E-DRUG: Health insurance: the bitter American lesson
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Interesting article from the french Newspaper Le Monde on the reform of the
Medicare drug benefit with an european perspective on the health insurance.
Translated by Swennen Philippe
Dr Philippe Swennen
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[Copied as fair use from Le Monde 09.01.04 WB]
Point of view
Health insurance: the bitter American lesson, by Philippe Pignarre
LE MONDE | 08.01.04 |
Americans discussed throughout the year 2003 their health insurance model,
at
the time of the installation of a drug benefit system for the elderly with
low
income and without private insurance (Medicare). Until now, their hospital
health spending was supported by the authorities within the framework of the
Medicare program, but, the outpatient prescription drugs remained totally
supported by the patients. This debate could be very instructive for the
French public.
The American and French health insurance systems are at the ends of a
spectrum
which goes from most individualistic to most collective. All the reforms
imagined today in France to solve our difficulties tend to bring us closer
to
the American system. It�s worth thus knowing its effects. To do it without
being accused of anti-American bias, the best thing was to let speak the
American observers themselves.
In the United States, the big pharmaceutical laboratories fix freely the
public price of their drugs. From now on, each time the American government
negotiates a trade agreement, it tries to include a clause extending this
system and withdrawing any capacity of negotiation to the national States on
the drug prices. Australia is the first target today.
Frightened by the electoral consequences, its government has until now
resisted. But they�ll take a rain check.
But how then to limit the absolute power of the pharmaceutical industry ? If
the laboratories fix their prices freely, the risk is indeed to get quickly
a
doubling, even a tripling of the price of the main drugs. Why shouldn�t they
if there is no limit? It would be the way for the industrialists to maintain
very high profits which they until now guaranteed to their shareholders
whereas the rate of innovation seriously slowed down.
That would quickly explode the systems of benefits. The freedom of prices is
only possible if there is no national social Security based on the European,
Australian or Canadian models, which can function only if the spending is
controlled and thus prices fixed by the authorities. But by what to replace
the social Security, because nobody moreover wants a system without
insurance
which would lead to � on top of political disorders - a considerable fall of
consumption and the ruin of the industrialists?
The idea is to make manage the social Security by private insurances in
competition. They have the possibility, each one for itself, to negotiate
the
prices with the manufacturers. The private insurance companies negotiate
discounts on the (free) public prices with each laboratory. How do they
manage
it? The insurances have a means of pressure: they establish "forms" where
the
drugs which they reimburse are registered (the others are not refunded,
except
after a long procedure at the end of which a provisional authorization can
be
granted in a precise case).
What is the scope of the discounts? It is a secrecy, but they are estimated
to
vary between 20 % and 50 %. In the same logic, the [private insurances] are
led lo create networks of doctors and hospital which their members must
obligatorily consult to get the benefits. They dictate to the doctors even
the
duration of the consultation. In the projects of the French reform, that is
called the "basket of health care". It is thus only by limiting the list of
the accessible drugs and, more generally, of the accessible care that the
Americans manage to control their prices.
To decontrol the drug prices, the States should be led to dismantle their
national social Security system. Or, conversely, while dismantling the
social
Security, a future decontrol of the drug prices is made possible.
This system has an immediate effect of exclusion: partial price control
concerns only the insured persons. Those who do not have an insurance -
often
the poorest, working in small companies where there is no benefit scheme -
pay
the drugs at the public price, the highest.
It is here that are revealed all the difference between a solidarity based
system, which must benefit the poorest, and an insurance based system which
limits the risks according to the investments that each individual can make.
It is the difference between the Welfare state, and what certain American
theorists call from now on the Enabling State, the State "which makes able
the
individual".
It is a true social revolution which is proposed to us with the Enabling
State. The State gives up all its functions of social protection:
retirements,
unemployment, health insurance, and puts them in the hands of private
companies. Any specificity is withdrawn from the mutual benefit societies,
at
the origin of all the socialized redistribution forms. The mutual benefit
societies are put in the legal obligation to function on the model of the
private insurances.
