Redistribution and redesign in health care: An ebbing tide in England versus growing concerns in the United States

Abstract

Like many countries, the health care industries of England 1 and the United States consume large amounts of resources and struggle to achieve equity and efficiency. They attempt to reach these goals in quite different ways, exhibiting common challenges familiar to reformers throughout the world. Recent activities in England and the United States suggest that significant changes being discussed in the United States or implemented in the United Kingdom could upset previously accepted policies and threaten some or many of the gains made to provide more equal and timely accessible care to all individuals. Policy makers in both countries wrestle with similar problems of redistribution and system design. Although in the United States, the issues of equity and expenditure controls do not have the same importance as in England, both countries seek the “Holy Grail” of limiting spending both by government and the private sector by redesigning institutions that manifest inefficiency and contribute to inflationary pressures. Yet competing value systems permeate the political debate about how to accomplish these aims. These value systems underlie political preferences for regulation and markets. Although a minority in the United States advocates for universal care funded by a single payer, private employer-based insurance remains the bedrock mechanism. Unlike the United Kingdom and most Organisation for Economic Cooperation and Development (OECD) countries, the United States has never shown a political willingness to have government responsible for financial protection for all inhabitants against the cost of medical care. The United States has, however, accepted this responsibility for major components of society, namely, the aged, disabled, and low-income families and children (e.g., via Medicare, Medicaid, and the State Children's Health Insurance Program). This commitment was expanded with the Affordable Care Act (ACA) in 2010, commonly known as Obamacare. The outcomes of the two health care systems reflect a preference for collectivism in funding and access in the United Kingdom and for pluralism in funding (less third-party coverage) and a greater role for privately delivered care in the United States. But the battle continues in both countries as important groups advocate for the reversal of these preferences. Policy makers continually try to change their health care systems. Some of these changes seek to develop greater efficiency in how care is delivered as a means of controlling the burdens imposed on society by ever-increasing public and private expenditure. Both countries face common problems that have been well identified for decades but have proven difficult to resolve. Reformers face three common problems. First, unwarranted variations in clinical practice (Wennberg, 2008, Wennberg, 2012) are produced by price variations in insurance systems and volume variations elsewhere (Institute of Medicine, 2013). Second, both systems have been slow to develop measures of the value of health care outcomes, that is, improvements in the length and quality of life. Third, both health care systems have perverse incentives that inhibit efficiency-inducing change; for example, they use hospital pricing or tariff systems that incentivise activity with little regard to patient value. Inadequate evaluation and political resistance to change continue to produce inefficiency. The end result is unnecessary spending and unethical deprivation of beneficial care for some populations. The English single payer system is characterised by frugality and cycles of famine and plenty, with attendant bouts of supply side reform (Street & Maynard, 2007). Constrained funding in the 1980s led to the Thatcher reforms and the creation of the “quasimarket” of purchaser and providers contracting for public and private care. These structural reforms received increased funding in the early 1990s. By the end of the 1990s, financial parsimony was creating renewed performance problems, for example, increased waiting times for elective surgery. As a consequence, the Blair government financed a large increase in funding. Since 2010, the Coalition and now Conservative government has exerted extreme expenditure controls, and current plans will result in real per capita funding falling by 2018. Since the Thatcher era, the often violent fluctuations in NHS funding have been accompanied by the “redisorganisation” of structures and processes of care whilst maintaining universal cover age free at the point of use. The purchaser side of the National Health Service (NHS) market has evolved from health authorities to primary care trusts and now to clinical commissioning groups, all with similar functions and uncertain impact. The provider side of the market remains dominated by public institutions as private providers have made only marginal inroads to public funding. The current chronic underfunding of the NHS and social care, manifested currently by increased waiting times for elective procedures, has produced inevitable pursuit of the “Holy Grail” of increased productivity. The Five Year Forward View (NHS, 2014) involved the acceptance of government parsimony and for the 2015–2020 period. Its authors argued that the NHS would require £30 billion to