1. Comparative Systems - 2 © Allen C. Goodman, 2014

2. Let’s look at shares Share s = pq/y. For share to rise, what must happen? %  s = %  p + %  q - %  y. Assume first that p is unrelated to income y. Suppose that when y  by 1%, q  by 1%. So: %  s = 0 + 1 - 1 = 0! So for s to rise, (%  q)/(%  y) > 1. Means that income elasticity must be greater than 1. We did see earlier That as y , so does p. What does that do?

3. Let’s look at shares We saw that elasticities seemed to exceed 1. So, increasing per capita income seems in line with increasing shares. But US was even higher than that!

4. What about other countries? Good summary at following web site:web site http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2012/Nov/1645_Squires_intl_profiles_hlt_care_systems_2012.pdf

6. Great Britain's National Health Service (NHS) was established in 1946, and provides health care to all British residents. It is financed largely (about 83%) through general revenues, with capital and current budget filtering from the national down to the regional, and then to the district level. UK v. US The plan pays physicians on a capitation basis and hospital staff largely on a salaried basis. Doctors may, however, receive additional payments for many services, including maternity services, treatment of temporary residents, the training of assistants, and treatment of the elderly.

7. UK - NHS Services are not entirely free. NHS Charging system for Dental Work £204 (about $328) for each “course of [dental] treatment” English patients pay £7.40 (about $11.90 at the August 2011 exchange rate of about $1.61 per £1) for each prescription, but close to 90 percent of prescriptions are exempt from charges Patients in Scotland, Wales and Northern Ireland are not charged.

8. UK - NHS Those receiving means-tested benefits and their adult dependents, children under age 16 (under age 19 if a student), pregnant women, and nursing mothers are exempt from dental and prescription charges. People over the state pension age and certain other groups are exempt from prescription charges. The general practitioner, or GP, serves as the "gatekeeper" to the health care system. GPs are NOT government employees. Rather they are self-employed and receive about half their incomes from capitation contracts with a Family Practitioner Committee. How does the United Kingdom keep its health care expenditures this much lower while providing universal access to health care? Though patients have relatively easy access to primary and emergency care, elective services are rationed either through long waiting lists and by limiting the availability of new technologies.

9. Performance Under the NHS On the one hand, the effect of a system such as the NHS that depends on queuing for access to care is often to postpone, or simply not provide, certain services. On the other hand, the NHS devotes considerable resources to such high return services as prenatal and infant care. To these populations served, and to the larger public concerned with equitable provision of care to these segments of the population, the universal nature of the service is particularly beneficial. Over the years, the United Kingdom has spent considerably less on health care than the United States and many other countries. By most measures of mortality and morbidity, the United Kingdom does about as well. Certainly, there are many non-medical factors that are involved in determining disease and death rates in a population, and these factors will also vary across countries.

10. In addition, despite universal access to care in the United Kingdom, historically there have been considerable regional disparities in funding and in the use of health care. There is evidence showing that upper class patients have received substantially more care for a given illness than have lower class patients. Thus, even where access is universal, the results are not necessarily equal. Performance Under the NHS

11. Table 22-3 Inpatients Waiting 6 Months or More - London Region – 2000-2001 Inpatients waiting 6 Inpatients waiting 6 months or more as months or more as% of the total number % of the total numberof inpatients waiting of inpatients waitingfor each specialty AllTrauma &Ear, Nose Health AuthorityspecialtiesOrthopedicsUrologyand Throat Barking & Havering28.536.819.133.5 Barnet24.932.822.531.4 Bexley & Greenwich27.837.518.840.5 Brent & Harrow27.032.826.032.0 Bromley30.539.116.722.5 Camden & Islington21.830.416.724.8 Croydon32.851.830.610.9 Ealing, Hammersmith & Hounslow25.434.723.941.7 East London and the City25.529.019.438.7 Enfield & Haringey32.537.125.038.5 Hillingdon25.734.018.429.2 Kensington, Chelsea & Westminster19.524.016.926.3 Kingston & Richmond23.935.515.241.6 Lambeth, Southwark & Lewisham34.036.528.542.9 Merton, Sutton & Wandworth25.936.26.734.6 Redbridge & Waltham Forest34.548.235.935.9 Source:REPORT BY THE COMPTROLLER AND AUDITOR GENERAL HC 221 Session 2001-2002 26 July 2001 Varies a lot

12. What they say “ The NHS is making sure that you are seen as soon as possible, at a time that is convenient for you. To do this, the NHS Constitution gives you the right to access services within maximum waiting times, or for the NHS to take all reasonable steps to offer you a range of suitable alternative providers if this is not possible.” –You have the right to start your consultant-led treatment within a maximum of 18 weeks [emphasis added] from referral. –You have the right to be seen by a specialist within a maximum of two weeks [emphasis added] from GP referral for urgent referrals where cancer is suspected.”

