Healthcare in America:
Current Status and the Potential of a Socialized Model
By Peter Moyer
Biology Senior Seminar
1 December 2004
Thesis: A socialized model is the best response to the widespread desire for quality healthcare in the United States because the current U.S. model is deeply flawed beyond repair, socialized models are very effective in other nations, and the socialized model would function efficiently in the United States.
Despite the best efforts to stay healthy, periodic problems with one’s health are an unavoidable part of life. While many of these injuries or illnesses will pass without problem even if untreated, every person will almost inevitably face the occasional health issue that demands attention. The appropriate response to this ailment may involve going to a hospital to consult a physician, and with this step, the situation can become very complicated, particularly for Americans.
The significance of issues of healthcare in the minds of Americans was made especially clear this year with the recent presidential election. According to a survey taken between September 2003 and January 2004 by the nonprofit foundation The Commonwealth Fund, 57 percent of Americans classified the presidential candidates’ policies on reforming the healthcare system as “very important” in determining their vote for president (as cited in Mundell, 2004, para. 5). The large amount of concern regarding the issue of healthcare likely represents the widespread dissatisfaction with America’s current system. A 2004 Commonwealth Fund International survey indicates that citizens of the United States have significantly more negative feelings about their country’s healthcare system than any of the other industrialized nations that were surveyed, with one-third of adults in the U.S. calling for restructuring of the healthcare system (as cited in Gardner, 2004, para. 8). Since so many people are calling for change and demonstrating serious concern, the importance placed on the issue is logical.
Identified as the “single greatest problem confronting all Americans” on the cover of the Erik Eckholm’s analysis of former President Clinton’s Health Security Plan, Solving America’s Health-care Crisis (1993), it is obvious that politicians must address this serious public concern if they wish to retain support. The challenge for them, and for their supportive constituents, is to decide whether it is best to simply make minor adjustments in hopes of fixing the current system or to make significant changes and dramatically alter the face of healthcare in the United States. If politicians and citizens alike weigh their options thoughtfully, it should become clear that a socialized model is the best response to the widespread desire for quality healthcare because the current U.S. model is deeply flawed beyond repair, socialized models are very effective in other nations, and the socialized model would function efficiently in the United States.
Norma Raffel and Marshall Raffel’s The U.S. Health System: Origins and Functions presents a thorough history of healthcare in the United States and explains the present situation. The current U.S. system of federal healthcare came into being in 1965 through Congress’s amendment of the Social Security Act and the establishment of Medicare and Medicaid. Medicare began as a national health insurance program for persons age 65 and over, regardless of income or wealth. In 1973, coverage was extended for those on disability for at least two consecutive years. Medicare provides enrollees with a basic program of hospital insurance and supplementary assistance program to aid in paying healthcare bills (Raffel, 1994, p. 221). Through this, everyone who is old enough receives some healthcare.
Medicaid is also a national health insurance program, but it is administered by states and it can potentially assist a broader range of people than Medicare. The program serves to provide services for the “categorically needy,” such as those who are blind, aged, or disabled, and for the “medically needy,” those who can afford to live, but cannot afford to pay for medical care. Specific coverage and benefit details vary from state to state (Raffel, 1994, p. 224). This is intended to help people with high medical costs that are not old enough for Medicare.
Although Medicaid may sound generous, however, the program has many narrowing limitations. Numerous restrictions prevent the program from being offered to everyone who is poor and cannot afford medical care. Raffel notes that in 1994, less than half of all non-elderly people living under the federal poverty standard qualified in their states for Medicaid (p. 224). Eligibility for the program is not based on need alone, but is also affected by age, family status, and medical condition. In the Brookings Institution’s public policy dialogue Rationing America’s Medical Care: The Oregon Plan and Beyond, the authors point out that Medicaid coverage entirely excludes poor men and women without children, regardless of how poor they are, and it generally only includes pregnant women during the pregnancy, not before conception or after birth (Strosberg, Wiener, & Baker, 1992, p. 26). These exclusions cut out a huge number of eligible people and often do not provide adequate care for those that do qualify due to the heavily regulated, short term nature of care.
