Health Reform in the US Part 1: How American Healthcare Works (or not)

Thanks to my friend Faisal for inviting me to contribute to his excellent blog. My name’s Rob Ford, and I’m an academic working at the University of Manchester studying political science and sociology. I’m also an American Politics nut. So given Faisal’s interest in the current health care debate, I’m going to open with a little primer on health care in the US, a strange beast indeed.

In Britain, we all have a right to free health care paid for out of our taxes (specifically, out of national insurance), though we can opt to take out private insurance too if we want to. The doctors are all employees of the state, though they can opt to take on private patients too, and are played a flat wage based on seniority and specialisation. The government makes the decisions about what drugs and treatments to pay for, and how much, and through organisations like the National Institute of Clinical Excellence has proved to be a tough bargainer over drug prices.

Every aspect of this is different in the US. Most Americans do not get any health care free of charge – they have to pay a private insurance company to provide it. However, in most case it is not the individual who pays, but his employer, thanks to a massive government tax break which encourages all large American companies to offer health care benefits to their employees as part of their contract. However, employers are under no obligation to provide this benefit and many can, and do, refuse to insure their staff. Most Americans – probably two thirds – get their insurance through this system, either directly as the wage earner or indirectly through benefits also offered to spouses and kids. The insurance companies, however, are under no obligation to insure all illnesses, and they can (and do) impose charges for treating some diseases or people, or refuse to insure them altogether.

That’s not the end of the story, though. The American government, despite what the right wing Republicans say, is also heavily involved in the system. Two programmes enacted by Lyndon Johnson in the 1960s – Medicare and Medicaid – provide government funded health care to millions of Americans. Medicare gives every American over the age of 65 with free health insurance coverage – a sort of NHS for pensioners. Medicaid provides health insurance for the poor: although the coverage it offers is very limited and probably reaches only 40% of the American poor. On top of this, a more recent programme called S-CHIP provides free health insurance to the children of lower middle class parents too wealthy to qualify for Medicaid but too poor to afford private insurance.

What does all this add up to? A lot of money, for starters. America’s health care system is almost twice as large as any other rich country’s, consuming 16% of GDP. Every sixth dollar spent in America is spent on something connected to healthcare. The cost of providing health care to employees is an enormous burden for many American companies: it was a key factor in the bankruptcy of General Motors and Chrysler.

However, this money is spent very unequally. While wealthy and upper middle class Americans have world class health care, with no expense spared, those at the bottom have limited coverage or no coverage at all. About 15% of the poorest Americans have no health coverage at all. As most people get coverage through their jobs, they risk losing it (for them and their families) if they are made redundant. And if they get ill while in one job, then move to another, their new insurer can refuse to cover them or make them pay a lot more. As a result, health care costs are the number one cause of bankruptcy in America and unemployment is an even more scary and stressful business than it is here. Imagine if losing your job meant you, your wife and your kids can no longer get medical care if you get sick. Nice system, huh?

However, despite this injustice and insecurity , the performance of the US system is not that hot. America doesn’t rate very highly on most health care outcomes, and the mediocre performance they get comes at an enormous cost.

Its a complicated, inefficient, grossly unjust, massively expensive system that has been slowly bankrupting American companies and the American government for decades. Its pretty obvious to everyone that it doesn’t work. So what is Obama trying to do to fix it, and why is he finding it so hard? Tune in next time for the answers...