Perspectives on Health Care Reform in the U.K.: A dialogue with UK Secretary of State for Health Andrew Lansley

Brookings, Engelberg Center for Health Care Reform
November 9, 2011

Q&A

Mark McClellan, Director of the Engelberg Center:  Another point (that you mentioned) was the availability of care at a low or at really no cost to patients, to consumers. That is a big difference from the United States, obviously, where not just the more conservative members of our legislatures, but others as well believe that patients should have some accountability, some responsibility for some of the costs, and, conversely, if they make decisions to stay healthier, if they make decisions to use care more effectively, that they should get some of the savings. You put a big emphasis on how these reforms are going to lead to more patient choice in terms of GPs, in terms of hospital care, in terms of specialist teams, and so on. As you said, money following the patient. Is that going to be enough? There are a lot of people here who believe that you really need even more consumer involvement, consumer stake in care to drive real reforms in care.

UK Health Minister Andrew Lansley:  Well, I understand the view that says if people pay directly for something, they value it more. I actually think, in the British context, where health care is concerned, people understand the value of the health care that is provided to them. They don’t need to have it itemized in a bill sent to them and pay for it out of their own pocket to realize that the National Health Service provides them something that they should attach enormous value to. I think, generally speaking, it isn’t the case that people in Britain consume large amounts of health care, that they don’t need to, because it’s free. And in particular, I think through the intermediation process with general practitioners the relationship that is built up between the British public and their general practitioners is instrumental to the process of managing demand in a way that is responsible and effective. Now I think it’s not perfect, and I think that’s one of the central reasons why I think we need to give patients a greater say in decision making. I don’t think, in a free system, as a consequence of that we are going to see irresponsible or excessive demand. I think patients themselves, given good information and opportunities to make choices, on balance, will make decisions that are probably less costly, less invasive, less interventionist because they want to have care that supports them at home and very often they don’t want to be in the hospital. So issues like avoiding admissions to hospitals, I think patients are with us on this. They’re not conflicting with us. See, the one thing I would say is important in terms of access, that we don’t necessarily achieve, where we do need to act is to ensure that patients do have access to the latest and most effective treatments and medicines. And there, particularly, we acted, since the election, in the creation of the Cancer Drug Fund because we knew that, in Britain for example, there was a very low take-up of cancer medicines within five years of their being introduced. And I think that is absolutely an area where the public have an expectation and a right to expect that they should have access to whatever their clinicians regard as the most effective treatment available. Some of it’s cost effective but, you know, on that basis, with clinical judgement, they should be able to get access to it. I have to say, when you look at the cost, literally the transaction cost alone, of moving away from a taxpayer funded service as the NHS is, in the way in which we’re organized, at the moment we have something like five percent of NHS costs consumed in administration. I’m planning to bring that down to about three to three and a half percent over the course of the next four years. That alone will save us about one and one-half billion pounds a year. But that is very modest administration costs relative to the costs of administration of insurance systems in the United States. So on that basis alone I think there is, in a constrained financial bound, there’s no intrinsic merit in moving away from the structure of the system we have.

http://www.brookings.edu/events/2011/1109_uk_health_care.aspx

Health Minister Andrew Lansley of the United Kingdom is currently at the center of a storm of controversy over his efforts to further privatize their health care on the theory that expanding market competition for the National Health Service will improve quality and reduce costs. So it is instructive to ask if his views extend to include the U.S. concept of empowering consumers by requiring an even greater financial stake “to drive real reforms in care,” as former CMS Secretary Mark McClellan phrases it.

Although holding very conservative political views, Lansley almost scoffs at the suggestion that British citizens would consume large amounts of care merely because it is free. When you think about it, the suggestion that patients need price sensitivity to prevent over-consumption of health care  is almost an insult. Patients want to consult with their physicians to obtain the most appropriate care for their medical circumstance, in an environment removed from financial considerations. They are not looking for bargain basement deals.

This is about health care, for Pete’s sake. It’s not like deciding whether you are going to purchase a garment at Walmart or at Nordstrom. The assumption in the United Kingdom and in all other wealthier nations, except the United States, is that public stewards will ensure that health care will always be there for you when you need it. It is not a commodity that wise shoppers will follow and then purchase only after it goes on sale.

