Future of healthcare reform in the USA: lessons from abroad

Review

© Future Drugs Ltd. All rights reserved. ISSN 1473-7167 279

CONTENTS

Lessons from abroad

Summary

Expert opinion

Five-year view

Key issues

References

Affiliations

www.future-drugs.com

Future of healthcare reform in the USA: lessons from abroadThomas W O’Rourke† and Nicholas K Iammarino

Healthcare reform in any nation is an evolving process. Brought about by demographic, technological, social, cultural, economic and political factors, all healthcare systems are continually confronting issues related to cost, access and quality. This paper examines other countries’ approaches to healthcare in the ongoing efforts at healthcare reform in the USA. While recognizing the uniqueness of the healthcare system in each nation, it appears there are valuable lessons from other nations to be considered by policy makers in the USA as healthcare reform continues to evolve. This paper synthesizes several lessons for the USA that may be applicable by looking beyond its borders. In so doing, it reveals differences that may be insightful in considering future healthcare paradigms influencing healthcare reform efforts in the USA.

Expert Rev. Pharmacoeconomics Outcomes Res. 2(3), 279–291 (2002)

†Author for correspondenceDepartment of Community Health and College of Medicine, University of Illinois, 121 Huff Hall, MC-588, 1206 South 4th Street, Champaign, IL 61820, USA Tel.: +1 217 333 3163Fax: +1 217 333 [email protected]

KEYWORDS:access, cost, health status, international comparisons, lessons, public health, quality, reform, satisfaction, uninsured

Healthcare is one of the major concerns ofevery country in the world, regardless of itslevel of development and economic status. TheUSA is no exception. Healthcare issues (andthe debate surrounding healthcare reform) area significant matter of public concern formany Americans. These growing concernsfocus on a number of critical issues, such as:access, the uninsured [1,2], underinsured [3],quality of care, availability of care and basicpublic health services in rural areas and innercities [4] and especially cost. The differencebetween us and them is that many other coun-tries have taken bold steps in tackling thesedifficult issues in an attempt to reform andimprove their healthcare systems, while theUSA continues on a seemingly rudderlesscourse. As we enter the new millennium, theUSA is the only country in the industrializedworld that does not offer universal healthcarecoverage to its citizens.

The above issues are not only concerns ofthe poor and underserved, but have becomeissues for mainstream America – especiallythe issue of cost [5]. There are an estimated43 million uninsured Americans. This repre-sents 18.4% of the nonelderly population[6]. An additional 13% of the under 65 pop-ulation are underinsured – about 20 million

people [7]. Even more disturbing is the factthat American children under 18 years arealso uninsured. The US Census Bureau esti-mates the number of uninsured childrenunder the age of 18 years was 11.1 millionin 1998, or 15.4% of all children [8]. At thesame time, US healthcare costs continue tobe far higher and have risen more rapidlythan other nations [9]. Although the ClintonProposal met its demise in Congress in 1994and has faded from the American public’seye, the problems and crises in our health-care system still remain. Our problems aredeep, complex and are growing more urgentdaily. Further, our attempt at patchworkreform is not enough and simple solutionswill not suffice [10].

As health professionals, regardless of our par-ticular research interests and whether we work inbusiness/industry, school/university, or commu-nity settings, it is imperative that we not onlybecome informed of these issues, but that we alsohelp shape our healthcare future. There are a hostof misconceptions that extend beyond the gen-eral public and are commonplace even amongour own ranks. Thus, the purpose of this paper isto examine other countries’ approaches to health-care in attempts aimed at reforming the UShealthcare system. By no means does this paper

O’Rourke & Iammarino

280 Expert Rev. Pharmacoeconomics Outcomes Res. 2(3), (2002)

imply that other countries have ideal systems. Clearly they do not.All healthcare systems are confronting issues related to cost, qualityand access. However, we believe that there are important ‘lessons’to be learned or at least considered by looking beyond our ownborders. This article may be illustrative in comparing the USAwith several other leading industrial nations. We believe that thereare a number of principles that may challenge many preconcep-tions and evidence several interesting comparisons and differencesin healthcare paradigms.

Lessons from abroadIt is possible to provide universal access & at least restrain cost increases?For the past few decades, concern has focused on the rise inhealthcare expenditures and strategies to address these concerns.During this period, healthcare expenditures have risen rapidly.Costs are viewed in absolute dollars and as a percent of the grossdomestic product (GDP), which is defined as the value of allgoods and services produced. If costs had risen proportionally togrowth in the GDP then the percent of healthcare expenditureswould have remained the same. This is not the case. As shown inTABLE 1, healthcare expenditures in the USA have increased bothin terms of absolute dollars and percentage of the GDP, andgiven current trends, are projected to rise in the future to $2.1trillion or 16.2% of US GDP by 2008 [11].

These figures are frequently cited in the USA to argue that itis not possible to provide universal access. On face value, theargument is reasonable. However, an examination of healthcarespending in other countries suggests otherwise. An analysis of29 industrial countries, including the Group of Seven (G7)countries (Canada, France, Germany, Italy, Japan, the UK andthe USA), demonstrates that while the USA spent considerablymore on healthcare services and experienced more rapidincreases in the level of spending than most industrialized coun-tries in the period 1990–1996 both in dollars and percent ofGDP, it has the least access of any of the other 29 countries [9].

In 1960, the majority of countries had government-assuredhealth insurance, compared with only 6.9% in the USA. By1997, the USA was the only country that still had less than halfof its population (33%) with government assured coverage.The increase was due primarily to the passage of Medicare andMedicaid in 1965. The differences between the USA and theOrganization for Economic Cooperation and Development(OECD) countries are especially notable as shown in TABLE 2.

It is particularly notable, that other countries have achievedincreased coverage while restraining cost increases significantlybelow those experienced in the USA. How this is accomplishedis discussed in subsequent lessons from abroad.

Spending more money on healthcare, in & of itself, is neither necessary nor desirable – we already spend more than we shouldHealthcare in the USA in many respects is a unique problem.Ordinarily, to address many of the challenges or problems, such asimproving education, an aging infrastructure, ensuring a cleanersafer environment, improving mass transportation, creating a lessviolent society, reducing poverty, providing better housing andimproved access to healthcare services requires additionalresources. In the case of healthcare, increases in public expendi-tures squeeze other important areas, such as education. For exam-ple, state governments have been squeezed by rising expenditureson the Medicaid program that pays for acute and long-term carefor the eligible poor. Medicare, the largest federal program prima-rily serving the elderly has increased its budgetary importance. In1980, Medicare outlays represented $0.54 of each federal health-care dollar; in 1990, Medicare took $0.61 [12]. The result is fewerfunds for other areas, such as education, housing, transportationinfrastructure, or other human services.

