Health insurance without the bureaucracy

January 19, 2007 | By | 9 Replies More

People living in small rural villages in Uganda have found a practical solution to a problem which the greatest minds and vast resources of the United States seem unable to confront, let alone solve: how to make basic health care available and affordable. There’s no national health insurance and people are quite poor by American standards (the GNI in 2006 was US$280), so they have formed health co-operatives which make regular payments to the local hospital, in return for the provision of medical care to co-op members. It’s basically a group insurance plan on a very small scale, which includes the following points: 1) pooling risk 2) agreement among members about what services will and won’t be covered.

 The first point is the very basis of insurance: many people pay a small amount into a risk pool with the understanding that most of the time, they will not need the services offered; the money in the pool is there to pay for services for individuals who do need them, because no one knows when they will become sick or injured and the costs of care may be prohibitive. Of course a larger risk pool, such as the entire United States, would be preferable because the larger the pool the better risk can be absorbed, a fact our government seems not to understand. Think of it this way: is it better to spread the cost of paying for one expensive disease among 10 people, 100 people, or 100,000,000 people? Small group health plans have had to fold because of the costs of caring for one hemophiliac, for example, a problem which would not arise in a national plan.  

The second point may sound heartless but is in fact only facing up to reality: if the coop tried to pay for every possible health procedure, no one could afford to be a member. This point is less applicable to the United States, because we are a very rich country, but still food for thought: if people had some awareness of the costs of, say, MRI machines which sit idle, they might reconsider whether it is money well spent.

Of course the Ugandans have several advantages we in the United States don’t have. For one thing, they have no health care bureaucracy to impose 15-20% in administrative costs on their health care. For another, they don’t have a highly-profitable industry of health insurance companies to lobby against any simple method of financing health care.

 I don’t want to idealize the Ugandan experience. It is not universal care: you have to be a member of a co-op to receive treatment, and it doesn’t cover everything. And this system is not available throughout the country, only in 30 villages, and builds on the pre-existing structures of farmer’s co-ops. But there are definitely lessons in the provision of care at a reasonable cost in the Ugandan experience.

This was covered in a story on NPR, located at this link:

http://www.npr.org/templates/story/story.php?storyId=6915566

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About the Author ()

I'm a biostatistician for BJC HealthCare and an adjunct professor at Washington University School of Medicine in St. Louis, MO. In my spare time, I'm a musician, work on several kdhx-tv shows and write on various topics.

Comments (9)

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  1. Chris C says:

    Very interesting, Sarah. It's good to see unique solutions to a common human problem, especially given the limited resources involved.

    I was just reading about the health care crisis in the U.S. and I'm torn whether or not to support nationalized health care initiatives. Uniform health care is certainly is a noble idea, but I wonder if the details would destroy the integrity of the system. Government agencies are not known for their efficiency, and I've read complaints from both Britain and Canada about the state of their healthcare. I would love to see some more opinions, especially from a practical perspective. Does anybody know where to look for more information (besides Google)?

  2. Scholar says:

    For kicks, I went to the Christian Science Monitor to do a search on healthcare. (http://www.csmonitor.com/)

    Oddly enough, it seems they actually do some fair reporting on the issues of privitization vs universal healthcare. I guess they (christian science followers) have quite a bit at stake here too. For example, if the US decides to go with universal healthcare, everyone would have to pay, however the Christian Scientists would not get the benefits (since they believe only in God's healing powers and refuse modern medical treatment).

    Now that I think back to my childhood, Christian Science was one of the first clues that I had about the falacies of *God*. It just so happened, that our neighbor was a Christian Scientist, who, after suffering a fall while cleaning his gutters, refused hospital treatment. It was a "miracle" that he survived, however, it was hard to explain away the limp (and pain) he carried with him for the rest of his life. Thankfully, my parents were quick to condemn holy medicine like Christian Science.

  3. Sarah Boslaugh says:

    Well, the Wikipedia is a good place to start, and it has links to other sources:
    http://en.wikipedia.org/wiki/Single-payer_health_…. The problem is that there are no neutral parties in this issue (way too much money involved), so you have to look at information from different sources.

    The fact that nearly every other industrialized country has some kind of government-sponsored health system should tell you something, especially since the U.S. spends far more per capita than our peers (Britain, France, Canada, etc.) with worse health outcomes (we're number 37 according to the World Health Organization).

