Market oriented models that incentivize overall health outcomes – truth or fiction?

This question seems to come up a lot, especially in light of the ongoing debate about the future of the ACA and single-payer proposals. Most recently, a congressional candidate who is genuinely interested in the subject and finding an optimal solution posed it to us. So, what do the data tell us? Turns out there are actually a number of non-fully socialized systems that do well:

The first article, from the New York Times, set up a “playoff” of randomly assigned health systems. The authors asked a group of experts to pick the winners of each “game.”  Note that UK’s National Health System (a single-payer system) did not fair very well in this assignment. And a different type of system with universal coverage “won out” –  Switzerland, a system with private insurance and private delivery.

And here is an article that refers to rankings of the European systems. Note that they conclude that the Netherlands is best. Again, a system like Switzerland, that has universal coverage through private insurance and private delivery. They also conclude that, when looking at patient outcomes in particular, the government-run systems do not do well unless the country is small.

And even the Commonwealth Fund, which continues to rank the UK as the best system among those analyzed, says that they are disappointed that when it comes to patient outcomes, the UK does very poorly: “The U.K. stands out as a top performer in most categories except for health care outcomes, where it ranks with the U.S. near the bottom.”

As patients ourselves, we have always felt that what a health system is trying to provide, first and foremost, is excellent patient outcomes.

Interestingly enough, the US already has models for “fully-socialized” (VA/Military = UK), national health insurance (traditional, fee-for-service Medicare = Canada) and market-based (Federal Employees Health Benefit Plan /Tricare/employer-based = Netherlands/Switzerland) coverage schemes. Instead of re-inventing the wheel, why not chose the option that seems to promote high-value care (better outcomes at lower costs) and expand it to all? And on that note, Medicaid, the subject of another blog, is not the answer.

So, if we were asked, here are some key principles to keep in mind as we re-structure the current insurance system:

  1. People should have choice – this is the USA after all (conservative notion).
  2. Everyone should be insured birth to death in the SAME SCHEME (liberal notion).
  3. This would include the same set of insurance options, that everyone can chose for themselves and change as they see fit (conservative notion).
  4. The insurance options should be market based (conservative notion).
  5. The government role should be to provide means-tested premium support (liberal notion).
  6. The government should regulate the market with a utility mindset (liberal notion).
  7. People should have the options to buy up if they so desire (conservative notion).

These principles already exist in the insurance program for our federal employees and politicians – the Federal Employees Health Benefit Plan. Why not for the rest of us?

8 thoughts on “Market oriented models that incentivize overall health outcomes – truth or fiction?”

  1. Market based solutions work in some dimensions of the health service, support, care and information sector but do not work with all healthservices. Among the reasons why Switzerland has an effective health system includes the fact that they have engaged in dialogue about what they want their health system to do and among the objectives is they want the health services to function as a sytem not as a collection of components each of which is attempting to optimizes its position.

  2. This is a cut through the crap, common-sense approach to desperately needed change. It deserves a wider audience.

  3. Ultimately, this is a political question. Is it possible in the current environment that we could somehow reach a political consensus on the 7 principles listed? Is it possible that a political leader could embrace and champion these principles? Is it possible that our political leaders could find a venue to even discuss the issue in these terms? Could a national dialogue ala Switzerland occur? How can we work toward this goal, so sensible, so important and so hard, to have a process that would take the U.S. toward a better system that had better outcomes and assured at least basic health coverage for all of us?

  4. Universal coverage for catastrophic conditions is needed with premium support for those that can’t afford it. Health care savings accounts and the free-market with full price transparency should be employed for routine predictable expenses. Medicare and Medicaid have nearly 50% of the market in my home state of Illinois But constantly run in the red. IL Medicaid pays physician providers less than the cost of providing care ($28.50 for a medicaid office call) yet consume 38% of the state budget. I don’t see how giving them the rest of the market under a redesigned public option program would somehow make providing care sustainable. Obamacare put a lot of people on Medicaid and closed a lot of rural hospitals by paying less than the cost of delivering the care. We are one recession away from healthcare completely blowing up state and federal budgets.

  5. Thanks for the dose of policy driven common sense.

    When the United States figures out how to let policy, instead of politics, guide our path on health reform – we may figure out how to move forward.

    Currently, health reform remains a hostage of our polarized politics.

  6. The Healing of America by TR Reid did a nice job 10 years ago comparing these systems from a patient perspective. What role do you think stable health policy leadership plays? Austria and Switzerland had ministers of health with long tenures…15-18 years. Do you think we will ever evolve to a place where health is not a political football?

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