Market Competition in Health Care: The EU’s Parallel Struggle

Last week, I took a break from U.S. health reform and attended a fascinating conference on Health Care and EU Law at Radboud University in the Netherlands.  It gave me the chance to step back and revisit a struggle common to most health care systems — the appropriate role for market competition.  Without drawing too many parallels here, the view from 30,000 feet confirms that like the United States, European health care systems (varied as they are) must decide the extent to which health care is an economic, commercial product versus a non-economic, public good.

In Europe, this tension is generated by the European Union’s internal common market of 27 member states.  European law — enunciated through treaties, directives, regulations, and decisions by the European Court of Justice — prohibits states from restricting the free movement of goods, persons, and services within the EU, and bans anti-competitive or protectionist arrangements.

But is health care a commercial product subject to these market rules?  Or can member states control their health care systems without worrying whether it restricts free movement or is anti-competitive?  Although EU law says that states shall retain responsibility for managing services of general interest like health care and social security, case law has bounded this authority in several high-profile free movement and competition cases.  For example, a series of court opinions has held that member states have limited authority to prevent their residents from traveling to other member states for health care, or even to require prior authorization before reimbursing for that care back in the home state. Read more

Immigrants, Health Reform, and “Lies”

In a much-anticipated prime time address to Congress, President Obama made the case for health care reform.  One ostensible goal of the speech was to correct misinformation about the bills proposed by Congress.  As a scholar who studies both health care and immigration (and sometimes the intersection between the two), I’ve grown increasingly frustrated with the misconceptions surrounding this issue — and I very much hoped the President would deflate the myth that health reform would provide federal benefits to undocumented immigrants.

Of course, when President Obama made this very point (”The reforms I’m proposing would not apply to those who are here illegally”), he was greeted with a heckle from South Carolina Representative Joe Wilson, who shouted “You lie!”  Although Rep. Wilson later apologized for his “lack of civility,” he didn’t recant the basic factual assertion, making clear that he still disagreed with the President’s statement that health reform doesn’t cover undocumented immigrants.  Of course, the media has jumped on this story, but perhaps unsurprisingly, few bothered to clarify the underlying factual dispute.

Neither bill published by the House or Senate covers undocumented immigrants.  In fact, both bills state in pretty plain terms that they don’t do it.  The House bill, titled America’s Affordable Health Choices Act of 2009, states in Section 242 that those not lawfully present in the United States are not eligible for insurance subsidies or tax credits.  To make it even more clear, Section 246 is titled “No Federal Payment for Undocumented Aliens,” and states “Nothing in this subtitle shall allow Federal payments for affordability credits on behalf of individuals who are not lawfully present in the United States.”

Likewise, the Senate Health, Education, Labor, and Pension Committee’s bill, titled the Affordable Health Choices Act, states in Section 3111(h) that “Nothing in this Act shall allow Federal payments for individuals who are not lawfully present in the United States.”  The Senate Finance Committee has yet to release its bill, but it’s a good bet that undocumented immigrants similarly will be excluded.

Although nothing in the bills apparently would prohibit undocumented immigrants from purchasing health insurance in the new national marketplace (called an “exchange” and a “gateway” in the House and Senate bills), it’s not clear why anyone would take issue with immigrants purchasing insurance on their own, without federal subsidies.  Moreover, although nothing in the bills seems to alter federal funding for emergency care provided to immigrants, nothing creates such a benefit either — thus undercutting Rep. Wilson’s contention with the President.

This controversy should remind us that immigrants remain in a sort of health care purgatory, caught in our two most dysfunctional systems — immigration and health care.  In the mid-1990s, Congress severely limited immigrant access to programs like Medicaid as part of welfare reform, making it difficult for even lawful immigrants to enroll.  In fact, even lawful immigrants aren’t eligible for Medicaid for five years after entering the United States — and various peculiarities of immigration law often push this waiting period to ten years.  At the same time, immigrants do receive indirect federal funding for health care through the Emergency Medical Treatment and Active Labor Act (EMTALA), which requires hospitals with emergency departments to screen and at least stabilize patients presenting with emergent conditions.  Thus, hospitals must provide emergency care regardless of the patient’s immigration status.

Unfortunately, most immigrants are ineligible for means-tested public insurance programs like Medicaid.  This regulatory framework has led to “medical repatriation,” in which hospitals effectively deport immigrant patients to unload expensive long-term care burdens.  Of course, hospitals — most of which are run by state and local governments — complain about unfunded federal mandates like EMTALA.  Hospitals can be “stuck” treating immigrants whose medical needs have shifted from acute to long-term (as with the car accident victim who needs neurological rehabilitation and nursing care).  As Prof. Boozang discussed, a growing number have begun “repatriating” immigrant patients by sending them back to their country of origin — without consulting immigration officials — sometimes by purchasing commercial plane tickets or even hiring air ambulances.

Certainly, there are more humane ways to handle health care for immigrants.  California, for example, legalized cross-border health insurance, thus allowing immigrants living in the state to purchase insurance with lower premiums and deductibles that covers care provided in Mexico.  Arizona and Texas have considered similar legislation, to no avail.  Recently, UCLA researchers estimated that over 950,000 people travel from California to Mexico for medical care every year.  For a population being left out of health care reform, traveling to Mexico for care may be the future — whether voluntary or not.

Rationing or Cost Effectiveness?

