There are two basic types of health insurance plans in the United States: indemnity plans and managed care. Under an indemnity plan (also called fee-for-service plan), the insurance company pays a percentage of the cost of medical services provided (typically 70 to 80 percent). The insured person is responsible for the remaining 20 to 30 percent. Indemnity plans do not limit patients in their choice of doctors or hospitals. Managed care controls the use of medical services in an effort to keep costs low. An example of a managed care plan is a health maintenance organization (HMO). Participants in an HMO plan are limited in their choice of doctors and hospitals. They must receive medical services at HMO-operated facilities or visit physicians and hospitals that are affiliated with the plan. The cost to the participant is usually much lower, however, limited to a small co-payment for visits to a doctor or hospital emergency room.
Each type of plan has advantages and drawbacks. Indemnity plans are more expensive than managed care plans but they offer great flexibility. Managed care plans may require individuals to choose primary care physicians, or doctors who monitor their health care. Plan participants must consult their primary care physicians to get a referral to a specialist. Managed care plans emphasize preventive care such as office visits and immunizations, but they may limit coverage for medical tests, surgery, mental health care, and other support. By contrast, indemnity plans may not pay for some types of preventive care, such as checkups and immunizations.
Comparing Systems
Both government-based health care systems and the mixed public/private system of the United States offer benefits but also have serious flaws. The former provide universal coverage, guaranteeing access to health care regardless of income or employment. Most government-based plans also provide better care for pregnant women and newborn babies than the US system. Supporting these health care systems, however, requires higher levels of government spending than the public/private system.
Furthermore, the goal of providing good care for everyone cannot always be reached in government- based systems because of limited money and resources. The pressure to keep spending under control leads to tight government restrictions. As a result, patients in some countries, such as Canada and Sweden, sometimes have to wait a long time for certain services.
The health care system in the United States is more flexible than government-controlled systems because providing universal health care and containing costs are not its main goals. In the United States, patients can obtain virtually any kind of medical service. When a person becomes ill, however, treatment will usually depend on the nature of his or her health insurance. Someone who does not have insurance or the resources to pay the health care provider may not be able to get the necessary treatment.
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The Debate Over Health Care Reform
Many politicians, academics, and citizens have been advocating the position that the American health care system is in need of comprehensive reform. Proponents of this position rely on three major factors: the high costs of health care, the relatively low quality of care, and the large number of persons who are uninsured.
The costs of health care are escalating rapidly. Health care costs in the United States have more than doubled in the past decade and accounted for 17.9 percent of the country’s Gross Domestic Product in 2010. Health insurance premiums continue to rise faster than wages. Americans spend more on health care than any other country in the world. US health care spending reached $2.6 trillion in 2010. Employer-sponsored health care plans have increased more than 100 percent in the past decade. Some health economists have predicted that the United States’ health spending will reach $4 trillion by 2015.
Statistical measures and indicators suggest that, despite this high level of health care spending, the quality of health care available in the United States is low. According to statistics compiled by the US Census Bureau and the National Center for Health Statistics, a baby born in the United States has an average life expectancy of about 78 years. While the life expectancy is higher than in previous years, the United States’ life expectancy continues to lag behind many other countries in the world, such as most European nations, Japan, Canada, Australia, Singapore, Jordan, and Guam.
Finally, many millions of Americans are forced to go without health insurance entirely. This problem is exacerbated by the rising costs of care. Rising costs are the main reason why hundreds of thousands of companies have stopped offering health coverage for their workers. Also, due to the sluggish economy, many people have lost their jobs in recent years. This means that those who are unemployed often have no health care. Many who cannot find new jobs have been forced to take part- time work, and these jobs typically don’t offer health care benefits. The number of the uninsured continues to rise. Gallop polls found that 14.8 percent of Americans did not have health insurance in 2008. This number increased to 16.4 percent in 2010 and 17.1 percent in 2011.
For people who are underinsured or who lack insurance, getting health coverage can create a financial crisis. The high number of uninsured has health and social implications as well. While laws mandate that hospital emergency rooms take in all people, including the poor and uninsured, these people still
often do not get the medical care they need, especially at the appropriate time. “The uninsured are less likely to see a doctor … and are less likely to receive preventative services,” notes Arthur Kellerman, a medical professor and cochair of an Institute of Medicine (IOM) panel that has studied the problem. Thus they often wait until medical problems become severe before seeking medical care, creating more costs for the health care system that are passed on to others.
Proposed Solutions
Health care reform has become one of the most important issues in American politics. It took center stage for the entire first year of the presidency of Barack Obama (1961—). Advocates of health care
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reform have proposed several different systems that they believe would solve these and other problems. Among the most popular proposed solutions are a single-payer system, a rationing plan, and mandates.
A single-payer system is defined as a health care system that pays for doctors, hospitals, and other health care providers out of a single fund. Canada utilizes such a system nationwide, and Medicare is a domestic example. In Canada, for example, doctors are paid by a fund with money taken from taxes collected by the national and provincial governments. The government collects funds, sets fees for medical services, and pays health care providers.
Proponents of a single-payer system argue that it would simplify the United States’ patchwork system of multiple insurance providers and greatly reduce administrative costs in health care. Doctors would benefit by not dealing with multiple insurance forms. Nonaffluent patients would benefit from more affordable health insurance. Opponents argue that a single-payer system is too radical a change from the American status quo. They also argue that having the government control medical prices and costs will inhibit the development of new medicines and technologies and may compromise the quality of health care.
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