Health reform beyond the hype

How should services in the UK and US change, and what can they learn from each other?

Attendees:

Andy Burnham, secretary of state for health, Department of Health
Zack Cooper, health economist, London School of Economics
Henry Featherstone, head of health, Policy Exchange
Andrew Haldenby, chief executive, Reform
Branwen Jeffreys, health correspondent, BBC
David Merritt, vice president and director of national health policy, Centre of Health Transformation
Anthony Principi senior vice president for government affairs, Pfizer
T R Reid, documentary film consultant
Mike Richards, national cancer director, Department of Health
Michael White, assistant editor (politics), the Guardian

Branwen Jeffreys Comparing health systems is an extremely tricky business. No two are exactly the same. Patients are often extremely attached to the system they know. So, it is very hard to get public debate to move beyond stereotypes and national pride, whether that is "The Big Book of British Teeth" in The Simpsons or pictures of Americans queuing up to be treated in sports halls
or car parks.

The US spends proportionately twice as much of its wealth as the UK on health care, but this does not pay for universal coverage. The UK has a long history of containing spending through rationing, now with a firmer evidence base through NICE. The US prides itself on the cutting-edge innovation of its top-league hospitals and research facilities. However, both are looking down a long barrel at an inescapable truth: health care - already a large part of spending - is going to cost more in the future, driven by new technologies, ageing populations and the burden of the diseases of wealthy nations. Learning a little bit from each other may help us find a way forward. If either country were starting from scratch to design a system of delivering health care, neither would choose to begin where we are.
I would like to ask Andrew Haldenby and then T R Reid to explain the need for change and modernisation, first in the UK, and then the US.

Andrew Haldenby The UK has something the US does not, which is compulsory universal coverage. This is a crucial starting point, suggesting where there is no need for reform. We may need to change our funding system in the UK in the long term, but we do not need to change our universal coverage.

So, what do we need to reform in the UK? It is the pattern of provision; the way the NHS in particular does its business. I would very strongly praise the Secretary of State's predecessors in grasping the nettle on the need to change the way the NHS does its business. I would say the Department of Health has been the most reformist of the government spending departments in this decade: generally speaking, a more reforming set of politicians than the Conservative Party has had. In their willingness to effect change, they have raised ideas such as integrated care, more primary care - getting care out of hospitals, and using resources better. They have tried to push a purchaser/ provider split, they have tried to enhance the role of commissioners, they have advanced competition and they have advanced choice.

These are the right ideas to shift us away from the penalties of monopoly and gain the benefits of competition. The current Secretary of State said something important recently - which was the wrong thing to say. He said the NHS should be the preferred provider of care in the NHS market. This is a major change to government policy throughout this decade and it seems to be a retrograde one.

Branwen Jeffreys Just before I move over to the US, it is fair to say that most of these changes apply to the largest part of the UK. England has been the part that has driven innovation forward; the others have chosen to stay with the structural system. T R Reid, could you briefly outline why you believe the system in the US needs to change and what the main challenges are?

T R Reid In the US, some people get the finest treatment in the finest hospitals in the world with no waiting - that's the good part. The downside is that tens of millions of people rarely even get in the door. They get little or no care. We have not allocated the assets of our health-care system fairly and the results are lethal: about 22,000 Americans die every year because they cannot afford to see a doctor, and this does not happen in the UK. Some 700,000-800,000 Americans go bankrupt every year because of medical bills; the equivalent in the UK is zero. What is lacking is a national social commitment to provide care for everybody; we have never had this.

In the UK, you see health care as a social good that should be provided to everybody, but in the US we see health care as an economic good. If you have the money, you can buy it and, if not, it is tough luck, you must do without. This is why there are all those bankruptcies and unnecessary deaths.

The problem with fixing it is that we do not have as much of an affiliation with government as Britons and Europeans. So, when you suggest a government programme that would cover those tens of millions of people, as we have seen this summer, a lot of people rebel and say, "Oh my God, the government cannot even deliver the mail on time, how can it cure cancer?" We still have not overcome that mindset. So, even if you look at the strongest of the reform plans, they would still leave 15-20 million Americans uninsured after they were instituted. What is lacking is the commitment to cover everybody.

Branwen Jeffreys To draw out the argument, I am going to ask Professor Mike Richards and then Anthony Principi to talk about why technology and the possibilities of future treatment are going to drive change.

How fast are circumstances changing and offering us the possibility of innovation along with the difficulties of paying for it?

