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Our Government Run Health Services – Part 8 - Summary

UncleSamIn this series of articles we’ve looked at the following US government run health care systems: Indian Health Service (IHS); (State) Children’s Health Insurance Program (CHIP); Medicaid; Medicare; Federal Employees Health Benefits Program (FEHBP); Military Health System (MHS/TRICARE) and the Veterans Health Administration (VHA).

Some of these programs are run by the federal government and others are largely run by the states with some federal funding and oversight. There is also a wide range of ways in which care is provided, ranging from programs with their own facilities, such as the IHS, MHS and VHA, to ones such as the FEHBP that recommend private plans that use their own network or regular provider facilities. We’ve tried to make sense of the various features of these programs in the table below.

Feature Comparison
In the first section we look at how the programs are administered. When people talk about government run health programs they tend to infer that the federal government is pulling all of the strings. In fact, the two largest programs are actually administered by the states with policy, regulations, funding (split 60:40 federal:state) and monitoring at the federal level.

One, perhaps overly simplistic, measure of the effectiveness of a system is the cost per beneficiary, so the second section looks at budgets, beneficiaries, employees and the number of administrators. A couple of things leap out. First, there’s no clear relationship between who runs the programs and the cost per beneficiary. The number of beneficiaries managed per employee doesn’t show a clear pattern either. However, look at the difference between FHEBP, where a very small number of administrators recommend private plans, and the Indian Health Service or VHA. The FHEBP services 20,000 beneficiaries per employee, whereas the other two service 100 and 120, respectively. The reason is that both of the people-intensive programs provide everything from training and preventive care to water quality improvement projcts and extensive in-home care. The actual number of people involved in administering the FHEBP program should include all of the administrators at the private companies, but those figures aren’t directly available. If you compare Medicare and the FHEBP the costs per beneficiary are about the same, but Medicare patients are all over-65, so their health care costs are going to be much higher per person than for the federal employees, whose ages generally range from 18 to 65.

Even more remarkably, the costs of three of the federally administered programs also include all of the costs of building and running hospitals, clinics and other facilities, as shown in the third section. Although those costs show up within the figures for plans that involve private participation, they’re spread across these government programs and the private sector. Remember that one half of Americans have private insurance and the private facilities are servicing them and four of the government programs, notably Medicare and Medicaid.

The fourth section looks at the varying requirements for enrollment. Note that many programs allow beneficiaries to also take advantage of Medicare and Medicaid. The fifth section looks at trends and programs for improving the availability and efficiency of services, such as telehealth programs for the chronically ill. The final section shows that all of the programs can demonstrate that they have improved the care and outcomes for their beneficiaries, but there is always room for improvement. Only two of them, CHIP and FHEBP, avoid the criticism that they are inefficient. Even though the Indian Health Service is run on a shoestring, there have been well documented cases of money and resource mismanagement. There is also considerable room for improving the performance metrics gathering, analysis and corrective actions, with the VHA and MHS leading the field in that respect.

A comparison of government run health systems.
Feature IHS CHIP Medicaid Medicare FHEBP MHS VHA

Federally administered program Yes No No No Yes Yes Yes
State administered. Federal funding and oversight No Yes Yes Yes No No No

Annual budget ($Billions) 3.6 381 320 420 36 42 88
# of beneficiaries (Millions) 1.8 11.3 58 44.8 4 9.2 25
Dollars spent per beneficiary 2000 3363 5520 9375 9000 4565 3520
Total # of employees 15,000 38,000 2,500 4500 200 137,000 247,000
Beneficiaries per employee 120 300 23,200 9955 20000 2600 100
# of administrators 10,200 38,000 2,500 4500 200 3,500 2000
# of healthcare professionals 4,800 Unknown Unknown Unknown Unknown Unknown Unknown
Number of facilities operated 124 0 0 0 0 900 2650

Organization defines minimum benefits Yes Yes Yes Yes Yes Yes Yes
Organization runs its own care facilities Yes No No No No Yes Yes
Organization recommends private plans No No No Yes Yes No No

