American Health Care Reform: Possible Lessons for Iran


I’m Carol Molinari an associate professor in the health systems management program at University of Baltimore in Maryland. I have lived in several regions of the United States and have experienced several different models of health care.

I will base my comments about the US health care system and its 2010 reform from my work as a health care management academic, a trustee, and perhaps, most importantly, as a consumer. I planned to briefly discuss two key components of the Affordable Care Act namely: the health insurance exchanges designed to provide affordable and comprehensive health care coverage as well as the long term delivery reforms to reduce unnecessary and costly care while coordinating the quality of care for its users. These are particularly relevant as Iran launches its own current reform to rein in its high health care costs.

Given the strong private sectors in both countries, the lessons learned will involve how best to bring about change in the delivery of care and how to safeguard collective health of the country by monitoring its costs and its quality.

Health care costs are clearly the driver for reforms both in the United States as well as in other countries.

When we look at this graph, which spans 30 years, we see that in the US health care costs have been excessively high, especially when compared to the other developed countries.


We in the United States pay the most for our health care. Yet, we only have average levels of life expectancy and other health indicators like levels of disease etc. Granted that health care has the least impact on the health status compared to other factors such as environment, lifestyle and heredity, yet these excessively high levels of health care spending begs the question what is the value and benefit of spending so much on our health care system?

Having the most expensive health care system in the world has had its consequences. By the mid-2000s, a growing number of Americans were without health insurance. This was caused by a number of factors:

  1. Health care costs were increasing as were healthcare premiums. Making it increasingly unaffordable to a growing number of Americans.
  2. Employers who provide 60 percent of Americans with employer-based health insurance were also dropping health insurance as a benefit due to rising healthcare premiums to them.
  3. Workers were losing their jobs due to recession and thus lost their health insurance. And
  4. Finally health insurers themselves were dropping or denying coverage to those with preexisting medical conditions who were high users and thus were incurring high costs.


By 2008, health care reform became a key presidential campaign issue. When President Barak Obama was elected, he made health care reform a cornerstone for his first term in office. Through efforts of the Congress, as well as, the president, the country passed the 2010 Affordable Care Act 2010 also known as ObamaCare.

The 2 main pillars of this complicated legislation involved:  first addressing the issue of access to care by providing a comprehensive yet affordable health care plan for Americans and second making changes in how care was paid for and delivered in this country to ensure the long term financial sustainability of our American health care system.


Continuing with the reforms in terms of the delivery system under the Affordable Care Act involves provider payment change. American providers have historically been paid on a fee for service basis, which it means they get paid for every service rendered. This creates an incentive to do more as a way of both increasing revenues and income. With many years of research studying this form of payment, we see that fee for service has been a factor that has driven up the amount of care that we provide in the United States as well as the costs of care.

With the Affordable Care Act there are now incentives in place to encourage providers to accept a different form of payment: a bundled or capitated amount rather than fee for service.  The intent being that this kind of a payment structure would reverse some of these past incentives to do more. These bundled payments would provide incentives to better manage the health of each patient and thus in turn keep the cost of care down to more manageable levels than what we have seen in the past.

The second area for reform involves creating systems of care. In the United States the providers have pretty much practiced independently so that when a patient requires a variety or continuum of care especially for those suffering from chronic diseases. These patients often have to go to multiple providers in multiple locations and settings. The concept with a system of care is that, the patient can access a variety and a continuum of services in typically in one location that would provide more convenience and also help better coordinate care to manage the individual patients’ needs, especially when helping patients manage of chronic illnesses. What we know is that the lack of coordination we’ve had in the past with various independent providers has really caused a significant fragmentation of care. So this legislation is trying to address that lack of coordination and fragmentation by creating incentives to create established system of cares for the patient.

Now we are going to look at Iran. Iran has gone through some significant improvements in terms of its level of health in the country. As indicated in this table we see that there has been a marked improvement in life expectancy as well as a marked drop in infant and maternal mortality. All very much indicative of society that was and that is improving in terms of its overall health status.


We also know that Iran’s socio-demographics have been changing and improving. We have seen more Iranians gain education – their literacy rate has increased significantly. We also see that their income levels have gone up and we see increased levels of urbanization across the country meaning that more people are living in cities; being able to access jobs – income levels go up and with that we see increases in their living and health conditions.

To better understand why Iran is experiencing such high rates of health care inflation; let’s look at some of the changes happening in the delivery system. Over the past few decades, the public Iranian system has become replaced by private providers in which providers are no longer paid by the government but instead depend on generating their own revenues and profits for their services. We know that the supply of physicians, in particular over this period of time, has increased. More physicians are practicing in private facilities, especially those in growing urban areas. Also we know that fee-for-service is the dominant provider payment structure in place in Iran. So what we what we probably have seen, is that more physicians and providers crowd health markets in Iran? They order more services to sustain income levels and remain in practice. These economic forces obviously create some supply side demand. We have seen this happen in many other countries, with of course United States being probably first and foremost. So, it’s important to look at this and to see to what extent this may be happening in Iran.


Another source of demand to be looking at involves demand that comes from the consumers. And I’d like to just note that in Iran we see that they have extremely high C-section rate. As this graph indicates over the period of 2000-2005 we see very high rates of C-sections 35 to 40 percent and we know that these rates have been sustained in terms of current times.


What these rates suggest is that women are seeking medical solutions for non-medical conditions, may be for convenience, and may be for other cultural reasons in terms of thinking that a surgical delivery is a safer or is a preferred delivery. Perhaps they do not want to go through the time and exhaustion and effort to have a regular delivery, these may be some possible reasons why we are seeing such very high excessively high rates of C-section rates in Iran. However, we know that these high rates rival, those of other countries like Brazil, which has the highest rates, as does China and the United States.

Iran is making very significant strides in terms of health care reform. President Rouhani has decided to provide government support for a private medical insurance for Iranians who cannot afford care; that means between 5 to 12 million people under this plan will now be able to obtain their health care at a reasonable rate of out of pocket expense that will go from 70 percent to about 30 percent. This is expected to go into operation at the beginning of 2015, so next year. So a huge first step in terms of increasing access to care among the citizenry of Iran.


Another consideration, hopefully, that will be looked at, at some point in the future is ways in which the delivery system can be reformed so to ensure that health care costs in the future can be controlled and be maintained at more sustainable rates. As I mentioned earlier there has been changes in the delivery and the payment of health care in the United State moving from fee for service to a fixed capitation rate for providers  and maybe that an option for Iran  to consider as a way of keeping down and reining in its health care costs in the future.

So with that I’d like to conclude my video and to say thank you very much for your attention and I wish the best to Iran in its future reform endeavors.

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