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The Unique Problem with U.S. Health Care

How would you reform U.S. health care?

by Axios | Updated on 3.8.19

Democrats’ Medicare for All debate has turned into a referendum on the existence of private health insurance. But simply having private health insurance isn’t the weird thing about the U.S. system — the weird thing is how we go about it.

The big picture: Health care in the U.S. is yoked to employment — it's a form of compensation for workers, and then we use a smattering of public programs to fill in the gaps. Other rich countries, though, treat health care like a social program and organize their systems accordingly. And their way is cheaper and more effective.

About half of all Americans have health insurance through an employer, making it the single biggest source of coverage in the country.

  • If you look at other rich countries comparable to the U.S., you’ll find plenty of roles for private insurance. But you won’t find such a close tie between work and health care very often.
  • Most of those countries’ health care systems have better results than we do, for a lot less money. They’re also able to cover almost their entire populations.

How it works: If you get health insurance through your job, your employer probably pays most of your premiums. It doesn’t have to pay taxes on those benefits.

  • That’s the single biggest tax break in the U.S. In 2018 alone, it allowed employers to avoid some $280 billion in taxes they otherwise would have owed, per the Tax Policy Center.

“One of the distortions in the market is the tax advantage. Whether employers want to be in this business, the evidence is mixed,” said Ashish Jha, the director of Harvard Global Health Institute.

  • Some companies love being able to provide tax-free compensation, he said, while others, especially smaller businesses, are overwhelmed by the complexity of managing health benefits and would simply prefer to not have to take on that workload.
  • Employers’ piece of the pie adds up to about 20% of total U.S. health care spending, according to federal data.

“In other countries [employers will] contribute, but not be responsible for providing the insurance,” said Irene Papanicolas, a health economist at the London School of Economics.

The closest comparisons to the U.S., among performing European countries, would probably be Switzerland and the Netherlands, Papanicolas and Jha said.

  • Both of those countries have achieved universal coverage through private insurance.
  • But the government tightly regulates what those plans cover, so even when a change in job might cause you to change insurance, the differences won’t be as great as they can be in the U.S., Jha said.
  • Those countries, like most of Europe, also have stronger safety nets for people who are unemployed.

Between the lines: The Affordable Care Act tried to nudge the U.S. in this direction. It’s a regime of subsidized private insurance that you purchase on your own, which has to cover a specific set of benefits and abide by a standard set of consumer protections.

  • The ACA, though, was limited to low- and middle-income people who didn’t have the ability to buy coverage through their jobs.

That fragmentation — one system for workers, another for the unemployed or self-employed, plus Medicare for seniors, Medicaid for low-income families, one for the military, another for Native Americans — contributes to our wasteful spending by driving up administrative costs.

Almost nowhere in that convoluted process does the U.S. do much to control health care prices — another big difference from similar countries, and obviously a big reason our system is so expensive.

  • We also don’t use the power of government to break up monopolies or ensure that the market for things like hospital care are actually competitive.
  • “We don’t regulate prices and don’t have competition,” Jha said.

The bottom line: “It’s not unique to have a public and private system, but to have so many public and private programs co-existing — I can’t think of any other county that has that,” Papanicolas said.

Axios

Written by Axios

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(67)
  • Hillary
    03/08/2019
    ···

    Universal health care now. For what I currently pay in premiums and copays and out of pocket expenses several people could have very good health coverage. I don’t mind paying taxes for sick children and elderly and poor! I mind paying taxes for obscenely rich people To get more money off me.

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  • Robert
    03/08/2019
    ···

    The government DOES NOT screw up everything it is involved in. Through the Centers for Medicare & Medicaid Services it administers very efficiently the Medicare program for 55 million Americans. You pay into Medicare all your working life, as well as into Social Security which is another well administered program. Medicare uses private medical professionals to deliver the services which it pays for. Go to providers, hospitals, clinics, labs of your choice. Additionally there are about 10 Medigap plans you can choose from to supplement deductibles and co-pays. These are plans provided by private insurers at competitive prices. Medicare has the policies and administrative structure that work. Everything is in place to extend Medicare to all Americans of all ages. So what's the problem? Lack of willingness for political parties to come together and support a solution the Americans truly want. Administering universal healthcare by extending Medicare to all Americans will be cheaper than the current non-system.

