Growth In US Health Spending Remained Slow In 2010; Health Share Of Gross Domestic Product Was Unchanged From 2009

By Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team
Health Affairs, January 2012
Abstract
Medical goods and services are generally viewed as necessities. Even so, the latest recession had a dramatic effect on their utilization. US health spending grew more slowly in 2009 and 2010—at rates of 3.8 percent and 3.9 percent, respectively—than in any other years during the fifty-one-year history of the National Health Expenditure Accounts. In 2010 extraordinarily slow growth in the use and intensity of services led to slower growth in spending for personal health care. The rates of growth in overall US gross domestic product (GDP) and in health spending began to converge in 2010. As a result, the health spending share of GDP stabilized at 17.9 percent.
Conclusion
Health care spending experienced historically low rates of growth in 2009 and 2010 as the impact of the recent recession continued to affect the purchasers, providers, and sponsors of health care. Persistently high unemployment, continued loss of private health insurance coverage, and increased cost sharing led some people to forgo care or seek less costly alternatives than they would have otherwise used. As a result, growth in the use and intensity of health care goods and services in 2010 accounted for a much smaller share of personal health care spending growth than in previous years. Finally, as businesses, households, and state and local governments financed a smaller share of total national health care spending during and just after the recession, the federal government financed a larger share.
http://content.healthaffairs.org/content/31/1/208.abstract

For the present, growth in health care spending has leveled off at 17.9 percent of our GDP. But how? By high unemployment, continued loss of private health insurance, and increased cost sharing – all measures that prevent people from getting the health care that they should have. If you exclude from consideration this inappropriate decline in health care services, then you can only conclude that health care costs have continued their inexorable rise unabated. We desperately need a sane system of financing health care.

By Anu Partanen
The Atlantic, December 29, 2011

(Excerpts)

Everyone agrees the United States needs to improve its education system dramatically, but how? One of the hottest trends in education reform lately is looking at the stunning success of the West’s reigning education superpower, Finland. Trouble is, when it comes to the lessons that Finnish schools have to offer, most of the discussion seems to be missing the point.

So there was considerable interest in a recent visit to the U.S. by one of the leading Finnish authorities on education reform, Pasi Sahlberg, director of the Finnish Ministry of Education’s Center for International Mobility and author of the new book Finnish Lessons: What Can the World Learn from Educational Change in Finland? Earlier this month, Sahlberg stopped by the Dwight School in New York City to speak with educators and students, and his visit received national media attention and generated much discussion.

Yet one of the most significant things Sahlberg said passed practically unnoticed. “Oh,” he mentioned at one point, “and there are no private schools in Finland.”

This notion may seem difficult for an American to digest, but it’s true. Only a small number of independent schools exist in Finland, and even they are all publicly financed. None is allowed to charge tuition fees. There are no private universities, either. This means that practically every person in Finland attends public school, whether for pre-K or a Ph.D.

The irony of Sahlberg’s making this comment during a talk at the Dwight School seemed obvious. Like many of America’s best schools, Dwight is a private institution that costs high-school students upward of $35,000 a year to attend — not to mention that Dwight, in particular, is run for profit, an increasing trend in the U.S. Yet no one in the room commented on Sahlberg’s statement. I found this surprising. Sahlberg himself did not.

From his point of view, Americans are consistently obsessed with certain questions: How can you keep track of students’ performance if you don’t test them constantly? How can you improve teaching if you have no accountability for bad teachers or merit pay for good teachers? How do you foster competition and engage the private sector? How do you provide school choice?

The answers Finland provides seem to run counter to just about everything America’s school reformers are trying to do.

For starters, Finland has no standardized tests. The only exception is what’s called the National Matriculation Exam, which everyone takes at the end of a voluntary upper-secondary school, roughly the equivalent of American high school.

As for accountability of teachers and administrators, Sahlberg shrugs. “There’s no word for accountability in Finnish,” he later told an audience at the Teachers College of Columbia University. “Accountability is something that is left when responsibility has been subtracted.”

And while Americans love to talk about competition, Sahlberg points out that nothing makes Finns more uncomfortable. In his book Sahlberg quotes a line from Finnish writer named Samuli Puronen: “Real winners do not compete.” It’s hard to think of a more un-American idea, but when it comes to education, Finland’s success shows that the Finnish attitude might have merits. There are no lists of best schools or teachers in Finland. The main driver of education policy is not competition between teachers and between schools, but cooperation.

