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US healthcare 'in danger of collapse'

Published on 13/11/03 at 10:19am

The US healthcare system is in "imminent danger of collapse" and needs radical reform, according to one of the country's leading doctors.

Dr Floyd Bloom, president of the American Association for the Advancement of Science (AAAS), has added his voice to the growing calls for a fundamental re-think of the Medicare health insurance system.

The US spends more money on medicine than any other in the world, yet one-third of the 40 million retired population have no help in paying for their medicines, and 41 million other citizens have no healthcare provision at all.

"The costs of medications are exceeding the ability of employers to pay for them, patients are dissatisfied with their care, physicians are demoralised about the practice of medicine because of the high rates of malpractice insurance, and the numbers of nurses we can recruit to the profession is diminishing," he said. "The system is not working and we need to find ways to repair it."

President George Bush has now pledged to address the growing crisis with an extension of Medicare to cover prescription costs for the elderly or 'seniors.'

Re-affirming his belief in the Medicare system, President Bush said it was the "binding commitment of a caring society" and said the Government would renew its commitment to providing seniors with "preventative medicines and new drugs that are transforming health care in America."

The President's Republican party now has control of both houses of Congress and has the opportunity to bypass the political rows that have so far scuppered plans for reform.

But there are already serious doubts about the President's plans, with the promise of an extra $400 billion to "reform and strengthen" Medicare seriously undermined by billions of dollars in tax cuts, meaning state-run healthcare systems will be put under greater financial pressure.

A survey by respected healthcare charity the Kaiser Family Foundation found 32 states plan to cut back their Medicare programmes because of cost pressures. Meanwhile, the Bush administration's idea of expanding the role of private Health Management Organisations (HMOs) and Preferred Public Provider Organisations (PPOs) has been dubbed  "a huge step backward" by consumer activist group Public Citizen.

Frank Clemente, Director of the group's Congress Watch said: "It will mean less choice of doctors, unreliable coverage for beneficiaries and higher costs for taxpayers due to the inefficiencies of private plans."

Public distrust of the complicated working of the public-private system is growing, with accusations of profiteering being directed at medicine price brokers, pharmacy benefit managers and the pharmaceutical industry.

State Medicare systems are now looking at establishing their own non-profit groups to negotiate medicines prices, while many seniors are taking the initiative by purchasing cut-price prescriptions from Canadian Internet pharmacies (see story opposite).

Conducting its own independent analysis, investment bank UBS Warburg predicts that a Medicare prescription drug benefit will be in place by 2004, in time for the next Presidential election.

Analyst CJ Sylvester forecasts the reform will be good news for the industry in the short-term at least and especially for Pfizer and Merck.

"While the highly politicised nature of this debate will continue for most of 2003, we believe the key individuals are in place for a relatively benign programme to be instituted. Clearly, those companies with the greatest exposure to diseases such as arthritis and hypertension [Pfizer and Merck] have the most at stake."

But a forecast 20% increase in prescription numbers is likely to be offset by large price discounts, ultimately having no effect on the industry profits in the longer term.

President Bush's plans have been welcomed by the Hank McKinnell, chief executive of industry leader Pfizer, but voters may not share his view if a large proportion of them continue to pay for medicines directly from their own pocket.


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