Boot Straps

It would be hard to miss the political football that persons of all political persuasions are playing with the Affordable Care Act (aka Obama Care, but since it is a rehash of a plan pushed by some Republicans in the reign of Bush I, it should be called O-B [Obie] Care).  One aspect of the game of interest to me is what minimum health care benefits/services the Health and Human Services Department (HHS) will require in insurance policies and what those plans may cost.  It is of personal interest because in the next few years I (we) will without employer-subsidized insurance and will need to buy some kind of insurance, and of professional interest because other governments, especially of the low-income countries, are also working on defining and paying for a minimum level of health care services.  HHS is just starting its process of defining its “Essential Health Benefits” (HHS fact sheet), and has listed the categories of services to be provided:

  • Ambulatory patient services;
  • Emergency services;
  • Hospitalization;
  • Maternity and newborn care;
  • Mental health and substance use disorder services;
  • Prescription drugs;
  • Rehabilitative services and devices;
  • Laboratory services;
  • Preventive and wellness services and chronic disease management; and
  • Pediatric services, including oral and vision care.

I am sure there will be pushing and shoving among various parties on what providing these services may cost, but a good guess is that the plans will cost about what the most basic plans cost in Massachusetts, most high medical cost state, which is about $6000 per person per year (MA Health Connector).

What about the rest of the world?  Leaving aside the questions of quality, quantity, and government support/control, the average per capita health care spending was $3000 in 2009 among the 30 “the high-income” countries of the OCED (Organization for Economic Cooperation and Development) (OECD Statement to the US Senate) and which I am equating to the cost of providing basic health care since most of these countries are single-payer (government) systems.  For the mid-income countries, data are lacking.  I found that the Indian government is designing an essential health plan (EHP) that will cost about $60 per family per year (Times of India article).  In Brazil, 25% of population has health insurance at a cost of $88 per person per year (Affat 2012).

As for the low-income countries, I wrote about EHPs and their costs in a previous post (“A Plan for Essential Care” 1/20/11).  I noted that an EHP typically provides for:

  • Reproductive and child health (e.g., obstetrics, family planning, immunization, nutritional deficiency);
  • Communicable disease control (malaria, TB, HIV/AIDS/STD, epidemics);
  • Non-communicable disease control (cardiovascular disease, diabetes, trauma, mental health);
  • Other common conditions (eye, dental disease); and
  • Community health promotion and disease prevention (Tanzania Essential Health Package 2000).

As for cost, the few EHPs that exist cost about $30 per person per year in non-adjusted US dollars:

Country Cost* Source
Generic low income 16-32 WHO Technical Brief 2008
Malawi 28 Bowie and Mwase 2011
Uganda 28 Ssengooba 2004

More recently, the WHO estimated that an EHP covering maternal and child care alone could be provided to 95% of all Africans at a cost of $8 per person per year and is advocating that governments to spend a minimum of $40 per person per year on providing health care (WHO 2010).  So for a government to provide a minimum level of health care costs from $30 to $6000 per person per year depending, of course, on what is provided and by whom.

Why is this important and why should health care companies care?  First of all, for just about everywhere except the US, these plans characterize the “public sector” market for health care, that is, on what and how much governments are spending or plan to spend and there for provide an index of business opportunities.  For example, if all of the sub-Saharan countries were to spend $0.50 out of their $30 per person EHP budget on drugs to treat STDs (sexually transmitted disease) that would an annual $500 million dollar market and worth looking into.  Second, a government’s commitment to a EHP demonstrates its acceptance of the responsibility to provide a minimal level of health care as a good investment for the country and as an alternative to letting people die or having families carry the cost of care.  Last, an EHP creates a health care marketplace where a minimum level of publicly-provided care (which could be provided through government-owned means or through for- or not for-profit companies) is the base on which the other parts may build:  insurers, pharmacies, medical educators, hospitals, lab services, etc.  So for the developing countries not yet enjoying the sophistication and expense of a US-type health care system, the design and implementation of EHPs are good straps for boot strapping to better health care and, for companies, an opportunity to contribute to building new markets.


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