Review – The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care

The failed attempts by the republicans in Congress to repeal the Affordable Care Act (Obamacare) have yielded some surprising results. The process itself spurred many Americans to pay close attention to health care policy and to republican shenanigans.  In the end, instead of sneaking the legislation through quickly with minimal deliberation, conservative senators and representatives were confronted by firestorms of opposition at town hall meetings. Press coverage and continued protests have kept the issue alive.

Even more consequential, as a result of the awful bills put forward (and passed in the House), there has been a shift in public opinion toward the view that everyone has a right to affordable health insurance. Polling has found increasing support for single payer or Medicare for all laws. In addition, many governors, including republican governors, actively opposed the repeal legislation, because of what it would do to Medicaid and the prospect that large numbers of their constituents would lose insurance. And if we consider GOP claims about the legislation–dishonest as they were–that it would improve healthcare and reduce costs for everyone, it is clear they had no choice but to play this game on a field where healthcare for all was a basic ground rule.

The simple result is that universal healthcare is now high on the country’s agenda. Even centrist democrats including Al Gore, Jimmy Carter, and Senator Kirsten Gillibrand (NY) have come out in favor of guaranteed healthcare for all. But what sort of universal healthcare? Advocates commonly call for “single payer” or “Medicare for all,” sometimes referencing European healthcare and health insurance models. But these calls often rest on simplistic assumptions about how these European models actually work. Joshua Holland makes this point in a recent article and adds that figuring out the policy and politics of how to “get there” is a crucial step. If  progressives and liberals don’t get it right, they may squander a rare opportunity to achieve affordable healthcare for all.

So what are these other models that are often referenced, but rarely explained? T.R. Reid’s “The Healing of America,” even though it was published in 2010, is a great introduction to a diverse group of models that provide good healthcare for all at significantly lower costs than what we pay in the US. To survey the various healthcare systems, Reid visited more than ten countries to talk to doctors and other healthcare professionals about how their countries meet (and in some cases do not meet) their public health needs. His ostensible purpose, his “in,” was to talk about how to treat his bum shoulder and these discussions with doctors are interesting and often humorous. But the real value of this book comes when Reid pivots from his specific concerns as a patient to a broader discussion of the systems where he is seeking treatment. His insights are clearly explained and easily understood. The key takeaway, which builds throughout the book, is that the US–despite its impressive technological medical achievements–could be doing much better in achieving and paying for better health outcomes if it could learn from other countries’ experiences.

What are the various systems Reid identifies? He identifies three main types relevant to the discussion in the US: 1) private providers and insurers (Germany and Japan); 2) private providers and a single, public insurer (single-payer essentially as in Canada); and 3) government providers and financing (Britain). There are also countries, mostly in the developing world, where there is no health insurance at all. In these cases–sort of a fourth model–access to healthcare is based on one’s ability to pay. This reality partly describes healthcare for those Americans who do not have health insurance.

What can we learn from The Healing of America to inform our current debate about healthcare and health insurance? First, Reid observes–as have others–that the US currently has multiple healthcare systems, each of which actually resembles one of the other models. Medicare resembles Canada’s single payer system, while the Veterans Administration (VA) is very much like Britain’s National Health System. And for the majority of Americans with healthcare financed through their places of employment, there is a resemblance to the German and Japanese models of multiple providers and insurers.

In other words, it is not so much the structure of these other systems that provides lessons for the US. It is how they operate. One of Reid’s crucial insights is that all of the universal models he describes essentially have a single system. But this system is implemented in different ways. This is true even for where there are private providers and payers. The key here is the rules under which everyone operates. One of the most important rules is that special boards or government entities negotiate set fees for doctors, hospitals, and drugs. This goes a long way towards keeping costs down.

Second, Reid explains how a single system keeps administrative costs far below those in the US. Whereas the US healthcare industry employs a significant number of people in billing, insurance claims and payments, and related services, almost all of those transaction costs are eliminated in the universal systems. Administrative costs in these non-US systems range from under 5% of total costs to around 11%, which is a bit of an outlier. But in the US, administrative costs are in the range of 16-17%.

Costs are also kept down by the fact that insurance is a non-profit enterprise when it comes to basic healthcare. Insurance companies exist to finance healthcare, not to turn a profit and pay investors. This is an especially important aspect of these non-US systems because it creates a different incentive structure from what we have in the States. In the US system, before the ACA, insurance companies sought to sign up as many healthy people as possible, while limiting the numbers of those who were expensive to take care of: the elderly and those with pre-existing conditions. Insurance companies also refused (and still refuse) to cover charges at times. As Reid writes, “That’s why US health insurance companies are loathed by their customers, but loved on Wall Street.” [237]

In the universal coverage systems, on the other hand, incentives are structured toward preventing illness and the associated expenses. It is worth pondering the fact that in many of the countries Reid visits, people visit their doctors far more often than we do in the US. The smaller costs of these visits prevent much larger treatment costs and generally keep people healthier.

The ACA was designed to change the incentive structure in the US and no doubt it succeeded to a degree. But costs are still very high compared to other countries and billing remains confusing, complex, and non-transparent in much of the industry. And no matter how many people they cover, the exchanges are still mostly for-profit concerns.

The foundational principle of the successful non-US models Reid talks about is that they offer universal coverage. Everyone is covered and treated equally for basic, but comprehensive healthcare. Wherever it occurs, and it occurs just about everywhere in Europe, many Asian countries, and in some Latin American countries, universal coverage expresses a national consensus that everyone in society has the right to healthcare and that the government is responsible for guaranteeing that right.

So where are we in the US after the attempts to repeal and replace the Affordable Care Act? Although it provided health insurance for millions of Americans who did not have it previously and established some important principles such as the requirement to cover pre-existing conditions, the ACA did not do anything to simplify the US health insurance system. If anything, the exchanges created yet more complexity. In terms of costs, it appears that the ACA has not significantly affected the growth of of healthcare spending, although it is difficult to separate ACA’s effects from other economic factors. This conclusion is entirely consistent with the fact that the ACA’s reforms did not substantially touch the for-profit nature of the US system and the fact that there is no central mechanism that sets prices for everyone.

Nonetheless, the ACA and the attempts to repeal it have created a new political dynamic. This might be the most important success of the law. It gave over 20 million people access to healthcare they did not have before and will fight to keep. Initially many did not understand the ACA, in part because it is complicated, in part because of the botched roll-out and the failure of the Obama administration to fight for it once it was passed, and in part because of the hatchet job perpetrated on it by right wing forces. But now, after a few years of operation, public opinion has changed.   Many people have enjoyed the benefits, have been worried about losing those benefits, and have seen the dishonesty of the GOP repeal efforts. There is solid support for protecting those gains and moving toward a system that guarantees health insurance for all. If Reid is correct that the first step in achieving universal health insurance is for a country to recognize that affordable healthcare should be the right of every citizen, it appears that the US may very well have taken that step in the past few months.

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