What Hillary could learn from Canada and Germany - national health care - includes related article

Washington Monthly, March, 1994 by Susan Fitzgerald, Mark Jaffe

* Bureaucracy: In its effort to leave all the existing players in place (especially the insurers), the Clinton plan adds new layers of bureaucracy. First, it would create "health alliances,'' which would collect premiums from individuals and businesses and "certify" health plans that would in turn provide care. While the administration paints this as a simple and minor exercise, the alliances would be handling vast amounts of money as the principal conduit between consumers and health providers. The plan calls for the states to set up the alliances. But in many major metropolitan areas this would require extensive inter-alliance negotiations. Otherwise someone living in Arlington, Virginia, might not have access to the Johns Hopkins Medical Center 40 miles away in Baltimore.

On top of these new alliances would be a new National Health Board, which Health and Human Services Secretary Donna Shalala describes as a "minor" oversight body. But internal administration memos indicate that it would be a multi-billion-dollar agency with a large staff and "far-reaching authority." The board would set premium targets for each alliance to help control costs and collect information for consumer report cards on health plans and facilities. This sounds like a good idea. But Pennsylvania's experience in collecting performance data and then ranking hospitals on a single procedure-heart bypass surgery--has been extremely contentious, with hospitals repeatedly challenging the findings with reams of their own statistics.

So in the Clinton market there will be hospitals, doctors, insurance companies, health plans, health alliances, and the National Board. This means there will be more boxes on the flow chart than there are now. The Clinton approach in fact balkanizes American medicine, and it doesn't really make administration simpler or save much money. Observers such as Urban Institute economist Marilyn Moon estimate that at best the Clinton plan would save $10 to $15 billion in administrative costs--or 1.6 percent of the nation's total health care bill.

* Choice: The Clinton plan differs from Canada and Germany on doctor choice--something the administration is very touchy about. "One of the great lies that is currently afoot in the country is that the president's plan will limit choice," Hillary Rodham Clinton snapped in one speech late last year. "To the contrary, the president's plan enhances choice."

But that depends on how you define choice. Compared to Canada or Germany, where virtually all doctors and all hospitals are available to all people, the Clinton plan offers only limited choice. True, a German patient must be referred to a specialist by a primary care doctor. But if a patient is unhappy with one doctor, he can try another. No patient is captive to any single doctor or hospital. But in the Clinton plan, "managed competition" will be buttressed by "managed care." This approach, used by health maintenance organizations, limits an individual to a set "network" of doctors and hospitals. Because HMOs are paid an annual fixed fee per patient, they have a built-in economic incentive to limit the kinds of care they give in order to make sure that the cost of care does not exceed the HMO's overall receipts. This could mean, for example, fewer tests or fewer specialist referrals.