Why We Need Government Run Health Insurance

In a search for a real world model for health care reforms, there is good news and bad news.

The good news is that any of the health care models in highly rated countries will be a huge improvement over that in the US for most of its population. There are many different models and The Commonwealth Fund in March 2008 described some of the disparities even within West Europe. Some countries like the Netherlands since 2006 operate almost entirely through private insurers and providers while offering wide choices. It ranks No. 1 in the Euro Health Consumer Index for 2008. On the other side the No. 2 and No. 3 ranked health care systems of Denmark and of Austria (that rate even higher than The Netherlands in other studies) are mainly government run and financed, with fewer choices. Almost all of the other countries have heavy government involvement through public health insurance and/or regulated pricing (as in Singapore) for many medical services. But the systems vary enormously from country to country.

The bad news is that this wide variation in the health care structure in top ranked countries muddies the picture for reforming US health care. It allows special interests and the lawmakers under their influence to argue against the Democratic consensus on the need for public health insurance as an alternative to private insurance. When driven by the public outcry to lower costs and cover the uninsured, they can point to The Netherlands and the more expensive (but still a third cheaper than the US) private insurance system of Switzerland as examples that we don't really "need" public health insurance in the US. But this is a highly flawed contention, and I'll explain why.

Largely through industry influence and aided by bad planning and happenstance the US has a shortage of providers. Take the important case of doctors. Both The Netherlands and Switzerland have 3.8 doctors per 1000 population, which is above the OECD median of 3.4. So private insurers can get competitive deals and pricing with providers in these countries. In the US by contrast we have only 2.4 doctors per 1000 population so it's entirely a seller's market. That's the main reason many US doctors are opting out of Medicare because of low rates even though these are generous by European standards. We have a similar though smaller problem with hospitals. Due to lax anti-trust oversight we have allowed many hospitals and chains to consolidate so there is now reduced competition and low consumer choice of hospitals in many places.

Detractors will be quick to point out that some (though few) developed countries with less doctors do manage to have relatively good and inexpensive care. Specifically these exceptions are Singapore, Canada, Japan and UK. They have 1.4, 2.1, 2.1 and 2.5 doctors per 1000 population and health care expense per capita of $1,170, $2,578, $3,678 and $2,760 respectively in 2006, compared to $6,714 for the US. But all these countries have managed to keep costs and prices low precisely through heavy government intervention. Singapore directly imposes price controls and restrictions on most hospitals and providers, and has a younger population needing less health care (only 7% are over 65 years old, compared to 14% in the US.) The other three, Canada, Japan and UK all have public insurance playing a huge role that determines pricing.

In other words, when we have a constrained supply of providers as in the US, we also need the purchasing power of a dominant buyer like the government (i.e., a monopsomy) to keep prices in check. Private insurers and their supporters say that this huge buying power of a public insurer gives it an "unfair" advantage, but unfair to whom? Yes, going by the West Europe as well as Medicare versus the private Medicare Advantage enrollment experience, I fully expect that over 80% of the business will go to the public insurer if it were created. That's precisely because this public insurer offers by far the best value, and only the very affluent or those with generous employers will opt for the much more expensive private insurance.

Let's be clear though: public insurance provides the means to drive down prices but does not guarantee it. There still has to be sufficient oversight and proper execution to ensure that special interests don't exert undue influence to come away with overly generous reimbursements. Think Blackwater, no-bid contracts in Iraq and after Hurricane Katrina... But this should be less of a concern post 2008 elections, with the high profile of this issue and a better administration in place. Also we need to separately address the issue of provider shortages.

Back to public insurance the primary responsibilty of US policy makers is to set up a high quality, cost-effective and universal health system for US consumers. It's not to steer business towards private insurers by selling out the public interest. Unfortunately, this is precisely what they did in the Bush era when they created the complex Medicare Part D's drug program for seniors. This barred Medicare from negotiating drug prices and is rightly viewed as a giveaway to drug companies, private insurers and middlemen.

Given its importance will Obama and the Democrats be able to stand firm and set up a public insurance program to run alongside private ones? Or will they submit to "compromise" that eliminates or postpones this step? It's a huge deal that will radically affect health care costs, and is a fitting test of the commitment and effectiveness of the new administration. We'll see.

Different This Time?

The good news is that President Obama hasn't let the current economic situation make him lose sight of the imminent need for health care reforms. The question is whether he has the resolve and insight to push the most important ones through.

