Why is U.S. spending so high, and can we afford it?
Health Affairs
May/June 2004
U.S. Health Care Spending In An International Context
Why is U.S. spending so high, and can we afford it?
By Uwe E. Reinhardt, Peter S. Hussey and Gerard F. Anderson
From the ‘Abstract’:
Using the most recent data on health spending published by the Organization for Economic Cooperation and Development (OECD), we explore reasons why U.S. health spending towers over that of other countries with much older populations. Prominent among the reasons are higher U.S. per capita gross domestic product (GDP) as well as a highly complex and fragmented payment system that weakens the demand side of the health sector and entails high administrative costs. We examine the economic burden that health spending places on the U.S. economy.
From the section ‘Pricing Low-Income Americans Out Of Health Care’:
This prospect (projected premium for family coverage of over $20,000 one decade from now) puts U.S. policymakers at a crossroads.
One approach would be to persuade the upper half of families in the nation’s income distribution to help purchase adequate health insurance for families in the lower third. One may call it the “universal health insurance” road. It would, of course, involve added taxes and transfers flowing through government budgets, which would bring with them additional government regulation, especially if the aim were to structure the U.S. health system as a one-tier system in which sick people have roughly the same health care experiences regardless of their own ability to pay.
The alternative option would be to embrace as official policy, both in employment-based health insurance and in public insurance programs, a multi-tier health system in which a person’s health care experience would be allowed to vary by his or her ability to pay for health care. In such a system families in the upper half of the income distribution would have a noticeably superior health care experience than families in the lower half would have. This is certainly already the case for U.S. families with good health insurance and those without it.
The emerging political battle at this crossroads is unlikely to be styled in stark terms such as “rationing by income class” or “one-class” versus “two-class” medicine. Instead, it will be styled as a debate over “market competition versus government regulation”; as a simple, technocratic quest for greater “efficiency”; or as the dubious dichotomy of “rationing versus markets,” even though textbooks in economics instruct the reader that market prices are just another way of rationing scarce commodities, on the basis of ability and willingness to pay. At its core, then, the debate over health care, in the United States as elsewhere, is less a pure macroeconomic issue than an exercise in the political economy of sharing.
http://content.healthaffairs.org/cgi/content/abstract/23/3/10?etoc
Comment: This article answers the questions posed in only 16 pages. It should be downloaded and retained as a resource that can be used to dismiss the myths on affordability while defining precisely the actual economic issues that we are facing.
Download this article now. It should be read in its entirety and retained as an essential reference in your health policy library.