In a recent Health Affairs blog post, Universal Health Coverage? Why?, Walter McClure, Alain Enthoven, and Tim McDonald make a convincing case for expanding health insurance coverage in the United States. They argue that universal coverage is a “wise public investment” that “expands the workforce and makes it more productive,” similar to universal public education. Moreover, such a system can make long-term investments in prevention, wellness, and the overall health of people that over time can reduce costs as well as the severity and incidence of chronic diseases.
While their points on the merits of universal coverage are convincing, the authors are less clear about how the United States can achieve this goal. Their main recommendation is to create a system of managed competition between integrated provider networks. Competition between these systems based on price and quality theoretically improve the efficiency of the health care system. Also, they claim it would eliminate, or at least reduce the effect of, some of the perverse incentives associated with fee-for-service medicine that produce waste and drive up costs.
What this type of competition does not necessarily do – and here is the disconnect between the article’s initial premise and recommendation – is lead to universal health insurance coverage. Providers are already consolidating into systems such as Accountable Care Organizations, which in turn are attracting and competing for patients on the metrics the authors describe. Moreover, efforts are underway to enhance price and quality transparency among both public and private payers, though more work needs to be done on this front. Why then are nearly 30 million people still left uninsured?
The authors fail to consider the type of changes in health care financing that would guarantee more affordable access to the services the integrated delivery systems provide. The authors do describe what they are against – a pure private market, single payer, as well as public programs such as Medicare, which they argue has done little to curb uncontrollable costs. The authors do not make clear, however, what kind of financing system can complement the type of managed competition they describe and better guarantee equity, efficiency, sustainability, and value.
The authors also contend that Medicare is a single payer system, but this is arguably not the case. It is true that nearly all legal US residents over age 65 are covered by Medicare. However, that alone does not make a single payer. In a real single-payer system, the payer is strong enough to negotiate favorable terms for what it purchases. True single-payer systems are quite rare, but what is not rare in the rest of the world is the government’s willingness to set prices. While Medicare uses its market power to set rates and fee schedules for providers under Medicare Parts A and B, it does not set prices in Medicare Part D or Medicare Advantage. Instead, private plans fulfill this function.
True single-payer systems have many other features that Medicare lacks, such as the ability to make coverage determinations based on cost-effectiveness (which Medicare is barred from doing). Also, under these systems, coverage spans across all age groups, which spreads risk and creates strong incentives to cover prevention across the lifespan. If Medicare were expanded to cover all groups, then these features would become a reality for the program–but currently, they are not. Also, single-payer systems lack the public-private partnership structure that is incorporated into Medicare Advantage and Medicare Part D.
Some, including McClure and colleagues, argue that the magic bullet must be to give health care consumers more information, so they know which providers provide “better care for less,” coupled with incentives, financial or otherwise, to choose those networks. Unfortunately, patients already have access to substantial information about the quality of various types of providers, but few actually use such information. It is unclear if the types of incentives the authors envision would make a significant difference in the preferences of patients. It is worth noting that certain CMS demonstration programs, such as Next Generation ACO, have experimented with offering payments to beneficiaries who select preferred participating providers. The program has yet to be evaluated.
The public/private mix that we currently have is not working to ensure access to care for all. Reforms are needed to enhance competition and transparency beyond the status quo, but that alone will not be sufficient to achieve universal coverage.