Correspondence
The American Health Care System
N Engl J Med 1999; 341:917-921September 16, 1999
- Article
To the Editor:
Iglehart (Jan. 7 issue)1 has undertaken the admittedly difficult exercise of tracking how Americans spend money on health care. In Table 2 of his article, which shows expenditures in 1970, 1980, and 1990 and projected expenditures in 1998 and 2007, Iglehart indicates that about 18 to 20 percent of national health care expenditures are for physicians' services, and about 4 to 7 percent are for program administration. The expenditures that he cites for physicians' services probably reflect gross payments, including overhead, not physicians' take-home income. Overhead is much higher in the United States than in other countries and is related, at least in part, to the costs of dealing with the requirements of regulatory agencies that are unique to the American health care system. These requirements affect expenditures in most of the categories shown under “personal health care” in Table 2. Inasmuch as this portion of overhead is related to administrative costs, it can be argued that these costs belong more appropriately in the category of “program administration and net cost.” The high cost of dealing with regulatory issues may be an additional reason why health care expenditures in the United States are higher than per capita income would predict. Iglehart's calculations may underestimate these costs. Are data available to allocate administrative costs more accurately? If not, perhaps an additional category — overhead — should be included in an analysis of health care expenditures, so that the interested reader can have a better understanding of how the health care dollar is being spent.
1 ReferencesMani Menon, M.D.
Henry Ford Hospital, Detroit, MI 48202Martyn A. Vickers, M.D.
Department of Veterans Affairs, Togus, ME 043301
Iglehart JK . The American health care system -- expenditures. N Engl J Med 1999;340:70-76
Full Text | Web of Science | Medline
To the Editor:
Kuttner's assessment of this country's health insurance coverage (Jan. 14 issue)1 illustrates why the American Academy of Pediatrics has been calling for the adoption of a national health care policy to cover all children and adolescents and, eventually, all Americans.
Programs such as the Children's Health Insurance Program continue to be a priority for the American Academy of Pediatrics. However, as Kuttner points out, even with this program, millions of children will remain uninsured. Since 1989, children have lost private health insurance coverage at twice the rate that adults have.2
Health insurance coverage for all infants, children, and adolescents in this country should be a right, regardless of their economic situation. Such coverage must offer high-quality care that is accessible, continuous, comprehensive, family-centered, coordinated, and compassionate. We should expect no less for our children.
2 ReferencesJoel J. Alpert, M.D.
American Academy of Pediatrics, Washington, DC 200051
Kuttner R . The American health care system -- health insurance coverage. N Engl J Med 1999;340:163-168
Full Text | Web of Science | Medline2
Current population survey. Washington, D.C.: Bureau of the Census, March 1990, March 1997.
To the Editor:
We enjoyed reading Kuttner's article on employer-sponsored health coverage (Jan. 21 issue).1 However, we disagree with Kuttner on several points. First, he states that employers contracting with a single health plan prevent market forces from disciplining suppliers. However, employers listen to their employees and insurance brokers, as well as paying attention to published information, such as the insurance commissioner's ranking of complaints and National Committee for Quality Assurance status, when deciding whether to contract with a health plan. There are many competitors that are eagerly willing to pitch their products to employers. Thus, we believe that market forces are at play. For example, in Chicago during the second half of 1998, at least five health maintenance organizations (HMOs) and one indemnity-insurance carrier closed operations or merged.
Second, it is in the best interest of an employer to contract with as few health plans as possible, because doing so results in easier collection of premiums, fewer benefits packages to understand, and economies of scale for purchasing the coverage. This approach greatly eases the administration of health care benefits.
Finally, why is it so bad that employees have some out-of-pocket expenses? Consumers pay deductibles when they have claims involving their automobile insurance, home insurance, property insurance, and other insurance policies. We agree that workers unfortunately drop their health care coverage as their share of the premium increases, and this results in increased numbers of uninsured people. However, a policy of no out-of-pocket expenses would defeat the purpose of any insurance plan: to prevent catastrophic losses.
1 ReferencesStephen D. Boren, M.D., M.B.A.
David M. Boren
University of Illinois, Chicago, IL 606121
Kuttner R . The American health care system -- employer-sponsored health coverage. N Engl J Med 1999;340:248-252
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To the Editor:
Kuttner predicts a “shifting of costs to employees, paring of benefits, and resulting increases in the number of the uninsured and underinsured . . . as long as the basic system of employer-provided health insurance continues.” True, business is focused on price, but with his glum vision, Kuttner fails to ask, “Why?” The simple answer is that medicine has not quantitatively demonstrated the value of health care. How can corporations buy health care if no one can measure it?