Mike Richards I would like to start by building on what Andrew was saying. We have been through a decade or more of really profound change in this country. At the age of 60, the NHS is a great deal stronger than it was at the age of 50. We had the problems of long waiting times in A&E, people waiting over a year for heart surgery, and waiting for cancer treatment. To a very large degree we have solved those problems. Certainly, the job is not done yet and part of that is about technology.

Another issue we have to get to grips with is encouraging patients to come forward earlier so that we get earlier diagnosis. That applies to cancer, but also in other areas. I do not think technology is our only challenge, but let us not forget the opportunities provided by it. Treatments that were only available in one hospital in the country ten to 15 years ago are now widely available, and technology has enabled us to get people through surgery for cancer more quickly. Twenty years ago, breast cancer patients spent ten days in hospital for surgery; now they would typically be treated as a day case or stay for a single night. So, technology helps improve as well as costing. The challenge is to bring in the effective new technologies and that will, no doubt, bring us on to how we assess the effectiveness of technologies.

Branwen Jeffreys Could I ask Anthony Principi to talk about the speed of change in terms of developing new treatments? How much has that changed in the light of the new genetic knowledge we have?

Anthony Principi I think the US has three serious problems in health-care delivery. The first is that health-care costs are rising significantly faster than our incomes. Fifty per cent of the American population does not have private or public health insurance and that can lead to severe financial hardship or even bankruptcy. These problems persist despite the fact that our government spends $700bn annually to provide health care for the poor and our seniors, and another $220bn annually to provide a federal tax subsidy to individuals to acquire employer-cover health care. So there is a major cost issue. Of the 47 million who do not have health insurance, there is no individual mandate to have insurance. Sixty per cent of the uninsured are below the age of 35 and, in many cases, they choose not to have health insurance, even though they might have incomes above $75,000. Another 22 per cent (which brings you to 82 per cent) of the uninsured are illegal immigrants and do not qualify for these federal programmes. This is the crux of the problem.

How does technology weigh in here? Clearly, technological advancements - whether they are in pharmaceutical innovation or electronic medical records - hold great promise to improve the quality of life and to drive down costs. Yes, these advancements cost money,
but with prevention and wellness programmes, adherence to medications and treatments, and care co-ordination,
I think that we can begin to bend the cost curve. The incentive in America is quantity over the quality that leads to further treatments and those new technology advances, so it could have a counterbalancing effect on the cost of health care.

David Merritt There is a real distinction between health insurance and medical care. We often lump those two things together when they are very different. Health insurance is obviously a portal to receiving medical care, but I think there is a myth out there in Europe about the US system. That is: if you do not have health insurance, you will literally die in the street because you will not be able to get care. This is just not true. My boss, former speaker of the house Newt Gingrich, recently had an online debate with Sir Michael Rawlins over rationing, the quality of care and cost or clinical effectiveness. One of the real misnomers we saw come through in that debate was that many Europeans thought that, if you do not have insurance, you cannot get care in the US. Our government spends almost $1trn every year to provide care and coverage to the poor, the aged and the disabled. So, we have put a lot of money on the table to try to solve this problem. Obviously, we haven't solved it yet, but there are a lot of things you can do on the delivery side of health care that would save money and allow you to have more funds to expand coverage.
In the US, with the debate so focused on health insurance, our perspective is that you miss the point because, if you can reform the delivery of care, where there is so much waste, it would allow you to reform the health-insurance side.

Branwen Jeffreys David Merritt, can I ask you to give us a sense of the political mountain that has to be climbed in the US to get through any kind of change?

David Merritt We are doing a lot of climbing right now. The debate has been going on in earnest for the better part of a year. Teddy Roosevelt, our 20th president, campaigned on health reform in 1910. Thus this conversation really started 100 years ago, because we have had problems with our system for a long time, but it looks as though there may be some major changes in the offing. Changes that have to be made; my boss set up our company six years ago because he knew, from being a policymaker, that there were some things that needed to change for the future of the country.

The debate in Washington has slowed down because where the debate is going to go really depends on where the priority is placed.
Branwen Jeffreys I would like to bring in Michael White, because the National Health Service is one of those institutions that have a particular place in public opinion in this country. How difficult does this make it to implement any kind of substantial change?

