After setting up the public health infrastructure to fail, the World Bank and their allies are proposing a new solution: to create a publicly funded insurance package using the now expanded network of private providers, who will participate in the program, as long as they are guaranteed payment. While reinforcing the notion that healthcare is a commodity and not a basic human right, this approach has several problems and side effects: fragmentation of care, higher cost, precedence of procedures over preventive medicine and further dismantling of the public healthcare system. At the same time, insurance packages divert attention and funds from a more comprehensive approach directed at modifying the root causes of disease, through socioeconomic interventions aimed at increasing equity
What is Behind the Sudden Global Marketplace Call for Universal Health Care: Co-opting in the Making
by David Chiriboga*, MD, MPH
Former President of the Health Council for the Union of South American Nations (UNASUR) and former Minister of Health of Ecuador
Universal health care (UHC), meaning equal access to healthcare services for all, has been a longstanding demand from progressive movements around the world, for whom health is considered a basic human right and not a commodity to be privatized for economic gain. The neoliberal policies of “fiscal responsibility” promoted by the World Bank focus on decreasing public spending on social programs, with public healthcare services among the main targets. This has caused massive privatization of healthcare services worldwide and severely limited access for the poor. Why is there an apparent change of heart of the World Bank and the global corporate interests? Why do these organizations now seem to be rallying in support for UHC?
The answer to this change in heart stems from the understanding of the economic impact of “investing in health,” since the healthcare industry can be a significant component of economic growth, and when people have access to healthcare people live longer, and they produce and consume more. Global corporate interests have one goal: increased returns, and the best way to achieve this, aside from maximizing profit margins, is by increasing market share. As many other industries, including the tobacco and fast food industry, the healthcare industry, currently around a USD $7 trillion industry worldwide, with its related corporations (pharmaceutical industry, medical devices and equipment, and private insurance) are targeting previously untapped populations: the large pool of poor people in “third-world” countries, where over 3/4ths of the world’s population reside. A strategy to access that market share is to implement insurance packages, ideally publicly funded, since the poor have minimal out-of-pocket resources. These insurance packages tend to cover few specific conditions that affect certain high-risk population groups, like women of childbearing age and young children. However, many of these resource-poor countries have precarious public healthcare systems that have been severely undermined by the very same austerity policies put forward by the World Bank over two decades ago. After setting up the public health infrastructure to fail, the World Bank and their corporate and academic allies are proposing a new solution: to create a publicly funded insurance package using the now expanded network of private providers, who will participate in the program, as long as they are guaranteed payment. This will not only strengthen the private network, but will increase the market share of healthcare corporations, while reinforcing the notion that healthcare is a commodity and not a basic human right.
Although this approach may in fact save lives, albeit selectively, publicly funded insurance packages, delivered by private providers, have several problems and side effects: fragmentation of care, higher cost, precedence of procedures over preventive medicine and further dismantling of the public healthcare system. At the same time, insurance packages divert attention and funds from a more comprehensive approach directed at modifying the root causes of disease, through socioeconomic interventions aimed at increasing equity, since socioeconomic injustice is directly responsible for over one third of deaths in the world, about 20 million avoidable deaths each year, for the past 20 years. Investing on improving socioeconomic inequality could have an enormous impact on overall health and wellbeing that providing partial health insurance does not address.
Insurance packages provoke fragmentation of healthcare services and its associated health disparities under the banner of progressive (a little at a time) universalization, since they cover only specific services in restricted population subgroups. This causes huge gaps in care even within families, if a family member who is not a young woman or a child of a specific age group, the family will have to struggle to access the now dismantled public healthcare sector, or pay out-of-pocket for the private services. Similarly if the woman or child who is insured suffers an illness that is not covered, they are left to fend for themselves. Since eighty percent of the world population live on less than US $10 per day, when a serious illness strikes in this already vulnerable population, oftentimes, not even selling all their possessions and going into debt will cover the full cost.
As part of the neoliberal mandate, reimbursing private providers’ services takes priority in the government’s budget, therefore private doctors and hospitals, as well as the pharmaceutical industry, and the medical device and equipment companies, get reimbursed for their services first. In the meantime, public services continue on their downward spiral of quality due to chronic underfunding, decaying physical and technological infrastructure and brain drain. As a result, the private sector starts booming, since through the insurance packet the government picks up the tab, effectively subsidizing private practice, further distorting the notion of a rational, equitable healthcare system.
The packages cover for the most part procedures, and procedures will be done even if medically not indicated, as the mounting evidence shows, among a “cadre” of overbilling abuses, even in countries with strong regulatory agencies. An analogy could be drawn to having fire departments and firemen paid on the basis of the number of fires: it would become a system with perverse incentives. Therefore there is a need for a strong oversight, but, given that there are no appropriate governmental agencies to supervise the system, again as direct a result of the fiscal austerity policies and corruption, the usual prescription from the neoliberal cookbook will be to find a private third-party hired to do the job. Even with regulatory agencies in place there is growing evidence that in general they are seldom effective and tend to not be able to keep up with their mandate.