When one speaks about addressing these problems, the firstquestions are how much will it cost and who will pay? Lessonsfrom other countries suggest that unlike other important areasof public concern, spending more money on healthcare may beneither necessary nor desirable. An analysis of other countriessuggests that we are already spending more than we shouldwithout any greater benefit individually or to our society collec-tively. In 1998, the USA spent 14% of its GDP on healthcare.This translated into a per capita expenditure of $4270 [13].

Data presented in TABLE 2 indicate that citizens of otherOECD countries have greater access to health services (and atlower per capita costs and less GDP percent expenditures) thanthe USA. This led Angell to reject the notion that it is impossi-ble to provide universal access without necessarily costing morethan we are now spending [14]. Her retort to the argument that‘you can’t get something for nothing’ presumes that we are nowgetting our money’s worth. Citing healthcare expenditures andaccess to healthcare services, she concludes that Americans arecurrently not getting their money’s worth.

In her cogent article, she proceeds to show that other coun-tries provide universal access for all citizens and spend lessdoing it. In supporting her case, she shows that Americanhealthcare costs so much more not because we are sicker or

Table 1. US health expenditure in current dollars for selected years 1960–2008.

Year Expenditures in billions (US$) Percent of GDP

1960 26.9 5.1

1970 73.2 7.1

1980 247.3 8.9

1990 699.4 12.2

1999 1228.5 13.9

2001 1403.6 14.6

2008 2176.6 16.2

Sources: Healthcare Financing Administration (HCFA), Office of the Actuary; and US Department of Commerce, Bureau of Economic Analysis.GDP: Gross domestic product.

Healthcare reform in the USA: lessons from abroad

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suffer more expensive illnesses and not that we are aging dis-proportionately. Nor is it that we have unique, more expensivetechnology, although it is certainly more widely disseminatedin our country. Rather, the explanation lies in the way health-care is paid for and delivered. “Clearly, our system is peculiarlyinefficient and inflationary’ so much so that ‘we could cover allmedically indicated care for all Americans without additionalexpenditures” [14]. Brook and Lohr echo a similar sentiment [15].

Further support for the notion that increased expenditures forhealthcare is neither necessary nor desirable comes from formerColorado Governor and healthcare critic, Richard Lamm. In hisprovocative article, ‘The Ten Commandments of Healthcare’,Lamm challenges many of our current policies [16]. Callinghealthcare the Pac Man of the public budget and while referringto other countries, he cites a litany of examples where the USA isspending far more than it should without commensurate benefit,while endangering other important societal goals.

Supporting his argument, Lamm refers to America’s rela-tively poor health status indicators, overuse of ‘flat-of-the-curvemedicine’ – those medical procedures which increase cost, butachieve little or no improvement in health status. These mayinclude: heroic efforts and significant expenditures prolongingdeath not life, focusing on sick care not healthcare, focusingon expensive acute care rather than more cost-effective preven-tive care, an over and misappropriate reliance on costly hightechnology that benefits few relative to high benefit and morecost effective procedures and technologies that could have agreater impact on morbidity and mortality. For example, bil-lions of dollars could be saved by modeling other countrieswhich focus more on relatively cost-effective pre- and postna-tal care and less on much more expensive (but profitable to thehealthcare industry) neonatal care. Similarly, he cites giving254,000 millionaires Medicare coverage while closing well-baby clinics or the decision in California to fund organ trans-plants while 200,000 low income people were removed fromthe state Medi-Cal program.

Savings from administrative & inappropriate services are alone sufficient to provide coverage for those Americans presently uninsuredRising healthcare costs are a concern for all countries and cost-control efforts are not a new phenomenon. All countries haveadopted cost-control strategies, however some have demon-strated more success than others. Bodenheimer and Grumbachhave outlined a number of strategies and have sorted them intotwo categories: painful and painless [17]. Painful cost-control areefforts that lead to rationing of beneficial services. Painless cost-control is accomplished by methods other than reducing bene-ficial services. Three such examples that are applicable to theUSA are: reducing wasteful administrative expenses, eliminat-ing unnecessary medical treatments and underutilized capacity.Implicit in these strategies is the notion that the focus of therelevant outcome is the overall health of the population and notthe individual patient.

Table 2. Health insurance coverage in 29 countries, 1960 and 1997.

Country Percent of population with government-assured health insurance

1960 1997

Australia 100.0 100.0

Austria 78.0 99.0

Belgium 58.0 99.0

Canada 71.0 100.0

Czech Republic 100.0 100.0

Denmark 95.0 100.0

Finland 55.0 100.0

France 76.3 99.5

Germany 85.0 92.2

Greece 30.0 100.0

Hungary 100.0 99.0

Iceland 100.0 100.0

Ireland 85.0 100.0

Italy 87.0 100.0

Japan 88.0 100.0

Korea a 100.0

Luxembourg 90.0 100.0

Mexico a 72.0

Netherlands 71.0 72.0

New Zealand 100.0 100.0

Norway 100.0 100.0

Poland 100.0 100.0

Portugal 18.0 100.0

Spain 54.0 99.8

Sweden 100.0 100.0

Switzerland 74.0 100.0

Turkey 5.8 66.0

UK 100.0 100.0

USA 6.9 33.3

OECD median 85.0 100.0

Source: OECD Health Data 98: A comparative analysis of 29 countries (Paris: Organization for Economic Co-operation and Development, 1998).aNot available.



