How do Americans pay for health care?
The cost of health care in the U.S. is the highest in the world today. A higher percentage of national income, and more per capita, is spent on medical care by the United States than by any of the twenty-eight other country members of the Organization for Economic Cooperation and Development (OECD). The United States spent $4,178 per capita on health care in 1998, more than twice the OECD median of $1,783, and far more than its closest competitor, Switzerland ($2,794). U.S. health care spending as a percentage of gross domestic product (GDP), 13.6 percent in 1998, also exceeded the next most expensive health care systems, in Germany (10.6 percent) and Switzerland (10.4 percent) However, the U.S. government finances a smaller portion of health-care spending than does any OECD country except Korea (Friedman, 2001; Hilsenrath et al., 2004).
Being without medical insurance is synonymous with a lack of access to medical care. In the absence of a coherent, all-encompassing national health policy, such as universal coverage, Americans, under the age of 65 and above the low-income mark, face the necessity of obtaining some sort of private health insurance.
However, more than forty-two million Americans (15.5 percent) were not insured in 1999 (Bureau of Labor Education at the University of Maine, 2001). Most of the uninsured have no employer-provided health care options and are unable or unwilling to bear the cost for the few types of plans available to them. If ineligible for government assistance, the uninsured have little choice but to wait until their health concerns justify emergency room treatment, an extremely costly option for hospitals. In fact, these emergency facilities may turn patients away unless their conditions are deemed to be medical emergencies.
Of those who are insured, some can afford to pay, while others are covered by their employers for at least a portion of the cost. Employer-provided health care coverage, once an expected benefit, is becoming less common in the contemporary American workplace. Also, over the years, the array of services covered has become more limited, while the cost of insurance has risen. Rather like a black hole, the insurance industry, and the medical establishment in general, appear to suck in more resources while emitting less output.
What are the private plan options?
Cost, efficiency, freedom of choice and equity vary across the assortment of private health care insurance alternatives. The following includes a brief description of each type of plan (derived, in part, from Levchuk et al., 2000), and thoughts on the balance of these dimensions across alternatives.
The traditional fee-for-service plan, while still a key part of the Medicaid and Medicare vocabulary, is a rarity in today's managed care world. Under this type of plan, freedom of choice is high for patients and for the medical establishment. Patients with a fee-for-service indemnity or reimbursement plan can choose any physician or facility. Out-of-pocket costs apply until a deductible is satisfied. Each service performed is the unit for payment and treatment decisions are not limited. Efficiency of service providers is not so precious a goal given these contingencies. While fee-for-service remains an option, the need for increased cost control and accountability drove reform that took the shape of managed care.
Managed care organizations vary in...