13. More Evidence NHS data reported by the Guardian in July 2011 indicated that in April 2011, over one in ten (10.2%) of NHS patients had waited more than 18 weeks for treatment. This represented an increase of 24% over the 8.2% facing similar waits in the same month in 2010 (that is, 10.2 divided by 8.2). Despite 29,000 fewer procedures carried out in April 2011 compared with a year earlier, an additional 2,387 patients (of 241,000) had waited more than 18 weeks.

14. The Canadian Health Care System The Canadian system of financing and delivering health care is known as Medicare, although it should not be confused with the U.S. Medicare program developed for the elderly. In Canada, each of the 10 provinces and three territories administers a comprehensive and universal program which is partially supported by grants from the federal government. Various criteria established by the federal government with respect to coverage must be met. Coverage must be universal, comprehensive and portable, meaning that individuals can transfer their coverage to other provinces as they migrate across the country. There are no financial barriers to access, and patients have free choice in the selection of providers.

15. Canada's Medicare is not the same as Britain's NHS. Most Canadian physicians are in private practice and have hospital admitting privileges. They are reimbursed by the provinces on a fee-for- service basis under fee schedules negotiated by the provinces and physician organizations. Hospitals are also private institutions although their budgets are approved and largely funded by the provinces. Canadian and US health care systems also evolved similarly until the 1960s. Even as recently as 1971, both countries spent approximately 7.5% of their GNPs on health care. Since 1971, however, the health care systems have moved in very different directions. While Canada has had publicly funded national health insurance, the United States has relied largely on private financing and delivery (although governments have been heavily involved through Medicare, Medicaid and numerous regulatory programs). The Canadian Health Care System

16. Fuchs and Hahn Compared Canada to U.S., and Iowa to Manitoba. Somewhat dated, but indicative. Let’s look at a couple of slides.

17. What does ratio of 1 mean?

18. Quantities? US lower Fees? US higher

19. Availability of Selected Technologies, 2007-9 CT ScannersMRI UnitsRadiation TherapyLithotriptorsMammographs # Per Million# # # # Australia 94942.51305.82059.221 b 1b1b 53323.9 Canada 48414.42818.4-- 140.4-- France 76611.84517-- Japan 12420 b 97.3 b 5503 b 43.1 b -- 3792 b 29.7 b Switz’land 25532.6-- 12916.5-- 25933.1 United Kingdom 5108.33655.9319.65.2-- 5438.9 United States 10335 c 34.3 c 7810 c 25.9 c 349511.3-- 12215 b 40.2 b

20. Administrative Costs The centralized system of health care control in Canada has led to attention on the possible economies associated with administrative and other overhead expenses. Almost all patients in the United States are familiar with the extensive paperwork and complex billing practices. For providers and third- party payers, the paperwork involves major administrative expenses. In a 2005 article, Woolhandler, Campbell, and Himmelstein compared 1999 administrative costs per capita and found excess per capita administrative costs of $752, or in aggregate $209 billion, implying that a single payer Canadian style health system would save 71 cents out of every dollar of administrative costs currently. Re-examining their data, Aaron (2005) argues that looking at per capita numbers overstates the difference. He notes that administrative costs in the U.S. accounted for about 31% of total health care spending, compared to 16.7% in Canada. Even this more conservative calculation points to excess spending of $159 billion per year!

21. Cutler and Ly (2011) Cutler and Ly (2011) partition the $1,589 difference in per capita health care spending between the U.S. and Canada in 2002. Higher administrative costs accounted for $616, or 39 percent, of the difference. The authors argue that this figure probably underestimates the amount and share, because nurses also spend substantial time on administrative tasks, but accounts typically consider nursing time as clinical care rather than administration.

22. Posen and Cutler (2010) Multiplying this by 310 million Americans, and accounting for the approximately 20 percent rate of inflation from 2002 to 2011, yields a total of $232 billion dollars in “excess” administrative costs. This is between 8 and 9 percent of total U.S. health expenditures. This large cost does not appear to bring commensurate benefits along with it.

23. So … Data suggest that the Canadian system appears to do better than the U.S. system in several respects. Costs are lower, more services are provided, Universal access to health care without financial barriers, and Health status as measured by mortality rates is superior. Canadians have higher life expectancies and lower infant mortality rates than the United States residents. However, some argue that a system which is manageable for a population of about 30 million cannot be easily emulated in a more pluralistic country with a population 10 times that level.