Lessons from expenditure data from other countries suggestthat other countries are more effective in painless cost-controlmeasures. Administrative waste is a good example. Woolhan-dler and Himmelstein reported that in 1983 the proportion ofhealthcare expenditures consumed by administration in theUSA was 60% higher than in Canada and 97% higher than inthe UK [18]. They reported that:

‘Healthcare administration cost between $96.8 billion and$120.4 billion in the USA, amounting to 19.3–24.1% of totalspending on healthcare, or $400 to $497 per capita. In Canada,between 8.4 and 11.1% of healthcare spending ($117 to $156per capita) was devoted to administration. Administration costsin the USA increased 37% in real dollars between 1983 and1987, whereas in Canada they declined. The proportion ofhealthcare spending consumed by administration is now at least117% higher in the USA than in Canada and accounts forabout half the total difference in healthcare spending betweenthe two nations. If healthcare administration in the USA hadbeen as efficient as in Canada, $69.0 billion to $83.2 billionwould have been saved in 1987’ [p.1253].

In a subsequent article, Woolhandler and Himmelsteinreported that administration accounted for 24.8% of hospitalspending in 1990 and rose to 26.0% in 1994 [19]. Administra-tive salaries accounted for 22.4% of the average hospital’s salarycosts. These were higher than previous estimates and more thantwice as high as in Canada. Furthermore they reported that‘greater enrollment in HMOs, with more competitive biddingby hospitals for managed-care contracts, an important elementof proposed managed-competition healthcare reforms, does notseem to lower hospital administrative costs’ [20]. Additional sup-port for the apparent efficiency of other countries was cited in aGeneral Accounting Office study, which showed that if theUSA streamlined their administrative costs to Canadian levelsby adopting a single-payer system, the savings would be enoughto cover healthcare for every uninsured American [21].

Another area of concern is inappropriate care, which can takeseveral forms. It may be the result of carrying out unnecessaryprocedures or unneeded procedures. Both are possible. Giventhat health services are somewhat unique from other services, inthat the physician influences demand and many are paid on apiece-work basis, it is not surprising that unnecessary proce-dures may be performed at significant risk to the patient andcost to the payer and patient. Or, in an era of managed care,incentives aimed at reducing utilization may result in beneficialservices not being provided.

In a review of a random sample of about 5000 Medicarepatients at sites around the USA, researchers at the RAND Cor-poration, a leading health policy think-tank, used panels of phy-sicians composed of nationally known experts from a variety ofspecialties to assess the appropriateness of three elective proce-dures [22]. The procedures were: carotid endarterectomy (remov-ing build-up of plaque inside the vessel walls), coronary angiog-raphy (an x-ray technique in which a tube is inserted into theheart arteries and dye injected through it) and upper gastrointes-tinal endoscopy (an examination of the digestive organs with a

fiber optic tube). In separate projects, the researchers studiedcoronary artery bypass surgery and compared US and UKrates of use of the operation. On the basis of the panel’s rat-ings, researchers determined unnecessary surgery was mostcommon for carotid endarterectomies. They concluded thattwo thirds of these procedures were done for inappropriate orquestionable reasons. They also found that almost 10% of thepatients who underwent the procedure died or suffered astroke as a direct result.

The RAND research team also found that about 17% of thecoronary angiographies, performed to diagnose blockages inheart arteries, were clearly inappropriate, as were a like numberof the gastrointestinal endoscopies. At the time of the study,more than 500,000 coronary angiograms and 1 million endo-scopies were performed annually in the USA. Using methodsdeveloped for this study, researchers also found that 44% of386 coronary bypass procedures were performed for inappro-priate or dubious reasons. Based on these findings, theresearchers concluded that:

‘The levels of inappropriateness we found in widely dispersedgeographic areas suggest that inappropriate procedures arebeing done with high frequency by physicians in every part ofthe country. If we can prevent them from taking place, patientswill be spared unnecessary risk and money will be saved. Thesepotential savings are significant’ [p. 2].

Conservatively, assuming that 80,000 carotid endarterecto-mies are performed annually at an average cost of $13,000(1988 dollars), the researchers estimated that a reduction of30% (less than half of the amount of inappropriate or question-able use they found) would yield savings of more than $300million. This led one of the researchers to conclude that:

‘If rates of appropriate use studied are similar to those wefound in the four procedures we studied held for all procedures,it is not inconceivable that reducing unnecessary care couldtrim $50 billion from the nation’s medical bill. And thatamount of money could go a long way to meet the needs of theelderly for long-term care and the 40 million people in thecountry who have no medical insurance’ [p. 2].

The research team also compared US and UK standards ofcare by organizing separate panels of US and UK physiciansto retrospectively rate the appropriateness of coronary angiog-raphy and heart bypass grafts performed on randomly selectedgroups of USA Medicare patients over a several-year period.Although the prevalence of heart disease and the training ofmedical students are basically the same in both countries, thepanels came to strikingly different conclusions. The Britishphysicians were more than twice as likely to judge care asinappropriate than their American counterparts. The Britishphysicians appeared to require a higher level of scientific evi-dence before supporting a procedure. They also placed greateremphasis on maximizing medication therapy before enduringangiography and bypass surgery [23]. These results ledresearchers to suggest that if they were to apply standardscloser to those of the British panel, the rate of inappropriate-ness and thus, the potential for cutting healthcare costs,



would be even higher. They concluded that this would meanthey could selectively reduce inappropriate care withouthaving to ration effective care.

These findings are consistent with the belief that in the tradi-tional US system (which is changing rapidly as managed carecontinues to grow), doctors and hospitals were reimbursedlargely on a piece-work, fee-for-service basis, which preferen-tially rewards (not always appropriate) high technology caredelivered by expensive specialists and subspecialists. Not sur-prisingly, given these incentives we continue to produce toomany specialists and subspecialists and they can, to an extent,generate their own business. Coupled with most of the popula-tion having insurance coverage with limited consumer cost-sharing and the ability of the provider to generate demand asagent for the consumer, the results are not surprising, butunderstandable.

Health status of other industrialized countries compares very favorably with the USA – there is no evidence to suggest that our higher healthcare expenditures are linked to either better outcomes or health statusSeveral indicators are commonly used to compare health statusin various countries. It should be noted these are crude indicesand should not be considered comprehensive measures ofhealth outcomes. Well established is the fact that many factorsin addition to the healthcare system influence these measures[24–28]. Two of the more commonly used measures are infantmortality (deaths during the first year of life) and life expect-ancy. With respect to infant mortality, several trends emergewith respect to the USA. The infant mortality rate of the USAhas declined significantly. In 1960, the infant mortality ratewas 26.0 per thousand live births. By 1990, the US infantmortality rate declined by nearly two thirds to 9.2 per thou-sand and declined by another 15% to 7.8 per thousand livebirths by 1996 [9,29]. However, as shown in TABLE 3 the relativerank of the USA compared with other OECD nations duringthis period (1990–1995) declined. In 1960, the USA ranked12th among the 27 countries reporting that year. By 1996 therelative ranking of the USA had declined to 24 of 29 countries.

