How the healthcare debate is making America sick

Lyon Roth

President Obama's legislative overdose will not cure the US healthcare system's worst symptoms. But there is the Israeli model.

As Americans have spent much of December decorating their Christmas trees, Democrats in both the House and Senate have been working feverishly all month to decorate proposed legislation before delivering it to the president in time for the holiday. This week, the Senate version has been festooned with so many ornaments that it might actually tip over towards the 60 votes needed to avoid a filibuster. In numerous cryptic earmarks, additional billions will be secured for specific states simply to buy the votes of the most vociferous objectors and these are all from within the Democratic party itself. For example, Louisiana, Nebraska and Montana represent about 2% of the US population combined. Yet they will receive nearly 50% of the special goodies designed to persuade their wavering senators to vote in favor.

Perhaps hoping to become Obama Claus, the president undertook to bring Americans universal health care by Christmas when he assumed office in January. He is not the first president to promise Americans a better system. Yet, as predecessors such as Richard Nixon and Bill Clinton found, comprehensive reform can be as elusive domestically as Middle East peace is abroad. Throughout this year, the world has watched President Obamas handling of the economic crisis, climate change, the wars in Iraq and Afghanistan, dealing or not dealing with Iran and other foreign policy issues. In the United States, those issues have all been swamped by the endless, obsessive debate over health care reform. Some cynics say reform is especially important for this president because his own mother was turned away from a number of hospitals and was ultimately forced to give birth in a manger.

Costs will still rise

I dont know whether America has the best health care in the world, but it is unquestionably the most expensive. America spends 17% of its GDP on health care. Thats four times as much as it spends on defense. Nevertheless, about one in six Americans or nearly 50 million people lacks any type of medical insurance. Everyone agrees that needs to be addressed. The raging debate is as to how. In the past month, the House and Senate both produced separate health care bills that are over 2,000 pages long each.

As might be expected, the proposed bills have been criticized intensely by Republican political opponents in the House, Senate and the media. They claim that the current plans obsession with universal access will inevitably increase demand but does nothing to enhance supply and will thus further strain the equally essential elements of quality and costs.

There has been withering scrutiny from non-partisan sources as well. Dr. Jeffrey Flier, dean of Harvard Medical School claims that the people who favor the legislation are engaged in collective denial. There are no provisions to substantively control the growth of costs or raise the quality of care. In fact, the legislation will markedly accelerate national healthcare spending and would do little or nothing to improve quality or change healthcare's dysfunctional delivery system.

Practicing physicians are similarly unenthusiastic. According to Dr. Daniel Roth, a retinal surgeon in New Jersey (and also my brother), the proposed legislation exacerbates the already ridiculous situation where doctors and patients are marginal actors on the health care stage. I can think of no other industry where consumers and providers have so little say in the product, its pricing, its delivery and its maintenance. The current bill is myopic - it includes so many peripheral provisions, regulations and mandates that complicate life for doctors but does not focus nearly enough on insurance innovation. Finally, in my view, any plan that doesnt address comprehensive tort reform simply doesnt see the forest for the trees.

I feel sick - call a lawyer

It is hard to over-estimate how the legal system has transformed the medical profession. Its impact has been manifest in massive jury verdicts, skyrocketing malpractice premiums, and millions of unnecessary tests, procedures and referrals by doctors trying to fend off lawsuits. The estimated cost of these burdens is about $30 billion per year directly, due to medical tort litigation prosecuted by lawyers who typically earn 30-40% of whatever can be secured for the client. Moreover, according to PricewaterhouseCoopers, the specter of medical tort litigation generates over $24 billion in unnecessary procedures to protect against lawsuits. Collectively, tort reform would save at least $500 billion per decade. Yet the Democrats dont want to take on the trial lawyers. Their stunning contingency fee collections enable them to be among the most generous contributors to the party.

The strongest criticism of the plan even among many Democrats has been in response to the public option. Many Americans fear that it will eventually turn into a single payer system in which the government controls all health care. That is the system in Canada, where healthcare is about 40% more cost-effective than US healthcare. Furthermore, Canadians are generally pleased with their program, although many wealthier Canadians would like a private option and, in some instances, seek high-end medical care in the US, especially when time is of the essence.

The Israeli model - it works

So where can Americans look for a public/private model that can satisfy these objectives? Israel. Israelis enjoy one of the best healthcare systems in the world, and administer it much more cost-effectively than the United States. As stated, America spends about 17% of its GDP on health care, while Israel spends about 8%, comparable to the OECD average and slightly less than Israel spends on defense. Practically, that means that the average American has to work two months of the year just to cover his healthcare costs, while the average Israeli earns his coverage in merely one month. Moreover, since per capita GDP in the US is about 50% higher than in Israel, the per capita healthcare costs are three times as much!

While costs have been controlled, quality of care in Israel has improved. Dr. Yehezkial Caine, director general of Herzog Hospital in Jerusalem, is proud of what Israel has been able to contribute to world medicine: Israels disproportionate exposure to terrorism has made us 'experts by necessity' in treating emergency injuries and psychological trauma. On a more positive note, as life expectancy in our country increases, we have also developed expertise in geriatric medicine generally and particularly in certain specialized neurological disorders associated with ageing. Israelis are indeed living longer. In 1992 male life expectancy at birth was about 76 years in the US as well as in Israel. By 2006, it had risen to 77.8 years in the US and to 80.3 years in Israel.

Much of this improvement can be attributed to Israels passage of a National Health Insurance Law in 1995. According to Dr. Dov Chernichovsky of Ben Gurion University, that enabled Israel to join other developed countries such as Australia, Canada, France, Germany, the Netherlands, and Britain in embracing what can be considered the emerging paradigm of developed health care systems. This involves universal entitlement to a set core of medical benefits based on medical conditions and indications, not on employment status, place of work, or the level of ones mandated contributions to the system. So unlike in the US, all Israelis are covered by the system. Moreover, unlike the case in most of the other developed countries mentioned, Israelis can also buy private insurance to enhance their publicly provided protection if they so choose.

Israels National Health Insurance Law is 30 pages long, a sensible length for a sensible program. By comparison, muddling through both the House and Senate bills and then attempting to reconcile the myriad provisions in each seems an insurmountable task. Nevertheless, political pressure may ultimately push all this forward despite the burgeoning objections. But how would Congress perform if its proposed legislation were submitted as a Harvard Medical School thesis? According to Dean Flier, Id give it a failing grade. On the other hand, Dr. Roth did offer one optimistic caveat: If each of the 100 senators and 435 members of the House actually read the thousands of pages of legislation they produced, my ophthalmologist colleagues in Washington DC would enjoy a bit more business.

Lyon (Lenny) Roth is a senior executive at an international wealth management firm and a member of Ben Gurion University's Board of Governors.

Published by Globes [online], Israel business news - - on December 23, 2009

Copyright of Globes Publisher Itonut (1983) Ltd. 2009

Lyon Roth

Lyon Roth
Twitter Facebook Linkedin RSS Newsletters Israel Business Conference 2018