Health care

Lane Kenworthy, The Good Society
December 2019

An ideal healthcare system has universal health insurance coverage, quality healthcare services at an affordable cost, and patient choice among providers. What’s the best way to combine these? How is America doing?

Skip to:

HEALTH INSURANCE

People need health insurance. Health care, unlike food and clothing, is too expensive to purchase on an as-needed basis. If you go without insurance and end up having a coronary bypass operation, you’ll owe around $60,000 out of pocket. Many Americans wouldn’t be able to come up with that much money.1

Health insurance improves people’s financial security by reducing the possibility of a large unexpected cost. Large medical debt and related problems are less common among those who have health insurance.2

Unfortunately, in the United States some insurance isn’t as good as it should be at preventing large medical bills.3 In a 2014 survey by the Commonwealth Fund, 29% of adults aged 19 to 64 who had health insurance throughout the year reported that they nevertheless had outstanding medical debt, had trouble paying medical bills, were contacted by a collection agency for unpaid medical bills, or had to alter their way of life in order to pay medical bills.4

Health insurance also improves health. It increases the likelihood of treatment and reduces the incidence of lasting health problems and death.5

Some of the evidence is cross-sectional — comparisons across persons or countries at a point in time. The US is the only affluent democratic nation with a substantial share of citizens who lack insurance, and among these countries we have the lowest life expectancy.6 About one in three Americans, a far larger share than in any of ten other rich nations, say that in the past year cost considerations prevented them from getting recommended care, filling a prescription, or visiting a doctor or clinic when they had a medical problem.7 As figure 1 shows, 20% of Americans say cost leads them to put off seeking medical treatment even for a serious condition.8 Compared to children with health insurance, those without it are less likely to get medical treatment for ordinary conditions and emergencies, and when hospitalized they are less likely to survive.9 Americans who don’t have health insurance are less likely to have screening tests for breast cancer and colorectal cancer, so if they get either of these types of cancer, they tend to be diagnosed later; as a result, they have lower survival rates.10 People with diabetes, hypercholesterolemia, and hypertension are about 10% less likely to get diagnosis and treatment if they lack health insurance.11 At-risk adults who don’t have insurance are more likely to have a stroke, and stroke victims without insurance are more likely to have lasting neurological impairment or to die, compared to those with insurance.12 Among Canadians, all of whom have a standard public health insurance plan, the incidence of early death for persons with cystic fibrosis is similar to that among Americans who have private insurance, but 44% lower than among Americans who have Medicaid, which pays for fewer medications and therapies, and 77% lower than among Americans who don’t have any insurance.13

Figure 1. Put off medical treatment for a serious condition due to cost
Question: “Within the last twelve months, have you or a member of your family put off any sort of medical treatment because of the cost you would have to pay? If yes, when you put off this medical treatment, was it for a condition or illness that was — very serious, somewhat serious, not very serious, or not at all serious?” The line shows the share responding yes and very serious or somewhat serious. Data source: Gallup, “Personal Health Issues,” Gallup Historical Trends, gallup.com.

Other evidence comes from comparison over time. Among persons aged 50-64, those without health insurance have worse health outcomes than those who have insurance; when they turn 65 and get Medicare, this difference shrinks significantly.14 In 2006, Massachusetts expanded the share of citizens with health insurance to nearly 100%; access to care increased, and deaths decreased by 8 per 100,000 persons per year.15 Oregon conducted an experiment in 2008-2010, expanding Medicaid to a randomly-selected group of low-income persons and comparing them to a control group. After two years, the Medicaid group had better mental health and expressed better subjective assessment of their physical health, though they weren’t better off in blood pressure, cholesterol, and some other health measures.16 In 2013, Arkansas and Louisiana expanded Medicaid (largely paid for by the Affordable Care Act) whereas neighboring Texas chose not to. One year later, in 2014, the new Medicaid recipients in Arkansas and Louisiana were more likely to have received medical care and were better off than their counterparts in Texas on objective and subjective measures of health, and the following year, 2015, the gap had expanded.17 A study comparing all states that expanded Medicaid following the ACA with all states that didn’t found a larger increase in access to healthcare services and a larger improvement in self-assessed health in the expanding states.18

As figure 2 shows, the United States is the only rich democratic nation in which a nontrivial share of the population lacks health insurance. As of 2015, approximately 91% of Americans were insured.

Figure 2. Health insurance coverage
Share of the population. The vertical axis doesn’t begin at zero. Data source: OECD, oecd.stat, “Total public and primary private health insurance.” Data source for the US for 1963-96: Council of Economic Advisors, “Methodological Appendix: Methods Used to Construct a Consistent Historical Time Series of Health Insurance Coverage,” 2014, using data from the National Health Interview Survey and other surveys. The other countries are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Korea (South), the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.

