The strange world of US health care offers us a combination of horror stories to remind us how much we still have to defend in our NHS, and occasionally illustrations of more general principles. A recent flurry of studies on the US system has offered us a few of each. John Lister has dug through them.

The imposition of charges for health care, and especially for hospital care, where the likely charges can be much higher, is known to deter people, especially those on low or no incomes, from seeking treatment – irrespective of their clinical need.

A recent study of the levying of daily “co-payments” for patients receiving hospital care funded through Medicare Advantage in the USA has the dual advantage of confirming the general analysis and explaining some of the obscure terminology used by the US health insurance system.

The impact of copayments

The article, Association of daily copayments with use of hospital care among Medicare Advantage enrollees, explains from the outset that:

“Cost sharing is a common technique utilized by health insurers to “share” a portion of an enrollee’s health expenditures with the enrollee.

“This often takes the form of a payment at the point of service (co-payment) or payment for a fixed percentage of the cost of a given health service (co-insurance). In the hospital setting, this could also be a lump sum payment at admission (a deductible), or a payment for each day in the hospital (a per diem).” 

This is useful reference, as the article delves into the arcane world of US health care, pointing out to the many of us who didn’t know that Medicare (the publicly-funded system for providing care for senior citizens, introduced by Lyndon Johnson in the late 1960s) has always levied charges:

“The Medicare program has used cost sharing in various forms since its inception in 1965. Medicare enrollees are responsible for 20% coinsurance for physician visits and large inpatient deductibles for hospital admissions, with no cap on out-of-pocket spending.” 

In other words even the part of US health care that looks most like the NHS can still be expensive for pensioners to use, and the common factor with all charges is that they deter people:

“The imposition of an inpatient deductible in the United Mine Workers Health Plan in 1977 was associated with a 45% decline in the probability of having a hospitalization.”

The paper explains that the fixed fee of a “deductible” is less effective as a deterrent than daily charges, which impact most on those with greatest health need:

“A deductible is typically exceeded during the first day of a hospital stay, leaving no financial incentive for a patient to leave the hospital earlier. In contrast, a per diem structure retains an incentive for a patient to leave the hospital throughout his or her stay.

“Thus, changing a plan’s benefit structure from a deductible to a per diem could mean lower out-of-pocket spending for beneficiaries with shorter lengths of stay, but greater out-of-pocket costs for hospitalized beneficiaries with longer lengths of stay, and subsequently could lead to decreased utilization.”

In practical terms the change meant that in place of a fixed cost of $376 for a spell in hospital, under the new scheme over-65s who stayed the average 4.4 days would face a bill of $726, with the cost rising each day.

The study concludes, unsurprisingly that the switch to per diem payments did reduce the level of inpatient care for older patients, and that “the financial burden of changing from a deductible to a per-diem falls heavily on seniors with longer hospital stays.”

Mergers of hospitals

Another study, this time in the New England Journal of Medicine, looked at the impact on patient care of acquisitions and mergers of hospitals, which has become an increasingly common occurrence in the past decade.

Changes in Quality of Care after Hospital Mergers and Acquisitions looks at the US experience, where of course many hospitals are commercial businesses: but the merger of NHS hospital trusts and foundation trusts has become an increasingly common feature of our health service, and the clinical impact has not been fully evaluated.

The study looks at 246 hospitals that were subject to this process between 2009 and 2013, with almost 2000 hospitals which had not gone through the same changes as a ‘control’:

“we conducted difference-in-differences analyses comparing changes in the performance of acquired hospitals from the time before acquisition to the time after acquisition with concurrent changes for control hospitals that did not have a change in ownership.”

The findings – which of course in the US have to be viewed in the context of system that (despite decades of experience) still views competition between hospitals as a way to enhance quality of care – are that there was a decline in patient experience and “no detectable” changes in readmission or mortality rates:

“Effects on performance on clinical-process measures at acquired hospitals were inconclusive. Taken together, these findings provide no evidence of quality improvement attributable to changes in ownership.”

Overall the authors sum up with a negative conclusion of the impact of mergers that should stimulate some more critical thinking about the value of similar changes in England:

“These findings challenge arguments that hospital consolidation, which is known to increase prices, also improves quality.”

Costs – and savings from – introducing a single payer system

A third, even more recent open-access study in PLoS Medicine looks at the costs of switching from the current US system based on private insurance and a multiplicity of insurance companies to a ‘single payer’ system.

The study, Projected costs of single-payer healthcare financing in the United States: A systematic review of economic analyses, usefully explains the characteristics of a single payer system, as argued for by Physicians for a National Health Program, and, as “Medicate for all”, by Bernie Sanders.

The authors make clear a real single payer scheme would eliminate the private insurers, and eliminate or almost eliminate any “cost sharing” fees to access health care (fees in excess of $5-$10).

As a result it is accepted it would increase the use of health care by many of the millions who at present cannot afford to do so – while bringing down the cost.

“Key elements of single-payer include unified government or quasi-government financing, universal coverage with a single comprehensive benefit package, elimination of private insurers, and universal negotiation of provider reimbursement and drug prices.

Single-payer as it has been proposed in the US has no or minimal cost sharing.

Polled support for single-payer is near an all-time high, as high as two-thirds of Americans and 55% of physicians.”

The researchers searched the academic literature back to 1990 for articles that estimated the costs of this change, excluding studies that gave inadequate technical details or which assumed a substantial continued role of other health insurance.

They found 22 appropriately based articles: and their analysis showed a remarkable level of unanimity, in that 19 of them projected financial savings from the very first year of the new system, while 20 out of 22 “predicted savings over several years”.

The main source of the predicted savings was on reduced costs and complexity of administration, along with savings on drug costs.

As we discussed in a previous Lowdown, researchers have shown that wasted spending on admin and other aspects of the system adds up to a staggering 30% or more of US health spending, with estimates as high as $935 billion per year.

Introducing their new study, the authors sum up the grotesquely expensive US system:

“Healthcare costs continue to rise, approaching one-fifth of the economy. In 2018, national health expenditures reached $3.6 trillion, equivalent to 17.7% of GDP.

Government funding, including public programs, private insurance for government employees, and tax subsidies for private insurance, represented 64% of national health expenditures in 2013, or 11% of GDP, more than total health expenditures in almost any other nation.

Higher costs in the US are due primarily to higher prices and administrative inefficiency, not higher utilization.”

With such large numbers of Americans backing the idea of single payer after years of frustration with the existing system, the authors of this study are keen to get on and try out the idea which seems to have also secured overwhelming support from analysts:

“The logical next step is real-world experimentation, including evaluation and refinement to minimize transition costs and achieve modeled performance in reality.”

The sooner some of these ideas can take shape in reality, the more lives can be saved and the more misery can be avoided for uninsured and under-insured Americans.

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