American Healthcare and Addiction Treatment

American Healthcare and Addiction Treatment

by Tom Horvath, Ph.D., ABPP

trumpcare and addiction treatment With the passage of “Trumpcare” in the House we have renewed our national focus on healthcare legislation. Rather than address the specifics of this bill, let’s step back and consider two often over-looked “big picture” factors.

1) What is the role of government in healthcare?

Although in the US we like to think of ourselves as “the best,” in healthcare we are best perhaps in only one way. The very best medical care in the world is available here, if you have the money to pay for it. The Mayo Clinic, Cleveland Clinic, Massachusetts General, Johns Hopkins, UCLA, and other renowned facilities attract wealthy patients from around the world. These centers of excellence are good for all of us, because they promote the continuing advancement of care.

I view Practical Recovery as a center of excellence, but we are so far outside of mainstream US addiction treatment that most other providers view us very differently. I hope in time the knowledge we are gaining will be more widely recognized.

Other countries may not have quite the excellence we have, but on average they seem to perform much better, based on statistics for infant mortality, life expectancy, and the like. Despite our overall system not performing as well as other countries, we also unfortunately win the prize for spending the most money on healthcare.

The significant difference between the US and other developed countries appears to be whether healthcare is viewed as a public utility. Originally public utilities provided electricity, phone service, gas, water and sewerage. Recently internet access has been included by some. Although not normally thought of as utilities, roads and mail service are additional examples of public/private partnerships of various types, in situations where it is more efficient and effective to have an entire system of services developed with some guidance from the top down, rather than being solely driven by markets from the bottom up.

It is time to increase our understanding of how other countries use the public utility concept to make healthcare more effective and less expensive than the US version.

2) What is the role of payment method in healthcare?

The US has a fee-for-service system. Providers get paid when they provide services, and not otherwise. The normal progression in this type of system is the provider increasingly providing more care than is needed, because it pays to do so. This pattern is not necessarily abusive or fraudulent. It is just easier for any provider to recommend care, subconsciously, rather than not recommending it, when your income is at stake. I believe that fee-for-service is one of the primary drivers of the continuing major annual increases in healthcare cost.

A system like Kaiser Permanente uses capitated payment. Kaiser gets paid the same amount each month by subscribers, and the providers are on salary. The financial incentive here is the opposite of fee-for-service, to provide less care and keep the money you don’t spend! Fortunately, Kaiser is a non-profit and has no incentive to make money for owners. Do capitated systems at times deny care that some subscribers might want? Undoubtedly. The important point is that our current system denies a great deal of care now, but mostly in the form of individuals not having insurance coverage to start with, or certain services simply not being “covered.”

Another payment method is “bundled payment.” If applied to residential addiction treatment, the facility would receive a lump sum (bundled payment) for each admission. If the resident stays 5 days or 45 days or whatever, the payment is the same. Over time the bundled payment number is refined by averaging the cost of many admissions. The advocates of bundled payments suggest that they will continue competition between providers, to the benefit of patients. Patients would be free to enter any facility that accepts the bundled payment, so facilities would compete with one another. A challenge in this approach is to determine what the “bundle” includes. In this case, for instance, does the bundle include continuing care? If the bundle includes continuing care, there is no incentive to provide poor residential care, then dump the problem patient on another provider.

In either capitated or bundled payment, the limitations on care are decided by providers, more often than by insurers. In a single payor system, a public utility, the system would also make some decisions. Providers have ethical standards and generally follow them. Businesses are ultimately driven by money, and ethics may be secondary. I’d rather have providers making care decisions than businesses. Unfortunately, some addiction providers have low or poor ethics, but a public utility system would be in a much better position to identify them.

3) Other factors

Two additional factors that would massively improve US addiction treatment are decriminalizing substance use, and making harm reduction the over-arching treatment principle. We can again turn to other developed countries, which have taken these steps and are experiencing much lower rates of addiction problems. If we assume that the US is “the best” then we lose the opportunity to learn from the experiences of these countries.


On the basis of these factors, I suggest that we need a single US healthcare system ultimately administered by the government, as Medicare and MediCaid are now. The system would use capitated contracts, bundled payments, or both, to existing providers, and be oriented around harm reduction. Decriminalizing (or legalizing, as we did in 1933 by ending alcohol prohibition) would be an additional step outside of healthcare to reduce addiction problems, which is the ultimate goal of addiction treatment.