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What Spain gets right on healthcare

JACKSONVILLE (Florida) • First came the Affordable Care Act (ACA), then the American Health Care Act (AHCA) - time and again, politicians talk about controlling healthcare costs but end up missing the point.

Based on the historical rate of inflation, healthcare spending in the United States could consume nearly half of its gross domestic product in 30 years - an unsustainable trend that cannot be resolved through changing the insurance landscape.

The ACA, or Obamacare, focused on expanding coverage, with little to address the cost of care in the early stages. That was a fatal flaw: Voters saw already-expensive healthcare costs rise and were unhappy being forced into the system.

The AHCA, which the House passed last week, focuses on the cost of coverage, but in the wrong way. Cutting billions from Medicaid will reduce government expenditure, but only by cutting care for millions of people. The move back to underwriting for pre-existing conditions will reduce the cost of insurance for healthy people, but will drastically increase it for people with underlying health problems.

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Instead, we have to tackle insurance itself. In the US, we pay a large amount of money to insurance companies for the privilege of being the middleman in uninsurable primary-care transactions.

Other industrialised nations, where healthcare costs per capita are less than half of what they are here, offer lessons. Americans spend 25-30 per cent on administrative costs; if we brought that in line with levels in those other countries, to about 15 per cent, we could save about US$320 billion (S$445 billion) of the US$3 trillion spent on healthcare in the US.

Countries that provide good primary care have better health outcomes and lower costs because they provide efficient care of common and chronic illnesses.

Countries that provide good primary care have better health outcomes and lower costs because they provide efficient care of common and chronic illnesses. In America, the high cost of medical education, a reimbursement system that favours specialists and a poorly supported primary-care network have decimated our primary-care workforce.

In America, the high cost of medical education, a reimbursement system that favours specialists and a poorly supported primary-care network have decimated our primary-care workforce.

In the 1980s, Spain created taxpayer-funded community health centres located within a 15-minute radius of every citizen. This move dramatically improved health measures and provided a good base of primary care for everyone in the country.

In the US, community health centres could be funded directly by the government based on population, not fee for service. They would provide a broad, well-defined range of services, including primary care, with weekend and evening hours, telemedicine, basic pharmaceuticals and education for management of chronic illness. Mental healthcare would be provided, including management of drug addiction.

And the facilities could serve as a base for managing crises such as epidemics and bioterrorism events.

Anyone could use a community health centre without income verification, free. People could still use private primary-care providers, but they would have to pay for them directly.

Insurance would be reserved for emergencies, through inexpensive catastrophic coverage. Even Medicaid and Medicare could eventually be moved into a catastrophic-only model.

Such centres already exist throughout the country, many providing state-of-the-art primary, mental and dental care for low-income people for about US$1,000 each a year. At that price, the entire country could be covered for US$325 billion a year.

The savings would more than pay for the programme: Right now, the government spends US$250 billion a year on tax credits for employer-based coverage. Since insurance costs would decrease significantly, the revenue lost by this credit would decrease proportionately. And about 11 per cent of Medicare payments are for physician services while another 27 per cent are for Medicare Advantage payments, totalling US$240 billion a year. Since a good chunk of that is for primary care, it could be diverted to community healthcare services.

America has spent almost a decade making dramatic changes in its health insurance system, without addressing the real problem. We have the capacity to tackle the underlying costs with a tried-and-true solution. The only question is, do we have the political will?

NYTIMES

• Carolyn McClanahan is a certified financial planner and doctor.

A version of this article appeared in the print edition of The Straits Times on May 20, 2017, with the headline 'What Spain gets right on healthcare'. Print Edition | Subscribe