Lessons the Developing World Shouldn't Learn From U.S. Healthcare

There are a lot of things that developing countries might learn from the US healthcare system…in particular, what not to do for health financing. After all, when compared to other countries, the U.S. has the lowest life expectancy per dollar spent.

Part of this comes down to how we pay to access healthcare. For years, people have debated the effect of co-pays or user fees on patients. Proponents argue that user fees stop people from unnecessarily overusing healthcare services, while also creating revenue generation for health facilities and a sense of “investment” in health that will encourage people to take better care of themselves. By contrast, opponents feel that user-fees and high co-pays provide incentives for people to seek care too late, thereby increasing overall costs. (For example, treating bronchitis early is a lot cheaper than treating pneumonia late.)

A number of economists have found that in the U.S. healthcare system, increased co-pays do curb unnecessary health use, reducing costs without reducing health outcomes. (For more on this argument, you can check out NPR Planet Money podcast #143.) However, a Medicare study just published in the New England Journal of Medicine deals this perspective a major blow. In fact, the Medicare study shows that doubling co-pays lead to worse health outcomes and more expensive care overall.

The number of opposing conclusions out there can be perplexing. My theory is that co-pays might work to curb overuse in populations that already have sufficient access to healthcare, but (unsurprisingly) they also discourage people in populations that under-utilize care. Older people covered by Medicare already face transportation, mobility and emotional barriers to seeking care. Poorer people already feel the financial stress of even small co-pays.

How is this relevant to the developing world? Well, in 1987, the Bamako Initiative -- written by many of Africa's health ministers -- posited the idea that all healthcare users should have to pay some small fee for care, even if a nominal one. What's more, many developing countries are starting micro-insurance programs (often called “mutuelles”) that can help people access care, but also raise the tricky question of co-pays.

As this Medicare study suggests, strategies that force patients into a co-pay system need rethinking. Higher co-pays don’t work if limited access is the problem, and can in fact create worse health outcomes overall, ultimately costing more money. Rather than reinventing the U.S. health care system by promoting mutuelles and user fees, more countries should be considering streamlining and reducing out-of-pocket patient costs. In the long run, that's not only the most financially viable option -- it's also the most humanitarian one.

Photo Credit: ShellyS