What Healthcare System Types Does America Have?

Media today is filled with a slew of old and new terminology that describes the various healthcare system types operating around the world–single payer, “socialized medicine”, market-driven, and universal to name a few.  Many Americans will be surprised to learn that taxpayer-subsidized healthcare benefits in the United States are modeled after several different healthcare system types and which type any given American falls under is determined by membership in a particular health insurance group.  Several Republican-led healthcare reform alternatives to Obamacare (PPACA) are being discussed and having a clear understanding of the present American healthcare system types (and where you fit within them) is vital if you hope to weigh in on future healthcare reform legislation as an American citizen.

As Americans wait with mixed feeling for the ball to drop on Obamacare (PPACA), people are anxious to learn how new healthcare reform legislation will affect them personally. Will patient protections under Obamacare (PPACA) disappear or be replaced with better ones? Will healthcare reform be nation-wide or target specific Americans? Because healthcare benefits in the United States are delivered through various healthcare programs, people will probably not be affected by the changes brewing uniformly. The Americans who are now insured through the Health Insurance Marketplace (also called the Exchange) are particularly vulnerable if Obamacare (PPACA) is repealed without a workable alternative to replace it.

Let’s look at the healthcare system types that currently operate in the United States.

American Healthcare System Types

The United States is unique among industrial nations in that is does not have just ONE healthcare system type that is applied to all of its residents. Today, several different healthcare system types operate side-by-side. Which type of healthcare system any given American falls under depends on such factors as how old you are, how poor you are, where you work, and whether you spent two years or more in the armed services. The benefits and the amount of taxpayer subsidy vary from one group of Americans to the next.

In the table below, I have identified four different types of healthcare systems that operate within the United States borders:

  1. Single payer national health service (“socialized” medicine)
  2. Single payer national health insurance
  3. Multi-payer health insurance plans (market-driven healthcare)
  4. Free-market (100% out-of-pocket) healthcare

I have also included the names of countries where each of these different healthcare system types are the universal systems for healthcare.

table of healthcare system types in the USA

When the first three types of healthcare systems are practiced in the countries listed, the respective governments define one basic benefit package, negotiate prices for the entire population, and regulate for patient protection. Most of these countries also allow for private supplemental insurance plans to be sold to residents who wish to buy insurance above and beyond the basic, taxpayer-subsidized benefits.  The last healthcare system above (free-market healthcare) for the uninsured is really one where “if you can pay, you get health care, if not, tough luck”.  It is usually found in the poorest parts of the world where governments lack funds to care for their citizens.

The health benefits range from the generous “socialized” medicine enjoyed by veterans to no taxpayer-subsidized benefits for the uninsured.  While people who get insurance on the Marketplace and employees and their families share the same type of healthcare system (multi-payer health plans), their benefits and costs are not the same. Those with Marketplace insurance pay much more out-of-pocket and generally have more restrictive benefits than people with employer-sponsored health insurance.

While I did not include people on Medicaid (for the poor) in the above table, one should know that this group also falls under the multi-payer health insurance plan type with 50 separate states (and the District of Columbia) defining benefits, who is eligible, and the structure of the plans offered.  The vast majority of Americans fall under many independent multi-payer health insurance plans with differing benefit package, no mechanism for nation-wide price negotiation for the large combined group.  Unlike in other industrial nations, private insurance companies in the United States can profit from all primary health insurance plans offered.  The United States government does not define detailed basic health benefits for all citizens.  The broadly-defined Essential Health Benefits from Obamacare (PPACA) will soon disappear with the promised repeal of Obamacare (PPACA).

Which of these healthcare system types operating in the United States deliver the lowest healthcare costs? According to a Congressional Budget Office evaluation,  the costs associated with Veteran’s Health Administration (VHA) services were lower than all others in the table above. As a single-payer system, the administrative costs of the VHA are a fraction of those resulting from multi-payer systems.  In addition, unlike Medicare, the VHA is free to negotiate with drug and medical product companies for reduced prices, utilize health records for cost-efficient care, and coordinate among all doctors employed within the system. The VHA also doesn’t tack on profit to its costs like the other healthcare system types do.  All of these cost benefits are shared by other single payer national health services like those found in the United Kingdom.  The costs for healthcare services are higher as one moves down the list in the table reflecting the decreasing price negotiating power associated with smaller risk pools.

Why do Americans tolerate unequal taxpayer-subsidized benefits and different healthcare system types within its borders? One reason lies in history;  namely, as healthcare needs have arisen in the past, our government responded by tacking on new healthcare programs for specific groups rather than reforming the whole system. For example, in the early 1960s, when elderly people were unable to afford the health care they needed, Medicare was born as a separate government program on top of the employer-sponsored health insurance network that already existed. The richness of any new healthcare program and its details were directly impacted by how flush the government happened to be and how it affected the financial interests of private healthcare companies at the time .

Another reason that Americans do not call for more equitable treatment using taxpayer funds is simply because we do not possess the egalitarian sentiment found in other industrial nations that everyone should have equal access to the same basic healthcare benefits. We are still very much an “every man for himself ” nation. Reforming the entire United States healthcare system for cost-efficiency and equity is a much larger (and politically difficult) job than most federal administrations wish to take on. No administration will make the difficult transition to a single healthcare system that serves all Americans equally until individual Americans come together under one flag–an American one.

healthcare system types in USA and countries they come from

Perhaps the next President of the United States and members of the Senate and House of Representatives will finally come together and put the healthcare needs of the American population and the nation ahead of the moneyed self-interests of individual healthcare businesses. Our future economic and social well-being demands that we act now to bring Affordable Health Care and Beyond for ALL Americans. If not, we will continue to operate under several healthcare system types that deliver unequal benefits and costs that are higher than found in all other industrial countries.

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