Beyond the federal programs Medicare and Medicaid, inhabitants of the United States must look to private organizations to provide their healthcare. People may enroll in these independent health insurance plans through their employer or on their own if they can pay for it. Financial burdens greatly limit the system’s accessibility, however, and many in the U.S. are unable to fully utilize either option. In Rudolph Mueller’s scathing review of the American healthcare system As Sick as it Gets, he reports statistics on the number of U.S. residents accessing the healthcare system. Census estimates from 1999 indicate that 43 million Americans live without health insurance even though 75 percent of them have a full-time job or live in a household with at least one member working full-time (as cited in Mueller, 2001, p. 5). In addition to the totally uninsured, census estimates also reveal that approximately 42 million other people in the U.S. are underinsured. This means that they have some insurance, but are still unable to afford all of their needed prescriptions, tests, visits to physicians, or hospital bills (p. 20). By allowing so many of its residents to go inadequately insured, the U.S. model presents healthcare as a privilege for the wealthy, not as a right to which all people have access.
Several factors play into the economic inaccessibility of the non-federal healthcare system in the U.S. Although the privatized nature of the program and apparent patient control appeal greatly to Americans’ desire for smaller government and greater freedom of choice, it is precisely this component of the system that most centrally drives up costs. In Robert LeBow’s Health Care Meltdown (2003), an attempt to uncover myths and reveal the realities of healthcare in the United States, he suggests that the competition between healthcare providers that is intended to force rates down can instead push prices up as significant funds are wasted on marketing and on unnecessary repetition of diagnostic tests because results are not shared (p. 76). Finances are also required to manage these complex healthcare organizations, and it is estimated that 25-30 percent of health care spending in the U.S. goes to general administrative costs (as cited in LeBow, 2003, p. 137). The private market healthcare system in which many Americans pride themselves is clearly inefficient and has a huge effect on making healthcare so expensive.
Money is not being collected simply to cover costs, however. Healthcare has become the largest industry in every developed nation, and U.S. revenues totaled $1,077.1 billion in 1998 (as cited in Mueller, 2001, p. 2). Known as the “Gang of Four,” health maintenance organizations (HMOs), pharmaceutical companies, for-profit hospitals, and insurance providers use their sizable finances to exercise considerable clout (LeBow, 2003, p. 170). Huge political campaign contributions give the healthcare industry significant lobbying power in national healthcare policy. This power prevents the implementation of many restrictive regulations and allows the healthcare industry to continue high prices and money-making practices.
Private healthcare enterprises in the current U.S. system can also raise costs because of physicians with interest in financial gain. Eckholm (1993) reports that studies by both government and independent organizations have revealed that more than 10 percent of America’s doctors are invested in businesses to which they refer patients. These studies also indicate that doctors who share ownership of laboratories and other health-care businesses generally order more services than other physicians (p. 82). Although the U.S. government prohibited this “self-referral” for Medicare or Medicaid patients in 1992 (Eckholm, 1993, p. 83), patients with other care providers can still be referred to clinical laboratories in which the physician has a financial interest, continuing to contribute to the high costs of treatment.
A comparison of the success of the U.S. healthcare system to other industrialized nations quickly reveals the dramatic inadequacy of the American model. According to a study by the Organization for Economic Cooperation and Development (OECD), in 1998 the U.S. spent $4,178 per capita for healthcare, approximately 40 percent more than the next most expensive country, Switzerland with $2,794 per capita, and almost 75 percent more than Canada’s per capita spending (as cited in Mueller, 2001, p. 2). As for the Gross Domestic Product (GDP), a 2002 estimate again suggested that U.S. healthcare spending was the highest in the world with 14.7 percent of the GDP, about 40 percent more than the second most expensive nation’s spending (as cited in LeBow, 2003, p. 144). To justify the highest spending in the world, one would logically expect the United States’ healthcare system to produce the best results, but comparative statistics indicate otherwise.
