Health reform in the USA: markets are vital

Health policy guru Mark McClellan was the keynote speaker at our major conference at the National Press Club in Washington DC, answering with a resounding 'Yes!' the question we had posed in the title of our event, 'Is there a role for markets in health care?'

Mark, together with three international and two other U.S. health policy experts, concluded that markets and consumerism must work together, here and in other countries, to solve the problems all developing nations are facing.

'Fundamental trends in health care are the same in the U.S. and Europe,' Mark said, especially cost pressures. He says the quantities of health care consumption are rising everywhere, but 'too often it's the wrong treatment at the wrong time, the overuse or underuse of effective technologies, and a failure to emphasize prevention.'

Mark used the experience of Medicare reform to show that even government programs can be transformed by market forces -- a transformation he led as head of the Centers for Medicare and Medicaid Services.

Flexibility in benefits, less government micromanagement, useful information for beneficiaries, and incentives to seek value are all key, as is government's role in getting payment policies right, including risk adjusted payments.

International Policy Network co-sponsored the sell-out luncheon with the Galen Institute, and a podcast of the full event is available as are summaries of the remarks by our three international speakers.

There is so much good information here it is hard to summarise, but here are a few highlights:

• Dr. Helen Evans, director of Nurses for Reform in London: After 'nearly six decades of epic Soviet-style failure, the NHS currently finds itself in a perilous state. As Britain enters the twenty-first century it has around one million people on its waiting lists and another 200,000 people trying to get onto themÖ

  "As a result of this situation, recent years have seen the re-birth of Britain's private healthcare sector. Today, more than 6.5 million people have private medical insurance, 6 million have private cash benefits, 8 million pay privately for a range of complimentary therapies and 250,000 self-fund each year for private acute surgery. Millions more opt for private dentistry, ophthalmics and long term careÖ

  "As I look to the debate in the United States of America, I would urge you to use the market and not more state intervention to reform your healthcare system.'

• Johnny Munkhammar, program director of the Swedish think tank Timbro: 'In much of Western Europe, the free market is considered incompatible with the provision of welfare servicesÖToday, this model has severe problems, not least in health care. In a number of countries, there are waiting lists, where seriously ill people cannot access care for months or even years. There is inefficiency: A recent European Central Bank working paper showed that the bigger the public sector, the more inefficient it tends to beÖ

  "The US health care system is commonly perceived in Europe to be a complete free market, in which the poor are left to die on the streets if they cannot afford coverageÖIncreased trade in services combined with new technology could do wonders for the health care of tomorrow. But the way to achieve this cannot be through greater state intervention and control... For anyone interested in improving health care, the market should be embraced, not demonised.'

• Brett Skinner, Director of Health and Pharmaceutical Policy Research at The Fraser Institute in Canada: 'Canada has the only single-payer health system in the world among developed nations. No other country has tried to copy the Canadian system because it is a failure. Even Canadians are beginning to reject it. Americans would be making a huge mistake if they adopted Canadian-style health policies for the United StatesÖ

  "In 2003, 45 in-patient surgical procedures per 1000 population were performed in Canada, compared to 88 -- or twice as many in the United States. In 2004, 25.5 MRI exams per 1000 population were performed in Canada, compared to 83.2 -- or three times as many in the United StatesÖCanadian patients waited on average 17.8 weeksÖbetween the time they saw their family physician and the time they actually received specialist treatment.

  "The Canadian experience shows that a government-run single-payer monopoly is the worst way to achieve universal health insurance coverage. There are better international examples for achieving universal health insurance coverage if that is what Americans want.'

• Gene Steuerle, Ph.D., senior fellow at the Urban Institute in Washington: Gene said that the average American family spent more than $19,000 on health care last year, $11,000 of it through government expenditures and tax subsidies. And what do we get for all of this money? More and more uninsured people who can't afford the cost of insurance.

  He said that it is basically too late to move to a single-payer health care system in the United States because we can't afford the 40% payroll taxes it would take to finance the system.

  Instead, he said, we must move toward a balanced approach to health reform. 'We can use market-based approaches to reform that make use of regulation or regulated approaches that make use of the market,' he said. But the crucial thing is to get moving and put ideology aside. Here is more about his plan for reform.

• Len Nichols, Ph.D., director of health policy program at the New America Foundation in Washington: 'I have come not to bury markets but to praise them,' he began. 'But sometimes interventions help markets to work better.' A mandate for the purchase of insurance, for example, could eliminate the problem of adverse selection, and limits on premium variance may make insurance more affordable, he said.

  Like Mark, Len concludes that we must have better knowledge about what treatments work so people can 'buy smarter and use resources better.' He believes 'we need an objective body to decide' what is effective.

It was a wonderful program, and it really is worth your time to download the podcast to hear for yourself