The end result is that by using publicly-funded health insurance packages, there is an effective co-opting of the term universal health care, shifting from a human rights’ approach, towards the private sector, for profit-healthcare becomes a product that can be bought or sold. Therefore the World Bank and associates’ new proposal is yet another attempt at privatization of healthcare services, this time using government subsidies. Since the public sector has been set up to fail and deemed âinefficientâ, the private sector appears to save the day.
The private sector and its proponents claim that individual freedoms of both providers and patients are essential. Initially individual physicians may have the power to make decisions about practice patterns as well as pricing of services and procedures. As the private health market progresses, physicians groups take over that role and subsequently, the decision-making power shifts to insurance companies and healthcare corporations. Most physicians and other healthcare providers become salaried employees and have progressively less of a say on how business is run. Providers increasingly clash with the demands of meeting their daily quota of patients, while finding that sometimes even clinical decisions on individual patients are taken remotely by administrators, who respond to institutional financial needs and not always patient needs. As for the freedom of the population to choose providers in the private sector, the freedom is related to the purchasing power of the individual and to the type of insurance. As a general rule, the wealthier the person, the better the choices, otherwise, type of insurance, co-payments and caps progressively limit choice, and in the case of severe illnesses or catastrophic events, bankruptcy ensues. Individuals with public insurance tend to have little freedom of choice.
As the public insurance package only covers certain needs that selected high-risk individuals may have, the rest of the population fall prey to the supplemental private insurance market. Before the era of medical insurance the price of private services and procedures was limited by the out-of-pocket capacity of the population, however, with insurance this market safeguard has disappeared and allowed the price of procedures and services across the board to skyrocket, since now it is not just the cost of the procedure or the service, but the added compensation for an intermediary. Supplemental insurance is yet another way in which insurance package progressive UHC works for the private sector. Ultimately, people may end up having to pay several times for their healthcare services: first, in the form of taxes to finance the public services and limited insurance packages (a progressive tax); second, as workplace health insurance (social security and private insurance, which tend to be regressive -USD $300 a month per person is not the same percentage of the salary for a factory worker than it is for a corporate CEO); a third time as private supplemental insurance, also regressive, to cover the gaps in basic public and private insurance; and, finally, a fourth time, as out-of-pocket costs, for everything that is not covered by any of the preceding programs.
Health insurance packages are a method to induce progressive dependence on insurance companies. Once they are able to introduce the basic package, the rest will follow. They create a “need” by inducing fear of having to confront the high costs of private healthcare-made higher through their participation. They also market their services to providers as physicians and hospitals welcome the security of reimbursement, even if it means splitting the earnings to a point dictated by the size of the group practice. If the government subsidizes the initial package, this is welcome news, and the private insurance market is there to feed on fear, promising progressive coverage for the right asking price. Insurance companies thrive with low risk coverage (young and healthy individuals) and tend to use unethical “cherry picking” practices to avoid insuring those at higher risk, like pre-existing conditions, complications of deliveries, neonatal care, cancer, etc., either by refusing coverage or by applying event, yearly or life ‘caps’ on reimbursement and progressively increasing the price tag. As happens with the rest of the corporate world, these companies usually have little governmental oversight and regulation, even in high-income countries.
Another issue with the insurance package UHC, delivered by private providers is the creation of double standards. As the private sector gets stronger with the cash infusion from the government, it becomes more selective and tends to favor patients who have private insurance, since public insurance packages reimburse a lesser amount. In response to the progressive discrimination of the “poor” in the healthcare setting, the government has to setup economic stimulus, in the form of grants, for non-governmental organizations (NGOs) to compete over federal funding every year to provide healthcare services to the poor. This situation occurs in the United States (US) with the Medicaid program, a public insurance program in the US, which reimburses private providers for healthcare services. Many private providers stop taking care of patients with Medicaid insurance because the reimbursement is less. Therefore the system does not provide equal access. Not only double standards in terms of access, but there are many reports of public insurance holders receiving substandard healthcare services as compared to the private insurance holders.
