American Health System - Research Paper Example

American Health System American Health System OVERVIEW: The healthcare system in America is similar to the Bismarck healthcare Model followed in Germany and some other European countries. In such a model healthcare is provided through insurance funds which are called ‘sickness finds’ and these funds are supported by both employers and employees through salary deduction. The difference between the Bismarck Model and the American system is that in the latter insurances doesn’t cover everybody and at the same time they make profit for themselves. In my view these differences are the root cause for the numerous problems faced by the healthcare system in America. (Reid, The Healing of America: A global quest for better, cheaper and fairer healthcare, 2009) The United States of America spends almost two trillion dollars on healthcare making it the country spending the most money per capita and with the most technologically advanced medical practice. Despite this it only ranks 37th in the World Health Organization’s ranking of the World Health Systems.(WHO, 2000) Such state of affairs exists primarily because the American system of health is extremely fragmented. A long past of half-hearted efforts to form a universal system of health while at the same time bending to the interest of large private sector insurance companies has reduced the American health system to a patchy arrangement with complicated rules ( which differ in different areas) and huge wastage of resources. This fragmentation of the system has developed due to the multiple stake holders in the system coupled with the rising costs for health care provision. (Arthur Garson, 2010) HEALTHCARE IN AMERICA One fact that cannot be ignored is that a lot of money is being invested each year on healthcare in America. More percentage of GDP is spent on healthcare than on food. The governmental expenditure on healthcare sums up to 18.9 percent of total federal and state budget (WHO). Then there are the private and employment based insurances which are continuously rising. Despite the increased spending on healthcare we find that it has not translated into a universal or better health system. This is partly due to the gross inefficiency in the system. As the health sector becomes a larger fraction of the economy the inefficient functioning of the sector become even more costly. Despite this some health policy analyst argue that increased expenditure on health is necessary to cover the population and continue the cutting edge advancement in technology. It is true that medical care is continuously evolving and America is at the fore-front of this evolution but at the same time new medical technology increases cost of care as it makes it more specialized. New technology also opens more possibilities which lead to additional spending. Misuse of technology also increase expenses for e.g. patients elect for more current procedures because they are insured even if it is not strongly recommended. The result of this increased cost is that health insurance providers start to make irrational decisions to reduce costs and these decisions eventually stratify the population according to those who can afford health insurance ( the insiders) and those who cannot (the outsiders). This divide becomes increasingly expansive in the setting of medical progress as new technology leads to more money being spent on the insider whereas the outsider do not even have basic health coverage. To understand the cause and impact of this phenomenon better, the role of the different stake holders must be analyzed. Currently there are three general categories of healthcare insurance providers; employment based insurance, private insurance and government run programs. Employment based insurance is an important source of insurance provision. In 2004 an estimated 63.1 percent Americans below 65 were covered by either their own or a family member’s employer. Employment based insurance is also a big incentive for employment but at the same time it increases the insider and outsider gap as the elderly population and unemployed individuals are left out. The rising costs also put excessive strain on both employment based and private insurance which in turn try to select people with lesser health expenses. It is important to note here that healthcare consumption in America follows an 80-20 rule i.e. 20 percent of the population contribute to 80 percent of the expenditure and the rest of the 80 percent use the other 20 percent. Thus these insurance providers aim to exclude exactly those populations which are most in need of healthcare e.g. patients with chronic diseases. Despite the search for healthier people these insurance providers are faced with a huge obstacle of adverse selection; young and healthy individuals are less likely to pay the large premiums for health insurance as compared to people with high health expenses as they want coverage for them. This vicious cycle enhances the boundaries between the insured and non-insured population while at the same time there is increased wastage of resources to identify the healthy population. Since employer and private insurance have an obvious bias for coverage, the unprivileged population of the country has to rely on government run programs which include Medicare and Medicaid. The consumers of Medicare are more or less similar to the clientele of private insurances whereas Medicaid fills the void created by the policies of the other insurance providers. Despite this it is not able to cover all the population who cannot afford to buy health insurance due to their sheer number. Alongside is the fact that funding to Medicaid is subject to budget cuts which puts many restrains on its functioning. (Wells., February 22 2006) POLICY ALTERNATIVES From the above discussion we can see that the present American health system is in a very dilapidated condition. The whole system has become extremely complex and each party is working to secure their own interest. The government is forced to spend more and more