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‘Medicare for all’ doesn’t just rival Canada’s system. It goes further

An insurance system proposed by Rep. Pramila Jayapal takes cues from other countries, but is unique in other ways

Progressive Democrats of America holds a news conference to announce the launch of a Medicare for All Caucus at the Capitol in July 2018. (Bill Clark/CQ Roll Call file photo)
Progressive Democrats of America holds a news conference to announce the launch of a Medicare for All Caucus at the Capitol in July 2018. (Bill Clark/CQ Roll Call file photo)

Supporters of “Medicare for All” often cite systems in other industrialized countries to illustrate how putting health care funding in government hands could work in the United States.

Some of the benefits are clear. Besides expanding access to health insurance, the system could eliminate many complexities for patients, doctors and hospitals.

In Canada, each province and territory has an insurance program that covers most doctor and hospital services — simpler than dealing with various insurers and government health programs. Instead of doctors and hospitals figuring out each patient’s plan, “you have one set of paperwork,” said Raisa Deber, a professor at the University of Toronto’s Institute of Health Policy, Management and Evaluation.

As for that pesky issue of surprise medical bills when out-of-network doctors provide emergency care? “Not an issue,” she said. “There is no such thing as in-network, out-of-network.”

Watch: What if we switch to a single-payer health care system?

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A proposal for a government-financed health insurance system introduced by Washington Democratic Rep. Pramila Jayapal in February takes some cues from other countries but is unique in other ways, and often goes further than other universal plans. Most Canadians still depend on private insurance for dental, vision, and some drugs and mental health services. Medicare for All aims to cover all of that.

It’s generally true that the many forms of universal coverage in other countries lead to better health outcomes and lower spending. Medicare for All’s backers say that a single-payer system gives the government leverage to set prices and save money.

Currently, Medicare’s payments to doctors tend to be lower than those under private insurance, and under Medicare for All legislation, the government would negotiate to extract the best prices from manufacturers. Those are two ideas with parallels to health care overseas.

But the Jayapal plan would end patients’ cost-sharing like copayments, whereas universal coverage in other countries usually still requires patients to help pay for some services to deter unnecessary care.

The proposal’s backers also promise patients that they would be able to see any doctor they want. Other countries often require signing up with a general practitioner who controls which other doctors you see.

In France, for instance, government-financed insurance coverage is universal, but patients have modest co-payments for most services, usually capped at around 50 euros ($56) for each type of service.

They get financial incentives to sign up with a general practitioner and face higher fees if they go outside a referral, according to the Commonwealth Fund, a foundation that supports health research.

However, Robin Osborn, director of the international health policy program at the Commonwealth Fund, notes that the cost-sharing usually doesn’t apply to primary care services and generous exceptions typically are carved out for those with great needs. In France, there’s no copay for patients with any of 32 chronic conditions, and in Germany the chronically ill have an out-of-pocket maximum, capped at 1 percent of their income.

Overall, the systems are designed with an eye toward essential services, she said. “They make primary care the cornerstone.”

It also might be easier for other countries to control what doctors are paid than it would be in the United States, and negotiating lower prices for drugs might require tradeoffs that Americans have traditionally balked at.

One reason doctors often make more money in the U.S. compared to other countries is that they spend a longer time after high school in training, and less of it is subsidized by the government. Higher U.S. salaries can compensate for the combination of missed wages and a heavier loan burden than for doctors overseas.

But a bigger reason for the more generous wages is because of the broader opportunities for high-paying jobs in the U.S. In most countries, doctors are among the highest-paid workers, but in the U.S., people have more opportunities to make money elsewhere — such as in finance, law, business or technology. And those who do become doctors might have more lucrative opportunities than just practicing medicine, such as working for drug companies. The Association of American Medical Colleges estimates a current shortfall of around 32,000 to 44,000 doctors.

So to attract qualified people to be health practitioners, salaries are higher here. Potentially lower wages under a future Medicare for All system could put the pipeline of future doctors at risk, said Craig Garthwaite of Northwestern University’s Kellogg School of Management.

In Canada, where there is a single-payer system that varies somewhat by province, the country doesn’t use its power over the health system to control doctors’ salaries, according to findings in a forthcoming paper by Garthwaite and his colleagues.

Canada, Garthwaite said, “is choosing to not really exert all its power on the wages of physicians, partly because they might be worried that people would move to other professions.”

Jayapal’s Medicare for All bill borrows from other countries when it comes to setting drug prices. It would have the administration negotiate prices based on clinical- and cost-effectiveness. If the U.S. and a drugmaker can’t agree to terms, the government would let a different company make the product. But there could be inherent difficulties in any approach the U.S. takes to lower drug costs.

In Canada, officials have been able to use the system’s leverage effectively on drug prices, said Garthwaite. Each province is responsible for establishing a formulary — a list of covered drugs — and a quasi-independent commission known as the Patented Medicines Prices Review Board monitors for excessive price increases and has the power to order lower prices.

An October study by the Health and Human Services Department found that the U.S. paid at least twice as much as the average in comparable countries for 15 of the top 29 physician-administered drugs paid for by Medicare.

But in the U.S., a different calculation is at play. By using its buying power to lower prices, the U.S. might get a better price on a drug currently sold or one that would be on the market in the next few years. But if drug prices fall in the U.S., the risk of putting money behind new treatments that are still many years away might be less attractive for investors. That could be a problem for a country that prides itself on drug innovation and provides the most cutting-edge care.

“We want to get both low prices and access and all the new drugs. And you don’t get all three of those. You’ve got to make some choices here,” said Garthwaite. “If you want to make sure that everyone always gets access to every product, then you’re going to pay high prices.”

Under Jayapal’s bill, the U.S. would likely have to employ what other countries call “health technology assessment” or “cost-effectiveness research” to measure the overall benefits to the health care system from deciding to cover a new drug, device or procedure. This is different from regulatory approval, and more like what private insurers do in the U.S. before deciding whether something is worth covering. The question: Is the price worth it?

In the United Kingdom, the board that makes those kind of decisions for its National Health Service decided that one of the groundbreaking new gene therapies for certain blood cancers was not worth it. Germany’s system for assessing cost-effectiveness and setting prices for certain treatments has resulted in some drug companies deciding not to sell their products because prices were too low.

But countries usually make these decisions because there are other options, said Osborn of the Commonwealth Fund.

“People in other countries may not have access to every drug that we do here, but may have access to the ones that are going to help more and have more clinical benefit,” she said.

But Americans “like having access to the latest and greatest,” said Ashish Jha, director of the Harvard Global Health Institute.

“The problem with cost-effectiveness is you have to draw a line somewhere and then you have to say no to people,” Jha said. “And politically, that’s been extremely hard in the U.S.”

It’s already hard for Medicare to make a coverage decision that limits access, given the wide range of interests that seek to influence its decisions and a requirement to seek that kind of public input. It would likely be even harder when more than 300 million Americans are involved.

“Health systems can’t be divorced from the political systems that govern them and they certainly can’t be divorced from the people they serve,” Jha said.

Observing the U.S. debate from Toronto, Deber urges policymakers to consider that the system up north isn’t much different from a large part of the U.S. health care system. It even shares a name: Medicare.

“What our system is is what you already have for a whole lot of people,” she said. “It’s not particularly different.”

From the archives: Sanders, Warren and Democrats Unveil Medicare-for-All Bill

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