Prof. Karl Lauterbach
Health economist and member of the German parliament

How would you assess the U.S. health care system?

The U.S. has a system [that] does have a poor cost-benefit ratio. I mean, 40 million people lack insurance; another 30 [million] or so are underinsured. The people who are insured do have to worry whether they are able to pay the bills. People become bankrupt because they cannot pay the medical bills, and there are vast differences in the quality of care depending on how much you are prepared and able to pay. I think the system is not working well.

You watch American politics; you're in German politics now. Do you think we're going to change?

I think the Democrats will win the election, and they will then not change the system is my personal view; then they will lose a lot of credibility. ... This is my view.

... What would you say to Americans? What could we learn from looking at the German health care system?

... One can learn that competition is good. You need competition in the health care system and transparency, but you do not need for-profit competition. So limit profit and maximize competition and have everyone covered, and limit bureaucracy wherever possible. ...

... Another problem with the American health care system is that American insurance companies can a, turn you down and not cover you at all and, b, they deny claims.

Well, denying people and denying claims is both unfair and a waste of money and time for everyone. It is major bureaucracy, very frustrating, and ultimately someone has to pick up the bill. So this is only, let's say, repairing failures in financing the system. If the system is well financed, and if there is a risk adjustment among competing sickness funds, you do not have to deny people or claims.

Very important is that there's a pool of money from which sickness funds do get money if they have poorer or sicker patients because if that is working then you do not have deny anyone, you do not have to deny claims, and it is of interest to you to take everyone. Risk adjustment and the risk pool for the sickness funds, I think that is the most important single piece of the German health care system which might be of interest to you.

Nigel Hawkes
Health editor, The Times of London

Americans are very unhappy with our health care system. We're looking for ways to fix it. That's why we came here. We're looking for ideas. Do you think the NHS is a good model?

It's not one I would go with, to be honest. I think when it was invented in 1948, it may have seemed a logical thing to do, but that was the high-water mark of central planning, and things have moved on. We're now in a world in which people are much more demanding, and I think that the NHS is not very effective at delivering in that modern market-orientated world.

So I wouldn't go for a centrally organized, tax-funded, free-at-the-point-of-use system for many, many reasons. One is, you've got no control of demand whatsoever. The other is, it tends to be captured by the people who work in it. The money all tends to go into salaries, centrally negotiated contracts for nurses, doctors and so on, ... and you don't get a very patient-focused service. ...

My view, I have to say, is a minority in this country, in Britain. Most people believe that taxation is the way to go; for reasons I've explained, I don't. But if I were starting from scratch, I'd go for an insurance-based system, but with pretty firm price controls, centrally controlled, a bit like [how] the Japanese do it. And I think that works better.

But if you're starting from the NHS, to move to that system would be quite difficult. If you're starting from the American system, to move to that system would be quite difficult. Once you've got a health system embedded, changing it much is really quite a difficult job.

Prof. Uwe Reinhardt and Tsung-mei Cheng
Princeton University

If you're going to fix American health care, what do you have to do first? Do you first get universal coverage and then worry about costs? Or do you do it in the opposite order?

Cheng: ... Absolutely coverage first, providing access to all. Take Taiwan, for example. That is the route that they took. When National Health Insurance came in, in 1995, overnight they folded into the system 41 percent of the population who had no health insurance at the time. So overnight, immediately, these people had access to health care, and that saves lives. We all know that. ...

Reinhardt: ... Almost any policy wonk will now tell you, you must have universal coverage first. Then you have an even playing field, [not] one hospital saddled with a lot of uninsured, another one has few, and of course they can't compete. After you have that, you can have competition on quality, you can have competition on costs, etc. Everything hinges on there being universal coverage first. ...

If an economist were designing a system, would it be wise to put everybody into a single health care system, like, say, Britain's?

Reinhardt: I think that would make a lot of sense. Or you could have a system where everyone has the same standard benefit package, and then insurance companies could lay more stuff on top. ... In Germany they have 200 distinct sickness funds, but it's really one system. So you could have that. But what we have here makes absolutely no sense at all. ...

... May, what lessons do you [think] America could learn from Taiwan's health care system?

