What Hillary Could Learn From Canada and Germany
Jaffe, Susan FitzGerald and Mark
What Hillaiy Could Learn from Canada and Germany For less money, they cover more people and they make people happier. So why not take a cue from those countries that have made the hard choices that...
...But Evans liked North York...
...First, there could be pressure from consumers or health care providers that push the premium caps higher and higher...
...The "managed" market will offer options and additional coverage so that those willing to pay more in premiums and deductibles will have more choices...
...German patients are now liable for an $8-a-day co-payment for up to 14 days in the hospital...
...In Ontario, for instance, non-emergency waits for coronary bypasses can last up to three months...
...The KV monitors pharmaceutical use, hospital use, the number of cases," Neubach says, "and it can call an audit at any time...
...But because each hospital's administrators and doctors decide how to spend its annual budget, each can adapt according to its needs...
...The rich pay for the poor, the young for the old, the well for the sick...
...Still, because it's a professional society run solely by doctors, there's far less of the frustration American doctors feel when dealing with insurance companies or Medicare and Medicaid...
...The German system has begun to resort to additional co-payments for items such as pharmaceuticals in an effort to blunt demand...
...The Clinton approach in fact balkanizes American medicine, and it doesn't really make administration simpler or save much money...
...Choice: The Clinton plan differs from Canada and Germany on doctor choice—something the administration is very touchy about...
...It also prohibits insurers from denying coverage because of a person's pre-existing medical condition...
...Canada, nine cents...
...We have social responsibility...
...Doctors trade off working under a budget for the power to manage what resources there are...
...The story is the same in Germany...
...The tough decisions that will have to be made—limiting access to specialists, telling people they must wait for an MRI scan or not have one at all, closing some hospitals while beefing up others—will be made by companies whose main concern is not universal coverage or equal access, but rather profit...
...I'm calling from the business office downstairs...
...Any health care system ultimately comes down to the doctor and the patient...
...This is a risky exercise, for many of the problems that beset American medicine today—inferior care for the poor, spiraling costs, problems with insurance and bureaucracy—are products of market medicine...
...With 473 beds, the Toronto hospital employs just 12 people to handle its billing...
...Premium increases are tightly controlled by the government...
...The only disadvantage was that the Canadians had a slightly greater chance of experiencing chest pains...
...They're "consumers...
...She hung up, glanced at the discharge list, and called the next patient...
...And it tries to control costs by limiting insurance premium increases and slowing the growth of Medicare...
...This means there will be more boxes on the flow chart than there are now...
...Through World War I, the Weimar Republic, the rise of Hitler, World War II, and the post-war economic boom, AOK was there to pay Hagel's bills...
...The government controls overall spending, but hospitals and doctors operate independently of the government...
...You can see the difficult decisions and trade-offs Canada and Germany are willing to make in order to guarantee their citizens the best possible care regardless of their income...
...Goldman sees no problem or crisis in this approach...
...The proposed benefits package covers hospitalization, doctor's office visits, some preventive medicine, and pharmaceuticals...
...Despite spending nearly $1 trillion annually on health care, 37 million Americans are uninsured and an equally large number are underinsured or fear losing what coverage they do have...
...The result is that both Germany and Canada spend less than half what the U.S...
...At North York, the numbers on the red-and-white cards are quickly verified by computer and admissions take no more than seven minutes...
...In crafting its plan for American health care, the Clinton administration has adopted goals similar to those in Canada and Germany...
...Across the Atlantic, Joan Evans, a woman in a white, flowered nightgown, had been lying in Toronto's busiest emergency room for more than twelve hours after injuring her head in a Susan FitzGerald and Mark Jaffe are reporters for the Philadelphia Inquirer...
...Four more patients lay in beds along the wall...
...In the market, "money talks" and "you get what you pay for...
...Andrews & McMeel, 1993...
...So it's worth examining how Canada and Germany turn the ideal of equitable, universal care into a working, day-to-day reality for their people—the very thing Clinton says he wants to do...