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  • Dave
    03/08/2019
    ···

    Other rich countries and poor countries, though, treating health care like a social program and organize their systems accordingly would work, and their way is cheaper and more effective. That is why we did not make the top 25 countries in the healthiest country in the world, but the most expensive? Canada is 16, most of the 25 are in Europe! We are 35. We are a indirect democratic (republic) socialist (we the people) Capitalist (Entrepreneur) United States (freedom to Pursue; life, Liberty and the pursuit of happiness)!

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  • JTJ
    03/08/2019
    ···

    No comparison, their population is a fraction of ours. Have you been there? They have no fat people. Their healthcare system would immediately collapse if used in the US.

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  • Nancy
    03/08/2019
    ···

    Single payer healthcare is the way to go

    Like (11)
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  • Mark
    03/08/2019
    ···

    Eliminate the mountains of government barriers to competition and our privately insured healthcare system will work and work exceptionally well! We would be the envy of the world! The “unique problem” that we have with the US healthcare system is the unique socialist idiots that refuse to stop tinkering with it, instead of unleashing the power of the free market drive down costs and raise the quality of care.

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  • Tooluser1
    03/08/2019
    ···

    Obamacare and the false, destructive promise of socialized medicine are the problem. Competition, reduced government intervention, and increased choices are the solution! NOT reduced choices, mindboggling regulation, and government inefficiency! No one who has EVER dealt with any government agency should be willing to support any form of "single payer"! The VA and Native American Hospitals are PRIME examples of just how horrifying government run healthcare will be.

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  • RAN
    03/08/2019
    ···

    What would I do? Nothing, health insurance should be part of compensation of an employer. Comparing us to Switzerland and Netherlands is ridiculous, the populations are minuscule compared to us. This article is full of nothing but crap! If the people let government control your healthcare, you are their property. When money begins to run out they will Ration. You want to lose what freedom you have left, “healthcare” is the way to go. People do not have the right to other peoples property or time. It’s theft to gain control.

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  • TrulyTexan
    03/08/2019
    ···

    The main problem with US healthcare is that the decision of whether we get any is being made by people who get it all for free from our taxes.

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  • Ken
    03/08/2019
    ···

    Why is it that there are those that want to keep their for profit insurance. You get to close your own doctors? Sure but only from a group that your insurance company has picked for you to choose from. This is only one false belief of many that insurance driven entities spread to muddy the waters of understanding. Universal health care is not socialism at work. For profit insurance undermines our ability to provide health care to everyone at reasonable cost. Do you actually believe that we could provide health care care for our military with a for profit insurance? We couldn’t. Doesn’t take a brain surgeon to figure this stuff out.

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  • DrCindyBean
    03/08/2019
    ···

    Right now we need to keep and strengthen ACA and Medicare and Medicaid. Keep prexisting conditions coverage. Keep essential health benefits. We need to phase in Over time to a Medicare for all, single payer plan. One way we can move in this direction is allowing people over 50 to buy in yo Medicare plans. Health care and health insurance coverage is essential to the peace and prosperity of our nation. Health Insurance is not a typical ‘free market capitalism’ type of situation. It will not work as a ‘free market’ type of industry. Don’t even try going that direction. It does not apply. We need trump and ridiculous republicans out of government before we will be able to move forward sensibly with Democrats and sensible republicans. It’s important for right now to keep ACA and strengthen ACA.

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  • eliyak
    03/08/2019
    ···

    As direct primary care and dispensing become more popular, insurance companies will have to adjust their model to compete. (If that's even possible under current law.) 1) We need to allow free market forces like DPC back into health care. 2) We should also allow importing cheap medicines from Canada and elsewhere. 3) The FDA needs to approve generics much more quickly.