Finally, in Finland, school choice is noticeably not a priority, nor is engaging the private sector at all. Which brings us back to the silence after Sahlberg’s comment at the Dwight School that schools like Dwight don’t exist in Finland.

“Here in America,” Sahlberg said at the Teachers College, “parents can choose to take their kids to private schools. It’s the same idea of a marketplace that applies to, say, shops. Schools are a shop and parents can buy what ever they want. In Finland parents can also choose. But the options are all the same.”

Herein lay the real shocker. As Sahlberg continued, his core message emerged, whether or not anyone in his American audience heard it.

Decades ago, when the Finnish school system was badly in need of reform, the goal of the program that Finland instituted, resulting in so much success today, was never excellence. It was equity.

Since the 1980s, the main driver of Finnish education policy has been the idea that every child should have exactly the same opportunity to learn, regardless of family background, income, or geographic location. Education has been seen first and foremost not as a way to produce star performers, but as an instrument to even out social inequality.

In the Finnish view, as Sahlberg describes it, this means that schools should be healthy, safe environments for children. This starts with the basics. Finland offers all pupils free school meals, easy access to health care, psychological counseling, and individualized student guidance.

In fact, since academic excellence wasn’t a particular priority on the Finnish to-do list, when Finland’s students scored so high on the first PISA survey in 2001, many Finns thought the results must be a mistake. But subsequent PISA tests confirmed that Finland — unlike, say, very similar countries such as Norway — was producing academic excellence through its particular policy focus on equity.

That this point is almost always ignored or brushed aside in the U.S. seems especially poignant at the moment, after the financial crisis and Occupy Wall Street movement have brought the problems of inequality in America into such sharp focus.

“When President Kennedy was making his appeal for advancing American science and technology by putting a man on the moon by the end of the 1960’s, many said it couldn’t be done,” Sahlberg said during his visit to New York. “But he had a dream. Just like Martin Luther King a few years later had a dream. Those dreams came true. Finland’s dream was that we want to have a good public education for every child regardless of where they go to school or what kind of families they come from, and many even in Finland said it couldn’t be done.”

Clearly, many were wrong. It is possible to create equality. And perhaps even more important — as a challenge to the American way of thinking about education reform — Finland’s experience shows that it is possible to achieve excellence by focusing not on competition, but on cooperation, and not on choice, but on equity.

The problem facing education in America isn’t the ethnic diversity of the population but the economic inequality of society, and this is precisely the problem that Finnish education reform addressed. More equity at home might just be what America needs to be more competitive abroad.

http://www.theatlantic.com/national/archive/2011/12/what-americans-keep-ignoring-about-finlands-school-success/250564/

Comment: 

By Don McCanne, MD

When you read these excerpts from this article on the education system in Finland, what is striking is how much the philosophy behind their vastly superior system contrasts sharply with ours. What is really mind-boggling is that if you re-read the same excerpts, except substitute “health care system” for “education system,” you then will have an inkling of what we are doing wrong in both education and health care.

One fundamental concept that has appeared repeatedly on the pages of Physicians for a National Health Program (PNHP) is that excellence is a product of cooperation, not competition. It is not choice between private for-profit and public systems, but rather it is equity within public
systems that facilitates excellence.

In both education and health care, Americans emphasize testing, accountability, merit rewards, competition, and choice. Yet Finland does not use standardized testing (analogous to HEDIS testing in health care), nor do they demand accountability – they don’t even have a word for it – but rather they expect responsibility. In Finland, all teachers are given prestige, decent pay, and a lot of responsibility. Finns are very uncomfortable with the concept of competition, especially since that interferes with the productivity induced in an environment of cooperation. Nor do they even consider choice – choice between publicly-financed and privately-financed schools – since the latter do not even exist.

So their secret is to establish equity and cooperation within the public sector. Now that it’s no longer a secret, we also can have high quality education and health care systems right here in the United States. We just have to shove the MBAs aside and place control in the hands of our own publicly chosen advocates of social justice.

