One of the most memorable lectures and “aha” moments I had in graduate school was in a U.S. Healthcare Delivery class. My professor, Dr. Greg Stevens, assigned us a handful of great articles to illustrate a point: healthcare in the U.S. is expensive. “It’s the prices, stupid: why the U.S. is so different from other countries” by Gerard Anderson, Uwe Reinhardt, Peter S. Hussey and Varduhi Petrosyan succinctly analyzed and explained why our healthcare system, when compared to others, was like comparing apples to oranges. Each country has its own structure based on payer-provider dynamics. The spectrum below can help illustrate how different countries approach financing healthcare for their citizens. The simplified explanations below do not account for special cases or more innovative payer-provider designs, which do exist, but more so as a basis of background understanding.
On one end of the spectrum, we have the United Kingdom (UK). The UK is an example of a healthcare system with a public-public dynamic. The government, also known as the National Health Service (NHS), acts as the payer and provider. The NHS pays government-employed physicians to provide healthcare services to all its citizens by using taxpayer funds.
Next, we have Canada, which has a system with a public-private dynamic. The government acts as a single insurance company, also known as the “single payer system,” which provides payments to private healthcare providers (physicians, surgeons, etc.).
Lastly, on the other end, we have the U.S. system, which has a system with a private-private dynamic. Private insurance companies act as the payer to provide healthcare services to their “insured” members. Doctors are also considered in the private world because they are typically in private practice or are employed by for-profit or non-profit hospital systems. The word “public” in our discussion refers to government employees, which again is a generalization because there are so many exceptions. One exception (out of many) to note is Medicare. Medicare is a social program that was enacted by President Johnson and Congress to provide healthcare services to individuals 65 and over, regardless of income or medical history. Under this program, the government (public) acts as the insurance company and pays private physicians for healthcare services that this population received. In summary, the U.S. healthcare system would be considered as having a private-private dynamic, but has special exceptions such as Medicare above, which has a public-private dynamic. Complicated, right? And we haven’t even looked at the 11000+ page document known as the Affordable Care Act…
Health policy wonk Sarah Kliff from Vox wrote a great analysis this past week. In her piece, Ms. Kliff describes 8 facts that explain why our healthcare system is in such disarray. The most remarkable fact: the economy from our healthcare system alone, separated from the U.S. overall economy, would be the fifth largest economy in the world. Take a moment to let that sink in. Our healthcare system has an economy bigger than the UK and France. It would fall behind the U.S., China, Japan and Germany AS ITS OWN ECONOMY. Mind blown.
Next logical question is: why is it that huge? Other questions that come to mind: given that we spend so much per capita, why does our healthcare system rank 38th in the world according to WHO? What are we paying for??
Stay tuned for part 2…
“When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.” –Henry Ford