US healthcare costs seek home remedy When Diane Flint visits an elderly patient on her rounds in Manchester, New Hampshire, to check on his newly attached prosthetic limb, she was regaled with tales of fall in Walmart. "I ended up looking like a raccoon with a couple of black eyes," David Willikens, 74, tells his nurse. I was probably 270 pounds when I went down. Not easy to get up! New Hampshire, a small state of only 1.3m people with an outsized number of hospitals, would seem well equipped to cope with an ageing population and patients such as Mr Willikens, whose leg was amputated in August after complications from diabetes. But the new frontier of medicine in the state is not the hospital - it is the home, where nurses such as Ms Flint go for face to face consultations, while tending to most problems over the phone. Ms Flint's work is part of an experiment being repeated across the US to control health costs, an issue that is fast becoming an existential danger to US public finances. Enshrined in President Barack Obama's health reforms, which are being phased in this year, are plans to reduce spending as well as extend insurance coverage to more Americans. The government spent $550bn in 2012 on Medicare, which funds care for the elderly and the disabled, the third-largest budget outlay behind pensions and defence. Within two to three years, Medicare costs are projected to surpass defence spending. That is just the start of the problem, as the programme's trustees estimate that Medicare outlays will outpace economic growth for the next 75 years. While the rate of growth in Medicare costs has levelled off in recent years, analysts say this is most probably because of the recession, which has cut the money patients can afford to contribute to the cost of their care. The broader trend is set, with costs rising 7-9 per cent a year, compared with economic growth of 2-3 per cent. Medicare was established in 1965 by Lyndon Johnson as a social insurance programme to guarantee care to the elderly and the disabled butother medical services have been added and life expectations have risen. As the costs increase, more of the funding is coming from general revenues. Only a decade ago, nearly two-thirds of the programme was funded by a payroll tax. Medical academics and doctors blame many issues ranging from high administrative overheads, to too little means testing and a rise in patient numbers as the population greys. But the Dartmouth-Hitchcock health system in New Hampshire, where Ms Flint works, is tackling what may be the biggest problem - chronic overservicing, with the bill picked up by taxpayers. Ms Flint, who has made her way to see Mr Willikens through six inches of snow, works for an accountable care organisation, one of several running across the US on a pilot basis as part of what Republicans term "Obamacare." When she see Mr Willikens, her job is not just to check his health but to make sure he can care for himself at home and stay mobile. "I aim to keep people out of the emergency room," she says. ACOs should, in theory, pay for themselves. If they meet benchmarks on patients" health and wellbeing, and minimise hospital stays, they can keep a portion of the costs saved. But moving from a system based not on services but overall care is difficult, as it means reducing expectations of what services are available. "Patients in the US do have, probably, higher expectations about what's available to them and that they have more or less the right to receive whatever they want," says Dr James Weinstein, the chief executive of Dartmouth-Hitchcock. More care at home and remotely will eventually translate into fewer hospitals. Dr Weinstein reckons New Hampshire's 32 hospitals can be reduced by a third. With such sensitive cuts on the horizon, Dr Weinstein appeared before state senators last week in Concord to sell his message. "There are no panaceas in healthcare," he told the panel. With an ageing population, we are going to have more sick people but we cannot put them all in hospital beds. Dr Weinstein looks to "disruptive" technologies, which can monitor patient care at home, including their blood pressure and weight, and drug bottles that will automatically tell a pharmacy when they need to be refilled. In the meantime, Ms Flint is on to her next patient, this time speaking on the phone to someone just discharged from hospital and back home. "That was a hard one," she says, as she puts down the phone. I didn't realise this patient is totally dependent on her father, but he's doing very well caring for her. Additional reporting by Christopher Booker By Matt Steinglass in Amsterdam Of all the universal healthcare systems, the one that most resembles the one the US will begin putting in place this year is that of the Netherlands, writes Matt Steinglass in Amsterdam. Reforms implemented in 2006 replaced the Netherlands" centralised system with a market-based one that resembles what Republicans call the "Obamacare" reforms. People are required by law to buy insurance from private providers, while government subsidies ensure the policies are affordable. Primary healthcare providers are almost entirely private-sector, while hospitals are a mix of private and public. As in the US, the Dutch government expected this market-oriented system would lead to cost savings as private providers competed with each other to provide better, more efficient care. But those expectations have not panned out. "Market competition has not yet helped to contain costs," said Casper van Ewijk, an economist at the Netherlands" Central Planning Bureau. It has increased quality and it has also increased the volume of care. Total health spending hit 13.2 per cent of gross domestic product in 2011, up from 10.3 per cent in 2001. It is growing faster than in comparable European countries such as Germany and Sweden, and even faster than in the US, according to the OECD, the Paris-based group of countries that tries to promote growth. As centralised budgeting was replaced by market competition, waiting lists vanished. But both prices and the total amount of healthcare consumed went up. According to CPB studies, much of the problem is that private healthcare providers can "create their own demand." One study found a 10 per cent increase in the number of hernia specialists would lead to a 7 per cent increase in the number of operations. Another found that having more providers led to a large increase in demand for operations when the providers were paid by the procedure, rather than on salary - suggesting that the demand was being induced by the providers themselves. That has led many in the Netherlands to call for a turn away from market-based competition and towards greater co-operation among providers, to use resources more efficiently. Meanwhile, Edith Schippers, health minister, has revamped the old practice of setting limits on hospital budgets. And coalitions of healthcare providers have negotiated covenants with the government, pledging to hold the growth in volume of care to 2.5 per cent by 2015. Economists are optimistic that new measures such as paying providers for results rather than procedures will lead to lower costs. But they warn that every strategy has its risks.