The health care forum kicked off by him on March 5 has generally been well received. News commentators and political pundits have contrasted the atmosphere of open discussion and hearing of all the interest groups with the behind-closed-doors formulation of the ill-fated 1993 Clinton plan. How well the new approach works depends partly on how the working group discussions have been structured, and whether all the ideas could be aired and properly debated.

In these open discussions there are hopefully safeguards to ensure that special interests can't through mutual compromises squelch good ideas that adversely affect them. For example, payers and patients stand to enormously benefit from an increased supply of doctors; a properly designed public health insurance plan that fairly competes with private plans; reform of tort laws including restrictions on jury shopping and imposition of malpractice caps; and using a cost-benefit criteria to evaluate drugs. But these measures can reduce excess earnings of doctors, private insurers, trial lawyers and the drug companies respectively. So they all decide to "respect" each other and downplay such proposals.

Another danger in open discussions is the advance warning and preemptive opportunities available to special interests and the lawmakers that they have influenced or bought. Five senior Republican senators have already affirmed their GOP group's opposition to the public option, declaring, "..forcing free market plans to compete with these government-run programs would create an unlevel playing field and inevitably doom true competition... Ultimately we would be left with a single government-run program controlling all of the market.”

Huh? If private plans are more efficient and / or offer something better than the government program then why should they be wiped out? I don't much doubt the prediction, since the experience in France and Germany indicates that about 80%-90% of the people will go for the basic government plan (though 90% of the French also buy supplemental private insurance.) It's because a properly administered government -run plan can deliver better value than private profit-seeking entities, but then that's a sound reason to change the system. Note the "properly administered" qualifier - Paul Krugman repeatedly points out the success story of the government run Veteran's Health Administration in the Clinton years. Then services deteriorated and scandals like at Walter Reed emerged in the subsequent Bush era.

On this issue of public programs it is a little disturbing to see Obama appearing less than resolute and making conciliatory noises at the outset. He says he understands the objections because "...if a public option is run through Washington and there are incentives to try to tamp down costs, (then) private insurance plans might end up feeling overwhelmed.” Why? A March 12 item by Reuters quotes conservative experts who assert it will be "almost impossible to create a level playing field (between a public and private insurers)" but give no reason to support this.

Still, there are two encouraging aspects that makes the present reform thrust much more likely to succeed than the 1993 effort (other than the over-hyped closed-door versus open-door contrast):
a) A sadder, wiser, more anxious public is less likely to be taken in by those Harry and Louise ads. And a more dire health care situation has made the push for reforms much stronger.
b) Obama has rightly focused on the very high costs of US health care as an even bigger issue than extending coverage to all the uninsured. That should force participants to come up with solutions for more efficient and cost-effective health care, instead of simply shoveling more taxpayer dollars to outrageously priced providers.

Major Reform Steps or Media Hype?

BusinessWeek in its Feb. 23 issue is carrying this big article titled "CVS's Bold Bet on Health-Care Reform." Tom Ryan, CEO of CVS, has built the drug store chain into a "national health-care colossus" with $76 billion in annual sales.

Ryan's goal is reported to be "to help transform America's expensive and often ineffective health-care system. Seeking to take advantage of President Barack Obama's commitment to health-care reform, Ryan wants to use CVS's vast prescription database and burgeoning network of in-store clinics to treat patients with chronic diseases and help keep them out of the hospital, where most medical costs are incurred. "I don't think our health-care system is broken," Ryan says. "We are just spending too much, and it's unproductive." " And so the article goes.

I am a little bothered whenever someone in the industry says that they don't think the healthcare system is broken. That seems to indicate that they want to tweak the existing system rather than go for an overhaul. Though CVS is reportedly setting out to "transform" healthcare it doesn't seem as if the two steps outlined will drastically lower costs or improve coverage.

These two steps in essence are a) to build their electronic health records (EHR) system so that patients are helped in continuing to take their prescribed medications thereby keeping in better health and averting some costly hospital visits, and b) to set up in-store clinics that are mainly run by nurse-practitioners so as to handle routine and minor health complaints without needing to go to a doctor or hospital.

Everyone is in agreement that EHRs should be promoted and CVS efforts tie in well with this objective (even if the jury is still out on whether CVS with its dedicated PBM Caremark helps consumers.) Then there are some questions about the viability and growth potential of in-store walk-in clinics, especially in view of the hostility of the AMA towards them. But we can hope that they flourish and expand so as to take some pressure off the demand for doctors' services that are in short supply.