Why doesn’t everyone purchase health insurance? The reason is that it’s expensive.19 Many things can go wrong with our health, and there are many things healthcare providers can do to treat and prevent health problems. Health care in the United States is much more expensive than it needs to be (see below); health expenditures are 17% of our GDP. But even if we spent just 10% of our GDP on health, which is more in line with other rich nations, that would amount to $15,000 per household.20 Average annual income among the bottom fifth of American households is only $20,000.21

Because health insurance is very expensive, people with limited income are inclined to go without, despite the risk. That’s especially true of those who are young and/or healthy. And when the healthiest don’t buy health insurance, insurers not only receive fewer premiums (payments) but also pay out more per customer. To offset this, they charge more for the insurance they offer, which further reduces the number who can afford to buy it.

The chief way to facilitate access to health insurance is for government to help. Government can purchase insurance directly, it can provide a subsidy to people to help offset the cost of insurance, it can subsidize employers (via a tax break) to encourage them to offer health insurance for their employees, and it can require that individuals purchase insurance. In the US, there have been two significant leaps in insurance coverage in the past half century, one in the 1960s and the other in the 2010s (figure 2). In both instances the driver was an expansion of government insurance provision or subsidization: Medicare and Medicaid were created in the mid-1960s, and the Affordable Care Act, passed in 2010, took full effect beginning in 2014. The Affordable Care Act has expanded health insurance through an assortment of means: expansion of Medicaid, subsidies for direct purchase on exchanges, tax credits to small businesses to encourage them to offer insurance to their employees, allowing young adults to remain on their parents’ insurance policy until age 26, and preventing insurers from denying coverage to persons with a preexisting condition.22

Americans currently get health insurance in the following ways: 55% employer-based private, 14% direct purchase private, 18% Medicare, 18% Medicaid, 4% current military or Veterans Administration (VA).23 The remainder, 9%, are uninsured. (These percentages sum to more than 100% because some people have more than one source of coverage.)

QUALITY PROVISION AND AFFORDABLE COST

The United States spends a lot of money on health care, and our spending has increased very rapidly. Figure 3 shows that over the past generation America’s health expenditures have soared past those of other rich nations. Yet the health outcomes we get aren’t as good as they should be. Life expectancy during this period dropped from the middle of the pack to the bottom, as figure 4 indicates. (The same is true for “healthy life expectancy.”24) This isn’t due to our rates of change in obesity, smoking, or homicide, which have been similar to those of other countries. Death rates in America exceed those in most other rich countries for many different sources, from cardiovascular disease to neuropsychiatric conditions to infectious and parasitic diseases. And we see a similar pattern for infant mortality.25

Figure 3. Health expenditures
Share of GDP. Includes public and private expenditures. Data source: OECD. “Asl” is Australia; “Aus” is Austria.

Figure 4. Life expectancy
Years of life expectancy at birth. The vertical axis doesn’t begin at zero. Data source: OECD. “Asl” is Australia; “Aus” is Austria.

Figure 5 brings together the data on health spending and life expectancy to highlight the degree to which the United States stands apart from other affluent countries.

Figure 5. Life expectancy by health expenditures
The data points are years, from 1970 to 2017. The lines are loess curves. Life expectancy: years at birth. Health expenditures: public plus private, as a share of GDP. Data source: OECD. The other countries are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.

The Commonwealth Fund periodically assesses the quality of our health care and that of ten or so comparable nations on four dimensions: prevention, chronic care, safety, and coordination of care.26 As figure 6 shows, in the most recent Commonwealth Fund assessment, in 2016, America’s healthcare system was ranked in the middle for quality. That would be fine if it weren’t for the fact that we spend far more than the other countries while leaving 9% of the population uninsured.

Figure 6. Healthcare quality by health expenditures
The data are for 2016. Healthcare quality: ranking. Based on assessment of the quality of prevention, safety, coordination of care, and engagement and patient preferences. Data source: Eric C. Schneider, Dana O. Sarnak, David Squires, Arnav Shah, and Michelle M. Doty, “Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care,” Commonwealth Fund, 2017, exhibit 2. Health expenditures: public plus private, as a share of GDP. Data source: OECD.