every year to cover the divide created by such a fragmented system which puts further strain on the economy. In spite of the increased government spending a significant percentage of the population is not secured with insurance. So what can be done to improve this condition? There have been numerous propositions to modify or change the current system so that better healthcare can be provided. One of these propositions suggests rationalizing the present system. Rationalizing is a concept based on multiple policies being implemented simultaneously and synergistically to improve the existing situation. In essence it is the process, as defined by David Cutler, “of figuring out how to save money while delivering better care to the people.” Money can be saved in a lot of ways some of which include wiring up the system of record keeping nation-wide, better management of chronic diseases and providing better incentives for work to doctors so that more patients are healthy instead of identifying the healthier population . Wiring will not only decrease costs significantly but also reduce inefficiencies in the system. If computerized record is available redundant and duplicative tests will be reduced while at the same time all the information of a patient will be available to all doctors around the country and thus will make it easy to follow up the former. Focusing more on prevention and screening high risk patients for chronic diseases e.g. diabetes will also reduce costs. (M.Cutler, May 2008) Another approach is to make the system consumer directed. This means that the patient himself pays for his/her health instead of a third-party payer i.e. the insurance company because there is a growing belief that due to the fact that a third party pays for a patient’s expenses the latter tend to spend more as neither the doctor or the patient are directly concerned about expenses. Although the argument may be true consumer-based payment is not the answer as most patients don’t know what their medical requirement is e.g. which specialialty of doctor to approach etc. and will eventually lead to more wastage of resources. (Wells., February 22 2006) This brings us to the third option available which is the initiation of a single-payer system. This involves coverage by a one insurer for the whole population. This policy, although a drastic measure, will reduce inefficiencies greatly while at the same time allow more people to be covered. The United States government currently is already spending money to cover 44.7 percent of the population and still most of the population is not covered with insurance. Thus such a system is quite favorable to the present scenario. Plus a lot of European nations e.g. Britain work on the same system and are able to cover the health expenses of their entire populace at much lower costs. (Christopher J.L. Murray, 14 January 2010) EVALUATION CRITERIA AND ASSESMENT Even though all the above mentioned alternatives would produce some sort of change in the current situation it is essential to evaluate if such measures are beneficial. This is one aspect that has always been ignored and no process of evaluation of policy change has been practiced in the health sector. Thus it is important to carry out comparative studies along with the inducement of policy change to check if the goals are being achieved. If such studies are not carried out we can never realize the effect of changing policy and hence not be able to judge whether they have improved the system or not. For e.g. the process of rationalizing requires strenuous comparative studies to be carried out to judge whether the alternate policies have brought about the intended transformation of cost reduction otherwise we will be implementing such strategies blindly. At the same time revamping the system completely as is the case with consumer-based and single-payer system would require exorbitant amount of money and to carry out such a task without testing it through a trial on a smaller population would be foolhardy. To evaluate and assess a policy it is essential to set targets and a time-limit to achieve these targets, for each step in the implementation, so that we can be sure that we are on the right track. (M.Cutler, May 2008) CONCLUSION We can see from the above argument that most of the problems faced by the American health care are due to the fragmented approach of the system to provide health. Health care in its true essence should be available for all and not subject to free market ideology. Unfortunately this is the exact ideology the American system is run on and the private insurances have become a huge road block towards universal provision of health. This is because private insurances and pharmaceutical companies have become important power brokers in the current system and make it increasingly hard for concrete measures to be taken to improve the condition. Another fact to realize is that although a single public payer system would make healthcare provision much better, it cannot solve all our problems. The American population needs to decide upon how much latest technology we really need. This is because medicine will always have a bias towards whatever will bring more medical benefit even if it is not cost effective.(M.Cutler, May 2008) (Wells., February 22 2006) REFERENCES: Arthur Garson, J. M. (2010). The US Healthcare System 2010: Problems, Principles, and Potential Solutions. American College of Cardiology. Christopher J.L. Murray, M. D. (14 January 2010). Ranking 37th — Measuring the Performance of the U.S. Health Care System. N Engl J Med , 362:98-99. M.Cutler, D. (May 2008). The American Healthcare System. Medical Solutions. Reid, T. (2009). The Healing of America: A global quest for better, cheaper and fairer healthcare. Penguin Press. Wells., P. K. (February 22 2006). The healthcare crisis and what to do about it. New York Review. Hill, K., & Organization, W. H. (June 01, 2001). Review of The World Health Report 2000: Health Systems: Improving Performance. Population and Development Review, 27, 2, 373-376 Read More