The advocates of consumer-directed health care are going to have to do a better job of explaining how requiring patients to pay out of their pockets or savings accounts when they access care is an answer to a problem, when that problem doesn’t seem to even exist. As Minister Lansley states, “it isn’t the case that people in Britain consume large amounts of health care… because it’s free.” Further, “the relationship that is built up between the British public and their general practitioners is instrumental to the process of managing demand in a way that is responsible and effective.”

How about that! The traditional physician-patient relationship works!

The per capita health care spending in the United Kingdom is less than half that of the United States. The British did not have to use consumer empowerment through price sensitivity to control their health care spending.

It appears that the only significant impact of increasing the financial stake of the health care consumer has been to erect financial barriers to beneficial health care services. So this detrimental intervention is being offered as a solution to the problem of high health care costs that other nations effectively manage using a responsible relationship between patients and their physicians? Talk about a disconnect between a problem and a solution!

McClellan says, “There are a lot of people here who believe that you really need even more consumer involvement, consumer stake in care to drive real reforms in care.” We could scoff at those people, but they’re in charge now. That’s tragic!

Physicians for a National Health Program
National Meeting, Washington, D.C., October 29, 2011

(Excerpts)

First I want to thank you for inviting me here. I bring greetings from the land of socialized medicine and death panels, to the land of “islands of excellence in a sea of misery.”

I’ve never been to this city before and when I told family and friends about my invitation to Washington they assumed I was off to meet the president. I told them it was much more important than that. But just in case he’s listening – I could be free for tea tomorrow….

****

Of course the NHS faces the challenges that all health systems do, i.e. changing demographics, increased range and cost of treatments, rising patient expectation and the global financial crisis. But in the face of all these the NHS still manages to be one of the most cost-efficient and equitable health services in the world. And the public love it. At the end of the Labour government’s 13 years in power it had the highest satisfaction ratings ever, and it still is the most popular institution in the UK bar none, and that includes the royal family.

So if it’s so good, why are we having to fight for it? Because there’s another big challenge which all public services face and that is the neoliberal agenda which still has the upper hand despite its current manifest failures on a global scale.

****

A successful public service is an affront to the free marketeers. They simply won’t let the facts get in their way. Despite all evidence to the contrary they continue to insist anything the public sector can do the private sector can do better and more cheaply, and no evidence to the contrary will persuade them otherwise.

So the politicians for ideological reasons, and the private sector for financial reasons, have had the NHS – traditionally publicly funded, publicly delivered and publicly accountable – in their sights for some time. They have acted together, beneath the radar, to turn the NHS from a cost-effective integrated public service into a kite mark attached to a ragbag of competing private providers.

****

Up till now you trusted your GP to give advice on clinical grounds. But now – if your GP says no to treatment and/or referral is it because they want to pocket the money that is saved – which the bill allows them to do? Or if they refer you to Hips R Us down the road, is it because their wife has a financial interest in it? 25 percent of GPs already have a direct interest in the private sector. This suspicion will be very corrupting, and most GPs are worried about it.

****

We fear NHS services being reduced to a core of poor services for poor people, with those who can afford it topping up their personal health budgets with insurance or out-of-pocket payments and those who can’t afford it going without.

And we really fear the arrival of the private companies, many of them from the U.S., whose behavior leaves much to be desired. They want to “cherry pick.” leaving the NHS to pick up the complex expensive patients as well as providing the expensive emergency care and the training that is not attractive to the private sector. We fear they will behave in a fraudulent way as they do already in the USA.

****

Our organization was vociferous from day one, saying that the bill spelled the end of the NHS, and of course we were accused of shroud waving and gross exaggeration. But we stuck in there and joined together with other campaigning organizations and the pressure has built up over the last year. How did we do it?

We produced analyses and simple 10-point critiques of the bill in our regular campaign newspaper as well as special pamphlets and postcards. We wrote doggedly – all of us would take it in turns – to national and local papers and had a lot of articles and letters published.

We offered to do public talks, to our own groups and also to anyone from medical students to pensioners, and in fact those two groups turned into some of our most outspoken supporters. We helped organize online petitions. We put a lot of energy into lobbying politicians.

We have helped expose the scandals of the revolving door between government and the private sector and the infiltration of government by corporate interests. We have questioned the neutrality of so called think tanks and helped expose the strength of the health lobbying industry in Westminster.

We marched, we used social media to spread our message and some of us even got elected to the Council of the British Medical Association so that we could begin to change our union from within.

****

The problem we have come to realize is that we aren’t just fighting the Tory government; we are fighting the global medical industrial complex with all its power, influence and money. And its cozy relationship with today’s politicians.