Why is our healthcare system so much more expensive than those of other rich democratic nations? It isn’t because we need or use more health care services. There are two key drivers: (1) the price of medical procedures, pharmaceuticals, and providers’ salaries is much higher; (2) administrative costs are greater.27

These differences owe to a number of features of our health care system:

  • Payers are fragmented
  • Many providers and payers (insurers) are for-profit
  • Some providers have a near-monopoly position
  • Generous patent protection for pharmaceutical companies
  • “Fee for service” payment

Other rich countries typically have one or more powerful actors — government or large insurance funds — that set healthcare prices and thus have incentive and ability to keep a lid on cost increases. In the US, most health insurance companies and healthcare providers (hospitals, small groups of physicians, and solo doctors) are for-profit and insurers are fragmented, reducing their bargaining power vis-a-vis providers. These features lead to higher costs in a variety of ways.

The fragmentation of insurers produces high administrative costs. Each insurer has its own set of provisions, costs, and billing arrangements, so providers have to spend a lot of time checking to see what procedures are and are not covered for each patient and filling out billing forms.

In other affluent nations, health insurance firms and healthcare providers tend to be public or nonprofit. They often compete with one another, but they don’t need to earn a profit on top of their salary or break-even revenues. The fact that our insurers and providers are for-profit contributes to higher costs for medical services and procedures. So too does the high compensation levels of hospital administrators and medical providers, which is a consequence of the fact that there is a limited number of providers in each geographic area coupled with the fragmentation of insurers. No single insurer has enough power to drive down payment levels. As of 2017, an MRI scan cost, on average, $1,400 in the US, compared to $450 in the UK. An angioplasty procedure, which opens a blocked blood vessel to the heart, cost $32,000 in the US, versus less than $8,000 in the Netherlands and Switzerland.28

The fragmentation of insurers along with generous patent protections enable pharmaceutical firms to charge very high prices for new drugs they develop. By one estimate, the resulting above-market addition to the price of pharmaceuticals is nearly $300 billion per year, which is about 10% of our total spending on health.29

Insurers frequently compensate healthcare providers on a “fee for service” basis. Payment is for services performed, rather than for patient outcomes. This encourages overuse of tests, procedures, and other medical services. Compared to the average among OECD countries, Americans get twice as many CT scans, MRI scans, caesarean sections, and coronary bypass operations.30

An additional contributor to the high cost of the US health care system is the fact that some Americans lack health insurance or are underinsured. This discourages them from seeing a primary care physician when they need medical attention. When the problem gets bad enough, they go to the emergency room, which is much more expensive than an ordinary doctor visit.

America’s healthcare system is more market-driven than those of most other affluent countries. Why doesn’t that push prices down? One reason is that competition among providers often is quite limited. The number of hospitals in many areas is small, sometimes just one. And licensing requirements constrain the number of physicians. A second reason is that the direct payers for health care are insurers. Insurers pool funds from individual consumers, and this means they can afford to pay more for healthcare services than those individual consumers could. The combination of fragmented-but-rich payers with quasi-monopolistic providers contributes to high prices.

When individuals are the direct purchasers of health care provision, they seldom compare and select the low-cost option as they might for many ordinary goods and services. To many people, choosing where to get an MRI is scary and difficult. They don’t know where to look for alternatives, and they worry more about making the wrong choice. So they rely mainly on physician recommendations.31

Is America’s heavy expenditure on medical equipment and medicines needed to stimulate innovation? One view says yes, because the cost of research, particularly for pharmaceuticals, is so high.32 Skeptics contend that it isn’t clear the United States is the world leader in medical innovation, especially when measured on a per capita basis. In addition, America’s universities and venture capital system are key contributors to its success in medical research, and they arguably would be quite robust and effective even in the absence of high healthcare prices.33

PATIENT CHOICE OF PROVIDER

Most of us want to be able to choose our doctor(s). In comparing healthcare systems, this is a nonissue. All rich countries, even those with full public provision of health care, allow individuals and families some choice among providers. And usually people can purchase additional private health insurance if they’re willing and able, which expands choice.

HEALTHCARE SYSTEMS IN OTHER RICH DEMOCRATIC COUNTRIES

Let’s look more closely at the healthcare systems used by other affluent democracies. There are two principal types. They’re sometimes referred to as the Beveridge model and the Bismarck model. I’ll label them “single payer” and “insurance funds.”34

Single payer systems

In this type of system, the government pays providers (from tax revenues), decides prices, decides what procedures are covered, decides copayments, and more. It also runs some or most of the hospitals and employs some or most of the medical providers. The best-known example of this type of system is the United Kingdom’s National Health Service (NHS).

Health care is paid for via taxes. Britons don’t pay health insurance premiums. There are no copayments for diagnosis and treatment, whether for a visit to the doctor or specialized surgery. There is a small copayment for medicines, but it is waived for the elderly, people with chronic conditions, and other needy groups.