Michael White Our American listeners may have heard the old British joke from a politician who said the NHS is the nearest thing the British have to a religion. You have to tread carefully with the NHS. Even Margaret Thatcher, with all her market-orientated reformist zeal, drew back from attempting to impose an insurance-based funding system on the British National Health Service. She was not defeated often, but she was defeated on this issue. On the other hand, since 1999, the Labour government has been putting a lot more money into health care - it has gone up from 5 per cent to about 8 per cent as a share of GDP. That is half of what you get in America, so we get a better bang for our buck. The government has also attempted to impose all sorts of reforms and greater responsiveness in the system, with inconsistent success. This includes greater responsiveness to medical innovation, technical innovation, the dreaded IT system and also, of course, consumer choice, customer choice and patient choice as a means of driving better performance among the staff. As every schoolboy knows, the NHS is one of the five largest organisations in the world, along with the Red Army and the Indian State Railway.

Branwen Jeffreys It seems a good idea to bring in the Secretary of State at this point. Andy Burnham, we have this system, which was devised as part of our post-Second World War settlement - tax-funded universal coverage. Some parts are already being altered; for example, we have top-up payments for certain cancer treatments. Are we going to see any fundamental shifts in the way that we pay for or manage health care in this country in the next 20 to 30 years?

Andy Burnham I think that was a very real question 15 years ago. In the mid-Nineties, people were questioning whether the NHS model was sustainable and whether could we carry on paying for health care in this way. Those who believed it was not would point to the lack of patient responsiveness in the system; the quality just could not be delivered in the NHS as it was. Those questions have largely gone for now but, inevitably, we are about to enter a different financial climate and, again, the NHS is about to be challenged - as is every health-care system in the developed world.

In the last 15 years, we have proved that the NHS model is sustainable. T R Reid was saying that, at its best, the American health-care system is the best in the world and I would certainly agree with that. There are things we have been trying to learn in terms of promotion and management of long-term conditions.

A lot of our thinking is drawn from the Kaiser Family Foundation and others in the United States regarding how you do this to the highest level. I do not over-claim for the NHS; I keep describing it as having gone from poor to good and, in the next decade, we want to go from good to great. The NHS will only be a great health service when it is more preventative. At the moment, it is still a "pick-up-the-pieces" service. It is not good enough at investing to detect cancer as early as possible, and really investing in people's good health.

It also needs to be more people-centred. Too often, services are provided at the convenience of the institution, rather than that of the individual. We need to learn from the American system to become more preventative and more people-centred, which, at its best, the US does very well. As Michael says, the reforms we have introduced have shown that the NHS can move - and is moving - in both of those directions. Where we have something to offer is in saying that you can provide a good-quality, financially sustainable health-care system to all of the population, through the model that we have.

Branwen Jeffreys I would like to ask Zack to contribute at this point. Is it about how we measure responsiveness to what patients want? Is it about outcomes such as cancer survival? How much is it about how responsive the system is to changes in innovation and
in spreading best practice?

Zack Cooper One of the interesting questions is: why did the August debate get so ugly? Part of the answer is that we talked about life expectancy in the US, which is a year shorter than the UK, even though we spend so much more. And part of the answer is that health care is not the only thing that leads to good outcomes in health.

If there is one lesson that the US needs to learn, it is that public health makes a difference. Health care is responsible for about 10 per cent of treatment for mortality, whereas behaviour is responsible for about 40 per cent.

If we are hoping to make the US system cost sustainable by doing things such as changing the way hospitals deliver care, we are just not going to win. In terms of quality, we have things such as access to the system, we have outcomes, public-health measures and responsiveness. It is a value judgement for different countries as to how they weight different measures.

The UK clearly puts more emphasis on equity and fairness than the US does. This is neither right nor wrong: it is a value judgement. The US says, "We are individuals, I do not want the government to come between me and my doctor. It is a sacred relationship." That is no more right or wrong than what the UK decides to do; it is just a cultural phenomenon.

Branwen Jeffreys Henry, do you think that, at times in the UK, we have put a system that provides for all ahead of providing the best quality?

Henry Featherstone No, I don't think so. The reforms of introducing choice and contestability, as Zack's rather helpful recent paper has shown, have not driven equality in outcomes, but that is confined to access to secondary care. If you look at primary care, it is a whole different ball game. We do not have enough GPs where we need them most.

Primary care is the most cost-effective way of delivering health care. Where we have more GPs, there are improved outcomes for patients and improved patient satisfaction. In a cash-limited system, we need to divert more into primary care rather than into very expensive hospital care.