A 2000 report on the world’s healthcare systems by the World Health Organization (WHO) did rank the U.S. first in healthcare spending, but America did not score nearly as highly in other categories. Along with a score of 54th in “fairness” (as cited in LeBow, 2003, p. 14), the WHO gave the U.S 37th place for overall quality of the healthcare system, putting the U.S. at the lowest position of any affluent democratic nation (Mueller, 2001, p. 3). Perhaps this extremely poor showing by the U.S. in the rankings should indicate the prudence in dramatically modifying America’s healthcare system and in looking to other, more successful nations for ideas.
One of the current socialized healthcare models that has been in place the longest is the British program. Established in 1948 with the motto of “free health care for all” (Strosberg et al., 1992, p. 221), the British National Health Service (BNHS) was set up to replace the previous inefficient market healthcare system. The British Labor government took complete control of British health insurance funds, clinics, and hospitals and began administering healthcare. Over the years, the BNHS has experienced its share of crises, most notably in the 1951 decision to require a fee for dentistry, drugs, and eyeglasses (Strosberg et al., 1992, p. 210), but the program has continued to effectively support the British people. According to the previously mentioned 2004 Commonwealth Fund International survey in which respondents from the U.S. were the most negative in their views of their nation’s healthcare, respondents from the United Kingdom were the most positive. The survey also indicated that citizens from the U.K. under the current healthcare system are more protected from medical bills than any other country surveyed (as cited in Gardner, 2004, para.8). The program demonstrates the ability of a socialized healthcare model to adjust over time and to have lasting success.
Perhaps the most remarkable model of socialized healthcare can be found in Cuba. In the midst of a crippling U.S.-led economic blockade and major financial struggles, Cuba has used a socialized model to develop the best health system in Latin America and maintain life expectancy and infant mortality rates comparable to those in significantly wealthier nations like the United States and the United Kingdom. K. Nayeri explores the history of healthcare in Cuba and discusses its current status in his article “The Cuban health care system and factors currently undermining it” (1995). He notes that socialized healthcare began in Cuba in 1959 and took a strong slant toward active community involvement of primary healthcare workers in the late 1970s and early 1980s (p. 321). The government-run program provides complete health coverage for all at no cost. Although a tightened embargo from the U.S. forced the system to undergo a restructuring and make it more difficult for Cuba to obtain basic medicines and other supplies, citizens are still receiving care (Nayeri, 1995, p. 322). Cuba’s remarkable success in healthcare despite greatly limited resources shows the great efficiency of the socialized system.
The socialized model with which the U.S. likely interacts the most commonly and directly is the Canadian model. Since its development in the mid-1960s, the provincially controlled Canadian national healthcare plan has provided medical for everyone without charge (Raffel, 1994, p. 282). Citizens’ feelings about the about the plan have been growing increasingly positive in recent years with fewer calls for restructuring (as cited in Gardner, 2004, para. 8). Unlike the healthcare programs in the U.K. and Cuba, Canadian physicians are not employed directly by the government, but instead operate privately while being reimbursed by the government. The Canadian system is especially efficient compared to the U.S. health plan because the consolidation of payment into one entity (the government) eliminates many of the administrative costs of multiple insurance plans (Strosberg et al., 1992, p. 6). This dramatically cuts down the price of healthcare because money is truly spent on providing care instead of fueling the organizational machine.
While the details of each socialized healthcare model differ, they are all united in the use of a single-payer system, a characteristic feature of any socialized health plan. This means that all healthcare providers bill one agency for their services and are reimbursed by the same agency. Donald Barlett and James Steele offer suggestions for reforming the current “costly, hugely dysfunctional” American healthcare system in their article “Health Care Can Be Cured: Here’s How” (2004). They note that a single-payer model is necessary to ensure access for everyone, avoid a divided class system, and reduce expenses (Barlett & Steele, 2004, p. 50). If a socialized single-payer system were to be implemented in the U.S., it could provide the same significant cost reductions and increases in access that socialized plans have produced elsewhere.
