Of the two things guaranteed in life, more time and effort are spent avoiding death than taxes. And the primary way in which to achieve that is through healthcare. Some are fortunate enough to have a choice in how their healthcare is received, but for many, they must rely on the systems presently available to them. Yet in a land that prides itself on opportunity, there is great frustration from Americans who feel they have scant liberty to improve their health. As physicians with the primary goal of assuaging suffering, the system in which we operate ultimately dictates what we can and cannot do, setting the limit to the frustration we can relieve, or determining the amount of frustration experienced before finding relief.

A health system is ultimately defined as “all organizations, people, and actions whose primary intent is to promote, restore, or maintain health.”​[1]​ This definition is intentionally nondescript, as the social, cultural, and economic context in which a health system exists shapes the expectations and goals for whom it serves. However, a quality health system is still definable and, according to the World Health Organization, requires five quality services: good governance, a skilled and competent workforce, financing systems that enable and encourage quality care, information systems that drive improving care, and safe access to medicines, medical technologies, and facilities.[2]​ These measures are important to keep in mind when evaluating the U.S. system and its endpoints, but a comprehensive understanding first requires the due diligence of a global perspective on healthcare delivery and its differences.

Health Elsewhere

There are a variety of focuses in which to compare and contrast health systems across the world, but the most pragmatic is based on the relationship between who pays for the patient and who employs the provider. In T.R. Reid’s The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care, he investigates the global climate of healthcare and the deficiencies in the United States. Published in 2009, this investigation was delivered at a major nexus of healthcare frustration, six months preceding the signing of the Affordable Care Act,[3]​ during a time when medical underwriting and healthcare rescission were still in the public lexicon. In it, Reid outlines four common models established globally: the Beveridge model, the Bismarck model, the national health insurance model, and the out-of-pocket model.

Bismarck model

Founded in Germany and adopted by Japan, France, Belgium, Switzerland, Japan, and Latin America, the Bismarck model of healthcare is a universal healthcare system with private doctors and private hospitals.[4]​​ In Germany, over 90 private, non-profit, but heavily state-regulated health insurance funds known as “Krankenkassen” are funded via employer/employee payroll deductions.[5] Interestingly enough, these non-profit funds compete with each other, not with core medical benefits, which 95% are government-mandated, but with minor supplements like 24/7 midwife hotlines, cashback systems for free gym memberships, or partial coverage of alternative medicine services. Since most doctors and hospitals are private, after a certain income threshold, one may opt out of the statutory health insurance system (and resulting payroll deduction) in favor of private insurance with better access and shorter wait times. This begs the question whether the healthy and wealthy who defect from the statutory health insurance in favor of its payroll deduction exemption leave a funding hole for services for the less fortunate, but any budgetary deficit is supplanted by the country’s separate progressive national income tax.[6]​

Beveridge model

Present in the United Kingdom and also Italy, Spain, Scandinavia, and Hong Kong (a result of British colonization until 1997), the Beveridge model of healthcare operates under the philosophy that healthcare is a public service, analogous to the police or fire department. There are no medical bills and no insurance payments. All of the providers and hospitals are employed and operated by the government. This model benefits from a very minimal administrative burden since a single centralized authority manages every aspect of the system. Simultaneously, this model may be criticized due to its lack of choice for patients seeking expedited treatment for elective or rationed services. Unlike the Bismarck model, an individual cannot opt out of this model. Private doctors may still exist in these countries; however, their access is entirely additional to the preexisting system and public taxation.[4]​

National Health Insurance Model

The national health insurance model is the final realized universal healthcare model discussed and is implemented in countries like Canada, Taiwan, and South Korea. Also referred to as a single-payer system, the doctors and hospitals are privately owned, yet the only insurance type is run by a single government entity. All healthcare spending is controlled by the universally enrolled government insurance fund, thereby controlling the market. Benefits include low administrative costs and no concern for “out-of-network” providers; however, at the cost of providers having little to no negotiating power over their services.[4]​ Unlike the Beveridge model in the UK, the Canadian government prevents competition with itself by making illegal those private services which are covered under its national health insurance plan (in all provinces but Quebec since 2005).[7]​

Out-of-Pocket Model

For all those less fortunate to live under a developed nation, or those who live within but are unable to be appropriately integrated, the primary means to the health they can achieve is limited by what they can afford. This is the unfortunate reality for millions of individuals around the world where healthcare is not afforded as a human right, in countries that are undeveloped or even those developed.

What type of system is the US?

Perhaps emblematic of its melting pot of cultures and ideologies, the United States is a combination of all the models listed above. The U.S. does not have a single definable model but has fragmented and compartmentalized systems targeting specific demographics.

Where the U.S. is closest to Bismarck: those generally healthy, less than 65 years old, and with an income greater than 138% of the poverty line. This group represents the average American who purchases private health insurance and is supposed to benefit from the “competition” of a free market (Whether this is factual will be explained later).