These efforts are fine and laudable. All I'm saying is that news coverage and hype about them shouldn't obviate from the larger issues of universal coverage, malpractice (tort) reform, doctor shortages, reduction of administrative waste, and drug policy rationalization.

Acting Now On Health Reforms

The state of the US economy and the Congress' struggle to pass a fiscal stimulus package seems to have crowded out the Obama Administration's mind share on other vital initiatives.

So I was glad to see Paul Krugman drawing attention to this issue in his Jan 29 Times OpEd "Health Care Now." Krugman argues that (a) The economic crisis and resultant swelling of the ranks of the unemployed uninsured adds to the urgency of reforming the health care safety net; (b) The cost of healthcare reforms are far less than the fiscal stimulus package, and hence not "too expensive"; (c) many of the health and health reform expenditures will of themselves stimulate the economy and should be part of the stimulus package; and (d) the time to act and seize the moment is short and we shouldn't let the momentum built from the current "serious crisis go to waste."

I agree with Krugman on all these points. If anything I'd like Krugman (and the Obama administration) to expand advocacy of health care reforms from universal coverage, single payer system and drug purchase coverage to also include other important measures. These are, addressing the doctor shortage and ensuring increase in long and short term supply of health care workers; malpractice and tort reforms that will immensely ease overall health costs; and allowing more international trade in health care services (importing doctors and exporting patients) that improves services and lowers costs. All these measures carry huge benefits, but are opposed by some influential lobbies.

Still, the main point of Krugman's article shouldn't be lost sight of. Congress has struck its compromise on a $789B package. Sadly, some needed health expenditures have been cut out, but a separate health care focused bill can address this. Obama's administration should keep sweeping health care reforms on the front burner and act before the window of opportunity narrows.

Build Upon Or Rebuild Our Health System?

This article by Dr. Atul Gawande on healthcare policy in the Jan 26, 2009 edition of the The Yorker has created quite a buzz in the US. Prof. Jagdish Bhagwati drew my attention to it last week, as did my brother Viranjit and his friends through email exchanges. Atul (bio here) is remarkable in that he's a prominent cancer surgeon in Boston, as well as a celebrated writer and a Macarthur (or "Genius") award winner. His longish article (that you can read first to compare your impressions with the comments below) contains vivid analogies and knowledgeable references to developments far beyond medical matters.

Atul's main theme in "Getting There From Here" is that it's far better to build on (or modify) the healthcare system that we have, rather than create a new one from scratch. He argues that good European healthcare systems like those in France, Britain and Switzerland are different from each other and evolved from some existing structures. He also draws lessons from technology advancement in phone service to stay with the tried and the tested. He blames debacles like China's Mao-era Great Leap Forward, Rumsfeld's Iraq war strategy and Bush's prescription-drug plan for seniors on the mistake of introducing something completely new. He cites the Massachusett's universal coverage plan as an example of successful incremental reform.

I partly agree with Atul and have the following comments:

• Borrowing from hi-tech terminology we certainly need a proper and well thought out migration path to smoothly shift to an improved system.


• There can also be "path dependance" in the system we end up with, as Atul points out. Snopes reports on the widely circulated email about vital design features of our booster space rockets (claimed to be) "determined over two thousand years ago by the width of a horse's ass."


• However, it doesn't follow that the final healthcare solution has to look anything like the inadequate and expensive mess that we have today. (How much do the space rockets resemble a horse's ass?) Talking practical policy, John Edwards at the beginning of the last primary season introduced healthcare reform proposals that addressed transition issues well. Hillary and Obama borrowed a lot of his ideas, and all three outlined sound migration plans.


• The major healthcare problems aren't confined to the people without coverage. Even "the hundreds of millions who depend on it" as Atul says of those who're insured incur criminally high costs. They at least indirectly pay for it through lower take-home pay (since employers look at the total cost of their employees), through higher taxes, and/or lack of international economic competitiveness. So a Massachusetts type plan that doesn't address costs is very inadequate.


• Atul does not offer solutions that address the high prices (double of those in Europe) of healthcare, and ways to reduce the scarcity of doctors.


• International trade (exporting patients and importing doctors) that Prof. Bhagwati and I have advocated isn't mentioned here. It can enormously help in savings and coverage while transitioning to the new system over say, a ten year period.


• The article has been selective in picking examples and laying out facts where others can lead to different conclusions. Some takeaways (as from the problems with the prescription drug plan) seem to be fallacious. See quoted text below.

I'll close by reproducing a detailed note from my brother Viranjit's friend Jonathan that's interesting and seems to make a lot of sense.