  4. grumpypilgrim says:

    The US could (surprisingly) take lessons in medical care from some developing countries; e.g., India, Thailand, etc. The citizens in those countries cannot afford to support a medical aristocracy (like there is in the U.S.), so they have found ways to save money, while — get this — simultaneously *improving* the quality of care. For one thing, surgeons do just that: they cut. They don't counsel patients, they don't do paperwork, and they don't manage other surgeons. They don't even do the non-critical portions of their own surgeries. They only do the critical tasks for which their rare skills are needed, while all non-surgical and non-critical tasks are off-loaded to support staff. In so doing, surgeons can spend more time operating, which means they quickly become very experienced and very *efficient* at doing surgery (compared to American surgeons, for example). All of this means much lower costs for their patients. For example, whereas an American cardiac surgeon might do a dozen bypass surgeries a week, at a total cost of about US$100,000 each, a cardiac surgeon in Bangkok can do that many in a day, at a total cost of about US$2,000 each.

    Asian surgeons are typically educated in western medical schools, so they have the same education as western surgeons; they just prefer to work where they can spend more of their time doing the work they enjoy, without the bureaucracy found in the west.

    Why do I mention all this in a discussion about health insurance reform? Because America appears to be heading, unavoidably, to a future in which a large percentage of its population will be unable to afford western medical care. With costs in Asia so low, one likely solution to this problem will be to out-source a significant number of medical services, just as so many other services have already been out-sourced to Asia for the same reason. Not emergency procedures, of course, but non-urgent procedures could — right now — easily *and economically* be outsourced to Asia. Just as unionized auto workers (who were overpaid by international standards) have been replaced by cheaper Asian workers, so, too, will unionized healthcare workers (ditto) likely be replaced in a similar way. When it is cheaper to fly patients (including their close family members) to Asia for a cardiac surgery, you can bet that health insurance companies in America will, someday, be offering policies in which the premiums are amazingly low, but the trade-off is that patients will have to travel outside of America for major, non-urgent medical care. We've already seen this happen with pharmaceuticals, where patients in America buy their medicines from Canada because the prices are so much lower. Likewise, as healthcare costs in America continue to skyrocket, it can't be long before patients who need medical *services* (and their insurance companies) will be doing the same thing. Telemedicine (the use of remote-controlled robots to do surgery, enabling the surgeon and the patient to be separated from each other by a vast distance) will likely contribute this change, enabling surgeons in other countries to "perform" surgeries on patients in America without leaving their own clinic.

    Of course, another consequence of these changes would be that patients would have very limited ability to sue their surgeon for medical malpractice…something that would be a great boon for insurance companies, though perhaps not so good for patients. Nevertheless, if it means providing affordable medical care to large numbers of poor Americans, then perhaps this factor will not matter as much as it has in the past.

    One thing is almost certain: big changes are coming in healthcare services, because America cannot afford to have healthcare costs grow forever at several times the rate of its Gross Domestic Product. Eventually, healthcare costs will become too enormous to bear and something will have to give. Most likely, that "give" will come (as it does with so many things) from poor Americans.

  5. Edgar Montrose says:

    Grumpy; substitute "engineer" for "surgeon" in your first two paragraphs, and you have exactly the situation we're experiencing in high-tech in the USA today. Engineers, computer scientists, and virtually all high-tech "professionals" have become highly-skilled, highly-educated commodity items. You can bet that the medical profession will do everything in its power to prevent that from happening to its members. I can't really blame them … I wish that we engineers had realized what was happening in time to do something about it.

  6. grumpypilgrim says:

    Edgar writes: "I wish that we engineers had realized what was happening in time to do something about it."

    Indeed, Edgar, the same thing has already happened to engineers in America. Unfortunately, there is nothing that could have been done to prevent it, even if American engineers had realized what was happening long ago. The economic force that causes these shifts is like the force that moves tectonic plates: simply too enormous to be stopped. Even delaying it or diverting it is nearly impossible in a free market economy. We are talking about supply and demand on a global scale. The medical profession, as powerful as it is, won't be able to stop it, either. Everything that can be bought or sold, whether a good or a service, is subject to commoditization. It happened a century ago to steel (a good) and railroad transportation (a service), both of which were once powerful monopolies. It happened a decade ago to cars, personal computers (goods) and retail shopping (Wal-mart, a service). It's happening now to goods such as operating systems (Linux) and office application software (OpenOffice), and services such as publishing (the Internet), digital television (satellite TV) and telephony (Internet telephones, wi-fi telephones, etc.). This blog is an example of this same disruptive force.

