Understanding the Complexities of a Healthcare System
Ahead of the 2020 presidential elections, Washington renews its debate about healthcare reminding us once again to consider why healthcare is so complicated.
The US healthcare debate is more than 100 years old and is rooted in our political history. Some of us might look to our northern neighbors and fellow western democracies, almost with envy, because they seem to have figured out the healthcare problem. While the United States spends more money than any other country on healthcare and has many social and economic issues with healthcare, the idea that other countries have it figured out is far from the truth. We are all living in a time of debate on whether healthcare should be a government responsibility and if we agree it is, then we debate on how it can be provided most effectively. To understand why we disagree so much about healthcare, it is important to briefly examine the types of healthcare systems the world uses and the problems associated with each.
Broadly, there are four types of healthcare systems used by different countries. No system is really perfect since we are all collectively facing an aging population with more demands and rising costs due to better technology. However, arguably, some systems work better than others.
The first is recognized as the “Beveridge” model, in which most of the hospitals and physicians work for the government. The system was developed and first put in use in Britain where it is still used today. Just like how the police or public schools are paid through taxes, in this system, healthcare is funded by taxpayers. Both government and private physicians are paid by the government, and the government decides how much physicians are allowed to charge for their services. The pros of this system are everyone receives healthcare and costs can be kept low since the government decides the pricing. However, the government can decide physicians cannot provide certain services and this may be harmful to some patients.
In another model, called the “Bismarck” model, employees are taxed through their paychecks and this money is put toward sickness funds through a public insurance system. This is similar to the insurance model in the United States, but the employers don’t limit their employees to a select few insurers. Private insurance companies are heavily regulated by the government and required to operate as nonprofit organizations, which keeps costs low. Some people who are self-employed or want better wait times may opt for private insurance. While citizens’ income taxes are high to pay for health insurance, people do not have to worry about going without healthcare. Furthermore, students and people who are unemployed have access to the public insurance system.
Americans may be familiar with the next system, the National Health Insurance model, because it is what Canada proudly operates on. The care providers are privately employed, but the payment comes from an insurance program that the government handles through taxes. The government, as the single payer, has negotiation power. In Canada, they have used this system to negotiate lower prices from pharmaceutical companies. Everyone has healthcare and costs are kept low. While this sounds perfect, wait times are often high and patients are limited in what services are provided.
Unfortunately, most of the world does not have established healthcare systems because they may be too poor to have an organized system. These systems operate on an out-of-pocket model where the rich have access to remarkable care and the poor may never see a doctor in their entire life.
Only about 40 countries operate on one solid system. Most of the world operates on the out-of-pocket model or uses a blend of the 4 systems. The United States is a strange mix of the four models, depending on who you are. For veterans and Native Americans, it operates more like the Beveridge model. For people over 65 on Medicare, the system is similar to the National Health Insurance model. For people with insurance through their jobs, the system is similar to the Bismarck model. For a fraction of Americans with no insurance, it might be an out-of-pocket scenario.
Most of the debate surrounding healthcare in the United States is a result of partisan politics whether we like to admit it or not. Under the Obama administration and a democratic congress, the Patient Protection and Affordable Care Act, which aimed to both decrease spending on healthcare and increase coverage, was passed in 2009 and signed into law in 2010. It aimed to extend insurance to the poor and elderly. Its 906 pages are filled with many rules and regulations, but it has a few famous provisions. One is that it extends coverage to people with pre-existing conditions and children can stay on a parent’s plan until they are 26. It proved to be effective in some sense: by the time Obama left office, more than 20 million new people had coverage. This was mainly due to the expansion of Medicaid. To no one’s surprise, the ACA has been under attack by many republicans.
The ACA certainly has its flaws. As previously mentioned, any major healthcare overhaul comes with pros and cons. Many Democrats do not like the law either noting (correctly) that private insurers have too much power. One of the most valid arguments from its opposers is that some people are actually worse off. In order to accommodate for those with pre-existing conditions, insurance companies have actually raised prices so healthier people are bearing some of the burden. There are strong ideological ideas against it from a conservative perspective too. It can be seen as an effort from the government’s end to takeover another aspect of citizen life. By far the least popular and most attacked point of the ACA is the individual mandate (which by itself has a long history in the US), which Republicans are trying to prove unconstitutional.
Most of the public does not have a favorable view of the individual mandate which basically penalizes individuals if they do not have coverage. Becuase efforts to repeal and replace the ACA have not made progress since 2017, Congress made the individual penalty $0 in December of 2018. While this left the individual mandate alone in law, individuals do not face consequences if they have no coverage. Following this act, the same month, a Texas judge ruled that with the individual mandate effectively out of place, the ACA as a whole was unconstitutional. In late March of 2019, the Department of Justice issued a statement supporting the Texas ruling. This led democratic-led states to start forming a coalition against the ruling.
While the ACA is far from perfect, many scholars, economists and judges have noted that repealing it would do more harm. This has not stopped Republicans’ and especially the Trump administration’s efforts to repeal it. As they see it, failing to repeal the ACA is one of the biggest failures in this term. While the current president has called for efforts to repeal it, he would first need a plan to replace it which he does not seem to have. He then issued a statement in April 2019 saying that Republicans will unveil a new healthcare plan after the 2020 elections, leading many to confirm the belief that they still have no real plan.
While it is not a uniquely American idea to try and blend different systems, the fragmentation existing in the US healthcare system cannot be found in many other places. It might make sense initially to have different systems for the employed and the unemployed, different systems for those that are over 65 or cannot afford insurance, or different systems for veterans and so on; however, the administrative costs of managing these different systems is beyond anyone’s imagination and is the primary culprit for rising costs. Some countries have been able to decide that universal healthcare is what they believe in, regardless of their party, and have found effective ways to implement it. Citizens have comprised and have agreed to higher taxes. The US can’t seem to make that decision. The United States has been soul-searching for a long time (more than 100 years) about its stance on healthcare, but some argue that there is no real hope unless we make large-scale changes that are beyond just healthcare.
While most countries with effective healthcare systems operate on a non-profit basis, the US healthcare system is very profit-oriented. Physicians make money based on the quantity of care rather than the quality of care. Pharmaceutical companies hike up drug prices as they wish because there are no effective government regulations. To achieve any real change, there needs to be a collective effort to work towards becoming a fairer system. It is hard to balance individual gain, partisan politics, and free market economics while being a fair society in terms of healthcare, but with a few sacrifices from all parties, change is possible. Whether Democrats, Republicans and the private-sector decide to go through that cultural change together is what will determine the future of American healthcare.
