Bangladesh’s commitment to achieve universal health coverage (UHC) by the year 2032, aligning with the Sustainable Development Goal 3.8, is an ambitious target. It took many decades and continuous evolution for the social welfare states to establish UHC. Those nations willfully initiated social protection programs that mandated everyone’s enrollment.
UHC involves ensuring access to preventive, promotive, curative, rehabilitative, and palliative health care that is affordable and of good quality, without causing financial hardship. This target must be integrated with the tenets of the health system where people will receive treatment and essential medicines by trained health workforce at a reasonable cost with good governance, holding the stakeholders accountable through implementing a robust health information system.
What does Universal Health Care mean? What are the key elements to achieve it?
Imagine a situation -- a sudden car crash leaves the breadwinner of a middle-income family in a debilitating state. The series of medical attention -- starting from MRI, surgery, post-operative care, and rehabilitation -- became such a burden that the family had to sell off assets to cover it all.
UHC is the concept that is devised to protect people from situations like this.
The principle of UHC is to reduce the direct out-of-pocket (OOP) expenditures by individuals and increase access to health care services. The OOP is the portion of the health care cost that is paid from individuals’ or households’ own cash reserves.
In countries with health insurance, OOP expense is the part paid by the beneficiaries’ own income which will not be reimbursed -- namely the deductibles and copayments.
Bangladesh has no formalized social protection or insurance scheme, the out-of-pocket outlay as a share of the total health expense is 74%. This is extremely high compared to 54.78% in India, 53.81% in Pakistan, 34.57% in Malaysia, 42.95% in Vietnam, and only 8.67% in Thailand.
High OOP expense to avail health care often leads to borrowing from others, selling assets, taking mortgages from banks or loan sharks for poorer households, and is considered retrogressive as people are pushed to more poverty.
Even for the wealthier households, spending their savings for severe, long-term chronic or palliative care may require selling assets or private borrowing. A pro-poor policy and urban protection scheme can alleviate such financial burden.
The cornerstones of achieving UHC is to avoid direct payment at the point of care by adopting a health insurance scheme, and strengthening primary health care. Despite attempts to control cost, the health care expense continues to rise because of the growing needs of the expanding population, costly technological and medical advances in product and services, and multiple stakeholders’ entry in the sector.
Countries with developed government-run health insurance systems, private health insurance systems, or a hybrid system are still evolving to keep health care cost sustainable.
What are the existing payment systems in health care?
Variations of the single-payer system exist in countries with established UHC. The payment for health care is usually made by the government to the health care providers on behalf of the population from a pool of funds segregated from tax-payers’ money and money allocated for health.
This is the most common practice for UHC, where everyone has access to comparable quality of care without having to worry about costs.
The “Sickness Fund” is a system where competitive not-for-profit health insurance plans are mandatory and privately managed. In addition to equal wage contributions made by employees and employers, the funds receive subsidies from the government.
A multi-payer system absorbs different payment methods -- single-payer by the government, third-party private insurers, and health insurance exchanges. Private insurance companies compete in a free market and offer various types of plans to the employers of companies that pay for their employees’ health or to individuals directly. This is considered to promote competition, innovative care, and higher quality care.
Then there is the OOP expense; it is predominant in countries having no social protective schemes. However, OOP expense also exists in countries with health insurance schemes, where beneficiaries pay additional deductibles and copayments to cover extensive service.
OOP is an indicator of the condition of the health care system; if it is too high, it deters people from seeking health care but when it is affordable, health care becomes obtainable for all.
Which country has the most expensive health care system in the world, and why?
The US has the most complex and expensive multi-payer health care system in the world. They spend 18% of their GDP on health, which was $3.8 trillion in 2019 only.
Despite such high spending, 91.4% and not 100% of their population have health care coverage.
Historically, health insurance was formally initiated in the 1930s. President Harry Truman’s idea to establish a single-payer National Health Insurance system in 1945 was vetoed for fear of heightened taxes and false analogies to socialism.
The social insurance programs Medicare and Medicaid were enacted in 1965; the former provides health care to US citizens aged 65 and older, and the latter covers low-income families.
Medicare is a single-payer system funded by the federal government from payroll taxes paid by employees, employers, and self-employed people.
People in the US do not expect to be looked after by their children after retirement, so while in employment, a part of their tax money paid from their salaries along with a part paid by the employers as health benefit goes into the trust fund accounts held by the US treasury. It becomes available to the beneficiary from the age of 65.
Medicaid is jointly funded by the Federal and the state government for low-income people.
In addition to these, Veterans Health Administration (VHA) under the Veterans Affairs (VA) is the largest integrated health care system serving nine million enrolled Veterans each year. VHA is a single payer system funded by the federal government, where VA allocated $78 billion only in 2019.
Medicare, Medicaid, and VHA cover 37% of the population.
