Health Reform in America–It IS Possible

Originally Published in RMP Advisor, Spring 2012

Posted by David Edman in Blog, Healthcare Reform, Healthcare Reform Blog, Newsletter Archive on February 17th, 2012 | No Comments »

Return to Newsletter Archive

We have been talking about ‘fixing’ health care in America for decades, but are we serious?  If we are, it is doable but it is not easy.  Mostly what is missing is an honest discussion about the problem and the political will to do something about it.   Consider the following data prepared by the Economic Trade Ministry of the Government of Israel, based in New York City, and presented in November 2011 at a Healthcare IT Conference in Philadelphia:

 

Source: “Israel’s Health IT Industry”, by Dr. Yitzhak Peterburg, Milken Institute, January 2010.

What Can We Learn About The US And Israel?

The first two lines above represent levels of technology adoption rates which, in the areas of electronic medical records (EMR) and computerized physician order entry (CPOE), is nearly universal in Israel.  In the US, we are still in a period of early adoption for these technologies, which remain at low levels.  The good news is that there is concerted effort to fund and thereby accelerate the usage of technology in the US as part of various public and private initiatives.

The most compelling statistics are the differences in per capita healthcare spending between the two countries.  At the time of this report, Israel was spending $2048 per person, representing 7.7% of GDP.  This compares with US spending of $7290 per person, representing 16% of GDP.  These differences are startling given that we are comparing two westernized countries with many economic, political, and social similarities.  But, are there differences that explain the respective levels of healthcare spending, and is it a valid comparison?

Understanding The Discrepancies

As noted above, the first obvious difference is the level of technology adoption, which has a major impact on both the quality and cost of health care.  The Leapfrog Group is a non-profit initiative launched by the Business Roundtable in 2000, in order to seek breakthrough improvements in the safety, quality, and affordability of healthcare for Americans.  One of its major initiatives is to increase the usage of CPOE systems, which have been shown to reduce serious prescribing errors in hospitals by 50%, with a potential estimated annual savings of $10 billion.  We also know that the effective use of EMR technology gives essential clinical information to physicians and other providers at the point of care, leading to improved quality of care and to reductions in cost.

Other relevant differences between the two countries include geographic size (“Israel is the size of New Jersey”), population size, and the role of government.  Israel maintains a public/private healthcare system with universal compulsory participation of all its citizens.  There are 4 health plans or HMOs that operate nationwide, and Israelis are given the right to transfer between plans once per year.  These private health plans to compete for members on the basis of the quality and cost of their products, which is consistent with the objectives of many health reformers in the US.  Coincidental or not, these are also some of the essential elements of a Health Insurance Exchange model being considered by State governments throughout the US.  So, while the comparison with the Israeli healthcare system is not perfect, there are lessons to be learned that can better inform the health care debate in the US.

Public Policy Implications

These data are not intended to describe a perfectly controlled, comparison study of the two countries, but rather to steer our efforts in the right direction.  Since Israel is the size of New Jersey, instead of comparing Israel to the United States, why not compare Israel to New Jersey?  Or Massachusetts?  Or Utah?  Since much of the health reform action is taking place at the state level, I would urge state officials to consider the cost and quality of healthcare in their state, and consider how to take steps to improve their results based on lessons learned from the Israeli model.  Certain of the key characteristics of the Israeli Health Exchange model are:

• An organized ‘marketplace’ to purchase health insurance within a specific geography.
• A level playing field built around ‘consumer choice’ of health plans.
• All consumers choose from the available plan options and participating health plans must accept all eligible consumers (in Israel, that’s everyone).
• Success is driven by health plan operations and innovations designed to improve results and lower costs.

I recently posted another blog titled “Every State Needs A Health Exchange—It’s Time”.   The goal should not be to reach the level of per capita costs that are achieved in Israel.  Rather, let’s seek a 10% improvement in your State’s healthcare costs?  How about 25%?  The enhancements to the business climate for small and medium size businesses in your State, and the resultant impact on your State’s economy, will be enormous.