A Look at the U.S. Healthcare System

The current system, however, is not nearly as private as most Americans believe. The public sector pays for 45% of U.S. healthcare (when tax subsidies are accounted for, that figure grows to almost 60%). Some 160 million Americans receive health insurance from their employers, which is heavily subsidized by tax incentives. Twenty-seven million individuals purchase their own health insurance (there are currently no tax benefits for doing so). Federally sponsored Medicare for the elderly and disabled, plus state-sponsored Medicaid for the poor, cover an additional 70.5 million, while 46 million Americans are left without health coverage. Approximately 5.5 million individuals are double counted in these estimates (for example, some persons are covered by a private plan and Medicare, but are listed under both categories). All efforts have been made to eliminate double counting, but the best available statistics have been used. While the current system does involve far more government funding than most citizens assume, it is still the most privatized healthcare system in the OECD.

There are some clear strengths to the U.S. system. Patients are granted far more choices regarding their own healthcare under the U.S. system than patients forced to deal with a single government-sponsored provider. Some foreign nationalized healthcare systems are plagued with crumbling facilities and long waits for treatment. The competitive nature of the U.S. system allows patients who are dissatisfied with their current provider to seek treatment elsewhere. Additionally, the U.S. system has been proven to more effectively foster innovation in medical technologies and treatments than other systems. One survey originally published in Health Affairs found that, over the past 30 years, eight of the ten most significant medial breakthroughs originated in America.

However, the U.S. system does have some severe disadvantages. Unlike most rich countries, not all Americans have health insurance. Forty-six million Americans currently do not have health coverage. This is staggeringly different from the universal coverage offered by most relatively wealthy nations. The U.S. system is also extremely costly. The United States spends 16% of its GDP annually on healthcare, nearly twice the OECD average. That equates to more than $6,000 per person. Indeed, these sky-high costs are blamed for sluggish growth in U.S. worker wages and job creation.

The current U.S. model will inevitably be overhauled as the aging baby-boom generation continues to further strain the system. Change is likely to be gradual and incremental, though, as Americans are wary of increasing government participation in this arena. There are many plans for reform, and may politicians and industry experts have views on the direction the system should take. President Bush has renewed his interest in healthcare reform, and developed a controversial strategy of his own. This topic is sure to remain at the forefront of public concern for years to come. Recognizing the historical roots, benefits, and drawbacks of the current system can provide a useful framework for evaluating these plans for reform.