Branwen Jeffreys Can I ask the three participants joining us from the United States if you want to contribute at this point? One of the big differences between our two systems is that we have family doctors as gatekeepers to our health system, which is part of the system of rationing care and also part of getting to people sooner.

Is that something the US could learn from the UK?

David Merritt I had an interesting meeting yesterday with former Senate majority leader Tom Daschle. He had an interesting visual: think of the health system as a pyramid, with the most basic services at the bottom - for example, primary care and chronic-disease management - and you work your way up to the top with the most advanced technology - for example, computerised tomography (CT) scans, heart transplants, and so on. What we are very good at is starting at the top and spending our money as we go down. Ultimately, the money runs out before we get to very good primary care.

Systems in Britain and across Europe do very well at starting at the bottom with excellent primary care. Numerous studies show the quality at a local level of primary care and disease management. However, as you work up the pyramid, the rationing and the boards such as the National Institute for Health and Clinical Excellence (NICE) come into play because there are scarce resources at the very tip of that pyramid.
I think both systems could learn from each other on that note, because we could really improve on the primary care foundation. Seventy-five per cent of our costs are driven by chronic disease, and behaviours and poor individual choices drive many of those conditions. In the US, childhood obesity has tripled in the last 30 years. So there are lots of things we need to change that are on the bottom of that pyramid, which hopefully will not impact on our ability to innovate and spend at the top as well.

Anthony Principi One exception to that in the US is the Department of Veterans Affairs (VA). This was a backwater of American medicine after the Second World War. However, today it is recognised as a leader. Why? For the reasons David said: it went from a hospital-centric system to a patient-centric system by closing unneeded hospital beds and dramatically increasing the reach of primary care by opening up satellite outpatient clinics in many areas of the US. Here, veterans could access that care and avail themselves of the use of preventative methods, whether it be beta-blockers, screening and other things that keep people healthy, including pharmaceuticals such as statins.

The VA is the leader in electronic medical records, so you can travel from one state to another and call up your medical records electronically without having to go through another battery of tests. There are a lot of aspects of this health-care system that can be applied to the reform debate that is taking place in the US as well as other parts of the world.

Branwen Jeffreys Yet a lot of the public debate about comparisons focuses on the top of that pyramid, on hospital care. I am going to ask Professor Mike Richards to come in here on cancer care, because that is an area where there has been an enormous amount of change but where, in the past, the UK has compared very unfavourably to the US and some of our European neighbours.

How much do we still need to catch up internationally on that top end of the pyramid?

Mike Richards Undoubtedly, our cancer survival rates have been poorer than many other countries. The question is, why? The more we look into that, the more apparent it is that late diagnosis is the problem and, therefore, failure to get the patient to the curative treatment. The curative treatments for cancer are very often not that expensive. The best treatment for cancer in many cases is surgery, and well-done surgery is not that expensive, whether it is for breast cancer, lung cancer or colorectal cancer. We are simply not picking up patients early enough.

This comes back to the previous discussion about primary care, of which I am a very strong supporter; I am from a family of general practitioners. We have tied the hands of our general practitioners to a certain extent because we have asked them to be overzealous gatekeepers, but we have not given them access to diagnostic tests. This is why I so strongly welcome the recent announcements that we will improve access to diagnostics for GPs. For cancer patients, for example, this will mean that people who have a low risk of having cancer based on their symptoms - but not no risk - will be investigated, and investigated quickly. The vast majority will then be reassured, but the small number who are found to have cancer will go into the system at a curable stage. That is a very important point. We need to put more emphasis on diagnosis and take more money out of the hospital system in terms of people being in beds when they do not need to be.

We have benchmarked ourselves against the United States on this and we do spend disproportionately more on inpatient care.

Branwen Jeffreys Zack Cooper, you wanted to come in on this point.

Zack Cooper There is this overarching theme of myopia. We all know the changes we need to make; the problem is that the benefits of the change are in the long term and the costs of doing the change are in the short term. This is true for the NHS and it is also true for the US. Britain has to shift to a much more responsive service, but that is a threat to the status quo and a threat to GPs.

Michael White But the lifestyle choices do not cost.

Zack Cooper They certainly do. Changing my behaviour? I like to live the way I like to live. There are all sorts of costs. Costs do not have to be monetary, and that is one of the big issues.

Andy Burnham I want to agree with Zack, and Henry made the same point earlier. We do need to get more serious about taking money out of the hospital system. We have said it for a long period of time; I do not think we can really say that we have done it in a sustained and significant way. The period coming is one where we have to address this in a much more structured way.