The legitimacy of the proposal for a socialized healthcare plan in the U.S. is verified by the success of modern attempts at systems of socialized medicine in the country. One of the most successful and longest lasting endeavors is the Oregon Plan, introduced by the president of Oregon’s state senate, John Kitzhaber, in 1989. With strong support from both parties, the Oregon’s Medicaid was restructured and a benefit package was developed to focus on the services with greatest impact on health (Strosberg et al., 1992, p. 28). Still functioning today, the state-funded program does not focus exclusively on the poor, but seeks to guarantee health access to any uninsured people in the state (p. 24). In addition to Oregon, a number of other states have made attempts at socialized healthcare. Conrad Meier evaluates some of these plans in his article “Maine Tries ‘Voluntary’ Socialized Health Care” (2004). He reports that Maine and Washington both are in the early stages of state-run socialized healthcare programs (Meier, 2004, pp. 1-2). Although these states are finding mixed levels of success in their new systems, they reveal a widespread interest in exploring the socialized model and show how the socialized system can take on a wide variety of forms, being uniquely shaped to most effectively suit a given area or state.
On the national level, a bill currently being reviewed in Congress could create a new American health insurance program with a single payer system. Congressman John Conyers of Michigan introduced “The United States National Health Insurance Act” (HR676) in 2003, and he is now supported by 38 of his congressional colleagues as cosponsors. The bill would expand the current Medicare system to include all U.S. residents under publicly financed, privately delivered healthcare. Patients would be allowed their choice of physicians and hospitals and would receive coverage for a wide range of medical services including primary care, prescription drugs, and mental health services (“Bill Summary,” 2003, sc. 1). The system would obviously alleviate the problem of residents without healthcare and could be designed to function most effectively throughout the United States.
Although such a national proposal may seem unreasonably ambitious, it is actually surprisingly feasible. Barlett and Steele (2004) suggest that Medicare is an excellent model from which to begin because its centralized nature and low administrative costs make it far more efficient than any other health-insurance programs in the U.S (p. 50). Costs can be lower with Medicare because 97 to 98 cents of every Medicare dollar goes to health care providers, while only 85 cents of every dollar in the private health sector makes it to providers (LeBow, 2003, p. 137). Providing healthcare for all U.S. residents would obviously be a significant cost for the government, but the sponsors of HR676 believe that the $200 billion saved through bulk purchasing and reduced paper work with a single-payer system would easily cover the added expenses (“Bill Summary,” 2003, sc. 1). Even if the savings were unable to completely cover the costs, it certainly would not increase them for the public receiving care.
In spite of the many positives of single-payer socialized healthcare, however, Americans are still fearful of such a system. A 2003-2004 poll by the Commonwealth Fund indicates that a large majority of Americans continue to reject the idea of state-run, socialized medicine (as cited in Mundell, 2004, para. 17). Despite some degree of openness to the idea of socialized healthcare, many people display a strong negative reaction to the policy name due to an ingrained rejection of anything apparently linked to “socialism.” A socialized model of healthcare, however, does not demand giving up personal freedoms and turning to a communist form of government. According to The Columbia Encyclopedia, the term socialized medicine simply refers to any “publicly administered system of national health care” (“Socialized,” 2003, para. 1). This can include a wide range of specific program details spanning from complete government operation of medical facilities to nothing more than a national health insurance plan. A socialized healthcare plan in the U.S. could be designed to allow people their personal choice of physicians and hospitals and make quality healthcare affordable for everyone without overbearing government involvement.
Some Americans seem to expect the quality of their healthcare to decrease and fear that long waiting lines, a lack of specialized care, and rationing will accompany socialized healthcare. These concerns ignore the potential variations on such a system and the possibility for continued private healthcare options amidst a socialized model. As Barlett and Steele (2004) point out, even if a government-supported socialized system was implemented in the U.S., wealthier citizens could still be free to supplement their basic coverage with additional private insurance (p. 53). The healthcare systems in Germany and the Netherlands are both examples of socialized models combined with widespread use of private health insurance. Everyone is guaranteed basic healthcare through government-regulated “sickness funds,” but anyone who can afford it is also free to spend extra money for increased care (Raffel, 1994, pp. 274-279). A socialized healthcare system can be inclusive without being restrictive.
As the American people continue to call for healthcare reform, a socialized model should be the goal. The countless major problems with the current state of healthcare in the U.S. put it past the point of mending and demand a significant overhaul. Socialized healthcare has proven its remarkable effectiveness in other nations, and it has tremendous potential for the U.S.
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