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  • Gingersnapsnmilk
    03/08/2019
    ···

    I would like to start with the ACA and work from there. ACA wasn't intended to be left as it is, rather it was a starting place we should have fine tuned. That being said my asthma med alone that I need to take daily costs $465.00 a month. My thyroid meds for Hyperthyroidism , anixety meds I take for Agoraphobia and my rescue inhaler would leave me with skipping treatments if I didnt have the ACA plan. These meds are all ones I need to survive and are now far below what I would have to pay if I didnt have ACA. Please dont destroy ACA...fix and refine

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  • Cindy
    03/08/2019
    ···

    Those in favor of Medicare don’t realize there is a 20% co-pay, it isn’t free besides the co-pay, there is not negotiations on pharmacy pricing, there are DRs and clinics and hospitals that do NOT accept Medicare and if you have employee sponsored insurance they will drop it just like companies did with the ACA but on a wider scale. This will hospitals to close, they will not be able to stay open on Medicare reimbursement, you will eliminate choice.

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  • Joe
    03/08/2019
    ···

    Eliminate the tax benefits on premiums and we would have competition and lower rates. A far simpler solution and guaranteed to work.

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  • Jim2423
    03/08/2019
    ···

    Medicare for all is not the answer. You will have to purchase another backup policy. Pharmaceutical seems to be one major issue. Costs have to get better and available. Do not simulate us to European countries. We are more populated and vast expanse. Insurance Companies need to regulate hospital costs much better. If the doctor and hospital are preferred providers then accept the insurance payment and co pay. No more.

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  • Joseph
    03/10/2019
    ···

    Solving this is actually much easier than everyone “over” thinks it to be. 1) there are already a number of first-world industrialized countries with Universal Healthcare. Go & study what works & doesn’t work for them, then apply the things that do work to the USA situation; 2) review all the elements that contribute to high healthcare costs in the USA to see what, where, how costs may be reduced. These elements would include but are not limited to: education, insurance, tort law, and the overwhelming belief of entitlement, wealth, & profits from caring for our society; 3) know, understand & accept that the Federal Govt is required to be the backstop on all costs as every human being in the healthcare system is also potentially a catastrophic loss. No insurance company can survive catastrophic losses now in terms of flood, natural disasters, wildfires, etc. Why would we expect anything less when you add in healthcare. People must be provided FACTS & purpose of a single payer government backed plan-period. They have no use for propaganda & mis-information!; 4) prepare all that taxes will increase, but that the evolving plan will offset the tax increase as healthcare will now be covered for all — efficiently, effectively & with empathy. Everyone will participate, no exceptions. You will keep your doctor, dentist, specialist, whatever as long as the participants utilize the plan correctly as designed. Now I did say this is easier than most believe, but only if the paradigm of people over profits is accepted & practiced without prejudice of any kind and done so willingly & proudly. If this paradigm is not a part of this formula, then NO plan will succeed or survive. Pretty much where we are now, so...

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  • Marylynn
    03/09/2019
    ···

    The problem is that the government doesn't do a good job about policing the healthcare industry. If anything our lawmakers are rolling in the dough that these companies donate to their campaigns, therefore they look the other way and allow them to get away with murder. It's about damn time we hold all the frauds accountable.

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  • Alan
    03/11/2019
    ···

    Social Security was supposed to be sustainable and would have been, if it wasn't abused, stolen from and given to those that didn't contribute. Not everyone will contribute to Universal Healthcare either, therefore it won't be sustainable and no doctor in his right mind will settle for a set pay.

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  • Darby
    03/08/2019
    ···

    Get out of health care and allow competition and the USA would be way better off. You know how many problems Obamacare caused, let’s not make the same mistake. I’m talking to you Finkenhaur who wants to allow babies to be murdered in the womb and call it healthcare. Discusting! I will not be voting for your for reelection and I never did vote for you. #RodBlumwasbetter you don’t even reply to my messages.

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