In today’s Wall Street Journal, Scott Gottlieb, a former senior official with both the FDA and the Centers for Medicare and Medicaid Services (CMS), warns that “Government Health Plans Always Ration Care.” Aside from recasting the same old aspersions about “rationing,” Gottlieb warns that if reform efforts can’t tame health care costs, the “government will turn to a less appealing but more familiar tool to cut costs: the regulation of access to drugs and medical services.”

Of course, “access” can mean many things. Theoretically, Americans have “access” to the best medical technologies in the world. But practically, most Americans-including those with health insurance-don’t actually access this type of care and couldn’t even if they tried. The bottom line is that every health insurer in the world, public or private, has to “ration” for the simple fact that health care resources are not unlimited. Only wealthy citizens truly have “access” to the best medical care money can buy, regardless of the country they live in or the health system they live under. That won’t change with or without major health reform.

Gottlieb is worried that reformers might formally embrace recommendations by the Medicare Payment Advisory Committee (MedPAC), which currently has a broad statutory mandate to advise Congress on the Medicare program. He also warns that rationing is “a European import,” as if no health insurer in the United States has ever had to draw the line somewhere and decide what not to pay for. For example, Gottlieb warns about organizations like the Committee for the Evaluation of Medicines in France and the Institute for Quality and Efficiency in Health Care in Germany. He doesn’t mention the National Institute for Health and Clinical Excellence (NICE) in the United Kingdom, but it drew similar scorn after the economic stimulus package funded comparative effectiveness research here in the United States. Gottlieb cautions that European countries “aren’t shy about rationing.”

Gottlieb is correct in one aspect: these organizations are prevalent in Europe. However, he misses three important points.

First, the countries in Europe that Gottlieb warns about spend considerably less than we do on health care (and don’t suffer negative health consequences for it).

Second, wealthy residents in pretty much all of these countries can purchase services and technologies over and above what the organizations that Gottlieb warns us about approve.

And third, we’re not exactly strangers to these organizations in the United States. Gottlieb is concerned about European imports, but he’s ignoring our home grown organizations, like the Agency for Healthcare Research and Quality (AHRQ), which makes new technology assessments for Gottlieb’s old agency, CMS, and supports comparative effectiveness research. Or the Medicare Evidence Development and Coverage Advisory Committee (MEDCAC), which also performs new technology assessments. In fact, it’s no secret in Washington that Medicare has long considered some amalgam of cost effectiveness and comparative effectiveness in its coverage decisions, even if nothing in the Medicare statute explicitly allows it to do so. (CMS has long stretched the definition of “reasonable and necessary” in section 1862(a)(1)(A) of the Social Security Act to fit its fiscal realities, even if CMS or its precursor, HCFA, haven’t been successful in cementing cost effectiveness as a formal criterion, as evidenced through failed rulemaking in 1989 (54 Fed. Reg. 4,302) and 2000 (65 Fed. Reg. 31,124)).

And just as importantly, private insurers make cost and comparative effectiveness determinations too, either by following Medicare’s lead, as expressed through national and local coverage determinations (NCDs and LCDs), or by setting up their own new technology evaluation systems, like BlueCross BlueShield has with its Technology Evaluation Center. Though the offical duties and decisionmaking processes of these organizations differ, the health care community generally understands these decisions as implicitly factoring in cost effectiveness or at least clinical effectiveness-thus doing precisely what the anti-reformers like Gottlieb warn about.

The Less You Change, The More It Costs

Today, on his Washington Post blog, Ezra Klein described how the estimated price tag of health reform is giving Congress sticker shock, and how Congress seems to be responding with less reform, not more. However, as widely-respected Princeton health economist Uwe Reinhardt explains, the status quo of our current system is too expensive to maintain. Thus, Klein notes perceptively that, “In health care, the less you change, the more it costs.”

With Congressional Budget Office estimates sinking in, Congress might be drifting towards compromises that could scale back proposed government involvement in offering health insurance. But as Tim Jost explained in a previous post, public plan alternatives like cooperatives probably won’t solve our problems without concerted and long-lasting support from the federal government anyway. In search of a viable alternative, conservatives have struck a familiar pose, decrying rationing and more government intervention, instead proposing market-based solutions like tax rebates and consumer-directed incentives.

However, conservative proposals would take the United States health care system further out of the mainstream and make us even more of an international outlier (relying primarily, as we do, on private, voluntary health insurance). These proposals don’t seem to hold water at a time when international experience suggests we should be moving in the opposite direction. As Timothy Noah explains (and as Tim Jost has argued persuasively elsewhere), American exceptionalism isn’t necessarily a good thing in health care. We spend nearly twice as much per capita as any other country, and we account for roughly half of all worldwide health care spending each year (roughly $2 trillion out of $4 trillion). Meanwhile, we leave around 47 million people uninsured, and another 25 million don’t have adequate insurance. Finally, we don’t rank particularly well compared to our peer countries on many quality measures. If we don’t start seriously revamping the way we provide and pay for health care, we’ll continue our dubious exceptionalism.

So as we deal with sticker shock, let’s remind ourselves where we stand in the health care world. Taiwan, given the chance, avoided our model like the plague. As one observer notes, “Taking lessons in health care policy from the United States is like receiving lessons in seamanship from the crew of the Titanic.” Why should we accept going down with the ship?