It doesn’t.
The United States Healthcare system is unique and very different from all other developed countries throughout the world. Other countries have single-payer systems led by the government and universal healthcare that generally pays for the costs of care for all citizens. The U.S. has an overly complex healthcare system fragmented across private and public markets with a large variety of players and competing interests.
The US Healthcare System Compared to Other Countries
Other countries have national health insurance programs controlled by the government with nearly all citizens entitled to receive healthcare. In the U.S., only elderly and low income patients are entitled to healthcare through Medicare and Medicaid, respectively (along with some other programs addressing small population sets). However, due to the competitive healthcare market in the U.S., many healthcare providers do not accept Medicare and Medicaid due to the low rates.
Moreover, Medicare only pays 80% of the bill, leaving the other 20% to the patient. All other U.S. citizens must buy private insurance, most of which is provided by employers. Roughly 30 million people in the U.S. (close to 10% of the population) have no health insurance, which was closer to 50 million people before enactment of the Affordable Care Act (ACA).
How US Patients Are Insured
Other developed countries provide universal access – theoretically, no uninsured patients. Universal access is provided by healthcare delivery systems that, in general, are managed by the government and provide a defined set of healthcare services to all citizens. Healthcare systems in other countries include national health insurance and national health systems.
National Health Insurance (NHI)
National Health Insurance (NHI) is a tax-supported national healthcare program in which services are financed or coordinated by the government but are rendered by private providers and/or health care is financed through government-mandated contributions by employers and employees (for example, Germany). Care is delivered by private providers/hospitals.
National Health System (NHS)
National Health System (NHS) is a tax-supported national healthcare program in which the government both finances and controls the service infrastructure. Primary care providers are employed by the government. Hospitals are owned by the government, and health care services are funded by taxes (for example, United Kingdom).
In addition to healthcare systems categorized into NHI and NHS programs, developed countries outside of the U.S. generally use two common payment models called Bismarck or Beveridge. Although there are some differences between the Bismarck and Beveridge payment models as highlighted in the table below, both models are basically structured for the rich and healthy to subsidize the poor and sick.
The following are some basic characteristics that differentiate the US health care delivery system from most other countries:
- No central agency governs the system – Unlike health care systems in most developed nations, the US health care system is not administratively controlled by a department or agency.
- Access to health care services is selectively based on insurance coverage – Unlike other countries where there is universal healthcare that is generally available to all citizens, Americans can access health care services only if they (1) have health insurance through their employers, (2) are covered under a government health care program, (3) can afford to buy insurance with their own private funds, (4) are able to pay for services privately, or (5) can obtain charity or subsidized care.
- Health care is delivered under imperfect market conditions – The U.S. health care delivery system is largely in private hands and only partially governed and, therefore, does not pass the basic test of a free market, so the system is best described as a quasi-market or an imperfect market.
- Insurers from a third-party act as intermediaries between the financing and delivery functions – The insurance intermediary generally does not have an incentive to be the patient’s advocate on either price or quality.
- The existence of multiple payers makes the system cumbersome – National health care systems are referred to as a single-payer system because there is one primary payer (the government), in contrast to the U.S. with numerous-different health plans that have resulted in extremely complex billing and collection challenges for healthcare providers.
- The balance of power among various players prevents any single entity from dominating the system – The U.S. healthcare system involves multiple players with different interests and agendas including physicians, administrators of health service institutions, insurance companies, large employers, and the government – all of which has resulted in highly politically active special-interest groups with their own economic interests to protect.
What is the bottom line? The United States healthcare system is ranked as the most expensive and has the lowest quality in the world, among all other developed countries. The chart below is as of 2019, and the U.S. healthcare spending as a percentage of GDP is now up to 20%.
Health Care System Performance Compared to Spending
Many suggestions have been made about how to lower healthcare costs while improving the quality of care in the U.S., but costs continue to increase. The good news is that the U.S. has many of the best doctors in the world. The challenge is that everyone is not on the same page regarding how to lower U.S. healthcare costs while increasing quality of care. This requires direction and leadership that guide us all to a less fragmented system of highly rewarding our healthcare providers for keeping patients healthy.
Sources:
- Delivering Healthcare in America: 8th Edition. Shi, Singh.
- Baylor University Hankamer School of Business Lectures
- University of Texas at Austin HIHIT Lectures
- https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries-2/
- https://www.commonwealthfund.org/publications/fund-reports/2021/aug/mirror-mirror-2021-reflecting-poorly
- https://www.researchgate.net/figure/BISMARCKS-VS-BEVERIDGES-MODEL_tbl1_328184770
Meade Monger, founder of Dallas-based CenturyGoal, is an expert in corporate restructurings, transformations and digital strategy. He is currently a PhD candidate in healthcare research.