...This dependence on the marketplace is, of course, by design...
...I've never thought about it...
...As a result, people who make more pay more for the system...
...So it is noteworthy that in Germany and Canada there is considerable freedom for both...
...Discharge is almost as quick, since the only bills are for telephones, televisions, and semi-private and private rooms...
...In Germany and Canada, there's considerable freedom for both...
...The Clinton administration says it wants the same goal, but it has proposed a radically different path for American medicine—a path that does not eschew the market but in fact embraces it...
...The system was created in 1883 by Otto von Bismarck, and the AOK was already 18 years old when Josefa Hagel was born...
...Just a reminder to stop by just to pay a telephone or television bill...
...The program's key line of defense against spiraling costs is limits on premiums set by the National Health Board...
...That Germans pay nothing out of pocket for an office visit may also help to keep satisfaction levels high...
...The plan calls for the states to set up the alliances...
...The funds have negotiations in advance to set a sum they are willing to pay, so there is only one offer on the table...
...heart attack victims were three times more likely than Canadians to be operated on...
...Thcs Doctor Will See You...
...And patients are completely free to choose doctors and change doctors as often as they like...
...This is what North York's billing office worries about—TVs, telephones, and room rates...
...Of that, more than 80 percent comes from four procedures—cardiac catheterization, angioplasty, bypass surgery, and heart valve surgery, according to the Advisory Board Company, a Washington-based consulting firm...
...North York General Hospital, for instance, knows that even while it is pinching pennies it can't afford to let its reputation slip because there are many other hospitals patients could choose...
...But in the Clinton plan, "managed competition" will be buttressed by "managed care...
...By comparison, only 30 percent of American doctors are primary care physicians, down from 87 percent in the thirties...
...heart bypasses are extremely lucrative...
...This was certainly true of patients in North York's emergency room this morning...
...Surveys consistently find greater satisfaction among patients and doctors in Canada and Germany than in the United States...
...She knew she would get good care and that if she had to wait for a bed behind a more serious case, the decision would be made on medical, not economic, grounds...
...I've never had a problem...
...If you have no queues, you have an excess of resources," says C. David Naylor, a researcher at Sunnybrook Health Center in Toronto...
...That is why Neubach tends to dispatch minor complaints like sore throats and ear infections in five to 10 minutes...
...In Germany, the family doctor is always the first stop and the key player in health care...
...A German patient only has to tell the hospital the name of his sickness fund...
...Overall, the Canadian and German patients' freedom of choice promotes quality...
...Although these systems wrestle with the same economic and medical pressures faced by American medicine, their annual limits on spending help keep costs from growing uncontrollably...
...A private room costs $120 a day...
...Later To Americans who detest even a short wait at the deli counter, queuing—waiting—for medical care is synonymous with rationing...
...On top of these new alliances would be a new National Health Board, which Health and Human Services Secretary Donna Shalala describes as a "minor" oversight body...
...As a gatekeeper to the entire German health care system, it is also her responsibility to use its resources wisely...
...This sounds like a good idea...
...Compared to Canada or Germany, where virtually all doctors and all hospitals are available to all people, the Clinton plan offers only limited choice...
...That is the only bill they will see, regardless of the number of services or doctors they use...
...And Germany's insurers are not completely profit-driven in the way American companies are...
...And yet a policy of "no waiting"—in other words, what Americans with access to care generally have now—creates another economic dilemma...
...It seeks to ensure that no one is denied coverage based on age, race, or geography, and it pools the risk of all individuals in order to spread the financial burden...
...BY SUSAN FITZGERALD AND MARK JAFFE Josefa Hagel was resting comfortably in a bed at Schwabing Hospital in Munich...
...system with patients being rushed into surgery," he says...
...A 1993 University of Sherbrooke, Quebec, study published in the New England Journal of Medicine found that American doctors were more apt to admit a patient with chest pains to the intensive care unit, more likely to prescribe drugs, and more likely to order X-ray angiography to look for clogged arteries...
