Private Healthcare is Challenged in Canada, Public Healthcare is Challenged in the USA

Writing September 11 in The Globe and Mail, columnist Andrew Coyne summarized a recent Supreme Court decision in British Columbia that encapsulates some of oddly symmetrical comparisons between Canadian and US American healthcare systems.  Both are challenged at balancing public and private components.  The core issue is how the two funding systems co-exist. 

Within the USA, there are prevailing misconceptions about Canadian healthcare.  First among these is that it is a socialist catastrophe, a narrative that has been actively promoted by for-profit insurance companies (follow Wendell Potter).  What may not be widely understood is that private payors flourish in Canada.  In fact, they constitute the only channel to pay for most pharmacy and psychological care, among other services.  Like the USA, Canada struggles with how to reconcile the sometimes competing objectives between these two methods of paying for healthcare.  

In Canada, there is an acknowledged risk that private healthcare will jeopardize public healthcare delivery.  In the USA, private insurers have been terrified by the prospect of a public option that competes against their offerings. 

Within the recent court ruling in B.C., physicians sought to expand private services outside the provincial health plan (Canada lacks a national health plan like in the U.K.; each province goes on its own).  This meant that physicians could receive both public and private payment streams.  Coyne, who is generally towards the right on a Canadian political spectrum, argues that the two systems must be kept separate: 

There are good reasons, from efficiency to personal freedom, to allow private providers to work within a publicly funded system, or to work outside it. But there are equally good reasons to forbid combining the two. It’s one thing to say that patients have a right to pay for care, if they are not satisfied with the treatment they are receiving from the public system, out of their own pocket: only the most blinkered ideologue would prevent people from doing what is best for themselves and their families, or from spending their own money.

But when patients are permitted to pay, and doctors to charge, fees in addition to what the public system provides – or what amounts to the same thing, if patients can pay privately for services such as diagnosis in return for preferred access to other, publicly provided services – that is not people spending their own money for private care. That is people buying their way to the front of the line for public care. That is giving first claim on public dollars to those rich enough to supplement them with their own – when the whole purpose of public funding is to ensure, as the judge wrote, that “access to necessary medical services is based on need and not ability to pay.”

He goes on to explain this problem in terms of adverse selection and moral hazard.  Also, he cites how the US addressed this problem through implementation of the individual mandate within Obamacare.  US Medicare, perhaps the closest analogue to a hybrid system within the USA wouldn’t allow private queue-jumping either.

However the scenario he fears in Canada has in other ways been actively promoted in the USA.  Poorer and older (read: sicker) patients are directed to separate insurers that rely on public financing.  Employer-sponsored coverage, for patients that are logically more healthy, is privatized.  Essentially, this increases the costs of public healthcare and subsidizes the private sector actors treating everyone else.  Provision of a public option (or M4A, or whatever it might be labeled) would upset this arrangement.  

It appears that there is a fundamental asymmetry between the approaches in Canada and the USA.  Within Canada, decisions are made more with a mind towards protecting the public purse.  In the USA there is more defensive posturing to protect existing income streams for providers.  The result is higher costs that are not simply due to the administrative burdens of a multi-payer system.  

-published October 6, 2020

Executive Order Implementing M4A Under Cover of COVID?

Were he smart, some argue, Trump might issue an executive order that implements Medicare For All (M4A), prior to the US election in November.   Maybe it would be an appealing campaign promise, capturing some populist energy.  COVID-19 has driven increased support for M4A.   As an opponent, Biden dismissed M4A, much to the disappointment of many otherwise enthusiastic supporters.  Putting aside questions of whether this can be accomplished through an executive order, even temporarily, it could shift perceptions to Trump’s favor amongst whatever voters haven’t already formed final decisions of who they’ll vote for.  

There are many reasons why it wouldn’t happen.  