It’s easy to lose hope but we mustn’t. We have to take on this cozy configuration of politicians and giant corporations which have come to a “comfortable accommodation” at our expense. We must change the tone of the debate with these people who know the price of everything and the value of nothing.

We must say that the market should serve society rather than society serving the market, that there are public goods and goals for which the market is not suited and that what matters is not how affluent a country is but how unequal it is. We must collect evidence and use it to criticize and expose. We must create the strong voice of civil society and we doctors have a particular duty to be that voice and we must organize and use it.

Firstly because – and we must never lose sight of the fact – we are right. Secondly, we are the patients’ true advocates and our patients are depending on us. And finally Aneurin Bevan, the great founder of the NHS, said, “The NHS will last as long as there are folk left with the faith to fight for it.”

We must be those folk because, personally, I am not prepared to let him down.

(Dr. Jacqueline Davis is a consultant radiologist working in a hospital in London. She is co-chair of the NHS Consultants’ Association, a nationwide group of distinguished physicians representing all specialties, and a member of the Keep Our NHS Public campaign.)

(You may have to cut and paste this link for it to work.)
https://pnhp.org/news/2011/november/the-fight-to-save-britain’s-nhs

Comment: 

By Don McCanne, MD

We share with the British concerns about the neoliberal attack on our health care services. In their case it is an attack on their public National Health Service, whereas in our case it is an attack on Medicare and other public programs and, even greater, a virtual blockade – a dysfunctional private financing construct that often uses public money – that prevents us from bringing comprehensive health care services to all of our people.

This luncheon address by Dr. Jacqueline Davis was a highlight of PNHP’s recent annual meeting in Washington, DC. You may want to take a moment this weekend to read the entire address, available at the link above, and then savor it. You’ll then understand clearly why we gave her a standing ovation, not to mention that it will reinforce your dedication to the cause of health care justice for all.

The Fight to Save Britain’s NHS: Luncheon address by Jacqueline Davis, M.D.

Physicians for a National Health Program
National Meeting, Washington, D.C., October 29, 2011

(Excerpts)

First I want to thank you for inviting me here. I bring greetings from the land of socialized medicine and death panels, to the land of “islands of excellence in a sea of misery.”

I’ve never been to this city before and when I told family and friends about my invitation to Washington they assumed I was off to meet the president. I told them it was much more important than that. But just in case he’s listening – I could be free for tea tomorrow….

****

Of course the NHS faces the challenges that all health systems do, i.e. changing demographics, increased range and cost of treatments, rising patient expectation and the global financial crisis. But in the face of all these the NHS still manages to be one of the most cost-efficient and equitable health services in the world. And the public love it. At the end of the Labour government’s 13 years in power it had the highest satisfaction ratings ever, and it still is the most popular institution in the UK bar none, and that includes the royal family.

So if it’s so good, why are we having to fight for it? Because there’s another big challenge which all public services face and that is the neoliberal agenda which still has the upper hand despite its current manifest failures on a global scale.

****

A successful public service is an affront to the free marketeers. They simply won’t let the facts get in their way. Despite all evidence to the contrary they continue to insist anything the public sector can do the private sector can do better and more cheaply, and no evidence to the contrary will persuade them otherwise.

So the politicians for ideological reasons, and the private sector for financial reasons, have had the NHS – traditionally publicly funded, publicly delivered and publicly accountable – in their sights for some time. They have acted together, beneath the radar, to turn the NHS from a cost-effective integrated public service into a kite mark attached to a ragbag of competing private providers.

****

Up till now you trusted your GP to give advice on clinical grounds. But now – if your GP says no to treatment and/or referral is it because they want to pocket the money that is saved – which the bill allows them to do? Or if they refer you to Hips R Us down the road, is it because their wife has a financial interest in it? 25 percent of GPs already have a direct interest in the private sector. This suspicion will be very corrupting, and most GPs are worried about it.

****

We fear NHS services being reduced to a core of poor services for poor people, with those who can afford it topping up their personal health budgets with insurance or out-of-pocket payments and those who can’t afford it going without.

And we really fear the arrival of the private companies, many of them from the U.S., whose behavior leaves much to be desired. They want to “cherry pick.” leaving the NHS to pick up the complex expensive patients as well as providing the expensive emergency care and the training that is not attractive to the private sector. We fear they will behave in a fraudulent way as they do already in the USA.

