The American Health System
November 12, 2008

RADIO 2CBA FOCAL POINT COMMENTARY BROADCAST ON FRIDAY OCTOBER 1 1999 ON RADIO 2CBA FM.

The American health system is the best that money can buy. Unfortunately many Americans cannot afford to buy it. For example, the average black person in a New York slum has a lower life expectancy than a person in Bangladesh.

Last night, Dr John Kitzhaber spoke at a seminar organized by the Health Services Association of NSW. Dr Kitzhaber is the Governor of the west coast American state of Oregon. He was at one time an emergency room doctor and so he knows the American health system from the inside.

Dr Kitzhaber is one of the founders of Oregon’s system of funding health cover. Health cover is a basic issue in the United States. But 40 million Americans have no health insurance at all.

In Oregon, the state pays for 785 medical procedures. If the procedure is not on the list, the state does not pay for it.

The Oregon scheme has six characteristics, First, it recognizes that there is a limited amount of money to finance health care – and so it rations the money. Of course, the money is also rationed elsewhere – not least here in NSW – but not necessarily in such an explicit way. A broadly based state committee has drawn up the list of 785 procedures that will be funded. This is the prioritization of health funding based on clinical effectiveness.

Second, the philosophy is therefore explicitly different from other systems where the money is just spread around to try to cover as many procedures as possible. You know where you stand with the Oregon scheme.

Third, the Oregon scheme does not finance losing causes. Dying is an expensive activity. 25 per cent of a person’s total lifetime health care costs will be incurred in the last year of a person’s life. The Oregon scheme does not finance fruitless struggles, such as the final stages of AIDS.

Fourth, the Oregon scheme is very popular with citizens and politicians. It has enabled many poorer people in Oregon to gain access to basic health cover. This is also good news for more affluent Oregon citizens, whose hospital emergency rooms are not being clogged up by emergency care for uninsured patients.

Fifth, the Oregon system has focussed health care debate on the people in need. Unfortunately, much of the American health care debate elsewhere is over what else should go to people who already have health cover. For example, pharmaceutical companies are very active in their lobbying the Congress in Washington about the inclusion of their products on the equivalent of the Australian Pharmaceutical Benefit Scheme. Big money has a major impact on the members of Congress. But across the country in Oregon, the attention is on the needs of poorer people.

Finally, the Oregon health care system is a bright point of hope in a gloomy situation. American health care costs are set to double in the next decade. President Clinton’s attempts to reform the health care system have failed. The Oregon system is a rare example of some progress being made. It has lessons for the entire country.