A similar pattern emerges with respect to longevity for bothmen and women [9]. In 1960, life expectancy at birth forwomen in the USA was 73.1 years and the USA ranked 13th of29 countries. By 1990, female longevity rose to 78.8 and to79.4 in 1996, but during this period the relative ranking of theUSA declined to 17th in 1990 and was 19th in 1996. For men,the USA ranked 17th of 29 countries in 1960 at 66.6 years.Despite increases in life expectancy, in 1996 the USA ranked22nd among 29 OECD countries. [29] Similarly, the percentageof the US population aged 65 years and older is below theOECD median (12.7 vs. 14.4).

Results of these and other indicators repeatedly reveal thatthere is no evidence to suggest that significantly higherhealthcare expenditures are associated with either better out-comes or improved health status. If there were a relationship,the USA would lead the world in all health status indicators.

To the contrary, while the absolute health status indicatorshave improved over time, the relative position of the USA hasin some instances deteriorated, despite the fact that healthexpenditures have risen markedly [13,29,30].

Universal access and cost control can occur within the parameter of a mixed private/public delivery system, it does not imply or require government ownership or operationA common misnomer is that universal access and cost-controlimplies government ownership and operation. A review ofother countries indicates this is not the case. The USA is theonly industrialized nation without universal access and exhibitsless cost-control than other countries. Yet other countries areable to cover the entire population and restrain growth inhealthcare expenditures within the parameter of a mixed pri-vate/public delivery system. An analysis by the US GovernmentAccounting Office compared the similarities and differences ofGermany, Japan and France (all of which have a mixed private/public system) with the USA [31]. In terms of similarities, thecitizens of all countries received their healthcare coveragethrough the workplace, most physician services were providedby private practice practitioners who were paid on a fee-for-service (not salaried) basis and financing was through privateinsurers, not the government. However, major differencesbetween these countries were noted. Each country provideduniversal access, provided a basic benefit package to all citizensand a uniform payment to physicians and hospitals. In all ofthese countries, the government, although neither owning noroperating the system, played a major role in mandating cover-age and restraining the growth of healthcare expenditures byhealthcare providers.

In Japan, for example, the healthcare system has been able toincorporate highly cherished American values, such as freedomto choose physicians, employment-based health insurance and alaissez-faire delivery system, among others. The Japanese areable to achieve this while offering universal access to all citizens.A key structural factor for keeping healthcare costs down istheir low administrative costs [32–34]. Ikegami and Campbellstate that despite criticisms, the Japanese healthcare systemneeds only minor changes [35]. They rate the system as excellentin cost control and access and very good in quality.

Even in countries that have public single-payer financed sys-tems, such as Canada, the UK and Japan, most physicians arenot government employees. In Canada, more than 90% of prac-ticing physicians are self-employed. Canadian physicians billprovincial medical plans on a fee-for-service basis [36,37]. Provin-cial medical associations negotiate their fees with provincial gov-ernments and if the total billings exceed the negotiated budget,the physician fees are adjusted. In the UK, most specialists (con-sultants) who are hospital-based are government employees (butare free to have a private practice), but the more numerous gen-eral practitioners (GPs) are not government employees. Rather,they are independent contractors whose professional tradeorganization, the British Medical Association, negotiates a con-tract between them and the government. Similarly, in Japan



only hospital-based physicians receive their salary from the state.The remaining private practitioners are reimbursed on a fee-for-service basis based on monthly bills providers send to the Social

Insurance Medical Care Fee Payment Fund. Fees are establishedby the central social insurance medical council, comprised ofinsurance representatives, providers and the public [38].

Table 3. Health status and outcomes in 29 countries (1996).

Country Infant mortality per 1000 live births

Life expectancy (years) Percentage of population aged 65 years and older

At birth At age 65

Female Male Female Male

Australia 5.8 81.1 75.2 19.6 15.8 12.0

Austria 5.1 80.2 73.9 18.8 15.3 14.7

Belgium 6.0 81.0 74.3 19.7 15.3 15.9

Canada 6.0 81.5 75.4 20.2 16.3 12.0

Czech Republic 6.0 77.2 70.5 16.5 12.9 12.5

Denmark 5.2 78.0 72.8 17.7 14.2 15.5

Finland 4.0 80.5 73.0 18.7 14.6 14.4

France 4.9 82.0 74.1 20.6 16.1 15.4

Germany 5.0 79.9 73.6 18.6 14.9 15.6

Greece 7.3 80.4 75.1 18.6 16.1 16.0

Hungary 10.6 74.7 66.6 15.9 12.1 14.1

Iceland 3.7 80.6 76.2 19.1 16.2 11.5

Ireland 5.5 78.5 73.2 17.4a 13.7a 11.4

Italy 5.8 81.3 74.9 19.6 15.7 16.3

Japan 3.8 83.6 77.0 21.5 16.9 14.6

Korea 9.0 77.4a 69.5a 16.9a 13.2a 6.1

Luxembourg 4.9 80.0 73.0 19.2a 14.7a 13.7

Mexico 17.0 76.5 70.1 18.8 15.5 4.1

Netherlands 5.2 80.4 74.7 18.6 14.4 13.3

New Zealand 7.4 79.8 74.3 19.0 15.5 11.3

Norway 4.0 81.1 75.4 19.5 15.5 15.6

Poland 12.3 76.8 67.8 16.8 13.0 11.5

Portugal 6.9 78.5 71.2 16.8 13.0 11.5

Spain 5.0 81.6 74.4 19.8 15.8 15.5

Sweden 4.0 81.5 76.5 19.7 16.1 17.5

Switzerland 4.7 81.9 75.7 20.3 16.3 14.9

Turkey 42.2 70.5 65.9 – b – b 5.2

UK 6.1 79.3 74.4 18.4 14.7 15.6

USA 7.8 79.4 72.7 18.9 15.7 12.7

OECD median 5.8 80.3 74.0 18.9 15.5 14.4

Source: OECD Health Data 98: a comparative analysis of 29 countries (Paris: Organization for Economic Co-operation and Development, 1998).a1995 Data.bNot available.



