Tuesday, June 26, 2007

"Mid-Atlantic Convergence"--The European Government-Run Health Care Systems Are Coming Our Way!

One of the themes I have often heard in international meetings on the topic of health insurance is the term, "Mid-Atlantic Convergence."

That is, our system may be gravitating to look more like those in Europe and theirs maybe moving more toward ours.

One of the people I often see at these meetings is Bill Boyles, publisher of Health Market Survey and Consumer-Driven Care.

Today, I have asked Bill to weigh in with his observations on the ongoing evolution in Europe and in other systems:

Worldwide Expansion Of Private Insurance, Not Single-Payer
by Bill Boyles

I have been studying the private health insurance (PHI) markets worldwide for about two years in preparation for a new publication I am doing on the subject. My original assumption, based on conventional wisdom in the U.S., was that PHI is declining worldwide due to unaffordable costs. What I found out is actually happening is instructive for those calling for government control.

I never really worry any more when I read about Sicko or the Massachusetts single-payer crowd. As I look around the world it is obvious that dozens of countries have come to the conclusion – independently – that private health insurance beats a public utility model.

Out of approximately 100 organized health systems worldwide, I have not yet come across a single one that is moving to a public-utility model or an all-public financing system. China is a good example: it is now debating which way to go because it has tremendous needs in a rural population but clearly prefers a private insurance system in it’s newly-prosperous cities. While this is being debate, private insurance is growing anyway by millions of members every year.

Private health insurance is fantastic for economic growth. It creates national wealth by building an infrastructure of hospitals, physicians, labs, and technology, boosting GDP and per capita income across the board and generating tax receipts and foreign trade.

This is really the lesson here: private insurance is a great economic stimulant – and in the case of the U.S. system this is too much of a good thing. We need to scale back the entire system because it is overcapitalized and bloated, unlike a new PHI system in China or India.

What is happening is that countries with private health insurance systems like most western European countries are moving to adopt U.S. private insurance management techniques like pay-for-performance, DRGs, price transparency, and even cost-sharing. The overriding goal is clear: they want to retain their universal coverage by keeping private insurance affordable.

Meanwhile, in dozens of emerging economies from Eastern and Central Europe to Latin America to Asia there is a rise in per capita income – driving demand for private health insurance. We estimate that there will be an increase in PHI worldwide enrollment of greater than 100 million covered lives in just the next five years. Meanwhile, Columbia and a dozen other countries have in just the past year converted their public-utility model health financing systems into private insurance markets with more announcements each week (I keep a list).

The U.K. is often cited as an example of where the U.S. does not want to go. I have news for all you critics: the U.K. is moving rapidly in our direction. I was shocked to learn that there will be no more waiting lists by mid-2008 following a major infusion of government funds combined with expansion of the private sector, resulting in a recent estimate of 11% of all encounters to private practice and a growth in private insurance (held by 40% of all U.K. workers).

The real question across the world health systems for the future is the balance between PHI and public funding of programs for the low-income population, seniors, and high-risk cases. If that sounds familiar it’s because that is exactly how the U.S. structures its approach, and represents a good starting point for emerging health systems looking for the right balance.
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