I am going over to Washington next week for the Commonwealth Fund report, which will be interesting in this context. I am told that Britain compares very favourably in primary care, but that we are not exploiting the full potential of what we can do in primary care. Where we have a genuine problem is the extent to which we can carry the public and NHS staff with serious service change. We have not yet found a way of taking people through very complex arguments around service change. For that reason, change has not happened as quickly as it might have done.
What we have done in the last ten years is expand the traditional model very successfully, so that it is much more responsive than it was. People do not generally have to wait to get into the system now, and when they do get in, it is generally a good experience.

What we have not done is re-engineer those patient pathways and, actually, that is the job which cannot wait any longer. In the next parliament, this issue will come to the fore and the question is: how do you take money out of the hospital system, how do you spend it on managing long-term conditions better in the community, and on early detection of disease, and carry the public and health service staff with you?

The challenge is to make change that they can believe in.

Zack Cooper I could not agree with you more. One of the biggest issues to look at in the UK is primary care trusts (PCTs). They are the organisations that purchase care locally. Their budgets are set, so - unlike any other organisation in the world - they do not have to worry about raising money. Part of the problem is that, when they go to their budget meetings, they say, "Well this is the addition from last year, what else am I going to purchase?" We talk a lot about commissioning, purchasing, in the UK; we do not talk about decommissioning because we know that the money is only going up. As length of hospital stays has gone down in the NHS, bed occupancy has stayed at the same level, which does not make sense. Until we have some real pressure, we are not going to see much change.

Branwen Jeffreys T R Reid, I would like to bring you in here, because there has been some discussion about whether the idea of a NICE-type body might be borrowed by the US. Do you think that the American public would accept any trade-off between access and the concept of limiting care in order to bring costs down for everybody?

T R Reid We limit care every day in our country. There are tens of millions of people who do not have the money to visit the doctor, and that is rationing care.

Branwen Jeffreys What about the town-hall meetings with the people who are insured? They are people who are motivated to turn out to these meetings. They are going to be motivated to vote and they are very frightened of change.

T R Reid Our insurance companies force people to make choices like that all the time. There are a lot of procedures and a lot of drugs they will not cover. I argued in my book that NICE does it better because NICE is transparent. They showed me the files and said, "Here is how we make the decision". This is the same decision not to provide certain drugs or not to cover a certain doctor that, in America, is made in the back room of insurance companies, where there is nothing transparent about it. So, the same decisions are made, but I would love to see a NICE in the US that was democratic and transparent.

I have to say that, listening to this debate, it is invigorating for an American to hear people talk about problems in the NHS. Your problems are so much smaller than ours are: you have better results than we do and you spend half as much. We would love to have your problems!

Branwen Jeffreys Anthony Principi, could I ask you about this concept of rationing budgets, particularly those
for future treatments?

Anthony Principi As David indicated, there is a big difference between health insurance and health care. In my own state, Maryland, there is a sign in the emergency room that says, "If you are uninsured and cannot afford care you will not be denied it". However, the problem is that it is the wrong type of care and there is no follow-up care. So I disagree to some extent with Mr Reid that you cannot get health care. The problem is thatit's not the right type, there is no follow-up and no care co-ordination. Care in the emergency room in the US is very expensive; we need to change that. Americans are concerned about the reform proposals being mentioned, a lot of which has to do with the media and how it is being portrayed with regard to rationing and death panels. These are gross exaggerations but, at the same time, people are very comfortable with the doctor-patient relationship in this country. For the most part, they can choose their doctor and let the doctor decide what treatment they will receive. So, I think rationing is a concern to people, and that is why we have seen an outcry in town-hall meetings this summer, which has increased the level of intensity in the debate before Congress regarding reform and the type of reform that we will see.

Branwen Jeffreys I would like to move on to future challenges, and the biggest of those challenges is paying for it all. The rises in the cost of health care tend to exceed inflation in the normal economy. In the UK, the Institute for Fiscal Studies and King's Fund have estimated that, by 2017, demographic pressures alone will cost the NHS up to £1.4bn extra a year.

Andy Burnham do you think the British public will be prepared to see a larger and larger slice of public spending go into health care, or is the alternative just to work smarter and have a leaner system, with people "topping up" in the way that we are seeing with cancer treatments already?

Andy Burnham I think it is a very challenging question. You cannot assume that the public is always prepared to pay more for health care. People do have it at the top of their public spending priorities - it is what would come first in a difficult climate - but you cannot assume that the NHS will get what it wants all the time.