Thus, the notion that universal access and cost-controlrequire government ownership and operation is not supported.Universal access and cost-control can occur in a private/publicdelivery system arrangement albeit the government providing amore important and powerful role than in the USA.

Generally, public satisfaction with health services is higher in other industrialized countries – there is no evidence to suggest a preference for US style healthcareComparing public satisfaction across countries can be problem-atic. In part, public satisfaction is a function of expectationsthat may be cross-culturally different [39]. Consumers often alsolack sufficient information/expertise to assess quality. Consum-ers with low expectations and little knowledge may rate theirsatisfaction higher than citizens in another country havingmore knowledge and higher expectations. However, one cannotsimply ignore public satisfaction, since it is the public that bothutilizes and pays for the healthcare system in any nation. Publicperceptions of and experience with the healthcare system areuseful at any one point in time. Over time, they can be used tobuild a baseline to measure public response to future changes,such as the continuing trend toward for profit managed care asthe dominant mode of healthcare delivery in the USA.

Surveys conducted by the Harvard School of Public Health,Boston, USA, and Louis Harris and Associates have assessedpublic opinion about healthcare systems in more than 15 coun-tries over the past decade. During this period, respondents wereasked if their healthcare systems needed only ‘minor changes,’‘fundamental changes,’ or whether their health system ‘has somuch wrong with it that we need to completely rebuild it’ [40].Despite having a healthcare system whose spending leads theworld, results of surveys in the early 1990s evidenced USrespondents being more critical compared with other countries,29% of respondents saying that the US healthcare system hasso much wrong with it that we need to completely rebuild it. Incontrast, only 17% of UK respondents and 5% of Canadiansreported similar responses.

Since the early 1990s, many nations have experienced dramaticchanges in healthcare financing and delivery of services. Manyfactors are responsible for these changes, including: rising health-care costs, increasing public expectations, emerging pharmaceuti-cal and other medical technologies and aging populations. In arecent study of five healthcare systems, Donelan reports that theviews of the public appear quite similar [41]. In no nation is therea majority content with the healthcare system. Public dissatisfac-tion with the US healthcare system has returned to the level thatit was a decade ago. Consistent with previous studies, uninsuredpersons were significantly more likely than insured persons toreport having access and cost problems. Uninsured persons alsoreport broad support for rebuilding the US healthcare system.Finally, Donelan’s data shows major differences for several meas-ures between those in traditional versus managed care plans, suchas Health Maintenance Organizations (HMOs). Specifically,people in managed care plans were less likely to rate physicianand overall medical care as excellent.

Despite having a healthcare system whose spending leads theworld, there is no evidence that Americans rate their providersor system more highly than other countries. Measures of per-ceived quality of physician and hospital care, as well as the over-all rating of the quality of healthcare services, did not varygreatly across nations. Ironically, respondents in the UK, anation that spends only about a third that of the USA and isamong the lowest spending of all industrial countries, are theleast likely to call for rebuilding their healthcare system and areamong the least likely to be worried about future health needs.In all cases there is no evidence to suggest that public satisfac-tion with health services is higher in the USA compared withother industrialized nations.

Healthcare spending in other countries is not open-ended, limits or caps on spending have been put in place for major providers & services (including physicians, hospitals & technology)Unlike most Western countries, the USA has no overall strate-gic long or short-term health plan. There is no limit to totalspending on healthcare by establishing a global cap. Instead, ithas become the black hole of our economy. In contrast, mostcountries adopt global spending caps. Countries, such as Can-ada, Japan and the UK, negotiate budgets with the healthcareproviders. In this respect, healthcare is treated like otheressential services, such as education, housing, nationaldefense, welfare and so forth. The system then operateswithin predetermined budget constraints.

In virtually all countries, the percentage spent on healthcarehas risen over time, in part due to an improved economy, greaterpublic expectations, technology and other medical advances andan aging population. At the same time, all societies face signifi-cant challenges in attempting to restrain the rate of healthcareexpenditures and these constraints are evident in various meas-ures of public dissatisfaction. Yet, the vast majority of industrialcountries have implemented expenditure caps while providinguniversal access. The USA has implemented neither. It spendsby far the most, while providing the least access of any industri-alized nation. From 1960 to 1997, the percentage of GDP spenton healthcare in the USA increased by 8.3% compared with3.7% in the median OECD country [29].

Healthcare spending is not open-ended in any country. Allcountries, including the USA, ration healthcare in some manner.In a number of countries, there are separate budget caps on serv-ices and capital expenditures, such as for facilities and equipment.In essence, these caps serve as a rationing mechanism focusing onthe supply side. In contrast, the USA, while not explicitly ration-ing, does so primarily on the demand side as measured by the abil-ity to pay. As a result, large and growing segments of the popula-tion are uninsured, or more commonly underinsured, whileexpenditures continue to escalate for those having coverage. Incontrast, expenditure caps used by other countries provide formore equity in access, a lowered rate of healthcare expenditureincrease, but less overall system capacity, often resulting in queuesespecially for some hospital and surgical services.



Other countries view healthcare more as a human service than a market commodity. This implies a very different way of viewing the nature of the problem & how it should be addressedMuch of our current efforts to address the American healthcaresystem problems, especially costs, are based on the notion oftreating healthcare as a market commodity rather than as ahuman service [42,43]. Relman has referred to this as the newmedical–industrial complex [44]. The growth of the for-profitsector, including the growth of a wide variety of manage careplans, such as HMOs and Preferred Provider Organizations(PPOs) is based on utilizing the discipline and inherent effi-ciencies of a market economy approach. The results to datehave been less than impressive [45]. Costs continue to rise whileconsumer choice and access decline.

In contrast, most other countries treat healthcare more as anethical issue [46–49]. In these countries healthcare is viewed moreas a human service, such as education, or police and fire protec-tion. They incorporate the concept of social justice as describedby Beauchamp [50]. MIT economist Lester Thurow sums up thecontrast well [51]:

‘Proponents of a market approach also forget that an egalitar-ian distribution is one of the factors that creates solidarity, afeeling of community and the nonmonetary attachments thatbind a society together. If healthcare is not part of the socialglue that holds us together, what is? Healthcare costs are beingtreated as if they were largely an economic problem, but theyare not. To be solved, they will have to be treated as an ethicalproblem.’ [p. 1571].

