The US Healthcare System: Problems and Proposals - Essay Example

The United s Health Care System: Problems and Proposals There is little debate regarding the goals of a well-functioning and comprehensive national health care system. Indeed, it is widely agreed that primary goals ought to include the production of well-trained doctors and nurses, the provision of high-quality care, and the delivery of cost-effective care. How a country attains these laudable goals, however, has generated a variety of different approaches and volumes of debate. Some scholars and health professionals, citing a popular notion of American "Exceptionalism" (Rodwin, 1984: 32), have argued that these goals can best be attained by relying on minimal governmental involvement. Others, citing the national health care models implemented in various European countries and Canada (Reinhardt, 1985: 23), have advocated changes ranging from selective involvement in prescription drugs to larger wholesale changes to the philosophical and structural underpinnings of the American health care system. In short, there are problems. There are shortcomings and areas where improvement is both necessary and possible. The question is how these improvements might be best achieved. This essay will identify some of the most common weaknesses in the American health care system. It will begin by characterizing the health care system in the United States, a system distinctly different from that employed in other industrialized countries, and follow with an overview of the issues of concern to both scholars and health consumers alike. The essay will conclude with some proposals for alleviating the severity of these problems. 1.1 The United States Health Care System As a preliminary matter, it is necessary to place the American health care system in context; more specifically, it is necessary to state rather clearly that America is unique in its approach to health care. America diverges from common practices among advanced industrialized countries in its approach to health care. Most significantly, while the majority of advanced industrialized nations have implemented some form of universal health insurance for citizens, the United States has not. Indeed, the United States is only one of two OECD countries which have not devised and implemented some form of guaranteed health insurance for its citizens (Morone & Dunham, 1985: 268). Governmental support, in terms of generating revenue and funding, is limited to very specific and narrowly-conceived programs such as Medicaid and Medicare. These programs are further limited to people whom are defined as eligible people, mostly comprising people categorized as senior citizens, very poor, or disabled in a very particular way. Outside of these special programs, the health care system both demands and encourages that health care must be paid for with private funds. These private funds come from individuals and, in many cases, an individual's employer. Thus, the American health care system must be primarily characterized as a privately funded health care system with certain publicly funded health care functions. It is within this privately-funded context in which the system must be analyzed in terms of goal-fulfillment, weaknesses, and proposals for improvement. 1.2 Substantial Gaps in Health Care Coverage Because there is no constitutional or legislative guarantee of universal health insurance coverage, the private market system is left to fill the gap. The effectiveness of the private market, lauded by some, is highly suspect; to be sure, even a cursory examination of health insurance coverage statistics in the United States demonstrates quite clearly that a significant portion of the population is not covered by health insurance. A recent study commissioned by the U.S Census Bureau found that 45.8 million Americans were without health insurance coverage (Helms, 2001: np). Some of these people were deemed as being in-between jobs, and therefore there was a theoretical possibility that they would become covered by their employer when they found a new job. Still, the study also found that of these 45.8 million uninsured Americans, between twenty one million and thirty one million Americans were chronically uninsured. The implication is serious. Millions of Americans are not covered by health insurance. The mixture of selective national programs, such as Medicaid and Medicare, combined with private health insurance, is inadequate for millions of Americans. The lack of health care coverage for these people is a significant problem. 1.3 Health Care Cost Drivers: An Expensive Health Care System The costs associated with the American health care system are pervasive and substantial. One striking comparison is with Canada, a socialized health care system, in which the data demonstrates that the United States spends more per capita on health care than Canada. Not only does America spend a great deal on a per capita basis, but it also allocates between thirteen and fifteen percent of its Gross Domestic Product to health care (Aaron & Schwartz, 1984: 17). There are a number of cost drivers contributing to these statistics, burdens on the American health care system which are in many ways unique to the particularities of American demographics. Some of these cost drivers include the health care costs associated with drug abuse and substance abuse, violence both domestically and more generally, illegal immigration, a lack of proper preventative care, surges in health care for veterans and war-wounded, research and development costs, and surging capital costs (Goldsmith, 1981: 67). These cost drivers exacerbate the aforementioned problem of inadequate coverage; in sum, health care is not only inadequate to cover American citizens, but a great variety of cost drivers are simultaneously increasing the costs of health care both on a per capita basis and at the macroeconomic level. The initial challenges, increasing health insurance coverage and controlling costs, are substantial. There have, as pointed out in detail by Woolhandler et al, been attempts to control costs (2003: 770). One novel approach has been the creation of managed care plans. Again, however, the emphasis has been in the private sector. Insurance companies have become more intimately involved in controlling the health care decisions by making choices previously reserved to medical professionals and health care consumers; a recent study demonstrates the force of this trend by pointing out that nearly seventy percent of all privately insured Americans now belong, in some form, to a managed care plans (Marmor & Klein, 1986: 21). The theory is that health insurance professionals, aware of the aforementioned cost drivers, are better able to guide and make health care decisions in order to minimize costs. An example is requiring second opinions before authorizing an expensive medical procedure or treatment. In practice, however, there is an inherent economic conflict of interest. Are health care consumers, for instance, denied necessary treatments, in order for the insurance companies to save costs Ought a private company, primarily engaged in the maximization of wealth for shareholders, to be allowed to make these decisions These are fair and important questions. That