Shopping for a complex product only on the basis of price is a poor strategy.1 Businesses know this and have attempted value-based purchasing (e.g., using measures from the National Committee for Quality Assurance). But only we in medicine can truly measure health and define quality. We have failed miserably because we have no systems to aggregate clinical data. Aggregated claims data, a poor substitute but the best available, now drive health care. However, if we in medicine can credibly measure health, businesses will, for two powerful reasons, buy on the basis of value. The obvious reason for businesses to buy wisely is to provide employees with the benefit of excellent health care. Measurably better health plans will attract and retain high-quality work forces, which are now in great demand. The less obvious but more compelling reason to buy wisely is productivity. Healthy people produce more, make better decisions, have better morale, and make fewer mistakes than do people who are not healthy.
Current ignorance about the relation of corporate expenditures for medical care to economic success is profound. The United States spends twice as much per capita on health care as other nations, yet economists cannot agree whether this expenditure is a drain on the competitiveness of America's corporations or a major reason for their global preeminence. At the core of this ignorance is the failure of the medical community to measure the health of the populations it serves. Physicians who practice occupational medicine believe that the potential value of gains in health-related productivity is huge — at least twice the amount of corporate spending for medical care.2 When better data confirm this, businesses will buy more health care, on the basis of the return on the investment. The return on the investment will result in a greater emphasis on prevention-based approaches to health care, which dovetail beautifully with population-based systems of clinical data. Doctors will once again focus on improving health rather than rationing care.
We are the problem, not our business customers. Physicians must unite and invest now in the data infrastructure. The electronic medical record will improve health more than penicillin will.
2 ReferencesGeorge W. Anstadt, M.D.
18 Rustic Pines, Pittsford, NY 14534-23241
Rubin PH. Managing business transactions: controlling the cost of coordinating, communicating, and decision making. New York: Free Press, 1990.
2
Brady W ,Bass J ,Moser R Jr ,Anstadt GW ,Loeppke RR ,Leopold R . Defining total corporate health and safety costs -- significance and impact: review and recommendations. J Occup Environ Med 1997;39:224-231
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To the Editor:
Iglehart's report on Medicare (Jan. 28 issue)1 contains a surprising inaccuracy that obscures both an important shortcoming in Medicare coverage and an injustice to Medicare beneficiaries with mental disorders. The author states, “Under Part B, Medicare pays 80 percent of the approved amount (according to a fee schedule) for covered services in excess of an annual deductible of $100.” In fact, for most outpatient mental health services, Medicare pays only 50 percent of approved charges in excess of the deductible.
This discrimination against beneficiaries with mental disorders has been part of the Medicare program since its inception, and it creates a financial barrier to mental health care for many elderly and disabled persons. In spite of continued efforts to secure parity in coverage for physical and mental health care, this inequity persists. Although not mentioned by Iglehart, it is one of the inadequacies of Medicare's current benefits package, which Congress would do well to correct.
1 ReferencesCavin P. Leeman, M.D.
344 W. 23rd St., New York, NY 100111
Iglehart JK . The American health care system -- Medicare. N Engl J Med 1999;340:327-332
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To the Editor:
The cutbacks in Medicare support for graduate medical education and reimbursements for physicians' services will soon limit medical school applicants to the well-to-do. It is not reasonable for Congress or the American public to expect physicians to bear the entire cost of their education in an era of declining income expectations, when they may already have incurred a large debt for undergraduate education and have, on average, 5 to 10 fewer working years than persons in other professions that require less education and training. Ultimately, the taxpayers are going to have to ante up.
Martin G. Rosenblatt, M.D.
3139 Barbydell Dr., Los Angeles, CA 90064To the Editor:
In your thoughtful series “The American Health Care System,” two issues that have important policy implications were not emphasized in Iglehart's article on Medicare1 or in Bodenheimer's article on measuring and monitoring quality in health care (Feb. 11 issue).2 The first issue is the finding that race and socioeconomic status are associated with the use of many Medicare services, which my colleagues and I reported in 1996.3 For example, in 1993, the rate of immunization against influenza was 31 percent for black beneficiaries and 52 percent for white beneficiaries; for the least affluent whites, the rate was 26 percent lower than it was for the most affluent whites, and for the least affluent blacks, the rate was 39 percent lower than it was for the most affluent blacks. As compared with whites and the most affluent members of both races, blacks and the least affluent undergo fewer common surgeries (e.g., hip and knee replacements) but strikingly more of certain procedures associated with poor outcomes of chronic diseases (e.g., amputation of all or part of a lower limb).3 Biologic differences do not explain these disparities. The association of beneficiaries' characteristics, such as race and income, with use of Medicare services was unexpected. It is clear now that the implementation of Medicare was a necessary condition for improving access to care on the part of the elderly, but Medicare alone is not sufficient to ensure equity in the use of Medicare services.