24. So … (2) Critics of the Canadian system charge that health care is rationed in the sense that all the care that patients demand, or would be provided to meet their best interests, cannot be supplied on a timely basis. Though specific estimates of such shortages are not available, there is a consensus that the limits on capacity and on new technology result in longer waiting periods for hospital services. The "safety valve" of a private system, as in the United Kingdom, for those who are willing to pay more, is not readily available, although some Canadians (particularly those near large U.S. border cities such as Buffalo and Detroit) use the United States facilities for this purpose.

25. So … (3) June and Dave O’Neill did a pretty interesting comparison – best to date. Three questions: What difference in health status can be attributed to 2 systems? A> Most of the differences are life style related, rather than the health systems. We have lower birthweight babies, and we’re more obese. Formal health care systems don’t do much about that. How does access to care vary between countries? A> In Canada they complain about long waits. In US they complain about high costs. Is inequality in access different in two countries? A> Relationship of health to income is about the same in both countries.

26. Newer Stuff How Health Insurance Design Affects Access To Care And Costs, By Income, In Eleven Countries By Cathy Schoen, Robin Osborn, David Squires, Michelle M. Doty, Roz Pierson, and Sandra Applebaum http://content.healthaffairs.org/cgi/content/abstract/hlthaff.2010.0862 http://content.healthaffairs.org/cgi/content/abstract/hlthaff.2010.0862

34. BOX 22-3 “Someone Else Needed It More than I Did” While on vacation in Florida one of the authors played golf with a Canadian man who remarked that this was his first round after having had his hip replaced. The surgery had incurred no out-of-pocket costs, and he felt fine. When asked how long he had to wait for surgery, he responded that he had waited 18 months. How did he feel about it? “It didn’t bother me … someone else needed it more than I did.”

35. With Obama Reforms The law will expand eligibility for Medicaid to those earning 133% of the federal poverty level. It will also provide subsidies for premiums for people up to 400% of poverty and for cost sharing for people up to 250% of poverty. Even after the enactment of health reform, the United States will also remain unique among countries in that it covers low-income people in a separate program. This poses the dual challenge of promoting equity across programs and ensuring continuity of insurance. In the other ten countries in our survey, providers were typically paid the same amount regardless of patients’ incomes, which is not currently the case in the United States

36. Even Newer Stuff – 2011 - Access

37. Even Newer Stuff – 2011 – Costs

38. Stop Here

39. Health expenditure per capita, public and private, 2005 1. 2004. 2. 2004-05. 3. Public and private expenditures are current expenditures (excluding investments). Statlink http://dx.doi.org/10.1787/114254751864 http://titania.sourceoecd.org.proxy.lib.wayne.edu/vl=623485/cl=24/nw=1/rpsv/health2007/g5-1-01.htm Older, for comparison

40. Aus.CanadaNZUKUSGer. Unweighted Sample Size702751704177015271503 Overall System View (in%ages) Only minor changes needed232127302316 Fundamental change needed486152524454 System needs to be completely rebuilt261720143031 Source: Schoen et al. (2005), Exhibit 7 Schoen, Cathy, et al. “Taking the Pulse of Health Care Systems: Experiences of Patients with Health Problems in Six Countries,” Health Affairs Web Exclusive, November 3, 2005, : W509-525. Health System Views and Experiences Among Sicker Adults in Six Countries, 2005

41. Older, for comparison

43. AusCanadaNZUKUSGermany Wait for specialist appointment552592552120711791181 among those needing to see a specialist Less than 1 week (Pct)111017112027 More than 4 weeks465740602322 Wait for elective surgery179165181231352235 Less than 1 month (Pct)481532255359 4 months or more1933204186 Access problems because of cost in past 2 years (Pct) Did not Fill prescription22201984014 Visit doctor when sick1872943415 Get recommended test or follow-up20122153314 Any access problems due to cost342638135128 Out of pocket expenses in last 2 years None1022965155 More than $1,000141484348 Source: Schoen et al. (2005), Exhibit 6 Schoen, Cathy, et al. “Taking the Pulse of Health Care Systems: Experiences of Patients with Health Problems in Six Countries,” Health Affairs Web Exclusive, November 3, 2005, : W509-525. Access, Waiting Times, and Costs Among Sicker Adults in Six Countries, 2005

44. 2007

45. Drug Copayments – Other Countries http://www.scotland.gov.uk/Publications/2006/02/08133407/7