A government agency draws on available research to decide what treatments and medications are sufficiently effective and affordable to justify coverage. Some basic things, like eyeglasses and some types of dental care, aren’t covered. Patients must see their general practitioner first and get a referral in order to see a specialist, much like with HMOs in the United States. Patients can see any general practitioner of their choosing, and once they get a referral they can choose which specialist to see next.

How is cost control achieved? The key is that a single agency decides what tests, procedures, and medicines will be covered and how much providers will be paid. In addition, administrative costs are very low because there are no disputes about eligibility, there is a single set of rules, and there is a single price list.

General practitioners are paid based on the number of patients they have (“capitation”), not the number of patient visits or the number of tests and procedures they perform or the number of referrals they make to specialist doctors. Most general practitioners in the UK aren’t government employees. Formally, they are self-employed doctors who contract with the government. But this is a distinction that makes little difference, as what they can do and how much they can charge are determined by the NHS. Doctors can provide private medical care on the side, charging what they like. But the private market is utilized by a small minority of Britons; 90% use only the NHS for their health care.

Britons pay for health care via their taxes and some small copayments. And if they want to avoid waiting to see a specialist or for a “nonessential” procedure, or if they’d like to get a procedure that isn’t covered by the NHS, they pay out of pocket.

Among the world’s rich longstanding-democratic nations, Australia, Canada, Ireland, New Zealand, Italy, Portugal, Spain, Denmark, Finland, Norway, Sweden, and South Korea have healthcare systems that are broadly similar to the British one. The United States does too; about 40% of Americans get their health care via Medicare (elderly), Medicaid (low income), the Veterans Administration (former military), or the Military Health System (current military). So this is the type of system favored by the English-speaking nations, the southern European countries, the Nordic countries, and most recently South Korea.

There are differences among these countries — whether or not medical providers are formally government employees, what tests and procedures are covered (two out of three nonelderly Canadians have private insurance to supplement the government package), whether patients must see a primary-care physician first or can go straight to a specialist, how much choice patients have about doctors and hospitals, the existence and size of copayments and deductibles, whether the key decisions are made mostly by a central government agency (UK) or by local governments (Canada, Denmark, Italy, Sweden), whether private health insurance can cover the same procedures as the public system (in Canada and Italy it can’t), and more. But the basic structure is the same: government decides what tests, procedures, and medicines are covered, how much providers are paid, and where the money comes from (taxes, copayments, something else).

In this type of system, these matters are political decisions. If citizens aren’t satisfied with their access to medical care, with its quality, with waiting times, or with the amount of taxes they’re paying to fund it, they can lobby the government to make changes or vote in a new government that will do so.

Insurance funds systems

Austria, Belgium, France, Germany, Japan, Netherlands, and Switzerland — the affluent continental European nations plus Japan — organize healthcare differently. Health insurers, usually referred to as insurance funds, are the principal payers. Citizens pick an insurance fund and pay a fee, often supplemented by a payment from their employer. The insurance fund determines what tests, procedures, and medications will be covered. Hospitals and doctors are mostly nonprofit or private; relatively few are administered or employed by the government.

In this respect, things work similarly to the way they do for a majority of working-age Americans who get health insurance through an employer-sponsored plan and get treated by nonprofit or private physicians and hospitals. But there the similarity ends. First, everyone is covered. Individuals typically are required to purchase health insurance through an insurance fund, and those who don’t or can’t are either assigned to a fund or are covered by the government. The insurance funds must accept all applicants; they can’t refuse coverage on grounds of age, risk, preexisting conditions, or for any other reason. Second, there is a basic plan that all insurers must offer at a fixed price. Typically they also can offer better plans, which cover more services or allow more choice among doctors or shorter waits, at a higher price. Third, prices are tightly controlled. Sometimes, as in France and Japan, government sets the prices in consultation with representatives of hospitals and doctors. In other countries, such as Germany and the Netherlands, prices are determined, for the nation as a whole, via bargaining between representatives of the insurance funds and representatives of medical providers. If those negotiations break down, government steps in to impose a resolution. Fourth, insurance funds can’t be for-profit. (They do compete with one another, though.)

There are differences across these countries. The number of funds varies: France has about 15, Germany 120, Japan 3,400. People can choose to join whatever insurance fund they like in most of these nations, but in France they must go with the one set up for their line or work or the region where they live, and they stay with that fund for life, even if they move across the country or lose their job. Japanese must go with their employer’s fund. In some nations people can switch between funds on short notice (Germany, Switzerland), whereas in others switching can only be done once a year (Netherlands). In some countries patients can go to whatever doctor or hospital they like (France, Japan), while in others they must first see a primary-care physician. Copayments and deductibles vary. In some of these countries, lots of people purchase supplementary private insurance to cover things the insurance plan doesn’t (90% of the working-aged in France, 84% of the population in the Netherlands). In Germany, but not in most other countries, the affluent (about 7% of the population) are allowed to opt out of this system and purchase private insurance on their own.