The second issue that was not underscored is the magnitude of the difficulty ahead in obtaining valid and reliable data from HMOs and other managed-care organizations. Several data problems must be acknowledged and solved to develop a useful monitoring system such as that which the Health Plan Employer Data and Information Set is intended to be. Data must be generated to monitor the use of specific services according to the race and socioeconomic status of the enrollees — including rates of preventive services, common elective procedures, diagnostic tests, and procedures associated with less than optimal outcomes of chronic conditions. Unless information is generated for vulnerable subgroups, inequalities in health care will go unrecognized in the managed-care environment. The next difficult problem is to implement methods to ensure that the data are reliable and comparable among HMOs and other managed-care systems. Another challenge is to deal with the problem of small samples, because the rates of use of many common procedures are relatively low.
Disparities in use of Medicare services remained undetected for the first 25 years of the program. It required the large Medicare administrative data base from the fee-for-service sector and the monitoring of many different services — on the basis of race and socioeconomic status — to discover disparities in patterns of care. Without adequate monitoring of the changing health care delivery system, the disparities may increase if vulnerable subgroups have more difficulties than others in dealing with the growing managed-care marketplace. This issue is especially important today because disparities in health are growing larger.4
4 ReferencesMarian E. Gornick, M.S.
Georgetown Public Policy Institute, Washington, DC 200071
Iglehart JK . The American health care system -- Medicare. N Engl J Med 1999;340:327-332
Full Text | Web of Science | Medline2
Bodenheimer T . The American health care system -- the movement for improved quality in health care. N Engl J Med 1999;340:488-492
Full Text | Web of Science | Medline3
Gornick ME ,Eggers PW ,Reilly TW , et al. Effects of race and income on mortality and use of services among Medicare beneficiaries. N Engl J Med 1996;335:791-799
Full Text | Web of Science | Medline4
Pappas G ,Queen S ,Hadden W ,Fisher G . The increasing disparity in mortality between socioeconomic groups in the United States, 1960 and 1986. N Engl J Med 1993;329:103-109[Erratum, N Engl J Med 1993;329:1139.]
Full Text | Web of Science | Medline
To the Editor:
I see no hope for the future of health insurance as long as the fiction is maintained that the employees of a company receive health care but do not pay for it. We must be certain that patients know they are responsible for their own health care. Giving businesses a tax deduction is not acceptable.
Since people do not wish to pay for health care, bottom-line, basic care might also be funded by taxes (through Medicaid). Physicians, patients, and companies must understand that they ultimately pay for their own health care.
Richard Angus Maun, M.D.
15141 E. Whittier Blvd., Whittier, CA 90603To the Editor:
In her editorial “The American Health Care System Revisited — A New Series,” Angell (Jan. 7 issue)1 compares the American health care system with the systems in other developed countries. This is not a reasonable comparison. Medical care in the United States is molded by many factors that are not present in other developed countries.
These factors include the wide availability of guns and the trauma caused by them, the high rate of infection with the human immunodeficiency virus, and the high rate of pregnancy among teenagers, with little prenatal care. In addition, the United States allows over 1 million immigrants to enter the country each year — more than the number of immigrants to all other countries combined. Many of these people come from Third World countries, bringing with them many medical problems. Millions more have entered the country illegally and receive medical treatment. Add to these factors the American legal system and bureaucracy, which account for untold billions of dollars in costs to avoid litigation and keep records, respectively. The American diet and lack of exercise have been cited for years as major causes of cardiovascular-related deaths.
These are just a few of the many factors that add greatly to the costs of health care in the United States. Comparing the costs of American health care with the costs of care in other developed countries without noting these and other differences does not provide a realistic picture of the unique problems the American health care system has to deal with.