A similar sentiment was echoed by Princeton political econ-omist Uwe Reinhardt, who mentions that in the Canadian andEuropean nations, healthcare tends to be viewed as a commu-nity service or social good whose provision and service is ulti-mately the responsibility of the public sector. Access to health-care is granted to each citizen as a matter of right to foster thesense of solidarity these nations consider an essential corner-stone of nationhood. To accomplish that end, the financing ofhealthcare is completely divorced from actuarial principles.The individual’s financial contribution to health is strictly afunction of his or her ability to pay and not at all of his or herhealth status [52].

In other countries, viewing healthcare as a human service ora social good is not only for humanistic and ethical, but it mayalso for pragmatic reasons. Specifically in part, other countriesprovide healthcare as a basic human right on the basis of utili-tarian reasons. That is, universal access is provided not onlybecause it benefits the individual, but also it benefits the soci-ety by helping to ensure a productive work-force and promotessolidarity among its citizens.

A classic case of utilitarianism combined with equity is theBritish National Health Service (NHS). Created in 1948, theNHS is a service that offers access to healthcare to the entirepopulation as a right of citizenship, regardless of the ability topay. It recognizes only one criterion for allocating resources topatients; that of need as defined by the providers of healthcare.

The NHS is Britain’s most popular institution based on publicsurveys. The NHS symbolizes social equity and collectivistcompassion. Interestingly, the NHS has enjoyed support fromboth Labour and Conservative political parties. On face value,one would think that the NHS, which is funded largely bygeneral taxation, would be the anathema for the Conservativeparty. Such is not the case. In his article, ‘Why Britain’s Con-servative Support a Socialist Healthcare System,’ Klein indicatesthat besides having widespread public support, the NHS hasbeen able to combine the notion of social equity while beingthe ‘best-buy’ model of healthcare in the Western world [53].The NHS manages to offer comprehensive coverage of theentire population at significantly less cost than other industri-alized countries because it global budgets account for theentire system. As a result, the population and its workforce arebasically healthy and public expenditures are kept in check.This is valued by the private sector, whose healthcare costs aresignificantly below other industrialized nations with whomthey compete in a global economy.

Spend thy money where it will do the most good. Any reform needs to focus not only on access & financing, but also on its organization designed to maximize output (health status) relative to inputs (healthcare expenditures). Put simply: get the biggest bang for the buck!A basic tenet of how problems are defined determines howsolutions are crafted. How the issues are defined sets the param-eters of what options are considered and debated and evenwhich facts and figures are considered relevant. Healthcare is anexcellent example. In her article ‘Access to What? Healthcare forWhom?’ Oswald contends that the current crisis in the USA hasbeen defined by the politicians and the media as one of financ-ing with two components [54]. The first is that healthcare costsare consuming an increasing percentage of the GDP and indi-vidual budgets. The second is that in this process an increasingnumber of Americans, now estimated at 43 million and grow-ing at about 100,000 a month, do not have access exceptthrough emergency rooms in times of crises. The problem hasbeen crafted so that the solution for many Republicans was tobolster the market economy and reduce ‘big government.’ Inresponse, the Democrats have framed the issue as one of financ-ing and equity and the solution lies in increased governmentfinancing or funding the right mix of payers. Oswald takesexception to the views of both political parties [54]. She arguesthat the current crisis will not be solved by only changing whopays, but by changing what is paid for. She maintains thatwhile poor people do not have access because the system as it isstructured is not available to them, the more important prob-lem is that it is not appropriately structured for most people inthe USA with or without coverage. What is needed is a newmodel – a new paradigm.

According to Oswald, the problem is the medical modelaround which the healthcare issue is debated [54]. Simply, themedical model is inappropriate, it is disease, not health-ori-ented. It focuses on people when they are sick, rather than on



keeping them from getting sick when they are well. The medi-cal model focuses on patients’ deficiencies and pathologies, nottheir resources. Further, the medical model is provider-centered– that is, around the needs of the providers, such as physiciansand needs of institutions, such as hospitals, rather than theneeds of the patients. The medical model continues to be phy-sician-centered. Financing and delivery of care revolves aroundphysicians. The medical model also is often focused on theindividual patient in isolation from their family, community,school, occupation or environment. Rather, she contends thefocus should be on the needs of the person and be population-based. As an example, it would be far more cost-effective andbeneficial to the person and society to devote more resources toprovide prenatal care than to treat a low-birth weight baby in aneonatal intensive care setting. Likewise, it would be more logi-cal for a system to treat a cold in its early stages than treat pneu-monia, to provide resources for AIDS education and preven-tion than to treat AIDS and to control diet through propernutrition than to remove a diabetic’s leg. It would be far morecost-effective and beneficial to devote resources and promotepolicies to reduce drinking and driving and handguns than tofinance more state-of-the-art trauma centers.

Therefore, the problem is not one of just restraining the rateof healthcare cost escalation or designing a bigger door for peo-ple to access services. Rather, as done to a far greater extent inother countries, the door to services needs to be redesigned tomeet the needs of consumers. In that context, the issue offinancing can and should be addressed. The system needs to beredesigned to get the biggest bang (improved health status) forthe buck. To accomplish this would require significant changesthroughout the present US sick care nonsystem (e.g., man-power supply, distribution, mix of services, facilities, technol-ogy supply and diffusion). For example, as evidenced in anumber of other industrialized countries, resources could beallocated to regions or states based on relevant demographicinformation and health status.

Increased incentives should be implemented to promote pre-vention, early detection and primary care with accompanyingdisincentives for specialization. Consistent with other nations,the ratio of primary care to specialists in the USA (currentlyabout 35% compared with 65%) needs to be reversed. Similarly,there should be increased reliance on other cost-effective provid-ers, such as nurse practitioners and physician assistants, whosefocus is often on the entire person (including their family andenvironment) rather than the disease or problem.

Any reform should concentrate on keeping people well onthe front-end and less emphasis and resources placed on expen-sive and often inappropriate treatment at the other end.Resources need to be directed at prolonging useful life and notflat-of-the-curve medicine that often prolongs disability anddeath at tremendous individual and societal cost.