Using employer payments as a major source of financing for health care seems outdated. In a society where people switch jobs frequently, it makes little sense for insurance against a potentially major and very costly risk to be tied to one’s employer. Moreover, providing health insurance is expensive for firms, putting them at a disadvantage relative to foreign competitors. And it likely acts as a brake on wage increases. Nevertheless, employer-based health insurance seems to work reasonably well in these insurance funds countries. An important reason why is that if people quit or lose their job, they are automatically kept with their existing insurance fund or switched into a government health insurance plan. And the cost of health care is contained, so it’s less of a burden for employers.35

Which type of system works better?

Figure 7 shows average life expectancy since 1980 in the twelve rich democratic countries that have a single-payer system and the seven countries that have an insurance fund system.36 There is no meaningful difference between them.

Figure 7. Life expectancy by type of healthcare system
Years of life expectancy at birth. The vertical axis doesn’t begin at zero. The “single payer” countries are Australia, Canada, Denmark, Finland, Ireland, Italy, New Zealand, Norway, Portugal, Spain, Sweden, and the United Kingdom. The “insurance funds” countries are Austria, Belgium, France, Germany, Japan, Netherlands, and Switzerland. Data source: OECD.

Life expectancy is influenced not only by a nation’s healthcare system but also by lifestyle, diet, education, affluence, violence, and more. A measure that more directly gets at the impact of the healthcare system on longevity is “avoidable deaths,” defined as deaths among persons aged 0 to 74 from diseases or conditions that are treatable or that could have been prevented through better public health interventions. Comparable data are available only for European nations and only for recent years. This includes nine countries with a single-payer system (Denmark, Finland, Ireland, Italy, Norway, Portugal, Spain, Sweden, and the United Kingdom) and six countries with an insurance-funds system (Austria, Belgium, France, Germany, the Netherlands, and Switzerland). As we see in figure 8, the avoidable death rate is virtually identical across the two system types.

Figure 8. Avoidable death rate by type of healthcare system
Per 100,000 persons aged 0 to 74. Deaths from diseases or conditions that are treatable (“treatable” deaths) plus deaths that could have been prevented through better public health interventions (“preventable” deaths). The vertical axis doesn’t begin at zero. The “single payer” countries are Denmark, Finland, Ireland, Italy, Norway, Portugal, Spain, Sweden, and the United Kingdom. The “insurance funds” countries are Austria, Belgium, France, Germany, Netherlands, and Switzerland. Data source: Eurostat, “Preventable and Treatable Mortality Statistics.”

Figure 9 shows health expenditures as a share of GDP. Here we see a slight advantage for single-payer countries, and that advantage increases a bit over time. It may be that this is due to greater efficiency — for instance, lower administrative costs or less waste. Then again, it could be a result of political choices to cover fewer procedures or medications, which might result in longer wait times or less use of medical care. We lack data that would permit the sort of detailed comparison we need in order to reach a confident conclusion about the sources of this difference in health expenditures.

Figure 9. Health expenditures by type of healthcare system
Share of GDP. Total (public plus private) expenditures. The “single payer” countries are Australia, Canada, Denmark, Finland, Ireland, Italy, New Zealand, Norway, Portugal, Spain, Sweden, and the United Kingdom. The “insurance funds” countries are Austria, Belgium, France, Germany, Japan, Netherlands, and Switzerland. Data source: OECD.

In 2013 and 2016, the Commonwealth Fund conducted thorough assessments of the healthcare systems of eleven of these countries. They included six countries with a single-payer system (Australia, Canada, New Zealand, Norway, Sweden, and the United Kingdom) and four with an insurance-funds system (France, Germany, the Netherlands, and Switzerland), along with the United States. They scored each nation in five areas — care process (preventive care, safe care, coordinated care, and engagement and patient preferences), access (affordability and timeliness), administrative efficiency, equity, and healthcare outcomes — and they used these scores to determine an overall ranking.

Figure 10 shows the countries’ ranking in each year along with the averages for the two groups. In 2013 the average rank for countries with a single-payer system was exactly the same as the average for countries with an insurance-funds system. In 2016 the average ranking was better for single-payer countries than for insurance-fund countries. But the difference was small — small enough that it easily could disappear if more nations from each group were included. It might also be a product of error; while these assessments are careful and thorough, that doesn’t mean they are perfectly accurate.

