The Price of Health

In 2006, the United States spent $2.1 trillion on health care. And yet 46.6 million Americans have no medical insurance, according to a 2006 U.S. Census Bureau report. This is in stark contrast to Europe, where government provides health care for all citizens.

These problems, as well as some solutions, will be the topic of Global Healthcare Challenges in the 21st Century: Transatlantic Perspectives, a discussion sponsored by the School of Management Health Sector Management Program and BU’s Institute for Human Sciences. The event, today at 6 p.m. at 595 Commonwealth Ave., is free and open to the public and features Stefan Winter, a professor of medicine at Hannover Medical School and Harvard Medical International and secretary of state for labor, health, and social affairs for North Rhine-Westphalia, Germany’s largest state. The discussion will be moderated by Mark Allan, a lecturer, executive-in-residence, and faculty director of the Health Sector Management Program.

BU Today spoke with Allan about health-care costs and challenges and what the United States can learn from Europe.

BU Today: What are the main health-care challenges facing us now?
Allan: That list can be quite long. The health-care sector is experiencing a rapid increase in technology, which is only going to accelerate through biotechnology, genomics, and diagnostic testing that allows more tailored interventions. The issue of cost will continue to be a major challenge. Right now there’s a clogging of the pipelines in pharmaceuticals and biotech, but that will lessen as science accelerates in generating drugs. Scientific innovations are going to drive improvements in medicine more rapidly than society can pay for them. This will happen in the next 20 years as science becomes more effective.

So technology could have a negative impact?
Technology is a challenge because the volume of improvements is impossible to sustain financially. As you get innovations that are highly effective, how should we harness technology, and who decides what is made available to whom?

There is also an emerging interest in measuring outcomes and providing service on a transparent basis. Historically, insurers and health-care professionals have closely held information. For example, how effective is a hospital? What’s the mortality rate after coronary bypass surgery? What’s the need to repeat coronary bypass surgery? This information provides more ability to measure how effective service is, and there is growing pressure to make information available publicly, which will have a dramatic impact on the health-care system.

Why would making information more widely available be a health-care challenge?
The challenge is truly patient-centered care, which is best embodied in personal health records. Historically, a patient’s own information is held by health-care professionals, and this reflects a system of care that is not catering to patient needs. Electronic records would make it easier for patients to be the owner of their records. Such personal health records would put patients at the center of the health-care system. The patient-centered health-care issue is much broader than just the United States; it’s an issue of equity.

Is Europe dealing better with equity in health care?
Europe made a choice to have a government-controlled health-care system, with economic analysis as the major way care is delivered. In the United States, the market determines the cost of care. Most decisions around FDA approval are on what the effect is rather than a cost-benefit analysis. 

Will the United States shift to a more cost-sensitive system?
Not in the short run. The Bush administration has been very committed to a market-based approach, and the country is still divided about the best approach.

How do the health-care challenges facing the United States and Europe differ?
It’s well known that we’re the only developed country that doesn’t have universal coverage. We’re still struggling with a fundamental issue that Europe resolved decades ago.

What can the United States learn from Europe’s health-care system?
The ability to make decisions about distribution of care based on economics. We do allocate resources, but in a haphazard way. In Europe they make conscious choices about what services to deliver and when in order to ration limited resources.
 
And what can Europe learn from the United States?
Our system is good but hugely more expensive, and the outcomes are no better. There’s a very strong commitment here to improvements in quality and the process of care, with the process of care driven by the outcomes achieved. For example, with the hospital infection rate — infections you get in the hospital — you can measure rates and look at what can be changed to decrease the infection rate. There are many complex processes in health care that tend not to be looked at because they’re so complex, and the United States is just beginning to make a substantial commitment in that direction. Europe has also learned to let us cover all R&D costs for their drugs [by letting us pay market prices for drugs while they try to keep drug costs down].

Will both countries face a health-care crisis as their demographics age?
Demographics are a big factor for countries with limited immigration, like Germany, where the ratio of different age groups has tremendous impact. In the United States we’re not in that situation as dramatically because of strong immigration. Baby boomers will have an impact, but not to the staggering extent as in Europe. 

Europe is better equipped to deal with aging demographics because of its ability to make decisions about the volume of care. Caring for chronic conditions of the elderly can be very expensive versus care for the young. Europe is more able than we are to make those choices of who to treat and how much, so in a sense they are better prepared than we are.

Will baby boomers pressure the U.S. government to lower costs on prescription drugs?
There is already downward pressure on the price of drugs in this country. The underlying issue here is what would happen to drug companies’ ability to fund R&D if the United States ever began intervening in drug prices as aggressively as European countries do. Europe strives to contain the cost of current drugs, not fund future drugs. Their system relies on our system. If we changed to the European system, there would be very severe consequences.

Catherine Santore can be reached at csantore@bu.edu.