...Such house calls are part and parcel of Neubach's job as a primary care physician...
...All the funds want to pay as little as possible" to the hospitals, explains the AOK's Johann Fann...
...Indeed, fully one-quarter of all U.S...
...But under a market system there are two risks...
...Both systems believe that hard choices have to be made in the public arena, and sometimes those choices are very hard...
...Her bill for the two-week hospital stay would be $112—an $8-a-day insurance co-payment...
...And because what money is spent is allocated through direct negotiations with hospitals and physicians' associations, the people closest to the systems have a strong voice in how they are run...
...Bills are calculated by multiplying the number of days the patient spends by a daily rate designated by ailment...
...Under Canada's system, she could go to any hospital she chose...
...The patient, a middle-aged woman with bowel cancer, was bedridden with nausea and diarrhea...
...But there is no evidence that heart patients fare any better in America than they do in Canada...
...Thank you...
...And the numbers back him up...
...But the Clinton plan envisions no global budgets and no direct negotiations, the features which control costs in the other systems...
...Once that's verified, a billing sheet is added to the patient's folder...
...It provides a clearly defined public good uniformly by raising revenues through a mix of income, sales, and property taxes...
...It always covered what was necessary," she said, surprised at a question about health insurance...
...And many of the other hospitals probably had room, because on a given day, Toronto has 1,000 empty hospital beds...
...But Pennsylvania's experience in collecting performance data and then ranking hospitals on a single procedure—heart bypass surgery—has been extremely contentious, with hospitals repeatedly challenging the findings with reams of their own statistics...
...The board would set premium targets for each alliance to help control costs and collect information for consumer report cards on health plans and facilities...
...In Ontario, for example, doctors work from a fee schedule negotiated with the Ontario Health Insurance Plan...
...We at least have the option of shifting resources," North York General president Murray MacKenzie says...
...At noon, she drove her blue Volkswagen Rabbit to the apartment of a patient who was too sick to go to a nearby oncologist for a chemotherapy appointment...
...But without curbing costs, every other goal—the comprehensive benefits, the universal coverage—is jeopardized...
...And in part it's because on average Germans see their doctors about 11 times a year —twice as often as Americans...
...This could mean, for example, fewer tests or fewer specialist referrals...
...Stephanie Woolhandler of the Harvard Medical School, a Clinton critic who favors a Canadian-style system, contends that the Clinton plan "is really ratifying a multi-tiered health-care system...
...American hospitals spend about 20 cents of every dollar on administration...
...Hagel, a sprightly woman with gray hair and sparkling gray eyes, had spent her time at Schwabing, the oldest of Munich's municipal hospitals, in an austere, semi-private room with well-worn furnishings and no telephone or television...
...By offering identical benefits and creating standardized payment forms, the plan attempts to simplify the bureaucracy...
...But that depends on how you define choice...
...In Canada and Germany, budget caps and uniform insurance coverage remove any question of financial incentive for prescribing surgery...
...All patients have access to the same medical care...
...The second risk is that the caps hold and providers are faced with the dilemma of balancing patient care against making money...
...Yet both nations cover everyone for just about everything at high levels of quality...
...By comparison, Lankenau Hospital in suburban Philadelphia, with 475 beds, has a staff of 65 to deal with the payment of bills...
...True, a German patient must be referred to a specialist by a primary care doctor...
...For example, the Clinton plan mandates a basic benefits package, but it reserves individuals the right to buy additional coverage...
...In Canada, the family doctor plays a similar role...
...Applied to medicine, this, in part, is why Americans have more heart bypass surgeries, hysterectomies, and cataract operations than any people on the planet...
...Despite the multiplicity of insurers, premiums are raised uniformly through payroll taxes, billing forms are similar if not identical, and payment procedures are standardized...
...Both countries have consciously decided health care is a universal, public good...
...The goal," Neubach explains, "is for someone to be responsible for the patient...