****

Our organization was vociferous from day one, saying that the bill spelled the end of the NHS, and of course we were accused of shroud waving and gross exaggeration. But we stuck in there and joined together with other campaigning organizations and the pressure has built up over the last year. How did we do it?

We produced analyses and simple 10-point critiques of the bill in our regular campaign newspaper as well as special pamphlets and postcards. We wrote doggedly – all of us would take it in turns – to national and local papers and had a lot of articles and letters published.

We offered to do public talks, to our own groups and also to anyone from medical students to pensioners, and in fact those two groups turned into some of our most outspoken supporters. We helped organize online petitions. We put a lot of energy into lobbying politicians.

We have helped expose the scandals of the revolving door between government and the private sector and the infiltration of government by corporate interests. We have questioned the neutrality of so called think tanks and helped expose the strength of the health lobbying industry in Westminster.

We marched, we used social media to spread our message and some of us even got elected to the Council of the British Medical Association so that we could begin to change our union from within.

****

The problem we have come to realize is that we aren’t just fighting the Tory government; we are fighting the global medical industrial complex with all its power, influence and money. And its cozy relationship with today’s politicians.

It’s easy to lose hope but we mustn’t. We have to take on this cozy configuration of politicians and giant corporations which have come to a “comfortable accommodation” at our expense. We must change the tone of the debate with these people who know the price of everything and the value of nothing.

We must say that the market should serve society rather than society serving the market, that there are public goods and goals for which the market is not suited and that what matters is not how affluent a country is but how unequal it is. We must collect evidence and use it to criticize and expose. We must create the strong voice of civil society and we doctors have a particular duty to be that voice and we must organize and use it.

Firstly because – and we must never lose sight of the fact – we are right. Secondly, we are the patients’ true advocates and our patients are depending on us. And finally Aneurin Bevan, the great founder of the NHS, said, “The NHS will last as long as there are folk left with the faith to fight for it.”

We must be those folk because, personally, I am not prepared to let him down.

(Dr. Jacqueline Davis is a consultant radiologist working in a hospital in London. She is co-chair of the NHS Consultants’ Association, a nationwide group of distinguished physicians representing all specialties, and a member of the Keep Our NHS Public campaign.)

(You may have to cut and paste this link for it to work.)
https://pnhp.org/news/2011/november/the-fight-to-save-britain’s-nhs

We share with the British concerns about the neoliberal attack on our health care services. In their case it is an attack on their public National Health Service, whereas in our case it is an attack on Medicare and other public programs and, even greater, a virtual blockade – a dysfunctional private financing construct that often uses public money – that prevents us from bringing comprehensive health care services to all of our people.

This luncheon address by Dr. Jacqueline Davis was a highlight of PNHP’s recent annual meeting in Washington, DC. You may want to take a moment this weekend to read the entire address, available at the link above, and then savor it. You’ll then understand clearly why we gave her a standing ovation, not to mention that it will reinforce your dedication to the cause of health care justice for all.

The Many Different Prices Paid To Providers And The Flawed Theory Of Cost Shifting: Is It Time For A More Rational All-Payer System?

By Uwe E. Reinhardt
Health Affairs, November 2011

Abstract

In developed nations that rely on multiple, competing health insurers — for example, Switzerland and Germany — the prices for health care services and products are subject to uniform price schedules that are either set by government or negotiated on a regional basis between associations of health insurers and associations of providers of health care. In the United States, some states — notably Maryland — have used such all-payer systems for hospitals only. Elsewhere in the United States, prices are negotiated between individual payers and providers. This situation has resulted in an opaque system in which payers with market power force weaker payers to cover disproportionate shares of providers’ fixed costs — a phenomenon sometimes termed cost shifting — or providers simply succeed in charging higher prices when they can. In this article I propose that this price-discriminatory system be replaced over time by an all-payer system as a means to better control costs and ensure equitable payment.

http://content.healthaffairs.org/content/30/11/2125.abstract

This is an important contribution to the health policy literature. It is intended to be a seminal paper designed to displace the useless discussion of cost shifting between public programs and private insurers with a discussion of reducing price discrimination (charging individuals, private insurers or government programs different prices for the same services) by shifting to an all-payer system that would better control costs and ensure equitable payment.

An all-payer system simply establishes “uniform price schedules that are either set by government or negotiated on a regional basis between associations of health insurers and associations of providers of health care.”(1) Why is this important?

