification of health professionals is carried out at state level and there is reciprocal recognition of licenses between most states, but not all. Patients’ access to providers and care Insured individuals tend to enter the health care system through a primary care provider, although with some kinds of insurance (e.g. PPO) individuals may go directly to a specialist. Uninsured individuals often do not have a regular primary care provider, but instead tend to visit community health centres (which provide primary care for low-income, uninsured and minority populations) and hospital emergency rooms for their health care, which hinders continuity of care. Due to OOP costs they may be reluctant or unable to seek out specialty, surgical, or inpatient care unless they need emergency care. Emergency departments in hospitals that receive payment from Medicare (which is nearly all hospitals in the US) are required by law to provide care to anyone needing emergency treatment until they are stable. Retail clinics (in pharmacies or large stores) are also emerging as places to go for treatment of minor medical conditions. The number of acute inpatient (hospital) discharges, as well as length-of-stay, has fallen over the past decades, with more acute-care services, such as surgery, being performed on an outpatient basis. For example, in 2010 more than three- quarters of all surgeries were provided in an outpatient setting. 4 Mental health services have also shifted predominantly from inpatient to outpatient settings, accompanied by substantially increased use of pharmaceuticals and a reduction in the provision of psychotherapy and mental health counselling. The utilisation of post- acute-care services such as rehabilitation, intermittent home care, and sub-acute care has increased over the past decades due to the financial need for hospitals to discharge patients not requiring acute care. Pharmaceuticals are expensive in the United States compared to other industrialised countries, and their use has been growing. With the exception of Medicaid and health coverage for veterans, there is little regulation of drug prices. Public health is decentralised, with the main locus of power at the state level. The actual public health structures at state level vary significantly; in some states, public health functions are further decentralised (eg. to county level). At the federal level, the United States Public Health Service brings together eight federal public health agencies (including the Centers for Disease Control and Prevention, the Food and Drug Administration, and the National Institutes of Health). Federal, state and local public health services have been underfunded, and tend to be driven by immediate concerns; for example, as concerns rose over terrorist attacks in the United States, much of the public health funding and services switched to terrorism preparedness, leaving holes in other areas of public health. 1 Eurohealth SYSTEMS AND POLICIES Eurohealth incorporating Euro Observer — Vol.19 | No.3 | 2013 43 Vulnerable populations Vulnerable populations in the United States include racial and ethnic minorities, those with low income, the uninsured, the disabled, the homeless, women, children, people with HIV/AIDS, the mentally ill, older people, and those living in rural areas. Low income and racial and ethnic minorities are more likely to be uninsured. The health of racial and ethnic minorities is generally poorer than that of the white population; the health of low-income individuals is worse than that of individuals with higher incomes; and the health of those without insurance is poorer than that of the general population. There are environmental, employment and social factors contributing to these disparities but lack of access to health care and differences in the quality of care are also contributors. Federal, state, and private agencies have programmes for reducing disparities in health and health care for these populations. Populations that have special access to health services include Native Americans and Alaska Natives, military personnel, veterans, and those who are institutionalised, such as prisoners. Health processes and outcomes The US health system has both considerable strengths and notable weaknesses. It has a large and well-trained health workforce, a wide range of high- quality medical specialists as well as secondary and tertiary institutions and a robust health sector research programme. For selected services, medical outcomes are among the best in the world. But it also suffers from incomplete coverage of its citizenry, health expenditure levels per person far exceeding all other countries, poor measures on many objective and subjective measures of quality and outcomes, an unequal distribution of resources and outcomes across the country and among different population groups, and lagging efforts to introduce health information technology. 1 Because a myriad of cultural, socioeconomic, environmental and genetic factors affect health status, it is difficult to determine the extent to which deficiencies are health-system related, though it seems that at least some of the problems with the United States’ performance with respect to health outcomes are a result of poor access to care. Changes on the way The adoption of the Patient Protection and Affordable Care Act (ACA) of 2010 – most of which goes into effect in January 2014 – was highly controversial and its content reflects the general American preference for minimal government intervention. Improving coverage is a central aim, with the ACA introducing a requirement for nearly all individuals to have some form of health insurance. Improved coverage is envisaged through both the public and private sectors: subsidies are provided for the uninsured to purchase private insurance, and, in some states, more low-income people will obtain coverage through expanded eligibility for Medicaid. The ACA also addresses under-insurance, providing greater protection for insured persons from their insurance being too limited in scope, inadequate in coverage or being cancelled once they became ill. Moreover, those with a history of illness cannot be charged more than others, although differences are allowed by age, smoking status, and geographic location. There are also increased funds for primary care to improve access. Public health is strengthened through increased funding and regulatory requirements. An example is that chain restaurants and vending