The health service is facing the biggest productivity and efficiency challenge of its history in the next five to ten years. I am certain of this. With that in mind, the NHS will have to demonstrate very clearly to the public how it is going about this job to prove that it continues to give very good value for money. There is still debate about whether the NHS is a black hole and does not spend money properly - which is not correct. Nevertheless, there is more we can do to make our own system more productive.

The big issue here is that we need to have a debate with people about taking more responsibility for their own health care, covering obesity and the challenges that it presents. We need to give people more incentive to become physically active. I am convinced that increasing rates of physical activity is the key to securing a population-wide health gain. When you are physically active in your life, you make lots of other positive choices about smoking, drinking and many other things. We lag some way behind Scandinavia, the Netherlands and Germany in rates of physical activity, so I think we have to get into this area in a much more systematic way. We need a better debate in this country about alcohol. We have failed to tackle this issue, and these are long-term challenging issues that we have around the way we store up health-care pressures for ourselves in the future.

The other side of this equation is our ageing society, and we have to admit that people are left financially short-changed by their social-care bills. Then there is the issue of how we fund social care in this country.

Branwen Jeffreys That is a whole debate in itself.

Andy Burnham Yes, it is, but it is not a separate debate. If you do not adequately fund social care, you rack up pressures on the health system, which sees more and more people coming in and out of hospital. An ageing society means that we have to look at all of these things - how do you keep people healthier and independent in their own homes for longer? Ultimately that makes the health-care system more sustainable.

Branwen Jeffreys All the chief medical officers in the UK, including your own, are backing minimum prices for alcohol as a way of controlling consumption. Why is it that you have stepped away from that, given that it has received backing from such a strong segment of medical opinion?

Andy Burnham I would not say that we have stepped away from it. I think the mix of reactions around this table demonstrates the point that the argument is not yet made or won with the British public that this is the right thing to do. We have to have a journey of change with alcohol - as we have gone through with tobacco. In the last ten years, we have progressively introduced measures as public attitudes have changed and things have become more acceptable. It is clear to me that we are getting to the point now where we need a different debate about alcohol in this country. You begin with voluntary measures, labelling and other things, but then you have to have public support. The argument is not yet made for minimum pricing.

Michael White I wanted to say that I have lived in the US, travelled it extensively, know it well and am very fond of it. My wife's cousin is a mental-health nurse in a big city in California and I have sat with him and talked about what actually happens to people who come in off the street. They get shunted around, it is bad stuff. However, my wider concern on the basis of living in a wealthy suburb of Washington, is the anxiety about money and health care and the possibility of losing your insurance. Rescission, where it is taken away based on a medical condition, has been mentioned by the president. People who are middle class, in the sense that we in Britain understand it, are worried about health care and the feeling that procedures are more money-driven than is good for people's health care. My wife came back from visiting the doctor with one of the kids one day and said that the doctor had suggested a course of action that did not involve spending any money; she had lived there long enough to be slightly surprised.

That said, this conversation seems to remind us that both health-care systems are third-party-funded and most health problems are converging on each other in rich countries. We do not get enough exercise, which is a particular problem in the US, where it is virtually against the constitution to walk - but, equally, my children are given the impression in school that more than one glass of Budweiser a week makes you an alcoholic. No wonder young people move straight on to mainline drugs once they find out that Budweiser cannot get you drunk.

In Britain, we spend a lot more money on our health service, but there is evidence of either poor productivity gains or productivity lapses; the measurement worries me. I have a hereditary hypertensive condition for which I take a lot of pills. I am two days into the statins suggested by my doctor - it has not changed my life yet - so, how do you measure that as a productivity gain? It may keep me alive, it may make the difference, but where does it show on the productivity statistics? It was the doctor's idea, not mine.

Branwen Jeffreys How do you get incentives? I would like to bring in Andrew. Is our system set up to get the right incentives for the system to work in a smarter and more productive way? How do you get those incentives into the population?

Andrew Haldenby Dealing with the system rather than the population, I think the coming fiscal squeeze will be a good thing for health reform in this country. Nothing concentrates the mind of a manager like a confined budget. I happened to speak at the NHS Confederation conference on the day that the Conservative shadow health secretary, Andrew Lansley, gave an interview on the Today programme in which he said that, because his budget would always go up, all of his colleagues' budgets will be cut to the bone.

