The paradox of US healthcare

Americans pay more but get less, so should the US abandon its profit-driven system?

The debate over health insurance reform is raging in Washington [GALLO/GETTY]

For nearly two decades, Wendell Potter led a very comfortable life as a public relations health insurance executive.

However, while flying on a corporate jet and being served lunch on gold-rimmed china with gold-plated cutlery, Potter had an epiphany of sorts.

He realised that the reason why millions of Americans were without health insurance or under-insured was because: “Our Wall Street-driven healthcare system has created one of the most inequitable healthcare systems on the planet.”

This June, Potter left his well-paid and secure job at CIGMA, one of the US’s largest health insurance companies, and has spoken out in favour of healthcare reform.

‘Killing thousands’

With almost 50 million people living without any health insurance and another 25 million people under-insured during a recession, the debate about how to reform the US healthcare system has been underway for many months in Washington and is expected to continue through to the end of the year.

Since leaving CIGMA Potter become a whistleblower and is now speaking out against industry abuses on national television news shows.

He does not mince words when telling Al Jazeera that if a strong “public option” is not passed by Congress, healthcare executives would be effectively allowed to continue policies that “literally kill thousands of Americans every year, through denied coverage, as a result of relentless pressure coming from Wall Street”.

The public option, currently favoured by the White House, would attempt to insure the uninsured, with the government providing a non-profit, publicly-funded insurance plan.

The public option, however, has not been fully vetted and passed by Congress and Republicans, coupled with a number of Democratic allies, have vowed to prevent it from reaching the desk of Barack Obama, the US president.

Paying more, getting less

About 50 million Americans are without health insurance [GALLO/GETTY]

In the meantime, the US continues to be the country with the highest proportion of uninsured people in the developed world. It also has the distinction of spending a greater portion of its total economic output on healthcare than any other developed country – just over 17 per cent of its gross domestic product (GDP) last year.

On average, the US spends twice as much as other developed countries on healthcare.

But even though US citizens pay more for healthcare, they get less of it, resulting in a lowly 37th place ranking among healthcare systems in the world, according to a study by the World Health Organization based on quality and fairness.

In terms of the infant mortality rate, a common marker for the overall state of healthcare systems, the US was outranked by all of the following countries according to the CIA’s World Factbook: Sweden (3rd), Japan (4th), France (7th), Norway (10th), Germany (14th), Israel (17th), Denmark (21st), United Kingdom (31st), Canada (35th), Taiwan (39th), Italy (41st) and even a few underdeveloped countries, including Cuba (43rd).

How can this paradox of the US spending the most and getting the least for its healthcare occur in the country with the world’s largest economic output?

Claudia Schaufan, an Argentine physician and professor of comparative health policies at the University of California in Santa Cruz, explains that the common characteristics of healthcare systems in the developed world have to do with the universality of coverage and the lack of for-profit entities.

The key behind each of these systems is that they all outperform the US in terms of their infant mortality rates, administrative costs, the extent of population with coverage and the proportion of GDP spent on healthcare.

Furthermore, there are no documented instances of citizens going bankrupt because of medical care in these systems while, conversely, some studies have shown as many as 700,000 Americans suffer that fate annually.

‘Making a buck’

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One grouping of healthcare systems can be described as socially insured and multi-payer (Germany, Switzerland, Japan, Israel, Belgium and Austria), another as socially insured and single-payer (Taiwan and Canada), and a third as nationally insured and delivered (United Kingdom, Spain, all of Scandinavia, Italy and Iceland).

Socially insured and multi-payer systems feature health insurance delivered by non-profit insurers. Those who are unemployed or cannot afford to pay for the insurance, receive governmental assistance so that universal coverage is achieved.

Certain multi-payer countries have a wide choice of insurance programmes, as is the case in Germany. When you choose a private, non-profit insurer – Germany has 240 of them – the government pays a portion of the costs based on your income.

Developed countries with one national insurer that is funded publicly – often described as single-payer – have a healthcare system that is delivered by either private (as is the case in Canada) or publicly-run institutions (as is the case in all of Scandinavia).

While these systems differ in their specific characteristics, the similarities are more important, according to Schaufan.