machines must display calories for food products. Improving quality and controlling expenditures are also addressed through a range of measures. These are broadly a combination of incentives for efficiency and better-quality care plus penalties linked to inefficient care (e.g. for hospital readmissions), rather than any major restructuring of the health system as such. However, the ACA also contains measures pulling in the other direction. Examples include a ban on US residents from buying and importing medication from other countries where it is cheaper, and preventing the use of cost-benefit analysis for health care practice or reimbursement in the Medicare programme. The overall quality and financial impact of the ACA is disputed and difficult to predict. Variable implementation of reform Implementation has been on-going in stages since the ACA was signed in March 2010, with most aspects of the law scheduled to be fully operational by 2014; however, political, economic, and social variables could change both the substance and the timetable. For example, a ruling of the US Supreme Court 5 has already made the participation of individual states in the expansion of Medicaid effectively optional, with some states planning to opt out. Many states have decided not to implement a state “exchange” for the purchase of insurance in the private market, relying instead on the federal government’s exchange. In 2014, seventeen states were organising their own exchanges, seven were partnering with the federal government, and the remainder relied solely on the federal exchange. States may revisit this aspect of participation in future years. ‘‘ The impact of the ACA is difficult to predictFuture outlook For the future, since the birth rate in the United States is higher than that of most high-income countries, the budgetary pressure from demographic ageing on social service programmes will be less acute than in most other high-income countries. Nevertheless, given high costs and mixed performance, major concerns about the macro-level efficiency of the health system remain. There is general agreement among those on the left and the right of the political spectrum that reforms are necessary to control spending. There is less agreement on whether there is a quality problem, nor much agreement on the need to provide coverage for the uninsured. In spite of these disagreements, and because of the adoption of the Affordable Care Act in 2010, the United States is facing a period of enormous potential change. Eurohealth SYSTEMS AND POLICIES Eurohealth incorporating Euro Observer — Vol.19 | No.3 | 2013 44 Whether the ACA will indeed be effective in addressing the challenges identified above can only be determined over time. References 1 Rice T, Rosenau P, Unruh LY, Barnes AJ, Saltman RB, van Ginneken E. United States of America: Health system review. Health Systems  in Transition, 2013; 15(3): 1–464. 2 Himmelstein DU et al. Medical bankruptcy in the United States, 2007: results of a national study. American Journal of Medicine, 2009;122(8):741–46. 3 OECD. OECD.StatExtracts, 2012. Available at: http://stats.oecd.org/index. aspx?DataSetCode=HEALTH_STAT 4 Barie P. Infection control practices in ambulatory surgical centers. Journal of the American Medical  Association, 2010; 303(22):2295–97. 5 Supreme Court of the United States. National Federation of Independent Business et al., v. Sebelius, Secretary of Health and Human Services et al., Certiorari to the United States Court of Appeals for the Eleventh Circuit. No. 11-393. Argued 26 – 28 March 2012 – Decided 28 June 2012. Available at: http://www.supremecourt.gov/opinions/11pdf/11- 393c3a2.pdf PURSUING HEALTH CARE EFFICIENCY IN LITHUANIA By: Marina Karanikolos, Liubove Murauskiene and Ewout van Ginneken Summary: Since the early 2000s changes in the health system in Lithuania have focused mainly on gaining efficiency in service provision. This includes developing primary care, expanding ambulatory and day care services, and restructuring outpatient and inpatient services. The most progress has been achieved in primary care and day care services, while overreliance on inpatient care still remains. At the same time, the strain put on providers by cuts in service funding, as a result of the financial crisis, has created concerns over financial viability and quality of services in the longer term. The next step is to put in place effective instruments, incentives and measurable goals that nurture change, build transparency and accountability, and gain the trust of health professionals and patients. Keywords: Health Care Reforms, Primary Care, Hospital Services Restructuring, Lithuania Marina Karanikolos is Research Fellow at the European Observatory on Health Systems and Policies and the London School of Hygiene & Tropical Medicine, UK; Liubove Murauskiene is Director of the Training, Research and Development Centre and a lecturer at Vilnius University, Lithuania; and Ewout van Ginneken is Senior Researcher at the Department of Health Care Management, Berlin University of Technology, Germany. Email: Marina.Karanikolos@lshtm. ac.uk Introduction In the late 1990s, the Lithuanian health care system became a mixed system funded primarily through mandatory health insurance contributions, the state budget and out-of-pocket payments. Since the early 2000s changes in the health care system have focused mainly on gaining efficiency in service provision, i.e. developing primary care, expanding ambulatory and day care services, and restructuring outpatient and inpatient services. At the same time, broader changes to fiscal policy were implemented aimed at ensuring stable health system financing. These changes have proven crucial in recent years, when the Lithuanian health system mostly made headlines because of the deep financial crisis it faced. It is easy to see why, as Lithuania’s Gross Domestic Product (GDP) dropped by a startling 15% in 2009 and unemployment increased from 5.8% in 2008 to 17.8% in 2010. 1 This led to dramatic reductions in statutory health insurance revenue, which in turn necessitated drastic cuts in public spending. However, the ensuing austerity package was less harsh than in some neighbouring countries and mostly included cuts to pharmaceutical expenditure, service provision costs, salaries of medical professionals, and sick leave benefits. Meanwhile less resource-intensive care was prioritised, but in contrast to some other countries heavily affected by