Cheng: ... [A] very valuable lesson is that the effective use of information technology does wonders for a health system, whether it be from a cost perspective or a quality perspective. In Taiwan's case, first of all, people access care with a smart card. It's a credit card-sized card. You go to a doctor or hospital, you present this card, and you're logged into the system. Then the doctors put in their provider's card, and now both the patient and provider are logged into the pairs system. ...

And this way, they can really monitor utilization. Taiwan's single-payer actually requires all the providers to submit, every 24 hours, a complete record of every piece of service delivered, ... and it can question you if it sees something untoward. ... So that's cost control. And also in terms of quality, they can see, by looking at what services are rendered for what diagnosis, whether the treatment was appropriate. ...

Is there a political lesson America could learn from the Swiss reform?

Reinhardt: Well, [the lesson] from the Swiss reform is that you certainly can have a private insurance system doing the purchasing of health care and administering that, and you can have some competition. Much of it is just actually imagined. It's just like having the airlines. ... American and United are pretty much the same, and yet, as a customer, it may please me to tell one of them to go to take a walk and fly with the other, although I get the same service for the same price. Still, that choice and that competition may have some use. You can learn that.

What you could learn from the Germans, they have a very clever system where the government tells private interest groups -- the doctors, the hospitals, patients -- to sit at a table and say: "We want you, within six months, to figure out how to solve this problem. ... And if it's reasonable, we'll accept it. If not, after six months, we will tell you what you will do." ... It's just like parents telling teenagers: "You go and do what you want. As long as you're reasonable, we'll let you do it. Otherwise, we'll take care of it."

Prof. William Hsiao
Harvard School of Public Health

[Could] Americans ... learn valuable lessons from looking at the health care systems in other countries?

Oh, certainly. There's no doubt in my mind United States can learn so much. To give you a concrete example, the U.K. began the paying of primary care doctors on a capitation basis [based on how many patients they cared for] and had them serve as a gatekeeper [to the rest of the medical system]. That started in the late 1940s, and the United States actually copied it in the managed care in the 1980s.

It was a good idea that worked and we could borrow?

Yes, no doubt about it. And other countries try new things, and some of them they have to discard because they didn't work, and others they defined as very successful.

... Do you have to get universal equitable coverage first before you can control cost, or do it the other way around?

In my experience, working in more than 40 nations around the world, I have never encountered a country [that] can control its health expenditure without establish[ing] a rational financing system first, because you need the info to control the health expenditures, and you need the financial power to influence the providers. ...

So in my world, when we advise nations we always say: Deal with the financing part first. And then, once you have done that, you actually have the capacity to deal with how to control the health expenditure inflation.

You have helped design health care systems in Colombia, Cyprus and Taiwan. Suppose you were going to do the same thing for the United States. Which model should we follow?

I will not say to the United States to follow any model. I think, if I'm designing for the United States, I will follow the principle [that] I will try to pick the best part of a system, and I will actually then try to go beyond that to remedy their shortcomings, because every system has some shortcomings. ...

Describe the Hsiao plan for reforming American health care.

If I had the influence of power, I would introduce a universal social health insurance for America, and that social health insurance would cover everything, but not long-term care. ... I will actually require people to save for their long-term care; then at age 65 they buy a single-premium, long-term care insurance policy.

So I will have universal social insurance cover everyone and a very comprehensive [benefits] package. I will require people to pay a modest amount [toward] company insurance, so people are aware there [are] resources used when you demand health care.

When you say "universal social health insurance," could we simplify that to "Medicare for everybody"?

Yes, Medicare for everyone.

Is that a solution for America?

That will be a solution for America on the financing side, ... and I will say if you have a unified system you can save billions of dollars in administrative costs, and that money can be used to pay for the uninsured poor people. So the total cost doesn't have to go up for the United States.

I would, on the provision side, require everyone to have a designated primary care, and I will actually follow the pay-for-performance system the U.K. has: I will let primary care doctors be the gatekeepers, and then they receive a fixed amount for every patient [who] selects that primary care doctor as their doctor.

If we went to Medicare for everyone, is there a place for Aetna and other for-profit insurance companies?

For America I think, in realistic terms, now they will have a role. They will become the administrators; this is what's done in Colombia. So you can create a role for the insurance companies, but they don't have the freedom they have [now] to operate and to generate the most profit.