What Americans Keep Ignoring About Finland’s School Success

By Anu Partanen
The Atlantic, December 29, 2011
(Excerpts)
Everyone agrees the United States needs to improve its education system dramatically, but how? One of the hottest trends in education reform lately is looking at the stunning success of the West’s reigning education superpower, Finland. Trouble is, when it comes to the lessons that Finnish schools have to offer, most of the discussion seems to be missing the point.
So there was considerable interest in a recent visit to the U.S. by one of the leading Finnish authorities on education reform, Pasi Sahlberg, director of the Finnish Ministry of Education’s Center for International Mobility and author of the new book Finnish Lessons: What Can the World Learn from Educational Change in Finland? Earlier this month, Sahlberg stopped by the Dwight School in New York City to speak with educators and students, and his visit received national media attention and generated much discussion.
Yet one of the most significant things Sahlberg said passed practically unnoticed. “Oh,” he mentioned at one point, “and there are no private schools in Finland.”
This notion may seem difficult for an American to digest, but it’s true. Only a small number of independent schools exist in Finland, and even they are all publicly financed. None is allowed to charge tuition fees. There are no private universities, either. This means that practically every person in Finland attends public school, whether for pre-K or a Ph.D.
The irony of Sahlberg’s making this comment during a talk at the Dwight School seemed obvious. Like many of America’s best schools, Dwight is a private institution that costs high-school students upward of $35,000 a year to attend — not to mention that Dwight, in particular, is run for profit, an increasing trend in the U.S. Yet no one in the room commented on Sahlberg’s statement. I found this surprising. Sahlberg himself did not.
From his point of view, Americans are consistently obsessed with certain questions: How can you keep track of students’ performance if you don’t test them constantly? How can you improve teaching if you have no accountability for bad teachers or merit pay for good teachers? How do you foster competition and engage the private sector? How do you provide school choice?
The answers Finland provides seem to run counter to just about everything America’s school reformers are trying to do.
For starters, Finland has no standardized tests. The only exception is what’s called the National Matriculation Exam, which everyone takes at the end of a voluntary upper-secondary school, roughly the equivalent of American high school.
As for accountability of teachers and administrators, Sahlberg shrugs. “There’s no word for accountability in Finnish,” he later told an audience at the Teachers College of Columbia University. “Accountability is something that is left when responsibility has been subtracted.”
And while Americans love to talk about competition, Sahlberg points out that nothing makes Finns more uncomfortable. In his book Sahlberg quotes a line from Finnish writer named Samuli Puronen: “Real winners do not compete.” It’s hard to think of a more un-American idea, but when it comes to education, Finland’s success shows that the Finnish attitude might have merits. There are no lists of best schools or teachers in Finland. The main driver of education policy is not competition between teachers and between schools, but cooperation.
Finally, in Finland, school choice is noticeably not a priority, nor is engaging the private sector at all. Which brings us back to the silence after Sahlberg’s comment at the Dwight School that schools like Dwight don’t exist in Finland.
“Here in America,” Sahlberg said at the Teachers College, “parents can choose to take their kids to private schools. It’s the same idea of a marketplace that applies to, say, shops. Schools are a shop and parents can buy what ever they want. In Finland parents can also choose. But the options are all the same.”
Herein lay the real shocker. As Sahlberg continued, his core message emerged, whether or not anyone in his American audience heard it.
Decades ago, when the Finnish school system was badly in need of reform, the goal of the program that Finland instituted, resulting in so much success today, was never excellence. It was equity.
Since the 1980s, the main driver of Finnish education policy has been the idea that every child should have exactly the same opportunity to learn, regardless of family background, income, or geographic location. Education has been seen first and foremost not as a way to produce star performers, but as an instrument to even out social inequality.
In the Finnish view, as Sahlberg describes it, this means that schools should be healthy, safe environments for children. This starts with the basics. Finland offers all pupils free school meals, easy access to health care, psychological counseling, and individualized student guidance.
In fact, since academic excellence wasn’t a particular priority on the Finnish to-do list, when Finland’s students scored so high on the first PISA survey in 2001, many Finns thought the results must be a mistake. But subsequent PISA tests confirmed that Finland — unlike, say, very similar countries such as Norway — was producing academic excellence through its particular policy focus on equity.
That this point is almost always ignored or brushed aside in the U.S. seems especially poignant at the moment, after the financial crisis and Occupy Wall Street movement have brought the problems of inequality in America into such sharp focus.
“When President Kennedy was making his appeal for advancing American science and technology by putting a man on the moon by the end of the 1960’s, many said it couldn’t be done,” Sahlberg said during his visit to New York. “But he had a dream. Just like Martin Luther King a few years later had a dream. Those dreams came true. Finland’s dream was that we want to have a good public education for every child regardless of where they go to school or what kind of families they come from, and many even in Finland said it couldn’t be done.”
Clearly, many were wrong. It is possible to create equality. And perhaps even more important — as a challenge to the American way of thinking about education reform — Finland’s experience shows that it is possible to achieve excellence by focusing not on competition, but on cooperation, and not on choice, but on equity.
The problem facing education in America isn’t the ethnic diversity of the population but the economic inequality of society, and this is precisely the problem that Finnish education reform addressed. More equity at home might just be what America needs to be more competitive abroad.
http://www.theatlantic.com/national/archive/2011/12/what-americans-keep-ignoring-about-finlands-school-success/250564/

