How is the american health care budget being filled and spent
“Everyone got used to the fact that the American health care system is in disarray. We are dumb with huge bills and consider high prices to be the inevitable burden of Americans, ”the famous New York journalist Elizabeth Rosenthal remarked in her preamble to her bestseller American Sickness.
The thesis declared by her is supported by figures: the annual national health budget exceeding $ 3.5 trillion sets a world record of 17.9% of GDP, and at the same time, in the ranking of countries with the most effective US health care system, they occupy only 50th place, yielding most European countries. Vademecum tried to figure out what was wrong with this rich, certainly high-tech medicine and its patient audience.
Mrs. Wikizer, a 50-year-old widow from Norfolk, raising two sons alone, went to Sentara Norfolk Hospital complaining of headache and vomiting. The patient was diagnosed with subarachnoid hemorrhage, requiring immediate surgery, and immediately transferred by helicopter to a large hospital for 160 miles. The woman was helped, the threat of death was over, and she was able to return home safely. Almost immediately after being discharged, she received a series of invoices totaling over $ 400,000 for the services of Sentara Norfolk Hospital and the second clinic, sanitation flight, diagnostics, and coverage of expenses of third-party organizations administering the operations team.
The six-digit account was due to Mrs. Wikizer’s lack of any health insurance. After her husband's death, she was interrupted by odd jobs, which did not imply the payment of medical assistance by the employer. State Medicaid insurance relied only on her children. Mrs. Wikizer tried to buy private insurance, but because of the regular use of antidepressants, she was classified by insurers as a high risk group, implying a monthly payment of $ 800 of insurance premium.
Such expenses are not the family budget. The widow tried not to get into the hospitals until her vessel “broke the vessel in her head”. Mrs. Wikizer tried to negotiate with the medical organizations to reduce or restructure the debt, but in vain - the creditors threatened to seize her house. “It would be better if I died, then you would have money left for college,” she told her sons in hearts, and then filed a lawsuit to the hospital and sent a petition describing the tragic circumstances of her recovery to President Obama.
This episode of the mid-2000s, given by Elizabeth Rosenthal in the book American Sickness, illustrates the main problems of national health care - the high cost and inaccessibility of high-quality medical services. “Unfortunately, a significant number of people in the United States do not have access to high-quality medical care,” testifies the famous journalist and chronicler of American life, Mikhail Taratuta.
Despite trillions of industry budgets, according to various estimates, from 10% to 15% of Americans do not have any insurance and therefore avoid taking medical care in every possible way. In a survey conducted in 2016 by the Kaiser Family Foundation, about a quarter of Americans aged 18–64 reported problems with paying medical bills.
In the ranking of countries in the world in terms of the effectiveness of national health care The Most Efficient Health Care 2016, compiled by Bloomberg, the United States ranked only 50th with an index of 32.6 / 100. Russia in the same table of ranks was on the 55th line with an index of 24.3 / 100. WHO's estimates show that the US model of medical services does not successfully combat the deadly epidemic of non-communicable diseases.
From the WHO report, published in 2018, which reflects 2016 data, the death rate from noncommunicable diseases, calculated as the probability of death as a result of any of the diseases in this category of population aged 30 to 70 years, was 14.6% for the USA. This is significantly higher than the indicators of almost all Western European countries: in Switzerland, for example, the index is 8.6%, in the UK - 10.9%. But some US neighbors in the hemisphere show better results: Chile - 12.4%, Costa Rica - 11.5%.
Why is the industry, pumped up with money and competencies, does not fulfill its main purpose - the savings of the nation?
Unlike many European countries, including Russia, the American model of medical care was formed at the beginning of the twentieth century solely on market insurance principles. The prototype of the system was created in the 1920s on the basis of the University Medical Center in Dallas. Many residents of Texas used the services of this hospital, but often could not pay for the treatment. The local lawyer, Justin Ford Kimball, offered the Texas trade union of teachers a deal: for $ 6 a year, or 50 cents a month, they received an offer for a 21-day hospital stay with full coverage of all costs. Without insurance, the same medical care would have cost Texans $ 525.