Figure 10. Healthcare system performance rank by type of healthcare system
The rankings are for 2013 and 2016. Data sources: Karen Davis, Kristof Stremikis, David Squires, and Cathy Schoen, “Mirror, Mirror on the Wall: How the Performance of the U.S. Health Care System Compares Internationally,” Commonwealth Fund, 2014, exhibit 2; Eric C. Schneider, Dana O. Sarnak, David Squires, Arnav Shah, and Michelle M. Doty, “Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care,” Commonwealth Fund, 2017, exhibit 2.

Given what we observe in the data, I see little, if any, basis for concluding that one of the two types of healthcare system works better than the other.

Indeed, it’s important not to exaggerate the differences between these two ways of organizing health care. Both systems control prices via a nonmarket mechanism — government imposition, government negotiation with providers’ representatives of providers, or negotiation between insurance funds’ representatives and providers’ representatives. Both dictate to a nontrivial degree what medical providers can and cannot do — what customers they must serve (usually all), what treatments they can and can’t prescribe (if they are to get paid). Even in countries where most hospitals are government-operated and most medical staff are government employees, the system operates in a way that’s very similar to what happens in insurance-funds systems.

The closest analog to the way the healthcare system functions in all rich democracies apart from the United States is a regulated private industry. Prior to the late 1970s, for example, airline firms in the US were privately owned. But they had to follow strict guidelines about where they could fly. They had to provide flights to and from a certain number of small cities, in order to ensure broad access to air transportation. And they were limited in the prices they could charge. Rail transportation, subways, and buses often are similar, as is local provision of electricity, gas, and water. This type of economic organization may or may not be the most effective, depending on the sector and the specific national or local circumstances. But in healthcare it seems to work well.

Transitioning

For the United States, transitioning to an insurance funds system would seem, at first glance, to be easier, because we could build on our existing employer-based provision of health insurance. But it would be no small matter. Insurers would need to shift from for-profit to nonprofit. Government would need to create a policy whereby the noninsured are assigned to an insurer or covered by a government program. Government would need to ensure that there is a basic plan that everyone can get. Prices paid to providers could be decided by negotiations between insurers, doctors, and hospitals, but government would need to be willing to step in and impose a decision if such negotiations fail to yield an agreement.

A transition to an American single-payer system could be done in one fell swoop, by expanding either Medicare or Medicaid to the entire population. Or it could be done gradually: lower the age at which Americans can get Medicare, raise the income limit for Medicaid eligibility, and add a Medicare-like program (“public option”) that individuals and families can purchase on health insurance exchanges and that firms can purchase for their employees. Or simply allow any employer or individual to buy into Medicaid or Medicare, with subsidies for those who need them. Eventually, much of the population would be covered by these public programs. This would achieve universal coverage, and the government, as the dominant payer, would be in a strong position to control healthcare costs.37

SUMMARY

America’s healthcare system fails to insure everyone, it’s very expensive, and its quality is average. Other affluent democratic countries structure their healthcare systems in varying ways, but each insures everyone, costs less, and achieves quality and outcomes similar to or better than ours.

