Developing a fixed health services budget is a radical idea given the convoluted nature of today’s healthcare system. Reverse-engineering a budget allocation to the American population would be difficult because of the need to restructure each player in the behemoth health care industry. A fixed health services budget promises capped healthcare expenditures by the United States government. Many countries around the world have implemented a fixed health services budget, including Scotland. Although such systems ensure capped spending, they pave the way for shifted ideologies about healthcare and limited access to care to the patient’s detriment while simultaneously altering the existing roles of each stakeholder in the health care industry.
A fixed budget demands many changes to the inherent guiding principles of health care. The new driving principles would be complimentary access at the point of care and care focused on need rather than the ability to pay. The system in the United States today focuses on care volume at the expense of quality. A fixed budget mandates a shift in focus from providing as much care as possible to a focus on providing the highest quality of care as possible to fit within budget constraints. By virtue of having a capped budget, there must be a shift away from the fee-for-service model of health care. The fee for service model incentivizes greater volume, an unviable model if spending is capped. In addition, the government would have to make preliminary forced investments in national wellness to reduce the demand for care in future years to ensure the sustainability of the new health care system. A drastic change to the existing health care system would require front-loading costs to implement policies, such as the wellness program, to ensure the success of the fixed expenditure system.
The cap on healthcare spending would also enable the United States government to allocate more money for research, education, and technological innovation that would hopefully lower the costs of medical procedures in the future. One of the reasons Japan is far more technologically advanced than the rest of the world is because it did not need to allocate a lot of money for defense after World War II. Instead, the Japanese put money that would have been spent on defense towards scientific research. Similar results would hopefully be emulated in the United States to produce medical innovations extending across the globe.
These ideological changes lead to a focus on quality-based care, which directly affects the patients of the health care system. Government sponsored healthcare would lead to most patients having little to no out-of-pocket expenses unless they opted to conduct elective procedures outside of United States sponsored health care. Since money would be allocated based upon need, more attention would be paid to the elderly, the sick, and the poor. These populations would benefit because their health needs are being addressed. Improvements in health in the elderly, sick, and the poor would hopefully translate to improved economic conditions from increased productivity, fewer absences from sickness, and more. This is compounded by the effects of most families across the country having increased discretionary income that would otherwise be allocated to health insurance or other health-related needs.
Unfortunately, capped spending presents the possibility of limited access to care. That is, a care rationing effect would occur. Patients would be unable to visit physicians as often as they wished and would be restricted to specific reasons for hospital admission. Rationing introduces wait lists for patients seeking advanced medical treatment. This also means hospitals would have to prevent readmissions for cost control measures. The overflow from health complications would have to be addressed. A possible solution is making those complications payable out of pocket. The end result is detrimental for the patients because it may become difficult to access care when needed.
In addition to the patients, a fixed budget severely affects the recipients of health care dollars, namely hospitals, physicians, insurance providers, and pharmaceutical companies. Constraints on budgets would yield new partnerships and consolidation in the players in the health care arena similar to how the Affordable Care Act has driven consolidation in today’s health care market. There is also the legal question of what constitutes a healthcare dollar. In other words, what part of the budget would go towards non-medical services? Medicare and Medicaid would have to reevaluate which expenses they would be willing to cover. Medicare, for example, reimburses some transportation costs for its beneficiaries. Limiting spending by Medicare and Medicaid would cause limited access to care also if transportation or language barrier-based reimbursements are eliminated. The requirements for Medicare and Medicaid would be reevaluated and become more conservative. Such programs could also begin to mandate higher copays, deductibles, and premiums.
The fixed health service budget system would be very effective at controlling the costs of physician and hospital services. Salaries and unnecessary expenses would most likely be reduced at the outset due to the capped budgets. There is also the possibility of shuttering many hospitals and clinics that notoriously operate beyond financial solvency. Rural areas would most likely be the worst affected because rural hospitals typically operate on the thinnest margins due to lower patient inflow. Rural areas would need to be supplemented with grants or larger slices of the budget for them to maintain solvency. Telemedicine would be another possible route to address these concerns. There is a potential for reduced service quality because the system would reduce physician’s salaries, but that fear could hopefully be eliminated by the prospect of losing one’s medical license or by other monitoring sanctions. Some physicians may opt to remove themselves from the hospital system altogether and shift to a sub industry akin to concierge medicine. The prospect of a greater quality of care may reduce hospital readmissions rates and provide another avenue of cost savings.
Insurance providers and pharmaceutical companies also come under duress from the capped spending. Insurance providers would have a reduced role in the health care system because the United States government would function as the single payer. Insurance providers would evolve to exist solely as a private network outside of the government. Typically, patients who would be willing to pay out of pocket to skip waiting lists or wished to undergo elective procedures not covered by the public health care system would hire insurance providers. Pharmaceutical companies, would also face fiercer competition and undergo greater consolidation due to shaved margins. Intense legislation would have to be put forth to cover medications under the health care spending budget umbrella by limiting pharmaceutical prices, thereby drastically reducing the interest of the private shareholder.
By analyzing how patients, hospitals, physicians, insurance providers, and pharmaceutical companies are impacted by the change in ideology resulting from a shift to a fixed health services budget system, one can conclude that certain patients are worse off because they suffer from a limited access to care despite the emphasis on higher care quality. Limited healthcare spending mandates care rationing. Only patients able to afford external insurance would be guaranteed a theoretical limitless access to care. Physicians and pharmaceutical companies would battle with financial incentives to deliver a lower quality of care unless provisions were set in place to combat those incentives despite the change in ideology to a quality-of-care based healthcare system.