Although there is considerable variation in prices throughout the health care system, high prices, on average, have been a major contributor to our very high per capita spending on health care.(2) As Uwe Reinhardt explains, much of this excessive pricing has resulted from private insurers, with a weak market presence, negotiating with health care providers, especially hospitals, that dominate their respective markets. The health care provider consolidation that is taking place can only compound the impact of this market distortion.

Although private insurers also are consolidating, competing plans are still not in a position to extract major price concessions from dominant health care providers. All-payer price setting through government or association negotiation is designed to displace the ineffectual private insurers as price negotiators while establishing both better cost control and more equitable payments for health care.

(In some areas, private insurers have been able to hold prices down at Medicare rates for physicians where the physicians have a very weak negotiating clout. This is less true of hospitals that have a weaker clout.)

Price discrimination – charging different prices for the same services – hits especially hard those who have the weakest bargaining power: individual patients who are now bearing more of the costs of health care. Contrary to widely held ideological beliefs, here it is price discrimination in the private insurance market and not the government that has created the perversity of rationing based on the ability to pay.

In his article, Reinhardt explains, “It should be recognized that the higher the fraction of health care spending that individuals and families must bear out of their own resources, the more heavily the model relies on rationing health care by price and the patient’s ability to pay — that is, rationing by income level. It may surprise some readers that anyone would associate markets with rationing. But as economists tell their students, free markets represent just one of many styles of rationing. Relying on price and ability to pay is precisely how markets in general manage to ration scarce resources among unlimited ends.”(1)

One of the reasons that this article on all-payer systems is so important is that we are at a crossroads in the reform process. He writes, “At this time, the US health system appears to stand at a clearly delineated crossroads. On one road, Americans would seek better control over national health spending through an all-payer system, such as the one operated by Maryland for the hospital sector. On the other road, Americans would seek better control of health care prices and national health spending through greater reliance on market forces for most of the health system. Depending on how that road is traveled, it could entail more pronounced rationing of health care by income class, meaning less health care for those who cannot afford it. The battle over US health policy in the coming decades is likely to be over which road to take.”(1)

Since an all-payer system would correct only a portion of the flaws in our health care financing, why shouldn’t we go full bore and enact a single payer system? Reinhardt brings up the political feasibility argument, as follows, “In any event, an all-payer system with multiple private insurers would be likely to be more broadly politically feasible than a government-run single-payer system, such as Canada’s provincial, government-run single-payer insurance systems. A single-payer system, of course, would be another alternative that would eliminate price discrimination and any cost shifting.”

Reinhardt discusses the effectiveness of all-payer for hospitals in the state of Maryland. In a previous response to the Maryland all-payer system, I stated, “If we can succeed in reestablishing a public service role for government, then wouldn’t it be reasonable to simply enact an all-payer system for hospitals? The problem is that it only makes one change in our fragmented, dysfunctional system of financing care, and not a complete change at that. Under all-payer, only the rates are controlled, but each service still must be accounted for and paid for independently, and the hospitals would still have multiple public and private payers with which they would have to interact.”(3)

So what about Switzerland? Reinhardt mentions it as having successfully applied an all-payer system. In another previous message on the OECD/WHO report on Switzerland, I stated, “It is not clear why so many in the U.S. are enamored of the Swiss health insurance system when this OECD/WHO report confirms that it is highly inefficient and fragmented, with profound administrative waste, inequitably funded, with regressive financing and with wide variations in premiums, has the highest out-of-pocket costs, has an increasing prevalence of managed care intrusions, and is controlled by a private insurance industry that has learned how to game risk selection at significant cost to those on the losing end.”(4)

Uwe Reinhardt is to be highly commended for moving us in the right direction, but…

We’ve said it before and we’ll say it again. If political feasibility is the barrier to enacting a single payer system, let’s not simply jettison single payer; let’s change the political feasibility instead! All-payer might be a modest incremental improvement (modest when compared to what needs to be done), but why settle for that when we can have it all through an improved and expanded Medicare for all?

(1) http://content.healthaffairs.org/content/30/11/2125.full

(2) https://pnhp.org/system/assets/drupal/docs/Its-The-Prices-Stupid.pdf

(3) https://pnhp.org/news/2011/september/hospitals-all-payer-or-global-budgets

(4) https://pnhp.org/news/2011/october/oecdwho-report-on-the-swiss-health-system