Beneficiaries must have limited income/assets No Yes Yes No2 No No No
Beneficiaries must be over-65 No No No Yes No No No
Beneficiaries may also qualify for Medicare Yes No Yes (Yes) No Yes Yes
Beneficiaries may also qualify for Medicaid Yes Yes3 (Yes) Yes No No Yes

Community focused Yes No Yes4 Yes4 No Yes Yes
Organization is focused on preventive care Yes4 Yes4 No4 Yes Yes Yes Yes
Plans provide coverage for long term care No No Yes Yes Yes Yes Yes
Organization uses electronic health records Yes Yes4 Yes4 Yes4 Yes4 Yes Yes
Organization has a telehealth program Yes Yes Yes4 Yes4 No5 Yes Yes

Verifiable health improvement achieved Yes Yes Yes Yes Yes Yes Yes
Organization has significant inefficiencies Yes No Yes Yes No Yes Yes
Organization could improve care Yes Yes6 Yes Yes No Yes Yes
Strong performance metrics program Yes No Average7 Average7 No Yes Yes

 1   The CHIP program is heavily funded by a tax on cigarettes and tobacco products. The others are funded from health care, income or other taxes.
 2   Beneficiaries must be aged 65 or over.
 3   Some parents may qualify for Medicaid.
 4   Varies widely by State.
 5   Many of the private providers have telehealth programs, but they aren’t driven by FEHBP policy.
 6   CHIP needs to reach a higher proportion of qualified beneficiaries.
 7   Could be improved along the lines of the VHA and MHS metrics.

Conclusions
We’ve looked at seven US government run health care systems. We haven’t attempted to go into the level of detail that formal studies and academic researchers manage, but a pretty clear picture has emerged. The programs are more diverse than most people realize and each has its strengths and weaknesses. Most of the programs run with lower administrative costs than the private health insurers manage. Even the Indian Health Service, which runs on a shoestring budget, achieves satisfactory results.

All of them could find some savings, but most of them either provide, or are starting to provide, preventive care, long term care, telehealth programs and electronic medical record keeping. The programs with military involvement – Military Health System and Veterans Health Administration, have much better metrics than the others and can more easily prove their worth.

Where there is interaction with the private sector there is considerable room for improvement. The FEHBP is mainly liked by its beneficiaries, especially members of Congress. However, that’s because it’s almost an “all you can eat” program. The VHA system looks best and it scores much higher customer satisfaction levels than the private insurers achieve. When the government has the ability to negotiate prescription drug costs it can make large savings. In some programs it is legally prevented from doing so – a ridiculous situation that puts corporate interests ahead of taxpayers’.

Removing the anti-trust protection that the private health insurers enjoy should also limit costs. The open market is a myth when it comes to health insurance. It’s a price fixing cartel. They allow the FEHBP, Medicare Advantage and so on to choose between very similar plans whose prices have been agreed in advance by the insurance companies behind closed doors.

If the government does introduce some kind of public option in the proposed health reform bill, let’s hope that they remove the handcuffs and blindfolds from the administrators before having them negotiate with the private insurers. If they were to decide to extend the VHA and run everything themselves there would be a huge outcry from the private sector. However, if only the uninsured were covered it would represent a doubling of the number of beneficiaries handled by the MHS and VHA. If they extend Medicare/Medicaid they would be handling about 50% more beneficiaries than they do now. In both cases, efficiency of scale should lower costs per patient. If they create a private exchange, similar to the FEHBP but with much stricter controls, to bring the services in line with the VHA’s, they may be able to achieve their goals with fewer new government employees than other options.

Tomorrow, we’ll return to looking at how much the politicians have achieved while we’ve been focused on this series. We’ll also set up a new page in the Resources area to draw together all of the episodes of the various series we’ve run recently.

Related Posts: Part 1 – Indian Health Service. | Part 2 – CHIP. | Part 3 – Medicaid.| Part 4 – Medicare. | Part 5 – FEHBP. | Part 6 – Military Health System. | Part 7 – VHA.

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