When you read these excerpts from this article on the education system in Finland, what is striking is how much the philosophy behind their vastly superior system contrasts sharply with ours. What is really mind-boggling is that if you re-read the same excerpts, except substitute “health care system” for “education system,” you then will have an inkling of what we are doing wrong in both education and health care.
One fundamental concept that has appeared repeatedly on the pages of Physicians for a National Health Program (PNHP) is that excellence is a product of cooperation, not competition. It is not choice between private for-profit and public systems, but rather it is equity within public systems that facilitates excellence.
In both education and health care, Americans emphasize testing, accountability, merit rewards, competition, and choice. Yet Finland does not use standardized testing (analogous to HEDIS testing in health care), nor do they demand accountability – they don’t even have a word for it – but rather they expect responsibility. In Finland, all teachers are given prestige, decent pay, and a lot of responsibility. Finns are very uncomfortable with the concept of competition, especially since that interferes with the productivity induced in an environment of cooperation. Nor do they even consider choice – choice between publicly-financed and privately-financed schools – since the latter do not even exist.
So their secret is to establish equity and cooperation within the public sector. Now that it’s no longer a secret, we also can have high quality education and health care systems right here in the United States. We just have to shove the MBAs aside and place control in the hands of our own publicly chosen advocates of social justice.

The Local – Germany’s News in English
January 8, 2012

Shocked by premium increases of as much as 50 percent, many Germans with private health insurance are seeking to switch to a national health plan, the news magazine Der Spiegel reported Sunday.

Many private health insurance plans pushed through hefty premium increases at the beginning of the year and that’s behind the move to switch, the magazine said.

“We’ve gotten increased telephone inquiries from those privately insured who want to come to the AOK,” Wilfried Jacobs, the head of the AOK in Rheinland/Hamburg, told the magazine. The AOK, with 15 regional branches and some 24 million members, is Germany’s largest public health insurance organisation. The magazine said other public health insurers have received similar inquiries.

But it’s not so easy to switch once you’ve opted for private insurance. German law only allows people to change from public to private in exceptional situations.

These include when someone has lost their job. You can also switch if you are an employee whose salary falls below the € 45,900 level. Workers who used to be self-employed but now have a full-time position with a similar salary may also change.

But a public health organization manager said, “There are tricks that we can use to help private patients, providing the employer cooperates.”

The Barmer GEK public health organization reported that 27,600 people switched from private competitors in 2011 – nine percent more than in 2010.

http://www.thelocal.de/national/20120108-39989.html

And…

Social Insurance and Individual Freedom

By Uwe E. Reinhardt
The New York Times, December 9, 2011

By law, every German must have coverage for a prescribed benefit package. German employees and pensioners earning less than 49,500 euros ($66,350) per year (in 2011) are compulsorily insured under the statutory system.

Employees and pensioners above that threshold are free to opt out of the statutory system and purchase private, commercial coverage, but if they do, they cannot ever return to the statutory system unless they are paupers. The intent is to minimize gaming of the insurance system by individuals.

http://economix.blogs.nytimes.com/2011/12/09/social-insurance-and-individual-freedom/

Comment: 

By Don McCanne, MD

It’s only January, yet Germany already is providing us one of the most important policy lessons of 2012. It may be great politics to allow more affluent citizens to opt out of public health insurance and to express their personal faith in private markets by selecting private plans, but they may decide that it’s terrible policy when the private plans come back to bite them.

