U.S. and U.K. Health Reforms

January 8, 2011 - It is Saturday morning. I find myself thinking about parallels between U.S. and U.K. health reforms. Next week the U.S. House of Representatives will vote to repeal Obamacare, and Democrats will undoubtedly cry Foul, Unfair, and Favoring the Rich! The Democratic Senate will not bring up the repeal for discussion, and if it were to do so and if it were to pass, President Obama would veto it.

The parallels are obvious. The ensuring debate over the merits and debits of Obamacare, in the U.S. and the U.K. will focus on philosophical and practical choices between :

• Conservatism vs. Liberalism

• Capitalism vs. Socialism

• Collectivism vs. Individualism

• Government vs. Markets

• Money Saved vs. Money Spent

• Government Expertise vs. Consumer Wisdom

• Regulation vs. Freedom

• Republicans vs. Democrats

• Tories vs. Labor

The Thatcher Years

I have been reading Margaret Thatcher: The Downing Street Years, a 914 page saga on her 11 years as Prime Minister from 1979 to 1990. She is famed for saying, “The problem with socialism is that eventually you run out of other people’s money.”During the latter part of our Prime Minister ship, she tried to reform the National Health Service, a popular program. After being introduced in 1948, the NHS created the largest single bureaucracy in Europe, and Thatcher thought the bureaucracy needed reform because of:

• Long waiting lines

• A shortage of medical technologies

• Rationing of high tech procedures, tests, and drugs

• Aging facilities

Thatcher’s reforms – a pro-market approach allowing hospitals to compete, more private pay to hospitals and doctors, and more private health insurance – met with limited success. Now her conservative successors, the Tory David Cameron government, has re-emphasized pro-market forces by encouraging hospitals to seek more private revenues ( one successful hospital, the Royal Marsden, already gets 25% of its monies from the private sector), by giving responsibility to Britain’s 35,000 General Practitioners to “buy” services, and by pledging to cut the NHS bureaucracy by 45%.

Whether these reform measures will succeed is unknown and unknowable. But I find the refrom proposals interesting because the Obama administration has taken the opposite tack by expanding government control, increasing regulations, introducing 150 more regulatory agencies, reining in the private sector, growing the bureaucracy, and appointing Donald Berwick, MD, as administrator of CMS (Centers of Medicare and Medicaid), an admirer of NHS.

Doctor Berwick has called the NIH “a national treasure,” is on record for making these comments.

"I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do."

"Please don't put your faith in market forces. It's a popular idea: that Adam Smith's invisible hand would do a better job of designing care than leaders with plans can."

"Indeed, the Holy Grail of universal coverage in the United States may remain out of reach unless, through rational collective action overriding some individual self-interest, we can reduce per capita costs."

"It may therefore be necessary to set a legislative target for the growth of spending at 1.5 percentage points below currently projected increases and to grant the federal government the authority to reduce updates in Medicare fees if the target is exceeded."

"A progressive policy regime will control and rationalize financing—control supply."

Add these comments to the fact that President Obama favors a single-payer system and believes the rest of the U.S. should follow the Massachusetts system, which promises universal coverage to its citizens, and you get a sharp sense of what the Obama administration is proposing.

But, as David Brooks, the moderate New York Times commentator, commented in a recent column, “Round 2,” referring to the new debate over repeal, the Obama health care agenda is vulnerable for these reasons.

• False projections. The new system is based on expert projections on how people will behave. In the first test case, these projections were absurdly off base. According to the Medicare actuary, 375,000 people should have already signed up for the new high-risk pools for the uninsured, but only 8,000 have.

• Cost projections are way off. For example, New Hampshire’s plan has only about 80 members, but the state has already burned through nearly double the $650,000 that the federal government allotted to help run the program. If other projections are off by this much, the results will be disastrous.

• Employee dumping. This is the most serious threat. Companies and unions across America are discovering they would be better off if, after 2014, they induced poorer and sicker employees to move to public insurance exchanges, where subsidies are much higher. This could involve 150 million Americans being forced to change their current ehlath palns..

• The number of people in those exchanges could thus skyrocket, especially as startup companies undermine their competitors with uninsured employees and lower costs. Costs could soar to $1.4 trillion if those who would be better off in the exchanges actually moved to them.

• Health care consolidations. Since the law passed, there has been a frenzy of mergers and acquisitions, as hospitals, clinics and doctor groups have joined together into bigger and bigger entities. These large outfits, because of monopoly of care in their regions, could charge what they please, raising rather than reducing costs.

• Public hostility. About 53 percent of Americans oppose the health care law and 43 percent support it. Complaints are especially high among doctors. According to a survey by the Physicians Foundation, 60 percent of private practice doctors say the law will force them to close their practices or to restrict them to certain categories of patients.

Small wonder, then, that Republicans, who have exit poll evidence indicating public opposition to the health reform law contributed directly to more than one-third of their election victories, These victories were based partly on American’s fear of “socialism.” Democrats will stress those aspects of the law that poll well.

The GOP is taking a political risk in seeking to repeal the health reform law. Their basic strategies will be to buy time until the 2012 elections by defunding, dismantling , delaying , disapproving regulations, directing oversight hearings, and delegating opposition to the states, who feel they cannot afford new Medicaid costs and costs of running health exchanges.