...Doctors' incomes are capped (maximum annual income is $320,000), and the physicians' associations agree to pay the plan back if billings exceed the set targets...
...An American reporter wandered from bed to bed, interviewing patients about the Canadian healthcare system...
...But her patients don't seem to mind the quick treatment...
...To the contrary, the president's plan enhances choice...
...But days of tests and monitoring revealed no serious problem...
...And because all patients are free to choose and are equally insured, there is no shunting poor patients into public clinics while luring well-heeled patients into private doctors' offices...
...So the final question posed by the Clinton approach to health care is which will ultimately be served: the public good or the bottom line...
...When the reporter came near Joan Evans, she blurted out: "We don't have socialized medicine...
...But Canadians are willing to put up with some inconveniences to pay for the comprehensive care they are guaranteed...
...While this may be uniquely American—the market, after all, has served us well in so many other ways—it does create a kind of policy schizophrenia...
...If her patients are dissatisfied, they can simply go to another doctor...
...It's the reason we have more high priced technology, such as magnetic resonance imaging machines and cardiac catheterization labs, than any other country...
...The remainder of her charges—about $4,100—would be paid by HMgel's insurer, the Allgemeine Ort-skrankenkasse, or AOK...
...The economic hallmark of the Canadian and German approaches is setting budgets and then negotiating with private health care providers over how that money is to be spent...
...If needed, she'd give the woman a shot of morphine...
...For doctors, the trade-off for working under limited budgets is the power to manage what resources there are...
...In fact, a 1987 Rand study found that 17 to 35 percent of American bypasses might be unnecessary...
...With its 1,200 different sickness funds, the German system would appear to be more like America's cumbersome, private insurance-based system...
...Through the birth of her children, three operations, and the death of her husband, AOK picked up the tab...
...A single sheet with the diagnosis, treatment, outcome, and the number of days spent in the hospital is sent to the sickness fund when a patient is discharged, and payment comes in two to six weeks...
...First, it would create "health alliances," which would collect premiums from individuals and businesses and "certify" health plans that would in turn provide care...
...People who are poor receive the same high quality of care as people who are well off, and while the well off are able to buy amenities—a private room, television, a telephone—everyone is treated the same medically, treated well, and is certain that this equal treatment will be there...
...It is also user friendly...
...One woman was knitting...
...Canadian doctors' fees are also held in check...
...Any health care system ultimately comes down to the basic relationship between doctor and patient...
...Patients in both Germany and Canada have complete freedom to choose doctors and to change doctors as often as they like...
...Room With a View Majorie Chin of the North York General billing office was on the phone...
...Although both Canada and Germany are market-based economies, they have taken health care largely out of the marketplace...
...To maximize her salary as much as the system allows, Neubach sees as many patients as she can, refers as few as possible to specialists, and provides additional services like house calls...
...Here it is all the same...
...German Engineering It was only lunchtime, but Katherine Neubach, a family doctor in the Munich suburb of Neuaubing, had already seen 32 patients for ailments such as the flu, high blood pressure, and pancreatitis...
...The market's purpose is to generate profits and provide goods on demand...
...Otherwise someone living in Arlington, Virginia, might not have access to the Johns Hopkins Medical Center 40 miles away in Baltimore...
...Although President Clinton's 1,300-page Health Security Act promises to "ensure individual and family security through health care coverage for all Americans," as you plow through the bill, with its cost-sharing options and rules on marketing, profit incentives, and even advertising, Clinton-style health care sounds a lot less like a public good and a lot more like a market commodity...
...And remember that, compared to the U.S., Canada spends a third less per capita on health care and Germany spends 42 percent less...
...No patient is captive to any single doctor or hospital...
...The explosion may have been spurred by the market as well as by medical need...
...In Germany, hospitals also must negotiate annual fees—calculated loosely as global budgets—with the sickness funds...
...Some lay propped on pillows, reading magazines or books...
...But if a patient is unhappy with one doctor, he can try another...
...fall...