“Everyone has health insurance and there is no significant for-profit aspect in any part of the medical sector … nobody in these systems ‘makes a buck’ at the expense of the health of patients,” she says.

Learning from others

Taiwan, which spends three times less than the US on healthcare, developed its current healthcare system in the mid-1990s, when the majority of citizens were uninsured and policymakers collectively decided the health system needed to be radically overhauled. However, the Taiwanese looked to other countries to forge their own system.

Asked what the proposed US reforms show in terms of learning from other examples, Naoki Ikegami, a leading Japanese healthcare economics professor, says simply: “Not much, because there has to be a willingness to learn and if anything, US leaders have isolated themselves from learning about other healthcare systems.”

Professor Ikegami’s co-author on numerous scholarly publications, John Campbell, an American-born political science professor, says: “The reforms being proposed in the US simply do not fix or get at the heart of the problem, which is price containment and unsustainable healthcare costs.

“The US would stand to gain a lot from going to a single-payer system, where costs could easily be contained and controlled.”

Failing millions

Protestors say thousands die every year because they are uninsured [GALLO/GETTY]

In terms of for-profit and corporate healthcare interests influencing policy in universally insured systems, however, the situation is quite different.

Campbell says: “Insurance companies have a very small presence here in Japan and simply do not influence policy at all. The exact opposite is the case in the US where they basically dictate policy.”

Potter explains that the situation in the US is a far-cry from that in Japan, as a result “of the lobbying strength of the for-profit, special interests in this country”.

Consequently, Potter describes current reforms being considered by Congress as little more than “limited” in their scope.

Schaufan is also critical, adding that for most people, the measures being debated in Washington will be little more than “mandates forcing people to take on for-profit-based insurance companies, which already depend upon the government to cleanse itself from having to cover the elderly and the poor, through the popular Medicare and Medicaid programmes”.

She believes the US should adopt more fundamental reforms putting it in line with the rest of the developed world that has opted for universal coverage within the scope of non-profit-based and administered systems.

Potter echoes Schaufan’s sentiments: “The system has already failed millions of Americans and will continue to fail millions more in the years to come.”

Other experts, however, disagree and point out that trying to rid the US of its profit-based system is unrealistic.

Timothy Jost, a healthcare policy expert and law professor at Washington and Lee University, says: “I would like to have world peace, but I just don’t think we’re going to get rid of a for-profit healthcare system.”

He says there are several significant steps Congress can take by passing meaningful reforms, including “the expansion of Medicaid, as all reform bills are currently proposing that Medicaid would be expanded to 133 per cent of the poverty line”.

Jost also points to “affordability subsidies, which would take care of a sizable portion of the population and help put limits on cost-sharing, which will cover most of the people who are under-insured”.

Cost-sharing transfers much of the burden of paying for healthcare to insured consumers and is a significant reason why many people are under-insured and many others have to declare medical bankruptcy, despite having insurance.

What the public wants

Despite Jost’s optimism about some of the reforms under consideration, the public opinion polls suggest a possible disconnect between politicians and the reforms they are proposing and what the public really wants from their healthcare system.

Based on a recent New York Times/CBS News poll, the New York Times reported that, “most Americans would be willing to pay higher taxes so everyone could have health insurance and said the government could do a better job of holding down healthcare costs than the private sector”.

Another recent ABC News/Washington Post poll documented public support for governmental insurance going even farther, as 56 per cent supporting the idea even if it meant running corporate insurers out of business.

What is even clearer than the apparent gulf that exists between public opinion and the limited reforms being considered, however, is that the US stands alone among other developed countries in terms of its profit-driven and industry-dictated healthcare system.

Andrew Kennis is a PhD fellow, an investigative journalist, an adjunct professor and a researcher in International and Political Communication. He is receiving his PhD from the Institute of Communications Research at the University of Illinois, Urbana-Champaign. As a journalist, he has written from locations ranging across four continents, including Chiapas, Israel, Venezuela, Taiwan, Guatemala, Quebec, Japan, Palestine and Mexico City. Andrew’s past online-based writings can be accessed at:

Source: Al Jazeera

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