  1. Lane Kenworthy, “Stable Income and Expenses,” The Good Society. ↩︎
  2. Kenworthy, “Stable Income and Expenses.” ↩︎
  3. Kenworthy, “Stable Income and Expenses.” ↩︎
  4. Sara R. Collins, Petra W. Rasmussen, Michelle M. Doty, and Sophie Beutel, “The Rise in Health Care Coverage and Affordability Since Health Reform Took Effect: Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2014,” The Commonwealth Fund, 2015, p. 6. ↩︎
  5. According to one prominent estimate, 45,000 Americans may die each year due to lack of health insurance. But there is considerable disagreement about this conclusion. See Institute of Medicine, America’s Uninsured Crisis: Consequences for Health and Health Care, National Academy Press, 2009; Andrew P. Wilper et al, “Health Insurance and Mortality in US Adults,” American Journal of Public Health, 2009; Richard Kronick, “Health Insurance Coverage and Mortality Revisited,” Health Research and Educational Trust, 2009; Megan McArdle, “Myth Diagnosis,” The Atlantic, 2010. ↩︎
  6. Lane Kenworthy, “Longevity,” The Good Society. ↩︎
  7. Karen Davis, Kristof Stremikis, David Squires, and Cathy Schoen, “Mirror, Mirror on the Wall, 2014 Update: How the Performance of the U.S. Health Care System Compares Internationally,” Commonwealth Fund, 2014, p. 20. ↩︎
  8. See also Board of Governors of the Federal Reserve System, “Report on the Economic Well-Being of U.S. Households in 2014,” 2015, p. 19. ↩︎
  9. Kaiser Family Foundation, “Children’s Health — Why Health Insurance Matters,” 2002; F. Abdullah et al, “Analysis of 23 Million US Hospitalizations: Uninsured Children Have Higher All-Cause In-Hospital Mortality,” Journal of Public Health, 2009. ↩︎
  10. American Cancer Society. ↩︎
  11. Daniel R. Hogan et al, “Estimating The Potential Impact Of Insurance Expansion On Undiagnosed And Uncontrolled Chronic Conditions,” HealthAffairs, 2015. ↩︎
  12. A. Fowler-Brown et al, “Risk of Cardiovascular Events and Death: Does Insurance Matter?,” Journal of General Internal Medicine, 2007; J.J. Shen and E.L. Washington, “Disparities in Outcomes Among Patients with Stroke Associated with Insurance Status,” Stroke, 2007. ↩︎
  13. Aaron Carroll, “Why Cystic Fibrosis Patients in Canada Outlive Those in the U.S.,” New York Times, 2017. ↩︎
  14. J. Michael McWilliams et al, “Use of Health Services by Previously Uninsured Medicare Beneficiaries,” New England Journal of Medicine, 2007. ↩︎
  15. Benjamin D. Sommers, Sharon K. Long, and Katherine Baicker, “Changes in Mortality After Massachusetts Health Care Reform: A Quasi-experimental Study,” Annals of Internal Medicine, 2014. ↩︎
  16. Ezra Klein, “What if Health Insurance Doesn’t Make You Much Healthier?,” Vox, 2015. ↩︎
  17. Benjamin Sommers et al, “Changes in Utilization and Health Among Low-Income Adults After Medicaid Expansion or Expanded Private Insurance,” JAMA Internal Medicine, 2016. ↩︎
  18. Kosali Simon, Aparna Soni, and John Cawley, “The Impact of Health Insurance on Preventive Care and Health Behaviors: Evidence from the First Two Years of the ACA Medicaid Expansions,” Journal of Policy Analysis and Management, 2017. ↩︎
  19. Yonatan Zunger, “Health Insurance: How Does It Work?,” Healthcare in America, 2017. ↩︎
  20. As of 2016, US GDP was $18.5 trillion and there were 125 million households. ↩︎
  21. Lane Kenworthy, “A Decent and Rising Income Floor,” The Good Society. ↩︎
  22. Margot Sanger-Katz, “The Biggest Changes Obamacare Made, and Those That May Disappear,” New York Times, 2017. The Affordable Care Act also imposed a fine on people who don’t have insurance (“individual mandate”), but it was eliminated in 2017. ↩︎
  23. Data source: Census Bureau, “Health Insurance Coverage in the United States: 2018,” table 1. ↩︎
  24. US Burden of Disease Collaborators, “The State of US Health, 1990-2010: Burden of Diseases, Injuries, and Risk Factors,” Journal of the American Medical Association, 2013. ↩︎
  25. National Research Council and Institute of Medicine, U.S. Health in International Perspective: Shorter Lives, Poorer Health, National Academies Press, 2013, ch. 1 and figure 2.4. ↩︎
  26. (1) Prevention: physicians report it is easy to print out a list of patients who are due or overdue for tests or preventive care; patients receive reminders for preventive care; patients are routinely sent computerized reminder notices for preventive or follow-up care; doctors or other clinical staff talk with patients about healthy eating, exercise or physical activity, health risks and ways to quit. (2) Chronic care: patients with diabetes receive all recommended services; patients with hypertension have had cholesterol checked in past year; patients with a chronic condition aren’t impeded from receiving recommended tests, treatment, and follow-up care by cost; physicians report it is easy to print out a list of patients by diagnosis; physicians report it is easy to print out a list of all medications taken by individual patients, including those prescribed by other doctors; pharmacist or doctor reviews and discusses all medications patient used in the past year. (3) Safety: patients know of no medical mistakes made in treatment or care in the past 2 years; patients