A chief executive of one of the Birmingham PCTs said she was furious about that because she had been saying to her managers for months, "We are going to have to do things differently now; the money has run out and it is time to do the difficult things." They had undertaken to make service redesigns, hospital closures and other extremely difficult things. She had been saying they were going to do all this and Andrew Lansley had taken the legs out from under her because he gave the impression that this could all be postponed. So, while these things are very hard to measure, if we had this discussion in one or two years' time, there would be a different mood and we would feel like having more difficult debates in the UK.

Andy Burnham Do you think we spend too much money in hospitals and is there too much of an incentive for hospital care to suck in the available resources?

Andrew Haldenby Yes, everybody agrees with that, but why is it so? I wonder if
it goes back to politics? When this government was elected in 1997, and afterwards, it prioritised hospital care as an area of improvement, so it directed resources into that with the waiting times targets. Why did it do that? I suspect it was because that is how the public conceives its health service.

Michael White Was that a mistake, Secretary of State?

Andy Burnham I do not think all those services could have been taken out of hospitals back then. So, I do not think it was a mistake, but the change will come when we start taking those services out. You can safely deliver a lot more care out of hospital now. I am not shying away from it, it has to be the change that we make. The question is: can you demonstrate that it is not just more productive or more efficient, but that it actually delivers more preventative and people-centred care? Can you align all of those things and redesign the way some services are delivered? I think you can - although not in every area - achieve the alignment where it is good for the patient and good for the taxpayer as well.

Zack Cooper It is hard to overestimate the value of security here - simply knowing that you are going to have health care, no matter what. Another impetus for change in both countries is this link between health care and the macro-economy. This was not precisely clear in 1992, but it is absolutely clear now.

The US cannot compete in a global world with health care that is 16 per cent of the economy now, projected to go up to 33 per cent in 15 years' time. It is a drag on any product we are trying to export and a hindrance to job flexibility. I think that is going to be the case here soon enough, where you cannot talk about health care without talking about the rest of government.

That is what makes the Secretary's job so hard; so much of what is related to health care falls outside of Richmond House, the Department of Health. How do we join up the different sectors of government and the different sectors of society in a problem that is larger than hospitals themselves?

Branwen Jeffreys David Merritt, do you think that you can learn anything from how the UK manages within a cash-limited system, to contain US spending in the future?

David Merritt We certainly need to learn from somebody! Our Medicare system, which currently treats about three billion patients every year, is on the hook for $37trn over the next 50 years. That means we have promised future generations $36trn that we have not saved one penny for. We have to find ways to control costs, otherwise it is literally a threat to the foundation of the country. That is without even mentioning Medicaid, which is the service for the poor. Currently, there are about 60 million Medicaid beneficiaries and states are responsible for about half of those costs. If you talk to any governor in one of our states, they will say that we need to reform our Medicaid system because it is bankrupting states across
the country.

There are three ways to address the cost issue. One is health, meaning a focus on prevention and wellness. Health care only accounts for about 10 per cent of the total make-up of your health; public health and genetics play a big role. This is where I think Pfizer and many of the researchers and innovators in this country can really play a role in creating personalised medicine, which is geared towards an individual's genetic make-up. This is where we run the risk of trying to stay at the top of that pyramid, but at the same time expanding the reach at the bottom.

There are estimates that as much as 50 per cent of all spending in the US does not add a single dime of value to the process. Many times it is insurance or government regulations and many times it is process deficiencies. Information technology is something that both countries have struggled with but know the importance of. Electronic medical records and other information technologies can be a cost saver and driver for the future.

Branwen Jeffreys Anthony Principi, would you agree with that? Is it not very easy to say that innovation will deliver cost savings, when it also delivers niche treatments that are expensive to develop and expensive to deliver?

Anthony Principi It cuts both ways. Technology and innovation can go a long way to reducing health-care costs, but we have to make sure the incentives are in the right place. In the Medicare programme, the incentives are to do more tests. Quality outcomes are not the measure for reimbursement and this needs to change. We are making great strides in personalised medicine and, as we look at comparative effectiveness research where we take large populations and compare treatment A to treatment B, we have to remember that there are small clusters of people who may benefit dramatically from the use of a medicine that perhaps would not benefit a larger group. We do not want to get on a collision course between personalised medicine, identifying genetic defects and comparative effectiveness research. Dr Francis Collins, who headed the human genome project, is very concerned about that collision. We have to take personalised medicine into account when we in America are undertaking more comparative effectiveness research.