The model not only caught on in Texas, but also became widespread throughout the country. By 1939, 3 million Americans were included in similar insurance programs called Blue Cross Plans, after the largest insurer company in the United States today. The purpose of organizing this insurance system was not to claim profit, but to increase the availability of medical care for patients and regular financial support for clinics.
Correction of good intentions occurred, one might say, because of events of historical scale. During and immediately after World War II, the US National Labor Council "froze" wage growth for many enterprises, and since it became impossible to directly motivate employees, employers began to attract employees by offering them health insurance. The federal government has supported the venture of regulations that exempt companies from taxation funds that are used to maintain the health of workers. Then the conditions for all insured were the same, regardless of age and the presence of disease.
Between 1940 and 1955, the number of health insurance holders in the country increased from 10% to 60%, which made health insurance a promising market. Providers began to insure younger and relatively healthy patients, those on whom they could earn. Following the graduation of the cost of programs, depending on age and the presence of disease. Powerful insurance companies emerged, industry leaders such as Blue Cross and Blue Shield corporations became known. On the other hand, medical care turned out to be practically inaccessible for numerous groups of the population. For example, Americans over 65 years of age were forced to pay premiums to medical insurers, three times the national cost of the policy.
The response to tough market conditions was the emergence of state insurance programs, primarily Medicare. The social project, approved by the federal government in 1965, aimed at an audience of Americans over 65 and provided medical care for about 60% of age patients. Medicaid followed, targeting lower-middle-income people. However, state insurance programs were forced to integrate into the established market, and therefore, to adapt to the prices and rules of the big game, without any possibility to influence the industry in a regulatory manner. So the United States remained one of the few countries in the world without a system of universal compulsory health insurance.
PLATINUM NUMBER SIX
The state program Medicare with an annual budget of about $ 700 billion (about 4% of GDP), provided by the federal government, in 2017 served no more than 18% of the population, including the main target audience - 49 million Americans over 65, as well as 9 million younger people countries with a disability.
Medicaid, targeted at people with lower than average income and funded from the federal and regional budgets, according to Statista, covers no more than 15% of the US population - 48.855 million people. Finally, the audience for the State’s Children’s Health Insurance Program (CHIP), designed for children whose parents earn a little but do not qualify for Medicaid, does not exceed 15 million people.
A number of specialized insurance state programs are addressed to narrow groups of the population: for example, the military and veteran Veteran’s Health Administration, plans for civil servants - the Federal Employees Health Benefits Program, for the indigenous people of the continent - Indian Health Service. Thus, the bulk of the working population of the United States, or more than 60% of the country's population (195.42 million people), are excluded from state programs and use corporate or private insurance plans.
According to the faculty of economics at Boston University, in 2014 (more recent information is not available), more than 1,200 insurance companies operated in the United States, selling tens of thousands of medical plans. The largest companies in this market, according to Health Payer Intelligence, are United Health Group, with 70 million people insured and a capitalization of $ 184.8 billion, and Anthem, with 39.9 million people insured and $ 89.1 billion capitalized. According to Health Reform Monitoring Survey, in 2016, 83% of the working-age population between the ages of 18 and 64 used corporate insurance plans paid by employers (in the US, one person may have several insurances at once).
At the same time, corporate and private insurances do not cover the entire range of services offered, and therefore the industry has a common practice of co-payments for medical services provided. Depending on the share of treatment costs covered by the insurance company, the plans can be divided into five categories: “platinum” insurance, the range of monthly payments for which varies from $ 500 to $ 1,100, covers about 90% of all medical expenses of the client; “Golden” - up to 80%; "Silver" and "bronze" are paid 70% and 60% of costs, respectively. The cheapest package with a monthly premium of less than $ 100 implies covering expenses only for emergency cases, is provided exclusively to persons under 30 years of age or those who can document their difficult financial situation.