1 ReferencesRobert F. LaPorta, M.D., Ph.D.
20 Swarthmore Ln., Dix Hills, NY 117461
Angell M . The American health care system revisited -- a new series. N Engl J Med 1999;340:48-48
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Author/Editor Response
The authors reply:
To the Editor: Dr. Leeman is correct. Medicare pays only 50 percent of approved charges (above the deductible) for most outpatient mental health services. The payment differential for services that treat physical and mental illnesses was adopted by Congress when it initially designed Medicare and reflected most private insurance policies in the 1960s. Because it was difficult for actuaries to determine the necessity of mental health services, insurers decided the market would be the best determinant of need. This payment differential is likely to receive greater attention from Congress in the future, because the number of disabled persons who are under 65 years of age, eligible for Medicare, and afflicted with problems treatable by mental health services is growing. Nevertheless, despite the improved treatments that are available and the demonstrated interest of legislators in achieving parity of payment for services that treat mental and physical illnesses, the discrimination against beneficiaries with mental disorders is not likely to be eliminated soon, because of the lack of understanding about these disorders.
Drs. Menon and Vickers ask a useful question. Unfortunately, not many data exist to allow an accurate estimation of regulatory costs. Woolhandler et al. attempted to estimate these costs for the hospital sector.1 They estimated that, nationally, administration accounted for an average of 24.8 percent of each hospital's spending in fiscal year 1990. They based their analysis on Medicare cost reports, one of the regulatory requirements that becomes a cost for a hospital. To my knowledge, similar data do not exist for the physician sector. Conceivably, a designated agency could solicit such information from physicians' offices. But the additional expense incurred by physicians in order to comply with the request for information would only add to the paperwork burden, thus increasing “administrative overhead” beyond current requirements. Without the broad-based collection of such data, estimates of regulatory costs could be gleaned only from in-depth interviews with a sample of physicians. Beyond the investment of time this would require of physicians and their office staffs, it is not clear who would pay for such an undertaking.
Dr. Rosenblatt asserts that reductions in the growth of Medicare's support of graduate medical education and reimbursements for physicians' services will limit the pursuit of a medical education to the affluent. The rising debt that many medical students incur as a result of higher educational expenses must certainly present a problem for young people who come from families of limited means. But despite the high cost of education, the uncertainty of changes in the system, and reports that many practicing physicians would choose a different career if they had a chance to start over, a large number of people (although a proportionately smaller number who are members of minority groups) continue to apply to medical school. One approach to this issue was suggested recently by Mullan, who urged the federal government to link educational subsidies for students to the requirement that, in return, they provide professional service for a specified period in geographic areas deemed to be medically underserved.2
2 ReferencesJohn K. Iglehart
1
Woolhandler S ,Himmelstein DU ,Lewontin JP . Administrative costs in U.S. hospitals. N Engl J Med 1993;329:400-403
Full Text | Web of Science | Medline2
Mullan F . The muscular Samaritan: the National Health Service Corps in the new century. Health Aff (Millwood) 1999;18:168-175
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Author/Editor Response
Gornick's letter about the influence of race and socioeconomic status on quality of care in the Medicare program is on target. Sadly, the situation may soon get far worse.
Senator John Breaux (D-La.) and Representative Bill Thomas (R-Calif.), who cochaired the now defunct National Bipartisan Commission on the Future of Medicare, are moving swiftly to push their Medicare-voucher proposal through Congress. If this proposal for what they call “premium support” passes, the quality of care for lower-income Medicare beneficiaries is likely to fall precipitously.
Under a voucher program, the government would pay a certain amount each year to assist Medicare beneficiaries in purchasing health care coverage.1 Beneficiaries would have to pay the remainder of the premium out of pocket. Those who could afford more expensive, higher-quality coverage would generally purchase it. Lower-income beneficiaries would be able to afford only the lowest-cost plans, which would probably be lacking in quality and access. The Breaux–Thomas proposal would divide the Medicare population into those with higher incomes, who could buy high-quality care, and those with lower incomes, who would be forced to buy lower-quality care. The result would be a worsening of the inequities so clearly described by Gornick.
1 ReferencesThomas Bodenheimer, M.D.
University of California at San Francisco School of Medicine, San Francisco, CA 941101
Vladeck BC . Plenty of nothing -- a report from the Medicare commission. N Engl J Med 1999;340:1503-1506
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Author/Editor Response
Dr. Angell replies:
Dr. LaPorta suggests that the American health care system is more expensive than systems in other developed countries because Americans are sicker. I know of no evidence to support that claim. In particular, there is no evidence that an early death from trauma is more expensive than a late one from Alzheimer's disease; the tragedy of the former is not economic.
Indeed, most measures of health status show that the United States is near the bottom of the list of developed countries but is not an outlier. It is certainly an outlier in terms of health care expenditures. The only reasonable explanation is that the extraordinary costs of health care in the United States stem largely from the system in which it is delivered, not from the health care needs of its citizens.
Marcia Angell, M.D.