The employment-based private insurance covers 54.4% of the US population through third-party insurance. Over a thousand private insurance companies exist; they design different plans for employers and employees. 80% of these plans are employer sponsored health plans for the employees.
This benefit is excluded from the taxable income of both the employees and employers. More medical service coverage can be included in the plans when beneficiaries pay additional copayments and deductibles.
Despite modifications for decades, Medicare and Medicaid still left millions uninsured. President Obama’s Affordable Care Act in 2010 was designed to cover this gap. Obamacare receives funds from states’ Medicaid expansion, excise tax from the most expensive health insurance plans, excise tax on medical devices, tax on branded drugs, etc.
Insurance is bought from an exchange, and payment contributions are made by both the government and individuals. There were 45.6 million uninsured people in 2012. The number came down to 28 million people by 2020 after getting Obamacare.
What are the contributors of such high health care spending?
High salaries of physicians, high spending on hospital services, costly prescription drugs, inflated health care administration cost are some of the major contributors of the US health care expenditure. The country has a fee for service policy which is a volume-based payment system, hence the more the utilization, the higher the cost.
What is the justification of high spending on prescription drugs in the US?
In 2019, $370bn of health care spending was on prescription drugs. The pharmaceutical companies invest 25% of their revenue in research and development for new drugs or new combinations of existing drugs; in 2019 alone they spent $83bn. The National Institutes of Health (NIH) also invests billions of dollars of taxpayer’s money to develop new drugs or devices.
R&D of drugs takes place in the pharmaceuticals and at universities. Universities receive grants from both NIH and private pharmaceuticals. In the last few decades, pharmaceuticals’ budget on R&D increased radically compared to NIH. When NIH spent $41bn in 2020, the pharmaceuticals spent $91bn.
One third of the new drugs in the last twenty years were developed by small or emerging pharmaceutical companies. These companies have little revenue and seek financing from the big companies or venture capitalists to spend mostly on developing new drugs.
Big pharmaceuticals then buy the innovations of these small companies and spend on the clinical trials until the drugs are ready for approval to be marketed.
There are usually three clinical trials, and sometimes a fourth is also required by the Food and Drug Administration (FDA) or even the pharmaceutical company themselves to prove the superiority of their drug compared to the ones available in the market.
It is estimated that on an average, companies spend $0.8 to $1.4bn on clinical trials for one single drug, and close to $1bn in preclinical R&D.
Pharmaceutical companies’ decision on R&D is driven by anticipated future profits which depend on the expected lifetime global revenue from the drug, the likely R&D cost, and the policies that affect the supply and demand of the prescription drug. Once a drug is approved for marketing, companies benefit from patent rights that last 20 years, which gives them monopoly power for sales.
The federal government invests in R&D and also purchases a substantial number of prescription drugs for the Medicare, Medicaid, VHA, and Affordable Care Act programs on behalf of retirees, veterans, persons with disabilities, and low-income households.
Revenues generated by pharmaceuticals from federal spending encourages new drug development. As is evident, business strategy requires covering all the cost incurred on developing the drugs, hence the costly price tags on medicines.
What is the function of accreditation?
Health care accreditation organizations create a set of standards with the help of industry experts, and health provider organizations need to be compliant of these standards to receive the accreditation. The US has five major accreditation organizations for the hospitals only.
Hospitals decide on the type of accreditation they want. These are based on hospitals’ performance in patient safety, infection control, and quality improvement. Ultimately, accreditations strengthen the organizations performance, but the process takes two to three years and requires reviewing every few years to maintain the certification.
This is expensive and an additional reason for the high cost of services in the US.
Accreditation is mandated by the law in the US to ensure reimbursements from the government. It is a commitment by organizations to continuously improve their quality and remain compliant to make the claims.
Does the Health Information System drive up costs?
Health Information Systems (HIS) are the conduit through which all the Medicare, or employer-based insurance claims, are processed. It generates the proof of the services provided. Many HIS are connected to the government's Centers for Medicare and Medicaid Services (CMS) to make direct claims for the services rendered. A comprehensive and integrated HIS is extremely expensive.
The above is a patchy discussion of the highly regulated and complex US healthcare system where patients, providers, payors, and policymakers are the stakeholders.
Their main challenge is the expense. To reign in the steep rise, they are changing to a value-based system where providers are incentivized to keep their beneficiaries healthy by giving more quality primary care to lessen the utilization of expensive hospital care, emergency care, and specialist care.
According to experts, the single payer systems, especially the VHA, provide more satisfactory care to the beneficiaries than the other plans.
Bangladesh has a long way to go to develop a sophisticated health care system, but it is important to be aware of what is out there.
Dr Maliha Mannan Ahmed is the Founder and Executive Director of Organikare. She has an MBBS, MBA, and a Master’s in Health Care Leadership.