• Trump isn’t smart about health policy.  Many argue he isn’t smart, period.  But he is intelligent at riling up US American passions.  On the topic of health policy, he plainly doesn’t want to be bothered.  Writing recently in the Washington Post,  Paul Waldman sums up how he has failed to grasp anything of substance about voter concerns over healthcare.  Therefore, this isn’t a topic that he understands well enough to excite voters, like immigration or tax cuts. 
• Campaign promises are quite different from actions such as an executive order.  In 2016, Trump told Jeb Bush that the Iraq War was “a big fat mistake”.  But then he found bellicose agents like John Bolton for his administration.  For all the hits on NAFTA, it is still essentially in place, but only with a different acronym.  Therefore, any edict to provide M4A would be more concrete action than has been characteristic of this administration. 
• The donor class (of both parties) would simply not countenance this level of intervention.  The existing system may be unbelievably costly and yet it props up so much profit that they would stop making campaign donations.  
• It would be a stretch to talk his supporters down, after hearing so much about “socialism” and healthcare.  Coming from him they might love the concept, but there would be cognitive dissonance to overcome. 

The more curious feature of M4A may be how it has seized voter imaginations thus far.  The prevailing public sentiment probably isn’t to enroll in what Medicare actually is- a hodgepodge of programs that have been thrown into a pot over decades.  Its various parts have complicated, differing cost and coverage rules. The privatized version, Medicare Advantage, resembles managed care provided by employer-sponsored coverage.  The one unique attribute of Medicare, at least in the USA, is that it is universal- for a limited cohort.  That may be its most appealing attribute; choice research could reveal if this is so. 

Beyond universality, what voters want is probably more like traditional Medicaid.  There would be no fees collected at the point of service, and copayments or coinsurance would vanish.  Unlike Medicare, there would be no means-testing on the basis of income.  Basically, it would be how healthcare looks in Canada.  Profits would be slimmer, and so the odds of many candidates proposing that within an election are zero. 

-published September 18, 2020

Discovering the White Space for Retail Clinics in Drugstores

“White space” refers to an unmet need for consumers (or patients).  Finding it is a critical step in successfully marketing any product or service.  On a visual or graphic representation, white space is an area of need that is not occupied by competitors, or where demand could be developed.

Drugstores are a tantalizing channel for new services, especially ones that patients would find convenient, useful, or more difficult to get elsewhere.  The COVID-19 pandemic is a disruptive event that will change how people use these retail settings.  What is missing from the drugstore experience now?  What services or products that could be successfully delivered there in the future?

Background

Drugstores have huge advantages in relation to other places where healthcare transactions occur.

• In the USA, the largest chains (CVS, Rite Aid and Walgreens) have many great locations, with bricks-and-mortar at a vast number of busy intersections. Pharmacies and drugstores are widespread in other industrialized democracies too, even if they function in quite different ways.
• These companies are nested within differentiated and profitably interdependent chains of services. Payors, pharmacy benefit managers, distributors and retail outlets constitute a single integrated ‘ecosystem’.   Walgreens owns about a quarter of Amerisource Bergen.  CVS Health is an amalgmation of the eponymous pharmacy, Caremark (PBM), and Aetna (insurance).  Even without outright ownership, the contracting matters within these chains and arms-length suppliers are complex and intricate- a topic for another day.
• The general public esteems pharmacists. Regard for their profession is very high, particularly in attributes such as trust and honesty (Gallup Poll 2020).  And unlike other highly-ranked professions, it is usually easy to access pharmacists, often on a walk-in basis, without an appointment. They are at heart of drugstores.  In some countries, such as France, they virtually are the store.  Pharmacies there are set up to function more like the independent hardware model in the US, centered on professional advice and recommendations.
• As the feasibility of primary care diminishes against procedure-oriented and diagnostic medical service models, a vast amount of clinical services are potentially more convenient and accessible outside traditional hospital or clinic settings.
• In theory at least, drugstores needn’t be as encumbered by models of sickness that underly other healthcare transactions. There’s more chance of promoting wellness than in hospitals or medical clinics.  People encounter the medical system because they are sick.  Drugstores benefit from visits for a wider range of purposes.

Retail Clinics sprung up over the last 15 years as a logical way of leveraging the value of drugstores to fulfill patient needs for speedy, convenient healthcare.   It is an evolving concept.  Like any early-stage product or service, the shape of retail healthcare isn’t settled yet.  Service models are constantly evolving.  Some are being refined while others are being ditched. Tom Charland of Merchant Medicine  (a great source for knowledge on this topic) refers to the broader category of on-demand medicine: “urgent care, virtual health, retail clinics and employer clinics”.  This is a key distinction- a common denominator among all of these is being able to offer professional services without an appointment. Read more…