In the United States, conservatives continue to push policies that would promote private plans that appeal to the healthier and wealthier sectors of our society. Consumer-directed plans with high-deductibles combined with health savings accounts are such options. Even with Medicare, conservatives have established the private Medicare Advantage plans for Medicare beneficiaries who would prefer to opt out of the public program.

If you just look at the Medicare Advantage plans, we have already seen that the private insurers have gamed the system such that they are receiving $3000 more per patient than the costs for comp[arable patients in the public Medicare program. What if the government required individuals to pay an extra $3000 for the “private upgrade”? It is likely that only the wealthiest and the most passionate anti-government ideologues would stay in the program.

What if, in addition, health care costs increased at rates well in excess of the growth in GDP, and the differences between the higher premiums that would have to be charged by the private plans compared to the more efficient public insurance program had to be paid in full by those enrolled in the private plans? You would see a massive exit from the private plans. Witness the current experience in Germany.

This is not hypothetical policy theory. The Germans fully understand the principles of social insurance. There are clear policy risks in allowing private options to government insurance plans. That is why they did not permit low- and middle-income individuals to make the foolish decision of exiting the public plans. They wanted to ensure both financial security and health security for these more vulnerable populations. If politically-influential wealthier individuals wanted to have the choice of private plans, then so be it, and Germany allowed it.

But no games. If wealthier Germans chose the private plans, then, as long as they maintained their higher incomes, they could not game the system by moving back into the public plan should they lose their bet that they would be better off in the private sector. Many Germans who made that choice are now facing skyrocketing premiums in the private sector. They want back into the public program, but many will have to continue to live with their ill-advised decision to go private.

Another sign of how flawed the private insurance concept is that they are now considering “tricks” that can be used to help private patients. Although tricks may produce winners, they automatically produce losers as well. There is no place for “tricks” in a public insurance program.

What is Germany to do now? It doesn’t seem fair to allow those who made this unwise decision to escape the consequences when it would expose the public program to adverse selection. There would be no problem had the government prohibited the wealthy from making an imprudent decision to go private in the first place, which they could have done simply by requiring everyone to participate in the public program.

For those who say that it is unfair to not allow choice, as mentioned the Germans were smart enough to prohibit that choice for low- and middle-income individuals, saving them from potential exposure to financial hardship. Ensuring security is fair; permitting the choice of insecurity is not fair for those who end up losing.

There may be less sympathy for the wealthy caught in a financial bind of their own making, but there are two important reasons why the wealthy also should be required to participate in the public program: 1) the insurance risk pools (sickness funds) benefit from including the contributions of this wealthier and generally healthier population, and 2) the influence of the wealthy provides greater political support for the public program in which they would be required to participate. Consider the great support for Medicare as opposed to the meager political and financial support for Medicaid.

The obvious lesson for the United States is that we should eliminate the over-priced private insurers and establish a single national health program that covers everyone. We still may have some compassion even for those who want to play their ideological games but then run into trouble when they really need health care, but we should not allow them to escape their obligation to contribute equitably, in advance, to a financing system that many of them someday would have to rely upon.

P.S., Canada, listen up!

Many seek to switch to public health insurance

The Local – Germany’s News in English
January 8, 2012

Shocked by premium increases of as much as 50 percent, many Germans with private health insurance are seeking to switch to a national health plan, the news magazine Der Spiegel reported Sunday.

Many private health insurance plans pushed through hefty premium increases at the beginning of the year and that’s behind the move to switch, the magazine said.

“We’ve gotten increased telephone inquiries from those privately insured who want to come to the AOK,” Wilfried Jacobs, the head of the AOK in Rheinland/Hamburg, told the magazine. The AOK, with 15 regional branches and some 24 million members, is Germany’s largest public health insurance organisation. The magazine said other public health insurers have received similar inquiries.

But it’s not so easy to switch once you’ve opted for private insurance. German law only allows people to change from public to private in exceptional situations.

These include when someone has lost their job. You can also switch if you are an employee whose salary falls below the € 45,900 level. Workers who used to be self-employed but now have a full-time position with a similar salary may also change.

