Being #1 isn't always the best

Dennis Bolin, Health Plan Alliance


Person lost in mazeI still remember the question. It was on the final exam of my Health Care Administration course wrapping up my first quarter in graduate school at Northwestern. While it was more years ago than I care to share—let’s just say DRGs were relatively new—I still hear the question being asked today, “How much of the nation’s GDP should we spend on health care?”
Back then (early 1980s) health care consumed about 10 percent of the nation’s economy. Today it is hovers around 18 percent—making America the #1 country in the world for health care spending per person. I started my final exam essay with, “In theory we could spend 100%. We as a society have to decide.” I then went on to explain that we had to wrestle publicly with this question because what we were spending was unsustainable in the global market. The professor must have liked my response because he gave me an “A”. 


A look at Costa Rica

I recalled the question and my answer recently as I was at the end of a week-long trip to Costa Rica with the International Health Academy. Along with 20 some other health care executives—including three Alliance members—we spent a week looking at the country’s health care system. Like other countries Costa Rica has a three level system.

Level I — Unfunded care

In Costa Rica much of their labor is by undocumented residents who do jobs like picking coffee beans. Jobs Costa Ricans do not want to do. Sound familiar? Anyway, they are not entitled to any government services so they are cared for by a network of privately funded clinics and providers. We visited one such clinic and we were all moved by the commitment and passion of the doctors serving this population.

Level II — Social Security

The second level covers the vast majority of the country. It is their public system, called Social Security. Every employed citizen pays a percentage of their salary into a fund to cover health care costs (and their pension). All services from primary care to high level specialty care are covered. Given the social structure of their society—role of the family in particular—long-term care is noticeably not covered. Everything else is available through government paid for clinics and hospitals and other provider settings. The government does contract out some of these services, for example the neighborhood clinics are operated by a number of for-profit companies who win government contracts, but the government pays for it all using the tax budget.

Level III — Private Insurance

The third level is private insurance which covers private hospitals and providers. If these services are used, the government does not contribute anything to covering the costs. Several private insurance companies successfully operate in the country. We visited a general hospital owned by a U.S.-based company and a trauma hospital operated by the largest automobile and workers’ compensation insurer in the country solely for their beneficiaries (the country has notoriously bad drivers so the wards are always full). As expected, only the higher income earning citizens buy their own insurance or pay cash to use these private providers.


Lessons Learned

We were told the citizens liked their system. Yes, the lines are long, the wait for some diagnostic tests or treatments could be months. I often hear that Americans would never put up with long waits or rationing of services, but if you visit your local safety-net hospital, like Parkland Hospital in Dallas, you will see that Americans wait in very long lines and wait weeks for some tests and treatments. So, some segments of the American population do wait in long lines and their care is rationed.

Which brings me back to the question from my graduate school exam: how much are we willing to pay for our health care? To answer that we have to ask what is the minimal accepted level of care every American is entitled to? Or better yet, is health care a right or a privilege?

We have answered a similar question in at least two other societal areas: our educational and legal systems. We say that every child is entitled to a basic level of education. Of course public schools’ quality varies widely and many prefer to send their kids to private schools, but we decided long ago that education was so central to our way of life that every child deserves a given standard level of education. Same for our judicial system: every defendant is entitled to a minimum level of representation, a public defender, even if they can’t afford a lawyer. Many folks don’t get the same level of defense as they would get with a private attorney. But again, we have determined that everyone deserves a basic level of defense.

I believe I have over simplified the argument—as I am sure I did as well in my graduate school essay; but the issue we wrestle with is real. And I have not heard any meaningful debate on the topic come from Congress. So how does America deliver a standard level of care to all Americans? I believe looking at the model of care and coverage exemplified by Alliance members and our affiliated providers is a good place to start. One thing is certain and that is the current system is not sustainable. 


Additional Resources

Leverage your Alliance community to keep up with industry changes and market shifts. Use the Alliance discussion forum to post questions to your peers and check out these recently added resources and upcoming events:

Webinar: Analysis and review of ongoing health care reform efforts 

Article: â€‹As House Republicans celebrate the AHCA, Senators begin to roll up their sleeves 

Webinar: Process improvement at Health New England (an update)

Value Visit: Health system/Health Plan Collaboration | Chicago | June 14-15, 2017 

Value Visit: Medicare and Quality | Madison, WI, July 18-21, 2017


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