COMMENTS ON ATUL'S ARTICLE BY JONATHAN STARR:

My reactions to the article are mixed. Some things that I think are done well are:
1) It gives an interesting and helpful presentation of some of the history of a few (but just a few) existing national healthcare systems.
2) It nicely introduces the concept of "path-dependence" in the development of present systems of various types.
3) It gives some evidence that in some ways the Massachusetts statewide coverage program might be working well. (If so, then it is the first of several such state-based attempts to succeed, or even survive, in a meaningful way. The others have failed to expand coverage on a sustained basis, and have become so expensive as to become politically unsustainable. I had previously read that the Massachusetts program was becoming financially untenable as well, but perhaps I should look into this further.)

Some things that I think are poorly done, or are very misleading, in the article:

1) The author is extremely selective, for failure, in his choice of large-scale, centrally-planned systems to describe. Instead, he might have described the Taiwan health-care experience. Here, government health-planners chose specifically to overhaul the entire existing system, studied various other national healthcare systems (and pointedly rejected the U.S. model), created a comprehensive new plan, and implemented the plan nationwide. The implementation went smoothly and the results are very good and popular. Closer to home, the national introduction of the U.S. Medicare system in 1965 also went very smoothly, even in the absence of modern information technology and other present advantages. And, as the author of this article notes himself, the Medicare program is extremely popular with beneficiaries and with medical personnel.
2) The choice of the recent introduction of the Medicare prescription-drug benefit as a cautionary example of ineffectiveness of central planning is very misdirected. The difficulties in the introduction and administration of that program were and are direct consequences of the success of the Bush Administration (and its associated insurance and drug industry lobbyists and Congressional fellow-travelers) in PREVENTING centralization of this program. Had this benefit simply been incorporated into the existing Medicare program, it could have gone very smoothly. But instead, Bush and company wanted to assure that private insurers got the most financial benefit out it, and that the pharmaceutical companies would not face a purchaser with large negotiating leverage. Consequently, they consciously pushed for and implemented the decentralized, disjointed, and confusing system that we got. (Furthermore, they introduced no new funding source, other than more federal borrowing, to pay for this new benefit.) So, this example should serve as support in favor of a more centralized approach, not as an example against it.
3) The author admits that present public programs are more successful than private insurance at improving quality of care. (The paper by Professor Hacker at Berkeley, which I have mentioned in previous emails, documents this as well.) The author also admits that the Massachusetts program does not control costs well, and he does not make any other meaningful suggestion for controlling costs through any other "path-dependent" evolutionary program. Meanwhile, Medicare has been shown to limit administrative overhead and to contain costs better than private insurance (see again the Hacker paper).

The author, Atul Gawande, clearly is well-intentioned and concerned about assuring quality medical care for all. In this, he is joined by other high-minded medical professionals (including Ezekiel Emanuel, the brother of the new administration's Chief of Staff) who have written sincere and thoughtful articles and books recommending methods to improve care and expand coverage without resorting to a single-payer system. But, while they often have very good suggestions for improving care (some of which are being actively pursued by the Daschle team), their ideas often seem extremely weak, naive, and poorly-examined on the financing side. (I plan to write a new little review of some of these publications to share with the single-payer-advocacy crowd, among others, and will share it with you.)

The various "middle-ground" and public-private-hybrid approaches that have been proposed might nominally (or just theoretically) make some level of healthcare insurance available to most or all, but they retain many of the problems of the present system: high administrative and insurance-company overhead costs, care-denial by profit-minded insurance companies, deflection of care-provider efforts and time to dealing with insurance-related matters, poor payer-based impact on care-quality improvements, anti-competitive burdens on American businesses, etc.

Medicare for All would expand an existing and popular program to cover everyone. The administrative structure is already in place. There would be enormous cost-savings from reducing administrative costs, eliminating insurance industry salaries and profits, increasing consumer negotiating leverage on fees and prices, and even from improving the identification and dissemination of information on the most effective approaches to care of particular conditions. The potential for improving health-care outcomes is enormous, and documentable from existing experience. Employers would be spared the financial and administrative burdens of providing healthcare insurance to employees (while simultaneously paying taxes to support existing public programs). Physicians, nurses, and other healthcare professionals could spend more time providing care and less time battling (often futilely) with innumerable insurance companies, and would be paid more predictably and reliably as well. Choice of medical-care providers would be maintained, and even increased compared to a lot of private programs which limit such choices to participating providers. And, supplemental insurance plans still could be offered privately (just as they already are now) to cover things not covered by Medicare.

