Students Speak: Scrutinizing the Healthcare Sector in Australia and the US - Part 2
This article is Part 2 of a two-part series.
Optimizing quality, cost, and accessibility of healthcare may be a three-pronged scenario, but there remains room for improvement in both Australia and the US. Business Today spoke to Anjana Sreedhar, author of “Healthcare of a Thousand Slights”, and Charles Fedor, an economics student at the University of Western Australia, about perceived gaps and possible solutions for the Australian and American health insurance and healthcare spaces.
Quality: which way to world-class?
Source: Ian Berry/CNN Money
While the profit incentive has driven innovation in healthcare research and solutions, particularly for the US which remains a leader in biomedical research publication and output, Anjana and Charles are both sceptical of its role in providing high quality treatment for patients.
“So much of our system has been based on the fee-for-service model where revenue is driven by volume and getting more patients into hospitals to drive up profitability, which is not necessarily in line with ensuring better health outcomes.”
This does not mean that the US performs badly. A 2017 report by the Commonwealth Fund ranked the US fifth out of 11 high-income countries in care process, including safe and coordinated care. Furthermore, compared to Australia where just 51% of patients are able to see a specialist within four weeks, close to three-quarters of Americans are able to do so.
However, a move towards the American system and focus on profitability is off the table for Charles.
“A doctor looking at a sick person should not be trying to work out how much the patient owes them, they should be focusing on getting the person through a tough time in their life,” he says.
Though the US is a world-leader in terms of 5-year survival rates for breast, prostate, and colon cancer, the Commonwealth Fund study places Australia second in care process and first in health outcomes overall - ahead of the US which ranked last in the latter.
Both systems have their shortfalls, but the US has ample room for improvement in terms of achieving high quality health care. Life expectancy in the US is among the lowest of comparable developed countries, and disease burden - the impact of living with an illness - among the highest.
Anjana says that steps have been taken towards improving the quality of healthcare, but that there are ongoing issues.
“Under Obamacare, we’ve had initiatives such as reducing the readmission rate through issuing penalties to hospitals if patients come back within 30 days,” says Anjana.
“Quality has recently become more of an emphasis as a result of the Affordable Care Act but the US doesn’t perform well in it.”
“There has to be this perfect balance between government and private sector and we haven’t quite figured out where we need to be at that crossroads.”
Cost: who’s afraid of the big bad bill?
Both Anjana and Charles identify the need to reduce healthcare costs through reshaping stakeholder incentives and reducing surprise billing through increased price transparency within their respective systems.
“Healthcare costs in the United States are out of control, and that is primarily because we have a lot of healthcare stakeholders at play that aren’t regulated to the same degree that they are in Europe or Australia,” Anjana says.
“Pharmaceutical companies are incentivized to make sure that as many people as possible use their prescription drugs, and there isn’t much regulation of how they advertise on tv or at the Super Bowl.”
“We need to do a better job holding pharmaceutical companies accountable. We don’t have the right incentives in place.”
Despite similarity in usage levels across OECD countries, the US recorded the highest per capita spending on prescription drugs in 2017. The country was also left looking obese in healthcare spending per capita, weighing in at USD 11,072, and eclipsing that of Australia which was USD 5,187. Even so, the US ranked last out of 11 OECD countries in access, equity, and healthcare outcomes, indicating ample room for improvement.
In Australia, the exodus of youth who do not see value in taking out private health cover has led to rising premiums and a progressively smaller proportion of individuals being covered by the private sector. This death spiral is problematic if Australia is to maintain a robust private health sector that complements and reduces burden on the public system.
“The cost of private health insurance is ridiculous...young people pay for what they need and not what they want,” says Charles.
“It would be quite expensive but preventative measures like healthy dieting could address the rising tide of obesity and binge drinking that health insurance will eventually have to deal with.”