Cost containment is an increasing concern, however, in a government-funded progressive UHC system delivered through private providers, there is limited opportunity to use the purchasing power in price negotiations for medications, medical supplies, devices and equipment. It is definitely not the same to buy, pain medication, anti-retroviral or chemotherapeutic agents for one hospital or even a group of hospitals, than it is to buy for the entire healthcare network of a country or even a continental region. The same applies to medical supplies, devices, and equipment, from blood pressure monitors to magnetic resonance imaging scanners. Given current levels of health expenditure we cannot afford not to use the leverage of a government or a continental region to control expenditures. Along the same lines of cost containment for the long run, and under the premise of health as a basic human right from a global perspective, novel and ethical ways of thinking about the outdated international patent system are required. International laws to defend the public domain, pool patents, and facilitate the strategic development of national or regional not-for-profit production of pharmaceuticals, as well as medical devices and health technology and equipment.
The end result of using this progressive UHC based on insurance packages and delivered through private providers is a highly complex, extremely expensive, procedure-based, publicly-subsidized private healthcare system, with a plethora of primary and supplemental private insurance companies, healthcare corporations, managed care organizations, private and public control agencies; with a struggling, disjointed yet massive administrative maze, in a frantic quest for quality assurance and cost containment. In the US, the richest country on the planet, and probably the most important exponent of healthcare as a commodity, the end product is not a system but an intricate patchwork scheme, with a price tag of around USD $3 trillion, or 18% of its GDP in healthcare.
That is with about 47 million non-elderly adults (15% of the population) devoid of any form of health insurance, either public or private. After the enactment of President’s Obama Affordable Care Act, which makes it compulsory to purchase health insurance or face tax penalties – a regressive measure, the number of uninsured dropped to 40 million. These uninsured people in the US are not poor enough to qualify for public insurance but neither have enough income to afford private insurance. In 2013, according to the US Institute of Medicine, in spite of this massive expenditure people in the US have shorter lives and poorer health than people in other high-income nations, making it not only an inefficient but also an economically unsustainable model.
On the other hand, in Europe, where there has been a longer tradition of health as a human right and of comprehensive UHC systems, with a mixture of public and private providers, there is a real danger of insurance companies gaining market share and causing and deepening fissures in the public system by selling supplemental health insurance, to either “jump the queue“ or other forms of preferential treatment, preying on the limitations of public systems. As long as health is treated as a commodity, there will be double standards based on oneâs ability to pay. Unlike most merchandise which we choose to purchase or not, all of us will need to use the healthcare system at some point, and when we do it needs to be accessible to all, effective and compassionate.
There is much to learn from successes and failures of universal healthcare systems across the globe. Those that succeed honor the right to health and recognize that economic injustice accounts for a significant proportion of morbidity and mortality, and by investing in the social determinants of health: sanitation, housing, education, job security, access to quality food, alternative urban planning, pollution control, among others, countries can improve health and overall wellbeing to a much greater extent than through healthcare services in and of themselves.
There are enormous challenges ahead for a mature, ethical world, which acts on universal societal principles, abiding by all basic human rights, so that we can provide the best possible level of physical, psychological and social wellbeing for all, while preserving our world for generations to come. To negate the catastrophic effect on our planet of having unregulated sustained economic growth and GDP as the sole goals is tantamount to insanity. We need an urgent change of course. We need to reclaim our say in the political realm and not let self-serving, economic, corporate and partisan interests dictate our fate and that of our planet. We will be responsible either way.
Citizens of countries with universal health care have a historical duty to defend true UHC from private co-opting, as an expression of their right to health, by participating in the search for creative solutions to the limitations of the current system, and by not giving in to the private market equivocation, a responsibility shared by governments of those countries, and international democratic organizations like the World Health Organization. Publicly funded insurance packages are NOT equal to universal health care and rather pursue the consolidation of the private healthcare sector and the health-associated corporations. So yes, we need universal health care (meaning for all people), through appropriate funding mechanisms, like fair regressive taxation, and developing a sensible, straightforward, ordered healthcare system based on the ethics of equity. A system that promotes, facilitates and rewards excellence in service; that is centered in health promotion and disease prevention, and which includes the active participation of the population in its design and implementation. Health is a basic human right, not an article of trade.
*Dr. Chiriboga obtained his doctorate degree in medicine at Escuela de Medicina de la Universidad Central del Ecuador, and his postgraduate training in Preventive Medicine and in Public Health at the University of Massachusetts Medical School and School of Public Health. He held academic appointments at the University of Massachusetts Medical School. He designed and implemented a comprehensive healthcare system for the indigenous people in central Ecuador 1988-2001. He served as Minister of Health in Ecuador (2010-11) where he undertook a major re-structure of the healthcare system of the country. He also served as President of the Health Council for the Union of South American Nations (UNASUR) 2010, bringing key draft resolutions regarding generic medicines and research and development of medicines for neglected diseases approved by the World Health Assembly. Dr. Chiriboga was the keynote speaker at the European Union Conference in Global Health held in Brussels in 2010. His interests include global health equity, the development of affordable universal health care systems, as well as multi-sectorial prevention strategies.