Leadership is the key, just as it was when LBJ got Medicare (and numerous other publicly-beneficial programs) approved, and just as it was (to contrary effect) when George W. got his badly-conceived prescription-drug benefit (and even more badly-conceived tax-cuts for the wealthy) approved. What impact will our present leadership choose to have?

Another Pune Hospital From Up Close

In our current India trip I've come into close contact with another major hospital in Pune, India. This time it is Ruby Hall Clinic (aka Grant Medical Foundation) which is more plush than Inlaks & Budhrani Hospital that I first talked about in my Oct. 28, '08 post. It's a more likely destination for Western medical tourists, though still imperfect including from the perspective of its geographic location and distance from an international airport.

On Dec. 24th after arriving in Pune Anita and I took my in-laws (Daddy and Mummy) by ambulance to Inlaks for a thorough follow-up medical examination. The pronouncements by Dr. R and Dr. P were very encouraging. Daddy had recovered well from his two surgeries 2 - 3 months earlier, and both Daddy and Mummy needed just some minor adjustments in their medications. Our system of having four good round-the-clock attendants and daily home visits by a physical therapist seemed to have worked well. Mummy's main problem was a persistent irritation in the throat and esophagus that sometimes caused her to throw up while eating. Dr. R ascribed this irritation to a drug she was taking to control heart function and blood pressure, and switched it.

On December 25 while we were dining together, Mummy gagged on a mouthful of food. Familiar with the drill, Shabana (her attendant) brought a pan as she coughed and retched, and then quietened with her head down while (we thought) regaining her breath. But a few moments later we asked whether she was okay and there was no response. She was immobile and slumped over with her eyes open. I immediately did a Heimlich Maneuver in case something was choking her. No effect. Then suspecting a major stroke attack I dialled 101 (the Indian equivalent of 911) for an ambulance though the system worked differently from the US.

The operator advised me to directly call the ambulance service of the hospital and gave me the number of Ruby Hall that I picked among the choices. The Ruby Hall dispatcher was quick, and asked if I wanted a doctor to come with the ambulance for an extra charge and I said yes. (Otherwise they send ward boys to help evacuate the patient, but they are not trained and equipped like the paramedics in the US.)

Mummy came to four minutes after her attack, just as I put down the phone. She didn't recall losing consciousness, and wondered what the fuss was about. Fifteen minutes later at about 10pm the Ruby Hall ambulance arrived with a resident doctor from the trauma unit and other staff. The doctor asked questions, examined Mummy, and found her functions and vital signs to be near normal. Mummy was then carried down from their second story apartment to the waiting ambulance and we arrived at the Ruby Hall emergency and trauma center.

There, she was further examined by other personnel including the emergency medical officer, then sent for head MRI, X-ray and other tests. They found nothing alarming. By now it was well past midnight, and she was moved to a nice big private room in the in-patient wing. Our attendant Shabana whom I had brought with me had done a good job helping tend to Mummy and stayed the night with her in the hospital.

In the morning the senior neurologist Dr. B. came into Mummy's room, examined her as well as the test reports and told us she hadn't suffered a stroke and there was nothing to worry about. She had merely fainted ("transient loss of consciousness") because her fit of coughing and heaving had temporarily restricted blood flow to her brain, with no other ill effects. If it ever happens again, he advised, she should be made to lie down (this time she had been kept propped in her wheelchair) so that the increased blood flow to her head revives her more rapidly. By 4pm that evening Mummy was back at home. Anita had stayed back at the apartment to take care of it as well as Daddy, and there was relief and celebration when we all got back together.

The outcome was the best we could have hoped for under the circumstances, and we went ahead with our plans to fly to Delhi the following morning. Our overall experience with Ruby Hall was very good. Here are some highlights:

Ruby Hall is certainly more upscale than Inlaks. Security staff at the entrances checks bags (a fallout of the Nov. 26 '08 terror attacks in Mumbai.) The staff to patients ratio is higher and the rooms and corridors are cleaner. In the inpatient wing the attentive female staff at the nurses' station was smartly dressed in two distinct types of sarees. I learned that nurses wore one type, and the other was worn by "coordinators" who were there to help schedule appointments for patients, assign them rooms, look to their comforts, regulate visitors, etc.

There were several residents and interns in the emergency and trauma center when we had arrived around 10pm who looked very young and not too experienced. They did have a "full-fledged" doctor in the emergency medical officer and a head resident, who both also looked thirtyish or less. But when I think back to emergency room visits to US hospitals during off-hours the availability of doctors is far less.