    As you've observed, it hit engineers with exceptional speed, mainly because of the manifold benefits of global design teams: once companies realized that product designs (both hardware and software) could be developed much faster by teams in different parts of the world that were working around the clock (by electronically forwarding their day's work to the team in the next time zone), every company that could do it jumped on board. The result was a global shift — an earthquake, to use my tectonic plate analogy — in the way products were designed and developed. Engineering services, which for two decades had already been close to becoming a commodity, immediately became fungible…and tens of thousands of well-paid American engineers lost their jobs. The pre-millennium Internet boom and post-millennium economic crash were just aftershocks.

    In the medical world, this force has already hit radiologists: digital technology has enabled medical images (digital x-rays, MRI scans, CAT scans, PET scans, etc.) to be sent anywhere on the planet for analysis, making radiology services a commodity. Telemedicine, as I mentioned, will do the same thing for surgery, as will the skyrocketing cost of medical care in America. All will have to adapt or perish.

    If you want to read more about this phenomenon, I recommend Clayton Christensen's book, "The innovator's dilemma: when new technologies cause great firms to fail." What it says about the commoditization of products can be applied equally well to the commoditization of services. Christensen's companion book, "The innovator's solution: creating and sustaining successful growth" is less applicable, but might still be of interest.

  7. Devi says:

    I never seem to hear about providing universal health care in the U.S. I always hear about providing universal health insurance. Wouldn't insurance companies love that? Lots of money at stake, indeed.

  8. Sarah Boslaugh says:

    Good point, Devi. It's all about the money. One reason for having health insurance is that insurers bargain with providers for better rates on everything from office visits to major surgery. If you've ever had to pay out of pocket for a medical service, you probably paid several times what the insurance company would have paid the same provider for the same service. But you don't have any bargaining power as an individual, while the insurance company can extract a lower rate by threatening to exclude a given provider or hospital within its network.

    I note that in Canada most people don't have insurance for pharmaceuticals: they pay a reasonable rate for the drugs they need because in order for a drug to receive patent protection in Canada , it has to meet a number of requirements, the most germane of which is either proving that it is truly a breakthrough drug (offering a marked benefit over drugs currently available) or pricing itself similarly to other drugs for the same condition.

    Of course, Canada is a very small market compared to the US. But I have yet to see any studies which demonstrate, or even credibly suggest, that the Canadian system of drug pricing harms anyone's health. Many of the new drugs introduced to the US market are "me too" drugs to treat common conditions, offering no particular benefits over drugs already in the market.

  9. Anonymous says:

    Everyone makes excellent points. I'd like to share the website of Richard N. Fogoros, MD, formerly Professor of Medicine at the MCP-Hahnemann School of Medicine, and Director of Cardiac Electrophysiology at Allegheny General Hospital in Pittsburgh, PA. http://www.yourdoctorinthefamily.com/

    He has a Grand Unification Theory of Healthcare.

    http://www.yourdoctorinthefamily.com/grandtheory/

    "The Grand Unification Theory rests on a simple, 5-step chain of logic:

    1. The rationing of health care is an economic imperative, and cannot be avoided.

    2. Since the very notion of rationing health care is taboo on our society, the necessary rationing must be done, and is being done, covertly – that is, without acknowledging that any rationing is occurring.

    3. Covert rationing fundamentally works by applying coercive pressure to the focal point of all health care spending, namely, the physician-patient encounter. Thus, the final common pathway for all covert rationing must be – can only be – destruction of the doctor-patient relationship.

    4. Loss of the doctor-patient relationship is fatal to the medical profession, life-threatening to patients, and debilitating to society.

    5. The key to defeating covert rationing, and all the evils that flow from it, is to restore the doctor-patient relationship. "

    It is easy to apply this chain of logic in Uganda in a rural village, but it can never happen in the United States and elsewhere in the West: greed, avarice, subversion of the political process by special interests, and the refusal by those in power to see the patency of the above theory and make use of it — perhaps we would all be better off in a village in Uganda.

    A final point from Dr. Fogoros' Grand Theory pages:

    "In the early 1990's, at about the time 13% of the GDP was going toward health care, we were spending an average of $3900 per year on health care for every man, woman and child in the United States. If you were a family of four, your fair and equitable out-of-pocket annual health care insurance costs at the time should have been $15,600. Yet, if they were anywhere near that high, odds are you would have been a tad upset. Nonetheless, that’s what it would have cost at the time to provide one year of health care coverage to your family – or to any four average Americans."

    Today the cost is an independent variable.

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