Different insurance plans and the type of interaction of the insurer with the client. For example, the co ‑ pay model implies that the insured person pays a fixed amount for each of the services, while the rest is covered by the company. The co-insurance scheme has a similar logic, but here the patient pays a certain percentage of the cost of the service. The deductible model obliges a client to spend a certain amount to activate insurance coverage. Finally, out-of-pocket maximum implies an individually calculated fixed amount that a patient can spend on medical care during the year, costs in excess of the established limit are covered by the insurer.
Monthly payments for private insurance plans vary from state to state and are calculated personally based on the preferences of the client, his age, income level, as well as the selected insurance model. An important factor in the price and filling the package is the presence of chronic diseases. For example, according to Healthpocket.com, the average cost of a private premium for a 30-year-old American is $ 483, and for a 60-year-old - $ 1,150. Very few people in the country can afford such monthly expenses, but the lack of insurance will increase the cost of medical services factor of.
According to Authoritydental.org, if insurance, for example, root canal treatment costs an average of $ 333–608, then without insurance it can reach $ 957–1,156, the average installation price of a crown for insurance will cost $ 618, and without it.
According to healthhearty.com, the average co-payment for surgery on the knee joint for a patient with insurance will be $ 4–6 thousand, while without the insurance such an operation will cost $ 30–70 thousand. And getting into the clinic, moreover, on the operating table, an uninsured American condemns him to long-term maintenance of medical bills.
As Elizabeth Rosenthal notes in her American Sickness, the rapid growth of the private health insurance system, the absence of legislative restrictions for setting service providers to disperse the medical inflation rate - the insurers benefit from an expensive general “pie”.
“Instead of seeking a more affordable cost of medical care, insurers simply pay clinics, and compensate their costs at the expense of clients by introducing additional options, developing loyalty programs, selling premium plans and other means,” Rosenthal writes. - The widespread health insurance caused a domino effect. Hospitals and doctors have adapted to these financial realities, the pursuit of money has begun, in which no one has protected the patient. ”
The configuration of the medical infrastructure in the United States, especially the management of this business, force providers to maintain price increases. “Imagine that you bought a plane ticket, and then received separate bills from the airline, pilot, co-pilot and flight attendant. This is how the healthcare market works. In no other country in the world, prices for the same product change dozens of times, depending on where and how it was purchased. But this is exactly what happens in the pricing of echocardiograms, MRI and blood tests, ”says Elizabeth Rosenthal. Separate bills for medical manipulations, examinations, anesthesia and service have become a routine practice of American clinics.
In the United States, the practice has become widespread when physicians of certain specialties, for example, surgeons or anesthesiologists, do not belong to the hospital staff, but unite in separate structures, cooperate with the clinic by outsourcing. In the case of attracting such specialists, the hospital bills the patient or the insurance company for the days spent in the hospital, and the doctors' cooperative is actually for the manipulations. And such a division of accounts only prevents the optimization of prices.
Processing of documents, the abundance of complex netting with insurers lead to significant administrative costs, which, of course, are included in the cost of services. “About a quarter of health care costs are administration-related — much higher than in any other country in the world. For example, in 2010, Duke University Hospital, designed for 900 beds, employed 1,200 personnel employed in insurance documents, billing, defining insurance claims, ”said Harvard economist David Cutler in an interview with Investopedia.
The increase in total health care costs is sometimes promoted by an excessive number of appointments that are customarily made in American clinics. According to the Organization for Economic Cooperation and Development, in 2014, doctors in the United States, compared with their colleagues from other developed countries, prescribed mammograms three times more often, and two and a half times - MRI, performed 31% more cesarean sections.