...So North York made some tough choices: It closed 30 general medical beds in order to maintain its neo natal intensive care unit...
...hospital revenues come from cardiac-related business...
...You can see all of these things in the operating rooms, wards, and doctors' offices of Schwabing and North York General...
...In the United States, nonemergency bypass surgery can usually be arranged in one day to two weeks...
...Physicians do not have to worry about insurance company "pre-approval" or "utilization reviews" as they must in the United States...
...Using the largely untested theory of managed competition, the administration hopes to make the United States the first country in the world to provide universal health care using market mechanisms...
...She'd been here before, and this was where her doctor practiced...
...But the essential difference is that unlike German or Canadian patients who can switch doctors, under the Clinton plan people would be stuck for at least a year...
...About two-thirds of Canadians have supplementary private insurance that picks up this tab...
...This is what that means on the ground: Ontario actually cut most hospital budgets by two percent in 1992...
...The sickness funds pay doctors a meager $5 for a routine office visit...
...Consider: > Bureaucracy: In its effort to leave all the existing players in place (especially the insurers), the Clinton plan adds new layers of bureaucracy...
...The simplicity of Majorie Chin's job reflects the administrative and financial simplicity of the Canadian health care system itself...
...Currently, about 12.5 percent of an individual's salary goes to health insurance, with that sum split between employee and employer...
...The room was spotless...
...In Canada and Germany, an individual can buy perks with extra insurance, but extra insurance does not buy better medical care...
...Still, the number of Americans receiving bypass surgery doubled during the 1980s to 265,000 in 1991...
...Those who want more and can afford more, get more...
...Germans consume twice as many prescription drugs per person as Americans...
...So how will it save money...
...The doctors take the time to sit down and talk to you," she told an American visitor...
...This approach, used by health maintenance organizations, limits an individual to a set "network" of doctors and hospitals...
...But since all of North York General's beds were filled, Evans had to bide her time until a room opened up...
...We see people having equitable access to affordable and appropriate health care regardless of geography, income, age, gender," said an Ontario Ministry of Health annual report...
...Neubach's income last year was about $136,000...
...Hooking a coat hanger to a chandelier, Neubach hung plastic bags of saline solution to begin the intravenous treatment the oncologist had prescribed...
...Last year billings actually went down...
...For example, Bernard S. Goldman, the chief of cardiovascular surgery at Canada's Sunnybrook Hospital, had a budget in 1992 to do 635 bypass operations...
...The results have to be approved by state authorities...
...Cost controls: The Clinton plan, unlike Canada and Germany, does not cap medical costs...
...The AOK is the largest of the 1,200 non-profit, payroll-financed "sickness funds" that comprehensively cover the health care of more than 90 percent of Germany's residents...
...This past December, to stay within its global budget, North York General was forced to shift to a reduced emergency schedule for 12 days—deferring all elective procedures and fur-loughing most of its staff...
...Schwabing Hospital, with 1,372 beds, manages with just 18 people in its billing office...
...counterparts...
...In the foreign systems, the responsibility for evaluating patients rests solely in the hands of doctors, who must decide who receives treatment immediately and who will wait...
...If your queues are too long, you don't have enough resources...
...Josefa Hagel and Joan Evans were deeply satisfied with their care...
...Even so, as far as Hagel was concerned, Schwabing had served her well...
...And seven others, Joan Evans among them, were in a cluster of beds behind the nurses' station...
...These are all admirable objectives...
...But her day was far from over...
...In the last few years, Canadian health costs have risen (though at a far slower rate than U.S...
...So why not take a cue from those countries that have made the hard choices that make national health care work...
...costs) and taxpayers have been restive...
...Germany, about eight cents...
...But in the market, those who can't afford more get less...
...Although it is a government-run system, it is surprisingly efficient...
...Canadian patients simply present their plastic health cards on entering the hospital...
...While the administration paints this as a simple and minor exercise, the alliances would be handling vast amounts of money as the principal conduit between consumers and health providers...
