Featuring Dr. Thomas Rice, health economist and Distinguished Professor at University of California, Los Angeles’ Fielding School of Public Health, and host Brenda Gazzar, discussing why it’s not “one-size-fits-all” when it comes to health insurance systems.
This is part two of a two-part series.
The $4T Elephant in the Room – U.S. Health Care
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Welcome to Code WACK!, your podcast on America’s broken healthcare system and how Medicare for All could help. I’m your host, Brenda Gazzar.
What can America do to keep prescription drug prices down? What else can we learn from other wealthy nations when it comes to having a more effective, affordable, and comprehensive healthcare system? To find out, we spoke to Dr. Thomas Rice, a Distinguished Professor at the University of California Los Angeles’ Fielding School of Public Health. He’s also the author of the new book “Health Insurance Systems: An International Comparison.”
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Welcome to Code WACK! Dr. Rice.
Q: What about prescription drug prices? They’re dominating the news these days. What can you tell us about how the U.S. ranks when it comes to the cost of prescription drugs, and what can be done about it?
Rice: Well, it’s interesting. There’s one area of prescription drugs we’re doing a really good job at and that’s generics. We have the highest generic drug penetration rate in the world. About 90% of prescriptions are generic, and if you look at generic prices, on average, they’re lower than most other countries, so where we fail and we do spend more money on drugs than any other country, is the brand name drugs and particularly the extraordinarily expensive specialty drugs where prices are two to four times higher and often several fold times higher than other countries, so we’re failing in the United States in terms of prescription drug prices.
So what can we do about it? Well, what we can do is follow the lead of every other country, and either set or negotiate prices rather than let insurers negotiate these prices with the pharmaceutical manufacturers. Medicare has tremendous market power, and it does a good job in negotiating prices for hospital and physician services. It pays way more than private insurers pay. Why not let Medicare negotiate prescription drug prices? The VA also has a lot of market power. It pays far less than private insurers do so the first thing we should do is do what everyone else does, and either set or negotiate prices, but I think we can do more than that. I think we should also follow the lead of other countries and not pay more for drugs that are not a big improvement. Other countries look at how much an improvement a new drug is and base the price that can be charged on if it’s a big improvement or if it isn’t a very big improvement. So these are the two things that I think we can learn from other countries. So what’s blocking us? What’s blocking us is political will because we have tons of information now about how other countries do it, and it really is quite feasible.
Q: What else do you think the U.S. can learn from these countries?
Rice: So, my book talks about five different lessons.
- The first is universal coverage. It’s the cornerstone of all country’s healthcare systems except our own.
- The second is a single set of benefits for everyone where one person doesn’t have better or more comprehensive insurance than another person does. There’s a national benefits package.
- A third thing we can learn is when there are multiple insurers, they each pay the same amount to doctors and hospitals. So one patient isn’t more valuable than another patient to an insurer. This is called an all-payer system. Germany probably provides the prototypical example. Japan is another example, as is France. It isn’t that way in the United States. Medicaid pays so little that doctors eschew treating Medicaid patients. We can learn this from other countries that don’t make one patient more valuable than another patient.
- The fourth lesson is government should be involved in planning of health services — don’t leave it to just the private entities, to employers and insurance, and furthermore the government needs to be involved in either setting prices or negotiating fees. We don’t do that here. Our prices are far higher than elsewhere.
- And the last thing I’ll mention is that other countries just don’t pay willy nilly for everything. They use cost effectiveness analysis to make sure they pay reasonable amounts based on how effective services are. They pay more for things that are more effective, particularly prescription drugs. So those are some of the lessons that I’ve drawn.
Q: Got it. Thank you. Health care is too expensive for many people even with insurance. Do you think single payer, improved Medicare for All could be a solution to this problem?
Rice: I think Medicare for All, where the government acts as a single payer could dramatically improve affordability, but it depends on what’s covered, and how much people have to pay out of pocket. So it turns out in this case I’m afraid that Canada is not a good example. Of my nine countries that have universal coverage that I’ve studied, it’s the only one that doesn’t cover prescription drugs for adults. It also doesn’t cover dental care. I think if you are going to have a single-payer system you want something that has very comprehensive and low cost sharing. The United Kingdom is an example there, where pretty much everything is covered, and patients often don’t have to pay very much, and if you look at Senator Sanders original bill for Medicare for All. It pretty much covers everything and everything is free. You know, there’s a lot of debate about how expensive that would be but if Medicare for All were comprehensive,it would definitely dramatically improve affordability, but I do stress that you don’t need single payer.
France and the Netherlands are countries that don’t rely on single payer. In fact the Netherlands is like the U.S. It has competing insurers, but they too have among the lowest per capita, out-of-pocket spending of any of the countries and this is something I’ve wanted to stress in our discussion here. It’s not one size fits all. There are many different models out there and that could help us achieve a much better healthcare system.
Q: What do you think is holding the U.S. back from exploring comprehensive system-wide solutions?
Rice: Well, it’s politics and I think that politics is driven by two things. One is philosophical differences among people, but the other is special interests who are heavily invested in our $4 trillion healthcare system. So that’s really what’s holding us back. But I think there’s a second thing. And I think it’s a lack of understanding that there are many ways we could achieve a better system…There are all-payer systems. There are systems even like the Netherlands and Switzerland that rely on competing health insurers. They all do a great job. So I think that people need to be more aware of the many models out there that have shown themselves to be successful.
Q: Got it. Thank you. Is there anything else you want to say, Dr. Rice, about this issue?
Rice: Sure. Let me just reiterate that we know so much more now about countries’ performances relative to each other and this makes us know that the U.S. could be achieving so much more than it’s already achieving and what I’m trying to do in this book is to showcase other systems, and show not only their successes but their shortcomings as well. But when you add them all up, they have far more successes than the United States does. And I want to emphasize that each has found a different way of doing this so there are lots of options for us available. But my bottom line is that the purpose of my book is to make crystal clear that accessible high quality, lower cost health care really can be within our grasp.
Q: One more question for you. What is the impact on people? The fact that we don’t have as accessible and as affordable health care, as many other wealthy developed nations. What is the impact do you think on people?
Rice: Well, I think the impact is twofold. One is the people are not seeking the care that they should be seeking, because they can’t afford it. I think prescription drugs offer a really excellent example there because copays can be so high for particular specialty drugs. People are not getting the drugs that they should. People are not renewing their prescriptions even when they’re given prescriptions because they know how expensive it is going to be so I think that one consequence of our system is people just aren’t getting the services and the drugs they should be getting, but the other has to do with health outcomes. It’s not just affordability. If people aren’t able to afford the care, people aren’t going to be as healthy as they could. The U.S. doesn’t look very good with regard to healthcare outcomes. One area we look pretty good in is cancer care. There’s been a tremendous emphasis over the decades on cancer prevention and screening. We actually look quite good internationally in terms of screening in terms of cancer outcomes. Unfortunately the list gets very short after that, in terms of where we perform better than other countries, in most other areas, our outcomes are poorer, so both affordability and better health are the things that we’re losing out on by having the healthcare system that we do have.
Thank you, Dr. Thomas Rice.
Find more Code WACK! episodes on ProgressiveVoices.com and on the PV App. You can also subscribe to Code WACK! wherever you find your podcasts. This podcast is powered by HEAL California, uplifting the voices of those fighting for health care reform around the country. I’m Brenda Gazzar.
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