said, the reality is that the American health care system is confronted by a number of problematic cost drivers and that the move towards managed health care leads to potential economic conflicts of interests and threats to the quality of care. There are a few additional cost drivers which merit mentioning. First, the litigation costs associated with the American health care system are substantial. Medical malpractice suits are commonplace and the damage awards are higher in America than in other countries. Second, the United States does not mandate curbs on the prices of drugs as in other countries; Canadians, for example, have greater access to cheaper generic drugs than do Americans. Third, America spends much more on research and development than do other countries. The costs associated with developing and protecting intellectual property are increasingly expensive. Finally, as the health care Markey becomes increasingly competitive, the insurance companies themselves are compelled to spend more on marketing and sales efforts. In the final analysis, America is a large and diverse country. Consequently, this diversity leads to cost drivers which are similarly diverse. Controlling all of these costs is a very real challenge and a very real social problem. 1.4 Some Proposals: Increasing Coverage and Controlling Costs A review of the literature demonstrates how fiercely debated health care policy is in the United States. On the one hand, there are those whom turn to the socialized health care models in other countries. They laud, for instance, the universal coverage of Canada without pointing out problems of access and dissatisfaction among health care professionals in Canada. In addition, these scholars often fail to point out the demographic features which give rise to different costs drivers and different social, political, and economic issues. On the other hand, there are those whom praise the free market as the ultimate arbiter of health care efficiency. These scholars, though, fail to point out the gaps in coverage which are simply not remedied by the free market. There is also some hypocrisy. The hypocrisy manifests itself in terms of a claim that the free market can solve all problems while at the same time advocating a tax policy for employers which distorts the costs of health insurance and advocating short-term measures, such as public funding for prescription drugs to mediate political disputes, without searching for more comprehensive solutions. The extreme positions offer more dislocations than are necessary. The problem is, in the final analysis, an American problem. Our demographics are particular to our circumstances, not another country's, and the free market has proven incapable of solving our health care problems comprehensively. Solutions in between these extremes are therefore necessary. Unfortunately, as pointed out by Rodwin, American health care policy has continuously fallen back on the free-market orientation, In the United States, by contrast, Abel-Smith notes that regulation has gone out of fashion and has been replaced by policies that promote competition and greater reliance on market forces. Examples of these unique American policy responses to health sector problems include: (1) the growth of deductibles, co-payments and other cost-sharing mechanisms - what AbelSmith calls "de-insurance"; (2) the trend toward making those who benefit from insurance actually pay the whole cost. This implies, for example, that reducing tax deductions will provide incentives for both employers and employees to shop more prudently for insurance coverage; and (3) the growth of competitive bidding as a mechanism of forcing competition between alternative providers (1984: 38). Health care is an issue which affects all Americans. To solve the problem, health care must be de-politicized. The only way to accomplish this goal is to implement a form of universal health care for all citizens. This solution will compel all parties to adapt to the realities of the universal mandate. Tax policy should create a health care tax. Citizens can pay the tax and become part of a socialized health care system, or they may opt out of the national health care system and claim a deduction if they purchase a qualifying form of health insurance from a qualifying health insurance provider. The unemployed will be covered. The private sector will thus serve a portion of the market directly (those whom have opted-out) and the other portion of the market directly (those whom have paid the extra tax and the unemployed). Competition will thus be preserved; it will be preserved because the quality of health care in each system will be the basis upon which people will decide whether to pay directly into the universal health care scheme or to opt-out by paying slightly higher private premiums. This assumes that health care premiums paid by employers are recharacterized as taxable income. These proposals would solve the coverage problems. The more difficult problems involve controlling the cost drivers. Universal health care, however, is the best way to address these cost issues. Scholars acknowledge that many of these cost drivers, such as health care for illegal immigrants and substance abuse, are the result of persons already outside of the American health care system. By bringing these people and these problems within a universal health care system, they can be addressed directly. Preventative care programs can be better and more comprehensively established for illegal immigrants, substance abuse can be addressed more directly, and a variety of seemingly uncontrollable cost drivers can be brought directly within the purview of the health care system. One, after all, cannot control problems, over which it has not control. 1.5 Conclusions The American health care system is unique both in terms of its problems and in terms of its structure. The most pressing problems are inadequate coverage and increasing costs. Extreme solutions are undesirable; the best solution is the creation of a universal health care system with public funding which exists alongside a private health care system. A tax system with opt-out provisions can preserve competition and encourage citizens to pursue the health care system best suited to their means and needs. Piecemeal solutions are simply inadequate. References Aaron, H. J., and Schwartz, W. B. (1984). The Painful Prescription: Rationing Hospital Care. Washington, D.C.: Brookings Institution. Clayman, C. (ed.), The American Medical Association Encyclopedia of Medicine. Random House, New York. 1989. Goldsmith, J. C. (1981). Can Hospitals Survive The New Competitive Health Care Market. Homewood, Ill.: Dow Jones-Irwin. Helms, R. B. (2001). "The Changing United States Health Care System: The Effect of Competition on Structure and Performance." Independent Institute Working Paper Number 29 April 2001. Marmor, T., and Klein, R. (1986). "Cost vs. Care: America's Health Care Dilemma Wrongly Considered," Health Matrix 4 (Spring): 19-24. Morone, J. A., and Dunham, A. B. (1985). "Slouching Towards National Health Insurance: The New Health Care Politics," Yale J. on Regulation 2 (No. 2): 263- 91. Nair C, Karim R, Nyers C. "Health care and health status. 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