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The Future of the U.S. Healthcare System

July 20, 2017

Since the Patient Protection and Affordable Care Act, well-known as Obamacare, was enacted in 2010, the US healthcare system has been a hot potato on Capitol Hill. President Trump promised to repeal Obamacare, the House of Representatives passed the American Health Care Act on May 4, and sent the bill to the Senate. The Senate unveiled their version of Obamacare’s replacement on June 22, and this release provoked confrontations between Republicans and Democrats, and even within the Republican bloc. Why has the US healthcare system been a war of words so long?

The Expansion of Public Funds into the Healthcare System

The United States is one of the countries which have the highest health expenditure per capita. The US placed third in 2014, with USD 9,402 in health expenditure, following Switzerland (USD 9,673) and Norway (USD 9,522) [1]. However, 48.3% of the total health expenditure was publicly provided in the US, compared 66.0% in Switzerland and 85.5% of Norway [2]. Apparently, US nationals are spending more of their own money to cover the costs for their health problems.

The key idea of the Patient Protection and Affordable Care Act was to transform the health sector by increasing the quality of health insurance, lowering the costs, and expanding the coverage of the insured people. In 2014, when the Affordable Care Act (ACA) took effect after including provisions, the uninsured rate plummeted from 14.4% in 2013 to 11.5% in 2014, and to 9.1% in 2015 [3]. The rapid reduction in the uninsured rate was mainly originated from the expansion of Medicaid (for lower-income families and individuals).

Image: Percentage of People who Lack Health Insurance Coverage. Source: US Centers for Disease Control and Prevention.Image: Percentage of People who Lack Health Insurance Coverage. Source: US Centers for Disease Control and Prevention.

The main idea of the ACA was making all Americans have legal health insurance from either private or public insurance programs. In order to serve more people who didn’t have insurance before, the ACA initiated a tax rate increase. Some people who didn’t want to purchase insurance were taxed, and the individuals with higher income were imposed more taxes. The government would contribute subsidies to provide expanded Medicaid and Medicare. More criticisms with the ACA come from the requirement of companies to offer healthcare plans if they have more than 50 full-time employees. Some companies would fire their employees while being unable to cover all the health insurance expenses.

President Trump and Republicans have opposed the ACA, and proposed to repeal the ACA. The newly proposed version is more related to a return to free market principles.

Universal Healthcare Insurance for Everyone – the Korean Healthcare System

Different from the US healthcare system, the Korean government provides public health insurance to the entire nation. Everyone in the country can obtain the health insurance, and go to any hospital to receive medical treatment. Since the National Health Insurance Service, NHIS, is responsible for the public health insurance and medical options, patients don’t have to worry about the insurance coverage or personal claims after treatments. The cost of health insurance is automatically charged from an employee’s monthly income more like taxes. The higher income a person generates, the higher cost he / she will pay for the health insurance. More affluent people compensate the deficit in healthcare costs for poorer people.

However, this system also has some disadvantages. Patients with serious diseases have more burdens, not covered by the public insurance, and depend on various private insurances. For example, the public insurance barely offers the coverage for cancer, so the cancer patient would pay for the rest of medical bills. The percentage of out-of-pocket health expenditure in Korea is three times higher than the States in 2014 [4]. Another problem is deteriorated health service from lower medical charges. In order to make up for the insufficient medical bills, hospitals and clinics want to handle more patients than they can manage, and this can link to lower quality of medical treatments. The Korean government is considering the national insurance premium hike to afford increased costs from the healthcare service.

Image: Out-of-pocket Health Expenditure. Source: World Bank Data.Image: Out-of-pocket Health Expenditure. Source: World Bank Data.

Which one is better? – A Controversial Decision

The decision on which type of health insurance is better is not an easy one. The policy on healthcare incorporates the norms, values, and sentiments of members in the society. For example, the long history of competitive private insurers in the US healthcare sector originated from the culture which advocates the freedom of choices based on more competitions. The Korean government’s extensive public health insurance was derived from the need of reconstructing social welfare from the war. The recent, heated controversy on healthcare reform in US might reflect different perspectives and weights while the society has been changing.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

 

References

  [1] The World Bank Data, “Health Expenditure per Capita (Current US$)”, data.worldbank.org, 2014, http://data.worldbank.org/indicator/SH.XPD.PCAP

  [2] The World Bank Data, “Health Expenditure, Public (% of Total Health Expenditure)”, data.worldbank.org, 2014, http://data.worldbank.org/indicator/SH.XPD.PUBL

  [3] US Centers for Disease control and Prevention, “Health Insurance Coverage: Early Release of Estimates from the National Health Interview Survey, 2015”, National Center for Health Statistics, 2015, https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201605.pdf

  [4] The World Bank Data, “Out-of-pocket Health Expenditure”, data.worldbank.org, 2014, http://data.worldbank.org/indicator/SH.XPD.OOPC.TO.ZS

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