Where the U.S. is closest to Beveridge: those in the military or veterans. The U.S. Department of Veterans Affairs owns public hospitals, employs its own providers, and those who benefit from it pay little to nothing, depending on strict guidelines. (Hence the adage, “Your ___ is not service related.”)

Where the U.S. is closest to national health insurance: those 65 years or older or with certain qualifying diseases (ALS, ESRD, etc.). Medicare is a centralized, single-payer system with a standardized set of rules that extends across state lines. Medicaid, on the other hand, is not centralized and varies between states that accept its “expanded” coverage. This disqualifies it in the national sense.

Yet with all these systems, those who are unintegrated or disadvantaged fall through the cracks and are subject, all in one of the greatest countries on Earth…

While this distillation is a very brief conceptual framework for understanding a very complex system, the U.S. attempts to benefit from adopting each, but lacks many benefits of commitment. No single model in the United States is entirely universal nor compulsory, leaving millions uninsured. Many who do not neatly fit into one of these groups slip through the cracks of our fragmented system, being subject to the same out-of-pocket terms as the millions of people living in underdeveloped countries. This is but one factor contributing to the American healthcare paradox: the U.S. spends the most per capita on healthcare expenditure while health outcomes and measures are below the median for similarly developed countries.[8]​

A Proposed Solution

To criticize is one thing, but to construct is another. How then do we fix the U.S. system to afford care for all while yet holding fast to our inborn American ideals of diversity of belief, freedom of choice, and independence? One proposed solution is what American economist Alain Enthoven calls “managed competition.” In his 1993 article, The History and Principles of Managed Competition, he defines his approach as “a purchasing strategy to obtain maximum value for money for employers and consumers.” In other words, it seeks to guardrail the benefits of capitalistic competition from the lure of unscrupulous motivations. How it differs from the typical regulations employed by the government currently, however, is that the competition is for the annual premium of a comprehensive health care plan rather than individual fee-for-service prices.

How managed competition functions in practice is through a balance between what’s called the sponsor, the accountable care organizations, and the patients.

A sponsor is a governing entity (employer, state, non-profit) responsible for ensuring equality of coverage, establishing standards of care, and facilitating incentives for cost containment between competing integrated delivery systems. The principal responsibility of this manager is to “overcome attempts by insurers to avoid price competition.”[9]​

The integrated delivery system is a supplier of both the insurance and the delivery of healthcare. Allowing both to be managed by one organization provides the benefit of a streamlined administration while avoiding the back-and-forth haggling of a separated health insurance versus provider system. (A real-world close approximation of this is Kaiser Permanente.)[10]​

There are other principles critical to the appropriate implementation of managed competition, such as fixed-dollar subsidies, elimination of tax-incentivized employer contributions, and the creation of price-elastic demand, but the key distinction from the U.S. currently is the predominance of capitation budgets rather than fee-for-service, universal coverage with a basic predefined plan, and price transparency with standardized terms.

Enthoven’s managed competition is designed to mitigate overutilization, market fragmentation, and imbalanced consumer leverage as a result of opaque pricing and information asymmetry. Many aspects of his ideology were discussed during the Clinton administration, while others were adopted into the Affordable Care Act in 2010. However, true implementation requires relinquishing the pipedream of a truly free market, which Enthoven states “does not and cannot work in health insurance and health care” as it “is plagued by problems of free riders, biased risk selection, segmentation, and other sources of market failure.”[9]​

What then?

Returning to the aims of a quality health system, where the U.S. is deficient in many, it excels in many. America has one of the most skilled and competent workforces with a financing system that certainly enables and encourages quality care, albeit often critiqued for its overspending. Many have postulated factors that contribute to the normalized increase in the cost of healthcare in America. In 2019, it was estimated that 16.8% of all healthcare spending was administrative, compared to 8.8% of other countries.[11]​ Authors like T.R. Reid often comment on physicians’ compensation, which exceeds that of similarly developed countries. Upstream causes for this pay difference may originate from factors such as the aura of defensive medicine, the higher burden of malpractice insurance, and the inflating costs of medical education (with averages near $250,000 for U.S. MD graduates).[12]​ However, for all its complications, it is hard to say whether the world-renowned workforce and technological and pharmaceutical advancements present in the United States’ healthcare would be present without its discomfiting history of “unconcerned” spending.

American progress has not stagnated, however. As mentioned prior, many aspects of Alan Enthoven’s managed competition were implemented in the Affordable Care Act in 2010. From approximately 49 million uninsured Americans in 2010 to nearly 27 million today, healthcare is continually being reformed in the United States. As a country influenced by the many cultures of its inhabitants, a one-size-fits-all policy may not be easily achievable, but with continual innovation and desire for change, eventually the United States may obtain equitable care for all.