But a public health organization manager said, “There are tricks that we can use to help private patients, providing the employer cooperates.”

The Barmer GEK public health organization reported that 27,600 people switched from private competitors in 2011 – nine percent more than in 2010.

http://www.thelocal.de/national/20120108-39989.html

And…

Social Insurance and Individual Freedom

By Uwe E. Reinhardt
The New York Times, December 9, 2011

By law, every German must have coverage for a prescribed benefit package. German employees and pensioners earning less than 49,500 euros ($66,350) per year (in 2011) are compulsorily insured under the statutory system.

Employees and pensioners above that threshold are free to opt out of the statutory system and purchase private, commercial coverage, but if they do, they cannot ever return to the statutory system unless they are paupers. The intent is to minimize gaming of the insurance system by individuals.

http://economix.blogs.nytimes.com/2011/12/09/social-insurance-and-individual-freedom/

Comment: 

By Don McCanne, MD

It’s only January, yet Germany already is providing us one of the most important policy lessons of 2012. It may be great politics to allow more affluent citizens to opt out of public health insurance and to express their personal faith in private markets by selecting private plans, but they may decide that it’s terrible policy when the private plans come back to bite them.

In the United States, conservatives continue to push policies that would promote private plans that appeal to the healthier and wealthier sectors of our society. Consumer-directed plans with high-deductibles combined with health savings accounts are such options. Even with Medicare, conservatives have established the private Medicare Advantage plans for Medicare beneficiaries who would prefer to opt out of the public program.

If you just look at the Medicare Advantage plans, we have already seen that the private insurers have gamed the system such that they are receiving $3000 more per patient than the costs for comp[arable patients in the public Medicare program. What if the government required individuals to pay an extra $3000 for the “private upgrade”? It is likely that only the wealthiest and the most passionate anti-government ideologues would stay in the program.

What if, in addition, health care costs increased at rates well in excess of the growth in GDP, and the differences between the higher premiums that would have to be charged by the private plans compared to the more efficient public insurance program had to be paid in full by those enrolled in the private plans? You would see a massive exit from the private plans. Witness the current experience in Germany.

This is not hypothetical policy theory. The Germans fully understand the principles of social insurance. There are clear policy risks in allowing private options to government insurance plans. That is why they did not permit low- and middle-income individuals to make the foolish decision of exiting the public plans. They wanted to ensure both financial security and health security for these more vulnerable populations. If politically-influential wealthier individuals wanted to have the choice of private plans, then so be it, and Germany allowed it.

But no games. If wealthier Germans chose the private plans, then, as long as they maintained their higher incomes, they could not game the system by moving back into the public plan should they lose their bet that they would be better off in the private sector. Many Germans who made that choice are now facing skyrocketing premiums in the private sector. They want back into the public program, but many will have to continue to live with their ill-advised decision to go private.

Another sign of how flawed the private insurance concept is that they are now considering “tricks” that can be used to help private patients. Although tricks may produce winners, they automatically produce losers as well. There is no place for “tricks” in a public insurance program.

What is Germany to do now? It doesn’t seem fair to allow those who made this unwise decision to escape the consequences when it would expose the public program to adverse selection. There would be no problem had the government prohibited the wealthy from making an imprudent decision to go private in the first place, which they could have done simply by requiring everyone to participate in the public program.

For those who say that it is unfair to not allow choice, as mentioned the Germans were smart enough to prohibit that choice for low- and middle-income individuals, saving them from potential exposure to financial hardship. Ensuring security is fair; permitting the choice of insecurity is not fair for those who end up losing.

There may be less sympathy for the wealthy caught in a financial bind of their own making, but there are two important reasons why the wealthy also should be required to participate in the public program: 1) the insurance risk pools (sickness funds) benefit from including the contributions of this wealthier and generally healthier population, and 2) the influence of the wealthy provides greater political support for the public program in which they would be required to participate. Consider the great support for Medicare as opposed to the meager political and financial support for Medicaid.

The obvious lesson for the United States is that we should eliminate the over-priced private insurers and establish a single national health program that covers everyone. We still may have some compassion even for those who want to play their ideological games but then run into trouble when they really need health care, but we should not allow them to escape their obligation to contribute equitably, in advance, to a financing system that many of them someday would have to rely upon.

P.S., Canada, listen up!