“The American system of medical care is characterized by excessive bureaucratization,” says Mikhail Taratuta. - In order to visit a narrow practice doctor, it is imperative to receive a referral from a therapist, and before that, the therapist must be satisfied with the examination of the need for such assistance. But before you have to go through a lot of tests and surveys, only after this can a diagnosis be made. ”
The CEO of The Doctors Company, the insurer of doctors, Richard Anderson told in an interview with ModernMedicine Network in 2016 that, due to the peculiarities of the legal system in the medical field, in any disputed situation, the doctor is directly responsible for any negative result. And doctors, trying to minimize the risks of prosecution, refer the patient to repeat research, even if they are confident in the diagnosis.
Elizabeth Rosenthal calls another reason for redundancy appointments - KPI, which clinics put specialists. The criterion here is a composite indicator RVU (Relative value units), which includes an assessment of the doctor’s work, the costs of the medical organization for its diagnosis and treatment, and the costs incurred as a result of its negligence.
According to Rosenthal, all large market operators, including Henry Ford Health System, Duke Health, Baylor Scott & White Health, practiced withholding premiums from doctors for low RVU rates and, conversely, paid doctors bonuses for “productivity” brought to the organization additional income. In 2015, 71% of American doctors received such awards. “The bonuses motivate the doctors as if they were bond traders,” comments the current practice of Rosenthal.
The largest attempt in the history of the United States to reform health care was adopted March 23, 2010 Affordable Care Act (ACA), known as Obamacare. The industry has not seen such a turnaround since the 1960s, when Medicare and Medicaid were established by President Lyndon Johnson. Obamacare's goal was to strengthen state control and increase the availability of medical care for the population.
Modernization involved expanding the health insurance audience, which, on the one hand, imposes fines for ignoring the project, on the other, subsidies for the purchase of insurance for the poor and small businesses, punishment of insurers for refusing to pay or discriminating clients in terms of income, sex, status health and so on.
It was supposed to create stock exchanges of insurance plans for citizens and owners of small companies. Insurers had to distribute at least 80–85% of the premiums collected by them directly to pay for medical services, and include preventive measures in their insurance plans.
Finally, ACA insisted on increasing the transparency of all market players - publishing the cost of medical services, standardizing insurance plans, accompanying them with consumer ratings and criteria for assessing the quality of medical care, justifying the increase in insurance premiums, disclosing payments from manufacturers of medicines and medical equipment.
Obamacare was designed for 10 years and was tentatively estimated at $ 900 billion. The initiators of the reform hoped that in the future the program should save the budget at least $ 4 trillion.
Provisions Obamacare immediately met with the resistance of insurers. According to Elizabeth Rosenthal, especially desperately, insurance companies protested against the norm requiring them to spend at least 80% of premiums to pay for medical care. In 2010, according to the author's American Sickness, this figure averaged 64.4%, while the rest of the company's fees were spent on administration, marketing, lobbying and other purposes.
“The inclusion of such a restriction in the ACA was regarded as a patient victory. But even it was quite generous for insurers, given that in the state system Medicare 98% of premiums are spent on medical care and only 2% on administration, ”Rosenthal writes.
However, ACA did not have time to drastically affect the health care system - in 2017, the federal act was abolished by a court decision, although it continues to operate in a number of states. One of the main criticisms from Obamacare critics was the argument about restricting the freedom of Americans, whom the ACA actually obliged to purchase insurance. The Donald Trump government has not yet offered an alternative to the reform of Barack Obama.
At the same time, according to the Committee for a Responsible Federal Budget, by 2028 only federal budget spending on health care will almost double - to $ 2.8 trillion, which makes analysts predict the collapse of the national financial system, already burdened by $ 22 trillion of external debt.
Talking about such crazy money takes American health care further and further away from the topic of patient interest. “Can we get other medical care in a country where clinics are more accountable to insurance companies and government agencies than to patients?” Imagine that the hospital where my father went to was to give an account of his care not to the bureaucrats, but to my grieving mother. Would a hospital forced to report poor-quality service to a real consumer would not force their doctors to wash their hands? ”Argues the writer David Goldhill in his book“ Catastrophic Aid ”telling about the death of his father from a nosocomial infection in one of the largest US hospitals.