by Axios | 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.
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.
“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.
“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.
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.
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.
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.
Written by Axios
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