College Basketball and National Health System Design

by Tom Robertson

Executive Director, Vizient Research Institute

The term "March Madness" has become synonymous with college basketball's season-ending tournament, culminating with the recognition of a national champion. The catch phrase wasn't associated with the NCAA tournament until 1982, when sportscaster Brent Musberger used it on television and the nickname stuck. It turns out that the term March Madness was first used in reference to basketball by an Illinois high school official in 1939, coincidentally the year of the first NCAA men's basketball tournament, won by the University of Oregon. Whatever its origin, March Madness is now inextricably linked to the collegiate tournament.

We borrowed the concept of a seeded bracket from athletics and created a "tournament" to discover which of eight different western countries' designs American health system executives would use as the basis for a brand-new system in a fictional country without any existing mechanisms for the funding and delivery of care. Healthcare executives were asked to temporarily step out of their role as providers and to make selections based on the overall best interests of the hypothetical country for which they were designing a health system.

Eight countries were included in the tournament. First round matchups involved national systems with significantly different characteristics. Great Britain, the most centrally controlled, publicly funded and publicly provided system in the world, with the second lowest per capita costs, faced Switzerland, a privately funded, privately provided system with minimal regulation and the second highest per capita costs in the field. Another first round pairing found the United States − with the least restrictive, most expensive and largest access disparities − facing Canada, closest to the British model among the remaining countries.

Germany, a largely private system with strict price controls and moderate per capita costs, faced Australia, which features a universal public insurance plan coupled with an optional private insurance overlay. The Australian government engages in bulk purchasing of selected services, including prescription drugs, a practice resulting in the lowest per capita costs of any country in the field. The final first round decision was between France, a publicly financed and privately provided system with extensive price controls and middle of the road per capita costs and the Netherlands, a largely private system with global spending targets that − if exceeded − trigger aggressive price controls. Costs in the Netherlands tend to be on the higher end of moderate.

The exercise was conducted numerous times with audiences across the country, and the results were stunningly consistent. In the first round, costs were the over-riding factor driving decisions. The United States, with per capita healthcare costs roughly twice those of any other country considered, was immediately eliminated in favor of Canada, by a wide margin. France was selected over the Netherlands and Australia consistently prevailed over Germany, again by healthy margins. Switzerland, the country with a system most like the United States, narrowly but regularly, gave way to Great Britain. When asked about the relative closeness of that vote, executives expressed a reluctance to adopt a publicly delivered system, although they ultimately did make that jump as the cost difference was too much to overcome.

Once costs were addressed, decisions quickly shifted to access. The four semi-finalists had per capita costs within an acceptable tolerance range, but access was widely variable. The British and Canadian systems struggle with very long waiting times and largely lack the amenities characteristic of the systems with a stronger private sector influence. Access became the decision lever once costs were normalized, and both France and Australia were selected over Canada and Great Britain by overwhelming majorities.

The final rounds always found France facing Australia. The French system has the shortest wait times, private providers and strict price controls with low but not the lowest per capita costs. The Australian system is a public/private hybrid, with good access but longer wait times than France. Per capita costs in Australia are the lowest of the eight countries considered. In a resounding majority, American health system executives chose France over Australia as a model on which to build from the ground up.

The purpose of the exercise was not to pretend that we could easily convert the U.S. health system to any of the others considered. It is much easier to be England if you started off as England. Nonetheless, there are valuable lessons to be learned from having played the game. Accessibility matters, but not at any cost. The United States and Switzerland, the two most accessible (and not coincidentally, the most expensive) systems were categorically eliminated from consideration at the first opportunity. The Canadian and British systems, universally criticized for their limitations on access, were chosen by American healthcare executives despite those concerns because the cost of not doing so was unacceptably high. Once costs were normalized − all four of the semi-finalists have per capita costs only a fraction of those in the United States − access quickly became the most important variable considered.

Is there a way to narrow the affordability gap between the United States and either France or Australia while maintaining most if not all our advantage with respect to availability? What is it about France or Australia that allows them to offer attractive access at costs so much lower than ours? The answer is deceptively simple: price controls. Of the eight countries in our March Madness exercise, the United States is the only health system operating without price controls. We'll never become England, but we don't have to. We just need to recognize what the other seven countries in our March Madness exercise already know: the market does not deliver efficient and affordable pricing when it comes to healthcare.

Hundreds of American healthcare executives, when given the choice of eight different national systems on which to model their own, chose France. Far more important than their selection of France over Australia, however, is the choice that they didn't make. They did not choose our own system. If starting from scratch, we would not build what we have. The adoption of price controls would move the system that we have just a little bit closer to the one that we would build if given the chance. To assume that we will arrive where we would ideally like to be without making any course corrections is … well, if it was March, some might say it was madness.