The State does not intervene any more but by giving tax cuts, inevitably
uneven. It is the way taken in France with the pension reform: the
"supplementary pensions", that each one from now on has to subscribe, will
entitle to an income tax cut. Too bad for the poorest, who does not pay any
taxes or few taxes: the State will not be able to help them to settle a
pension!
The political choice, for the Americans, is: to have access to all the
drugs,
but at very high prices, or to limit the prices, but having then access only
to a limited number. It is the kind of alternative in which the liberalism
likes to lock up the populations and wrongfully naive governments. Any other
solution seems then out of reach. The trap is closed again. The feeling is
created that there is no rational way to leave an infernal alternative.
The more the insurance companies are powerful and represent a high number of
policy-holders, the more they are in good position to obtain large discount.
Who benefits from these discounts? No control is possible, because their
amount is not made public and, from now on, the big companies which pay the
health insurance of their employees - as Ford � complains more and more
about
the "diversion" of this money to the single profit of the insurance
companies.
The unfortunate insured persons are thus faced not only with the giants of
the
pharmaceutical industry, but also with the giants of the insurance,
sometimes
with their employer as well, who are increasingly reticent to pay the
insurance premiums. Three against one!
How to believe that competition will benefit them rather than the insurances
or the laboratories? If these are the companies of which they are the
employees, which pay a part of their health insurance, then this part tends
to
decrease with the passing years. A big company as Wal Mart insures in 2003
only half of its million of employees. The policy-holders thus have all the
chances to be the fall guy.
No wonder that the Americans see their health expenditure soaring year by
year
and representing from now on 14 % of their gross domestic product (a little
more than 9 % in France), for a total service less good than in the majority
of the European countries, as the OECD statistics testify. The overcost of
the
assumption of responsibility of the health insurance by private insurances
could approach 50 %!
In its competition with the insurances for the share of the cake at patient�
s
expense, the pharmaceutical industry struggles on several fields. It
initially
obtained in the United States - what remains prohibited in Europe - the
right
to make advertising in the newspapers and on television for its prescription
drugs only. It allows to increase the pressure of the patients on the
doctors
and the insurance companies to oblige them to deliver certain drugs which
were
not included in the forms. The pharmaceutical industry should also prevent
any
constitution of a strong countervailing power able to oblige it to lower its
prices. It is one of the objectives of the reform which was adopted by the
American members of Parliament: any negotiation on the prices is forbidden
for
Medicare.
Moreover, to be entitled (from 2006 on) to the very partial Medicare drug
benefits, the elderly people will be strongly incited to take out a private
insurance which will be subsidized by the State and to which the management
of
Medicare will be delegated. Until now, Medicare entirely managed its
business
without intervention of the private insurance.
One of the principles of the reform is to balkanise what is still national
in
Medicare. One could thus think that the Medicare policy-holders who will
choose a private intermediary would enter the system of the restrictive
forms,
the only way to drop the prices. But, there still, under the pressure of the
pharmaceutical industry, the new law prohibit in this case the drawing up of
such lists! The private insurances will not be able thus to obtain discounts
on the prices, as they do for their other members. The pharmaceutical
laboratories won a point against the insurances, but the patients are always
the losers in any case.
The system is thus likely to become completely unmanageable. As the budget
of
the State devoted to this program will not be able to exceed 400 billion
dollars over 10 years (2006-2016), the only solution will remain to increase
the part paid by the patients, their monthly contribution, or to change the
threshold of the expenditure from which the drugs are refunded (the Congress
�
Budget Committee already calculated that the deductible would be raised of
10
% from 2007 on).
It was believed that the reform aimed at helping the elderly people with low
income. It will only be useful in fact to distribute liberally 40 billion
dollars per year to the pharmaceutical industry first and then to the
private
insurances. According to the most optimistic calculations made by the
American
press, that will amount as a whole refunding the drugs at a rate of 33 %,
even
if the conditions can be different depending on the private companies which
will be selected to manage the system from one State to another and one year
on the other.
Is this the way on which France must embark?
Philippe Pignarre is director of the editions �Les Emp�cheurs de penser en
rond� (Seuil), former executive of the pharmaceutical industry.
Small clarification: the systems of health insurance in Europe benefit
almost
all the population and not only the poorest.
Philippe Swennen
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