Branwen Jeffreys T R Reid, are you optimistic that you will get the scale of changes you would like in the US?

T R Reid We have to learn from the UK that, if you get everybody in the system, then you get the economic clout and political will to make the cost-control decisions. The NHS has been doing that for 60 years, but we are not there yet. It is interesting to hear my colleagues praising the Department of Veterans Affairs because that is an NHS system and Americans who are in it love it. If you cover everybody, you are doing what is morally and financially right. Unfortunately, it is going to take four or five more years before we get universal coverage.

Branwen Jeffreys Michael White, do you think the NHS is well set to change and innovate enough to manage the financial challenges ahead?

Michael White It will have to be, because the financial challenges will not go away. We say the demographics are awful when, in fact, they are terrific - we are all going to live longer, even me. However, the challenges are there. An interesting question, which hovers over the health-reform debate in both the US and the UK, is a question of liberty. What can you do that is consistent with a free society to make people pay insurance when they do not want to? A lawyer said to a friend of mine, "Why do you call it NICE when it kills people?" Here you have questions of liberty in terms of the price of booze, where you can smoke and whether we force people to go to the gym.

Branwen Jeffreys Zack, given how much of health is not due to health care, how do you avoid the nanny state?

Zack Cooper The good news is that we have people here from across the political spectrum and, largely, we all agree. In the US, we forget that, at age 65, people switch from traditional insurance to Medicare, so every incentive for insurance companies is just to get people over the edge: "Keep them healthy till they are 65 and I do not really care what happens when they cross that bridge." We have to be better than that.

Seventy-five per cent of Iowans are insured by one company; 90 per cent of people in Alabama are insured by the same company. Until we start creating real incentives not to exclude people, but to make them healthier as a way to save money, we are not going to do this. We have to get people to buy it, because they are going to be paying more if they do not.

Branwen Jeffreys But here they do not pay more. Andrew, how do you achieve a healthier society when people are going to be picked up by universal coverage?

Andrew Haldenby There is a health insurer, PruHealth, which has a deal with Sainsbury's, whereby if you buy healthy foods you pay lower health premiums. Can you hand over PCTs to PruHealth? I do not know if it would want them, and that is unlikely to be in any party manifesto, but the ideas are there.

Mike Richards We are on a journey. It took us a while during the 1990s to realise quite how far we had lagged behind - and that applies to the public, politicians and doctors. We are now much better off in terms of having better specialist services. What we need to do next is shift care to the community. One shift is better diagnostics, the other is to reduce hospitalisation. To do that we need to get the incentives in place, once we have won hearts and minds.

Branwen Jeffreys Henry Featherstone, do you think those incentives will work?

Henry Featherstone It depends what you do. Eighty per cent of costs arise from clinical decision-making, so we need to involve doctors and managers more closely, which is what the US does well, instead of having a clinical/managerial divide. We need to have some more physician executives, like they have in the US.

Branwen Jeffreys Andy Burnham, do you think that there is a public acceptance of the type of changes, such as moving services out of hospitals and putting more money into primary care; changes on which there is some consensus among people who are interested in health issues, but which are incredibly difficult to communicate to the public as a politician?

Andy Burnham Honestly, no. That is the job that the next period puts before us. We have to improve in explaining how we can do this and how it can be done in a way that is good for the patient and good for the system in terms of financial sustainability.

A service such as renal dialysis, where a patient will go three times a week to an acute site, often involving a long journey, can now very safely, and more cheaply, be done at home. Obviously, that has implications for hospitals and how they are configured. People have not yet thought of this as an improvement agenda, as opposed to a cost-cutting agenda. We are all sitting in the House of Commons and this place does not have a very good record at debating health-care reform.

We need Andrew and Mike and the other clinicians in the room to help us form a better argument as to how making these changes represents human progress. Doing anything to a hospital is not necessarily a huge retrograde step for the system.

I am serious in that we are coming out of an era of expansion and entering an era of re-engineering the system. That is how we will make it sustainable, but we can also improve the system and make it more responsive.

The NHS has defeated its critics in the last decade who said that the service is equitable but equitably rubbish. We have shown that it can be responsive, which is why we have drifted up the league table of the Commonwealth Fund producers because it looks at equity and quality as the twin poles.

As we have improved quality, we have climbed the league table. Keeping ourselves there means more prevention and more people-centredness. That will be difficult in the current climate. However, I am encouraged by the fact that you can align these things and that has to be the answer.

Branwen Jeffreys Thank you all very much.