Charles believes that existing incentives for young people to take out private health insurance are ineffective and inadequate, citing for instance, the tax rebate as a measure that is unlikely to sway young people who are not earning substantial amounts of taxable income. Instead if the goal is to sustain the private system, he suggests legislating a potential cut-off point for private health insurance once individuals reach 80 to 85 years of age. This would make private health insurance premiums more attractive for youth, albeit with foreseeable ethical objection.
The lack of price transparency is another issue, and one that is relevant to both Australia and the US.
“Surprise medical billing is happening quite a bit. These loopholes frustrate people to no end, particularly young people because they don’t currently have the capital,” says Anjana.
Charles believes that adopting a system similar to the National Health Service (NHS) in the UK would, while compromising the private health insurance system, lead to greater fee transparency.
“It would be quite expensive but preventative measures like healthy dieting could address the rising tide of obesity and binge drinking that health insurance will eventually have to deal with.”
Accessibility: the system is the limit.
Health insurance accessibility is an extant consideration for both countries, and has been particularly subject to the spotlight in recent US presidential elections and campaigns.
“Healthcare continues to be treated as a privilege: as something that you get by chance because you’re working for a company that provides health insurance,” says Anjana.
Although almost half of Americans were covered by employer-sponsored health insurance in 2019, job-losses to the tune of 30 million in July left a skeleton of shortfalls in coverage, prompting a robust fiscal response. However, longer-term structural reform may be needed to expand access to those who were already slipping through the cracks before COVID-19.
“There are healthcare disparities resulting from policies such as segregation that were in place for decades and even centuries,” says Anjana.
“We still have communities that are majority black, or majority lower-income that have challenges with safe playgrounds and access to fresh produce: circumstances which combine to cause worse health outcomes than for people in more affluent areas.”
Whilst these disparities cannot be easily reconciled, a uniform expansion of eligibility for Medicaid or access to subsidies for private health insurance across the country could remedy inconsistencies between states, particularly assisting those most vulnerable in economic vicissitudes: low income earners, youth, and ethnic minorities such as Latinos who disproportionately lack coverage.
Republican reticence around government intervention has led to continued efforts at repealing elements of the ACA such as the individual mandate penalty. This has contributed to a rise in the uninsured rate from 12.7% in 2016 to 15.5% in 2018 under the Trump administration, and a marginal increase in the underinsured rate.
“We have to continue evaluating the effectiveness of the Affordable Care Act,” Anjana says.
“But Obamacare was so fundamental because it’s a compromise whereby the government facilitates a market place through which you can choose health insurance provided by private companies.”
Australia’s Medicare system guarantees universal access to healthcare, but poses challenges to the affordability of private health insurance, from which younger, healthier individuals are increasingly opting out. Private healthcare often entails benefits such as shorter wait times for elective surgeries and the ability to choose a doctor. The nation’s healthcare system ranks fourth amongst 11 OECD countries in terms of accessibility, and outperforms the US which ranks last, but lags behind Netherlands, Germany, and the UK.
“I have private health insurance under my parents, but if I was not as privileged as I am now, I would not have it because medicare covers the main risks,” says Charles.
“Otherwise if we want to sustain the private health insurance sector, their coverage should expand to more mental health support because young people need that. Moving towards a system such as the National Health Service in the UK would ensure greater access, understandability, and transparency.”
The NHS is similar to the Australian healthcare system but is more generous in its coverage, providing free healthcare from hospitals and general practitioners, compared to free hospital care and 75% coverage of GP charges in Australia. However, the Australian system ranks above the UK in administrative efficiency and overall healthcare outcomes.
Quality, cost, accessibility: towards a cleaner bill of health
Adopting universal health coverage or at least expanding existing eligibility under the Affordable Care Act in the US could lead to marked improvements in the quality and accessibility of healthcare. Australia, meanwhile, must determine the merits of maintaining a robust private health sector over a system such as the UK’s National Health Service which could improve accessibility. Both systems underscore the importance of incentives for both firms and individuals in achieving desired health outcomes - the most significant challenge continues to be determining what these are and how much direction the government should provide.