...In those countries, health care is, as Princeton health economist Uwe Reinhardt says, "part of the cement of society...
...does on bureaucratic paperwork...
...Many were dozing...
...The 92-year-old Hagel had been rushed to the hospital with the classic signs of a heart attack—shortness of breath and chest pains...
...Because HMOs are paid an annual fixed fee per patient, they have a built-in economic incentive to limit the kinds of care they give in order to make sure that the cost of care does not exceed the HMO's overall receipts...
...Canada's Royal College of Physicians and Surgeons has adopted a policy that 50 percent of all doctors should deliver primary care...
...She had been there for nearly two weeks, but tomorrow she would go home...
...There was little doubt that he would find enough candidates...
...Although the Clinton plan would subsidize the poor and the unemployed, it does not give them the option of choosing plans that cost more unless they pay the difference themselves...
...His only objective was to start with the most serious cases and work his way toward the least serious...
...Although she'd been waiting, Evans was here by choice...
...To some degree, this is similar to the imperatives Katherine Neubach faces or the efforts of Canadian surgeons to prioritize their patients...
...They are the authors, with Donald Drake, of Hard Choices: Health Care at What Cost...
...The elements which control costs and assure everyone access to equal care in Canada and Germany are just not in the Clinton plan...
...Observers such as Urban Institute economist Marilyn Moon estimate that at best the Clinton plan would save $10 to $15 billion in administrative costs—or 1.6 percent of the nation's total health care bill...
...But internal administration memos indicate that it would be a multi-billion-dollar agency with a large staff and "far-reaching authority...
...So while Neubach, for example, decides what services her patients get and whether they see specialists, she must be sensitive to their wishes...
...This happens a lot at North York, which is forced to strike a delicate balance nearly every day between patient demand and available resources...
...A financial officer at Philadelphia's Lankenau Hospital—one of the area's leaders in bypass surgery—describes the procedure as an economic "winner...
...Under Canada's tax-financed, single-payer system, Evans' red-and-white plastic card from the Ontario Health Insurance Plan entitled her to full medical treatment...
...Neubach made sure the patient was comfortable and told her she'd be back later that day...
...Yet Germany, like Canada, operates with administrative simplicity...
...Good morning...
...She wasn't alone...
...It's why, until the real possibility of genuine reform reared its head recently, some of the hottest stocks on Wall Street had been those of health-related companies...
...Indeed, under the Clinton plan, people who need medical care aren't "patients...
...One of the great lies that is currently afoot in the country is that the president's plan will limit choice," Hillary Rodham Clinton snapped in one speech late last year...
...Yet despite the less aggressive treatment, Canadian heart patients were no more likely to die or suffer a second heart attack than their U.S...
...I suppose there is a big difference having a practice in Beverly Hills or the inner city," Neubach says...
...And now she was well and going home...
...For the market is not built to promote equity...
...How will the hard choices be made...
...But whether they can be achieved under the complicated, market-based Clinton plan is questionable...
...But in many major metropolitan areas this would require extensive inter-alliance negotiations...
...To be sure, these overall caps also mean that Canadians sometimes must wait for non-life-threatening procedures like hip replacements, German doctors' fees are cut if they bill too much, and the purchase of new technology is parsimonious and its use limited...
...This is not by chance...
...Unlike England, they do not have socialized medicine...
...So in the Clinton market there will be hospitals, doctors, insurance companies, health plans, health alliances, and the National Board...
...All but two of the room's 19 curtained examining cubicles were filled...
...But guess who will be able to switch at any time under Clinton...
...Hysteria is built into the U.S...
...The study also found that U.S...
...And, "In Germany, we operate under the social solidarity principle," explained Johann Fann, a top executive with the Bavarian AOK...
...In part that's because when they need Neubach to make a house call, she makes it...
...Her own prosperity depends on it...
...The medical staff had been attentive...
...The time most people want to see another doctor or go to another hospital is when they disagree with a diagnosis or treatment...
Vol. 26 • January 1994 • No. 3