The canteen and food catering service was impressive. Poor Shabana hadn't had time to eat dinner in our rush to the hospital. When we finally settled into the private ward past 1 am, I could order in sandwiches, tea and coffee from the limited menu they offer round the clock. And during regular mealtimes they had an extensive menu and good preparations of vegetarian and non-vegetarian fare that would have done an upscale restaurant proud. The prices were low too - under $2 per entree. I half-joked that we should come here when we want to eat out.

Some folks had warned me that hospitals like Ruby Hall may try to keep patients longer and order more tests than are necessary just to increase their earnings. But I found absolutely no evidence of this. In fact, Mummy was upgraded to a "super-luxury room" at no extra charge because the deluxe room we sought was unavailable.

The senior doctors here (who are mostly "consultants") enjoy a good reputation, including the neurologist Dr. B who was competent, genial, and committed to his patients. He was very accessible and gave me all the extra time I requested to discuss Mummy's condition and prognosis.

In overall prices Ruby Hall is costlier than Inlaks, but still remarkably inexpensive by Western standards. We paid a total of Rs. 15,000 ($310) including $160 for the MRI and X-rays, $60 for a deluxe private room, and $25 for the two ambulance trips (with the doctor on board for the inbound trip). Our total also included $42 for an optional bone mineral density (BMD) test that we went for since Dr. R from Inlaks had recommended it though Inlaks didn't have the equipment and Ruby Hall happened to be offering it.

One shouldn't extrapolate from a single instance and I've heard a couple of stories to the contrary about Ruby Hall. But our own experience there was very good.

Our Commentary in FT - Comprehensive Healthcare In US Can Be Realized

On Dec. 23rd the Financial Times published our letter / commentary on the need to import doctors and export patients to alleviate shortages and cut soaring costs. These trade aspects of healthcare haven't yet been mentioned in proposed Obama reforms and incoming Healthcare Secretary Tom Daschle's recent book. Here is our published content (the FT uses "English English" and not "American English") :

From Prof Jagdish Bhagwati and Mr Sandip Madan.

Sir, In his characteristically insightful fashion, Clive Crook ("The long road to healthcare reform", December 15) alerts us to the problems that await the likely approach to comprehensive coverage of healthcare by Tom Daschle, the incoming US secretary of health and human services, as suggested by his recent book on the healthcare crisis.

But the fact that Governor Mitt Romney's similar reform in Massachusetts ran into the difficulty of finding doctors and other healthcare workers for the newly insured, and that Governor Arnold Schwarzenegger had to abandon similar efforts in California because of high costs, raises the question of why Mr Daschle and President-elect Barack Obama have not yet recognised that the systematic and comprehensive embrace of international transactions in medical services can make a big impact on both these problems.

Today, many foreign hospitals and physicians offer a world-class service for a fraction of the cost in the US. Expensive yet standard procedures with short convalescence periods, including heart operations and joint replacement surgery, are candidates for such treatment abroad.

By our estimates, 30 such procedures, costing about $220bn in 2005, could have been undertaken abroad. The "import" of medical services in just a quarter of those cases would have implied a saving in medical expenses of between $40bn and $45bn.

But the scarcity of medical professionals is equally crippling. Under President Lyndon B. Johnson's Great Society, a selected class of foreign doctors were allowed to "stay on" provided they worked for specified periods in under-served areas. The time has come to expand such programmes. We have recently suggested several ways this could be done, while amending the US immigration policy accordingly.

These programmes, "exporting patients" and "importing doctors" as one of us proposed almost 15 years ago, are now essential if comprehensive coverage of healthcare is to become a reality rather than simply an ineffective reform seriously undermined by shortages and high costs. Once you add the savings from online diagnostics and the reduction of administrative costs (conservatively estimated currently at $500bn annually) through further outsourcing of administrative services, the prospects for easing scarcities and costs are even more inviting.

But all this will involve getting over the jaundiced view of international trade that afflicts most of the new Democrats. Will they choose de facto protectionism, masquerading as "fair trade", and sacrifice the invaluable opportunity presented by possible international transactions in medical services? Or will President-elect Obama truly give us genuine leadership and have Mr Daschle override the anti-trade and medical lobbies that hold up effective healthcare reform?

Jagdish Bhagwati,
Professor of Economics and Law, Columbia University
Senior Fellow, Council on Foreign Relations

Sandip Madan,
Founder, Global Healthnet

Copyright The Financial Times Limited 2008