The United States has one of the most expensive healthcare systems in the world. But what exactly is it composed of? The US has what is known as a polycentric unbounded healthcare system. This means that it’s centered around many things and is also not completely bounded. As you may know, the US federal government set up both Medicare and Medicaid, which are administered by the states. However, in terms of the healthcare market, there isn’t much regulation beyond quality control.

So how much does the US actually spend on healthcare? Good question. The United States spends about 3.5 trillion dollars on healthcare which is 17.9% of its GDP. This is also 42% higher than Switzerland, which spends the second most on healthcare in the world. Now it’s important that we understand only 10-20% of the money spent on healthcare actually contributes to health outcomes. During this series, we will learn about a multitude of different healthcare systems, and in doing so, we have to look at the systems holistically. The principle of non-linearity tells us that we cant estimate how health outcomes will change based on money.

Now, in terms of where the money is going for the US healthcare system, we can see that most of the money is going directly to mandatory spending for programs stipulating spending. These would be programs like Medicare and Medicaid as well as Social Security. What the US does differently is we spend more money on healthcare than social spending. When looking at health, it’s important to recognize that health is affected by social determinants like education, crime, community, environment, etc. Thus, when looking at US health outcomes, it makes sense why we have relatively low health outcomes compared to other countries. The US healthcare system focuses on helping specific populations instead of focusing on the population as a whole. This is clearly illuminated through the enormous amounts of money we put into medicare and Medicaid. Both programs are meant to help the underinsured or the aging population. While helping the underinsured and specific populations is always a good thing, it’s important to remember the populace as a whole.

Now let’s take a look at the structure of the United States Healthcare System. As aforementioned, the structure is based on a politically fragmented polycentric system. Both the federal and state governments look to ensure the quality of healthcare and also the quality of healthcare outcomes. Additionally, 45% of healthcare spending is done by the US government. An important aspect of the United States healthcare system is that it functions unbounded, which means that the healthcare system is allowed to run its course. Now, looking back to United States history makes a lot of sense that this is a case considering the United States’ fervent utilization of laissez-faire economic policies. However, this can also lead to big problems, especially within the pharmaceutical market. And that is exactly what happened. Over the years, the United States has had soaring pharmaceutical prices starting in the 1990s, and it’s never stopped rising since. In 2006 the healthcare industry was worth about 52 billion dollars, but in 1997 it was worth 6 billion, so we can see that in 9 years, there was a massive increase in value for the pharmaceutical industry.

Finally, let’s take a look at the financial system of the United States Healthcare System. The United States collects about 2.4 trillion dollars that they raise on their own with 1.2 trillion dollars in private spending. The United States has about 10% of the population being uninsured. Despite the United States collecting enormous amounts of money for its healthcare system, we see that there are still a lot of people that are left without healthcare. The United States healthcare system has become increasingly difficult to enter as prices have gone up and accessibility has been made more difficult. A theory as to why this might be the case is that the United States doesn’t have a self-governing system. In looking at other countries’ systems, they have physician groups negotiate with insurance providers to create prices that are accessible and to understand which services will be covered and which won’t. Now, while the United States also has this type of communication, it still hasn’t seemed to take effect. The United States utilizing an unbounded system makes it easier to have runaway prices which can lead to many not being able to enter the healthcare system and get the care they need.

The paradox presented in the United States healthcare system is a complex one at that. Over, the United States see, in my opinion, must be able to reorganize how they spend healthcare money in order to optimize the healthcare outcomes they get.

Sources

Corbett, A. (n.d.). Comparative Health Systems. https://www.coursera.org/learn/comparative-health-systems.

Frakt, A. (2018, November 12). Something Happened to U.S. Drug Costs in the 1990s. The New York Times. https://www.nytimes.com/2018/11/12/upshot/why-prescription-drug-spending-higher-in-the-us.html.