Lessons from abroad indicate this is the approach used inmany countries. Greater emphasis is placed on low-tech front-end efforts, such as prenatal and primary care and less onexpensive tertiary care. Even at the end phase of life, many

countries focus their efforts on palliative care rather than heroicefforts to prolong life, often at great public and personal costs.A classic example is the hospice movement, which was firstinstituted in the UK and continues to be utilized to a greaterextent than in the USA.

Many other countries have approached healthcare deliveryfrom the perspective of how to get the maximum output(improved health status) relative to society’s ability and willing-ness to pay. As a result, their systems, while certainly not with-out problems, are designed, organized and financed quite dif-ferently. As previously shown, they appear to do better for theentire population by providing universal access while spendingsignificantly less.

Improvement in health care & status requires a broader perspective than focusing on medical care. Comparing the USA with other nations allows us to examine the fundamental issues & challenges facing our country & the future of healthcareImproving health status requires a broader perspective thanfocusing on medical care. Patchwork incremental reform of themedical (sick care) system will not work [55]. A broader per-spective is needed; a new paradigm is needed [56]. The funda-mental question is how can health status be most improvedand within that context, what role can and should publichealth and medicine play?

In study after study, socioeconomic status emerges as one of themost important influences on mortality and morbidity. We pro-pose that it may be more efficacious to reverse the tendency tomedicalize and to be ready to regard illness as the result – direct orindirect – of important social determinant factors, such as socioe-conomic status, class and race. Bezruchka suggests that economicequality is the medicine we need to decrease the health statisticsgap between the USA and other more egalitarian nations [57].Thus, rather than focusing on medical care as an important healthdeterminant, it may be more advantageous to direct increasedattention on issues, such as: education, income distribution,employment, drug use, teenage pregnancy, diet, violence, suicide,environment, racism and so forth.

With specific reference to medical care, we need to onceagain ask whether healthcare is a right or privilege? Should wetreat healthcare as a social good, as we do education, police andfire protection, including its collective financing and accounta-bility, or should it continue as a private consumption good,often inappropriate and distributed based on an ability to pay?Should the billions of dollars in profits, inappropriate care andadministrative waste be diverted to provide rational compre-hensive health (not just medical) services to all individuals inthe USA as a basic right of citizenship? Should we set a specificlimit on spending? Should we budget the healthcare system aswe do virtually every other thing in our society, be it in thepublic or private sector? Are we aware of the immense opportu-nity and personal costs involved? Do we really care? Are weready for a paradigm shift in our healthcare system? Are we upto the challenge proposed by Oswald who suggests [54]:



‘Let us build upon the models that we know work – focusingon prevention, primary care, community, empowering patientsby building on the resources they have and making them part-ners in their care and respecting the contributions of all differ-ent healthcare professionals and their interdependence. Let uscreate the political will to build the kind of system we want tohave access to’ [p. 31].

SummaryComparing the USA with other nations allows us to examinethe fundamental issues and challenges facing our country andthe future of healthcare. It also may provide insights into thequestions and challenges mentioned above. As we have shown,the US healthcare (a medical/sick care nonsystem) does notcompare very favorably with other industrialized nations. Itoffers the least access, least comprehensive benefits and is themost expensive; it has the most complex, inefficient and costlyadministrative structure and among the poorest quality interms of health status measures.

Lessons from other countries suggest that there are other par-adigms that we can learn from. By no means do other countrieshave perfect systems; there are not any. At the same time, manycountries have at least addressed the major issues in a mannerthat may offer valuable insights for the USA.

Ultimately, careful and thoughtful introspection of ourunderlying values and goals are necessary before appropriatehealthcare system policies are formulated and implemented.Lessons from abroad suggest that spending more money onmedical care is neither necessary nor desirable. To support addi-tional medical care spending within the context of the presentnonsystem is, in essence, akin to throwing money at the prob-lems. Addressing the fundamental problems of cost, access,quality and improved health status will not be easy. No one saysit will. Lessons from abroad imply that the ultimate merits ofany meaningful reform effort rest upon significantly changingthe status quo. Providing bandaids is not sufficient; the prob-lems will only intensify. Our current approach to the delivery ofhealthcare is seriously flawed and a major overhaul in theunderlying philosophy is needed. Comparing the USA withother nations suggests insights to address current healthcarereform efforts.

Expert opinionPerhaps Winston Churchill was correct when he said, ‘You cancount on Americans to do the right thing, but only after theyhave tried every thing else.’ Our article suggests Americans maybenefit from considering and translating, in their unique Ameri-can way, some healthcare lessons from abroad. It is clear thatover the past half-century, changes in USA healthcare financingand delivery have occurred. During this period, the relationshipsamong the four major actors have changed and continue toevolve. These actors are: the purchasers, both public and private,that supply the funds, the insurers who receive the funds fromthe purchasers and reimburse the providers, the providers (hos-pitals, physicians, nurses, nursing homes, pharmacies etc.) that

render the services and the suppliers, such as the pharmaceuticaland medical supply industries. However, there has emerged nostrong consensus on what is the ‘right thing’ to do. The absenceof consensus is also expressed among the citizenry. The resulthas been a Band-Aid here and another there depending uponthe issue of the day. The American healthcare system (or nonsys-tem may be more accurate) appears to be more akin to the say-ing that ‘if you don’t know where to go then any road will getyou there.’

The healthcare system of any nation is, in part, reflected bystrong underlying societal values. In the USA some of these val-ues include choice (including everything from ice cream tohealthcare), competition, belief in the importance of the mar-ket to allocate resources, the notion that you get and should getonly what you pay for, individual responsibility, wariness of thegovernment involvement and a fundamental belief that govern-ment (at any level) is inferior to the private sector in perform-ing or administering anything (the post office and public edu-cation are frequently cited examples). Values, such as equity,equality and collective responsibility certainly exist, but are lessprominent. Simply put, healthcare in the USA is viewed as aprivate consumption good whose financing is an individualresponsibility. Within this context, the status of USA healthcareis not surprising.

It has been shown that in any nation there are trade-offs tobe made among competing goals reflected by societal values.Basic goals in any system include a decision about the degreeof egalitarian distribution (access), cost-control and the free-dom from government involvement in the pricing and deliv-ery of healthcare services. All three cannot be optimizedsimultaneously. Ultimately you can choose any pair of thesegoals or, more likely achieve less than optimal attainment ofall three. Most nations have opted to achieve access and cost-control using the power of government. In the USA, neitheruniversal access nor effective cost-control has been achievedamidst relatively modest government involvement.

