Obama and the US difference

José María de Areilza. Dean. IE Law School

4 December 2009

Huge healthcare costs in the US, coupled with 45 million citizens without health insurance and the individualism that is so characteristic of the US, are three pieces of a puzzle that Obama is going to have a very hard time piecing together.

In matters of public health, the United States differs from the rest of the West. It is true that its problems are similar to those of European countries with regard to high spending on health and its lack of control. Moreover, in terms of technology, research and continuous advances in the fight against various diseases, its results are also comparable with Europe’s, or even better.

However, it has a system that proves very expensive for state funds and does not provide sufficient benefits: almost 45 million citizens do not have medical insurance, and in many cases it is not for the want of trying. These long-suffering citizens only receive health care beyond the age of 65 years or in genuine emergencies, despite the disproportionate weight of health spending in the state budgets and the fact that it would be far cheaper to provide them with care using a system that applies preventive medicine.

In the 20th century, half a dozen presidents tried to carry out an in-depth reform of this model, but one after the other ended up throwing in the towel. They saw how the dominant culture of individualism and many citizens´ mistrust of the state’s powers make it impossible to import social models from Europe. Of course, this cultural difference is fostered by the powerful pressure groups made up of private insurers and their health business allies.

If we measure time on a political scale, Barack Obama is halfway through his term of office. Any new President of the US (and any fan of the series The West Wing) knows that once a term of office begins, he or she has an 18-month window for starting up his or her programme before the arrival of legislative elections, when all his or her efforts having to focus on re-election. Obama, one of the most fascinating and pragmatic characters of the recent history of the US, has decided that besides dealing with the economic and financial crisis and the war in Afghanistan, two exceptional and tremendously imposing challenges in themselves, he is ready to wager his presidency by playing the health reform card.

From what we have seen in recent weeks in the negotiations at Congress, the discussion focuses not so much on the state´s intervention as a new player, but rather on improving current legislation with incentives for every citizen to have an insurance policy. Currently in the US, general practitioners earn very little and consultants usually earn more than a lot. There is no good system for gauging the quality of a doctor or hospital or rationalising the number of tests and interventions, which prevents competition between hospitals and doctors when it comes to producing positive results. The care given to anyone in an emergency, including illegal immigrants, greatly increases hospital costs, which makes insurance more expensive. The main cause of individual bankruptcy in the US is the inability to pay medical bills. The mission of one third of the employees at private insurance companies is to reject patients who need extensive medical care and to refuse to pay claims or pay as few as possible.

The new legislation needs to eliminate these perverse incentives and allow the entry of new cooperative-type service providers with a prominent mission as a public service (providing cover for those who don´t have it at present but would like to) in a competitive system. In this debate, the Republican Party does not seem to be too interested in recovering the White House in the future. The exaggerated accusations made against the President by the Republican right wing have helped him focus and elude his initial commitment to completing the reform with the consensus of the two large political groups. It is my impression that, in the end, he will end up somewhere between the two. He will succeed in his transaction being seen by the left wing of his party as the best possible result of a balance between idealism and political realities. Furthermore, the centre vote will be relieved when it sees how certain improvements have been made but medicine has not been nationalised. Even so, the Obama reform may be the start of a shift away from a health system that is unfair and not particularly efficient.

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