meet demographic and technological demands, of which only £8 billion was to be provided from tax revenues. The additional £22 billion was to be funded from productivity increases. Current NHS spending is £110 billion. Currently, a frenzy of structural reform proposals range from integration of currently fragmented hospital, primary and social care systems to hospital mergers to the abolition of the purchaser-provider “market” with the creation of accountable care organisations. These proposals involve unevidenced merger plans and deskilling of nursing and other workforce changes. The Sustainability and Transformation Plans (https://www.england.nhs.uk/stps/) are radical but unlikely to yield £22 billion of productivity gains in 5 years. There is little available funding to finance the change process, and its duration is likely to take many years to free up resources. Both options assume that healthcare is much more expensive in the United States than in any OECD country because American patients use too much medical care. Yet the evidence does not support this assumption. Americans are less likely to be admitted to a hospital and have a lower length of stay once in a hospital than many OECD countries. Americans also are less likely to see a doctor or use fewer pharmaceuticals than patients in OECD countries. U.S. patients do use more very expensive medical devices such as MRIs or new and expensive drugs, but on net, the pluses and minus may cancel out. What separates United States spending from that in OECD countries are the prices charged for all medical activities. The reasons for the higher prices are complicated and due to a myriad of factors including the higher wages paid to most participants in the healthcare system (not only physicians); the much higher prices Americans pay for drugs and medical devices; and the fact that the complexity of the U.S. system has evolved in a way that requires the use of many more lawyers, consultants, and administrators, all of whom are well paid. The latter consideration is possibly more central because some key providers such as primary care physicians receive relatively low compensation relative to education costs and work conditions. Additional efforts within the United States that are sometimes related to the ACA include a broad interest in insurance redesign, emphasis on value from services provided, and a focus on patient-centred outcomes. Value-based cost-sharing approaches are being implemented in the United States as well as other OECD countries (Thomson, Schang, & Chernew, 2013), though these approaches are more easily implemented for certain services such as pharmaceuticals. The Medicare program is testing a number of value-based payment innovations and incentive payments. The Patient-Centered Outcomes Research Institute is a nongovernmental institute created under ACA that was charged with assessing the effectiveness and appropriateness of medical treatments. However, the Patient-Centered Outcomes Research Institute is not able to mandate coverage or reimbursement for any treatments and infamously is prohibited from considering cost per quality-adjusted life years in its recommendations despite widespread interest in this measure in many other countries. The American and the English health and social care systems differ greatly, but they are surprisingly similar in some dimensions. Key differences pertain to who pays for care and how it is delivered, with the United States having a more decentralized and fragmented system leading to inequalities in the provision of care and its funding. The English system is universal and largely free at the point of consumption system but constrained by limited funding (which also generates inequalities in access to timely care). The supply side problems are more similar for both countries. Increasingly, U.S. reform in terms of payment mechanisms is being emulated by the English. Both systems seek better measurement and management of “value,” that is, the effects of health care on the length and quality of patients' lives. The hospital systems of both countries are attempting to integrate care function and move away from “fee for service” to bundled or incentive payments. The American system is the product of producer incentives producing grossly inflated costs. Concomitantly, a growing proportion of the U.S. population has a limited view about who should be eligible for government-supported health care services and the types of services that should be supported. Despite greater underlying consensus in favour of universal coverage, the English system's crisis is a product of parsimony and fragmentation of funding and provision. Both systems are permeated by organisational inertia and the defence of political values and self-interest. The United States is grappling with more than a sea change given political restructuring and the very uncertain future of most expansions of insurance or medical cost coverage under the ACA. England faces potentially revolutionary structural changes in supply and a real political challenge in its single payment system. Although current trends are not positive, the authors maintain hope that both countries will prevent further deterioration in health care coverage and return towards more progressive policies to protect their inhabitants' access to care when subjected to the misfortunes of medical illness.