By no means does this imply that other nations have attainedNirvana. They have not as evidenced by varying degrees ofpublic discontent and calls for reforms in many nations.

It is not the intent of this article to suggest that the USAimport any model from any one country. That would be foolishindeed. What this article does suggest is that other nations seemto manage these competing goals better than the USA. It is alsoevident that these goals may be achieved within the parameters ofa mixed private/public sector delivery system that is consistentwith strongly held underlying values in the USA.

Five-year viewAll countries will continue to attempt to address issues of health-care costs, availability, access and quality. Aging populations, med-ical advancements, technological changes and changing expecta-tions will continue to present significant challenges. Reform willnot be episodic, but ongoing and incremental. The differencesbetween the USA and its industrial nation counterparts observedin this article will persist.



Healthcare cost control in the USA will remain elusive.Heathcare costs will continue to rise at a rate in excess of infla-tion. The USA will continue to be an outlier in terms of health-care costs and access. The USA will continue to devote about5% of its GDP for the privilege of not following the lead ofmany other industrial nations that have adopted various formsof universal access and lower GDP expenditures.

Regardless of when the American economy improves, thenumber of uninsured and underinsured in the USA will increase.The economy will influence the magnitude, but not the overalldirection. Income discrepancy in the USA will continue toincrease and contribute to the problem of healthcare coverageand health status indicators. Inequities in coverage across incomegroups will widen. Canadian healthcare economist Robert Evanswas right when he said, ‘Americans have no trouble throwingpeople overboard as long as they don’t have to hear the splash.’

There will be no broad support in the USA for large-scale pro-grams targeting the poor, the uninsured or the underinsured.There will also be few government initiatives to create new pro-grams or expand current programs. For most Americans, man-aged care will continue to dominate in the USA, but will con-tinue to evolve. There will be continued political and publicsupport for legislation to curb managed care abuses. Regulationof managed care plans will increase in the form of disclosurerules, clinical protocols and medical records privacy rules. How-ever, regulations will not extend effectively to controlling costsor increasing access of the uninsured.

Most working Americans will continue to obtain their cover-age through the workplace. Faced with rising costs and an inabil-ity or unwillingness to deal with the problem, employers willaccelerate the trend from a ‘defined benefit’ to a ‘defined contri-bution.’ That is, employers and quite possibly the governmentwill attempt to limit their exposure to rising healthcare costs byshifting them to their employees or citizens. Employers will makea fixed sum contribution (rather than a fixed benefit) to theiremployees and allow them to navigate the health insurance land-scape, or the government will do the same through some sort ofvoucher program. In either case, the responsibility and exposurewill be on the consumer. The shift from defined benefit todefined contribution will remove the incentive for employers orgovernment to control healthcare costs. The result will be higherpremiums and greater inequities and ‘tiering’ between groups.

Although not explicitly acknowledged, healthcare in the USAhas always been tiered. In the past, this tiering has been primarilydetermined by those who had private coverage or Medicare, thoseon the public welfare Medicaid program and those without anycoverage. With the evolution to the next generation of managedcare, the tiering will become more explicit and extreme. The toptier will have considerable discretion, the second tier will be thosein managed care plans, such as Preferred Provider Organizations(PPOs) or similar organizations having some discretion to go ‘outof plan or network’, but at higher personal costs. The third tierwill be consumers having private healthcare coverage, but little orno choice in plans, such as one or two HMOs, either because ofemployer decisions or inability to afford more expensive plans

offering greater choice and/or benefits. The next tier will be thoseon public welfare programs like Medicaid who are left to eatwhat’s left on the table and finally the uninsured who, at best,might get to eat the crumbs from the floor.

Although seriously flawed, the existing paradigm of medicalcare equated with healthcare and in turn with health, will con-tinue to persist. The present paradigm narrows our perspective ofthe nature of the problem and what reform options to consider,debate and implement. This paradigm will inhibit efforts toimprove the health from a population-based perspective focusingon the social determinants of health.

Key issues

• Of 29 industrial countries including the Group of Seven (G7) countries, the USA spends more on healthcare services than most industrialized countries both in dollars and percentage of GDP while having the least access to care of any of the other 29 countries.

• USA healthcare administrative costs are 60% higher than in Canada and 97% higher than in the UK.

• There is no evidence to suggest that significantly higher healthcare expenditures are associated with either better outcomes or improved health status. Savings from administration and inappropriate care are sufficient to provide coverage for those Americans presently uninsured.

• Universal access and cost control can occur within the parameter of a mixed private/public delivery system. It does not imply or require government ownership or operation.

• Despite having a healthcare system whose spending leads the world, there is no evidence that Americans rate their providers or system more highly than other countries.

• Unlike most Western countries, the USA has no overall strategic long or short-term health plan. While the vast majority of industrialized countries has implemented expenditure caps and provides universal access, the USA has implemented neither.

• Other countries view healthcare more as a human service than a market commodity. In other countries, viewing healthcare as a human service or a social good is not only done for humanistic and ethical reasons; it may also be done for pragmatic reasons. Universal access is provided not only because it benefits the individual, but also it benefits the society by helping to ensure a productive work force and promotes solidarity among its citizens. In contrast, the USA views healthcare as a private consumption good to be allocated on ability to pay.

• Since socioeconomic status and other social determinants of disease emerge as important influences on mortality and morbidity, it may be more efficacious to reverse the tendency to medicalize and regard illness as the result – direct or indirect – of important factors, such as socioeconomic status, class, race, education and employment.



ReferencesPapers of special note have been highlighted as:• of interest•• of considerable interest

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Health care reform in the USA: lessons from abroad


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Affiliations• Thomas W O’Rourke, PhD, MPH, CHES,

Department of Community Health and College of Medicine, University of Illinois, 121 Huff Hall, MC-588, 1206 South 4th Street, Champaign, IL 61820, USA, Tel.: +1 217 333 3163, Fax: +1 217 333 2766, [email protected]

• Nicholas K Iammarino, PhD, CHES, Department of Kinesiology, Rice University, Houston, TX 77005, USA, Tel.: +1 713 348 5768, Fax: +1 713 348 8808, [email protected]

Documents

Future of healthcare reform in the USA: lessons from abroad