weren’t given wrong medication or wrong dose at a pharmacy or while hospitalized in the past 2 years; patients weren’t given incorrect results for a diagnostic or lab test in the past 2 years; patients experienced no delays in being notified about abnormal test results in the past 2 years; hospitalized patients report no infection while in hospital or shortly after; doctors routinely receive a computerized alert or prompt about a potential problem with drug dose or interaction; doctors routinely receive reminders for guideline-based interventions and/or tests. (4) Coordination of care: patients have a regular doctor or place; regular doctor or place always or often helps coordinate and arrange care from other doctors or places; specialists have information about medical history; when primary care physicians refer a patient to a specialist, they always or often receive a report back with all relevant health information; when primary care physicians refer a patient to a specialist, they always or often receive information about changes to a patient’s medication or care plan; when primary care physicians refer a patient to a specialist, they always or often receive information that is timely and available when needed; doctors receive alert or prompt to provide patients with test results; patients know who to contact for questions about condition or treatment; patients receive written plan for care after discharge; hospital makes arrangements for follow-up visits with a doctor or other health care professional when leaving the hospital; primary care physician always or often receives notification that patient has been seen in emergency room; primary care physician always or often receives notification that patient is being discharged from hospital; primary care physicians receive the information needed to manage a patient’s care within 2 days after they were discharged from the hospital. ↩︎
  27. Irene Papanicolas, Liana R. Woskie, and Ashish K. Jha, “Health Care Spending in the United States and Other High-Income Countries,” Journal of the American Medical Association, 2018. ↩︎
  28. Rabah Kamal and Cynthia Cox, “How Do Healthcare Prices and Use in the U.S. Compare to Other Countries?,” Peterson-Kaiser Health System Tracker, 2018, using data from the International Federation of Health Plans. See also Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan, “It’s The Prices, Stupid: Why The United States Is So Different from Other Countries,” HealthAffairs, 2003; Philip M. Boffey, “The Money Traps in U.S. Health Care,” New York Times, 2012; T. Siro, E.O. Lee, and E.J. Emanuel, “Price and Utilization: Why We Must Target Both to Curb Health Care Costs,” Annals of Internal Medicine, 2012; H. Moses, D.H. Matheson, E.R. Dorsey, B.P. George, D. Sadoff, and S. Yoshimura, “The Anatomy of Health Care in the United States,” Journal of the American Medical Association, 2013; Joseph L. Dieleman et al, “Factors Associated with Increases in US Health Care Spending, 1996-2013,” Journal of the American Medical Association, 2017; Abe Dunn, Eli B. Liebman, and Adam Shapiro, “Decomposing Medical-Care Expenditure Growth,” Working Paper 23117, National Bureau of Economic Research, 2017; Margot Sanger-Katz, “In the US, an Angioplasty Costs $32,000. Elsewhere? Maybe $6,400,” New York Times, 2019. ↩︎
  29. Dean Baker, The End of Loser Liberalism, Center for Economic and Policy Research, 2011, ch. 10. ↩︎
  30. OECD. These data are for 2012. ↩︎
  31. Austin Frakt, “Shopping for Health Care Simply Doesn’t Work,” New York Times, 2018. ↩︎
  32. Tyler Cowen, “Poor U.S. Scores in Health Care Don’t Measure Nobels and Innovation,” New York Times, 2006; Glen Whitman and Raymond Raad, “Bending the Productivity Curve: Why America Leads the World in Medical Innovation,” Policy Analysis 654, Cato Institute, 2009; Sally C. Pipes, “Those Misleading World Health Rankings,” Wall Street Journal, 2013. ↩︎
  33. PricewaterhouseCoopers, “Medical Technology Innovation Scorecard,” 2011; Thomson Reuters, “2016 State of Innovation,” 2016. ↩︎
  34. My discussion here draws heavily from T.R. Reid, The Healing of America: A Global Quest for Better, Cheaper, Fairer Health Care, Penguin, 2009; Elias Mossialos, Ana Djordjevic, Robin Osborn, and Dana Sarnak, eds., International Profiles of Health Care Systems, Commonwealth Fund, 2017. ↩︎
  35. Ezra Klein, “Why an MRI Costs $1,080 in America and $280 in France,” Washington Post: Wonkblog, 2012. ↩︎
  36. South Korea isn’t included in the comparison here because it switched from one type of healthcare system to the other in 2000. ↩︎
  37. Jacob S. Hacker, “Stronger Policy, Stronger Politics,” The American Prospect, 2016; Hacker, “The Road to Medicare for Everyone,” The American Prospect, 2018; Dylan Matthews, “Donald Trump Promised ‘Insurance for Everybody’. Here’s How He Can Do It,” Vox, 2016; Sarah Kliff and Ezra Klein, “The Lessons of Obamacare,” Vox, 2017; Paul Starr, “The Next Progressive Health Agenda,” The American Prospect, 2017; Starr, “A New Strategy for Health Care,” The American Prospect, 2018; Michael S. Sparer, “Buying into Medicaid: A Viable Path for Universal Coverage,” The American Prospect, 2018. ↩︎