Is the US solving the right healthcare problem?

All over the developed world, the cost of healthcare is becoming a major concern. For example, the NHS is seeing treatment costs rising dramatically, with £30,000 needed to provide cancer drugs that will give patients an extra three months to live. Combined with the infrastructure needed to provide patients with this treatment, such as new hospitals, it is quickly becoming unaffordable. In part due the Labour government’s use of expensive and punishing Private Finance Initiatives (PFI), this has led to disaster, with the first ever NHS Trust recently falling into administration, while many others are struggling to balance the books, losing over £1,000,000 per week.

In the UK, we have universal healthcare coverage, which is free at the time of delivery, paid for by taxes, but in the United States, no such system exists. The government does fund two kind of healthcare plans, Medicare and Medicaid, designed to help the elderly, poor, young and disabled.  Many Americans have insurance provided as part of job benefits, but the lack of a safety net means around 50 million people are without coverage. Due to this, they will find it difficult to afford even basic healthcare, leading to healthcare debts being the biggest cause of bankruptcy. Not only does this problem cause a direct affect, but it also leads to a lower productivity and low human capital as people neglect health issues.

Since being elected, President Obama has tried to solve this problem, with a set of reforms designed to provide health care coverage for more Americans, financed by tax rises on the rich. Along with this, it would require that the insurers to cover children; prohibiting those with pre-existing conditions from being denied insurance and requiring businesses with more than fifty employees provide insurance for their staff.   Causing tension between the Democrats and the Republicans, it was up to the US Supreme Court to give the final ruling. This came recently, where it declared that the “Patient Protection and Primary Care Act”, commonly known as Obamacare, constitutional, allowing the reforms to be put into place. The political strategy, and the reasons why the mainly Republican Panel upheld the reforms is a different debate, but although the Democrats believe that this will bring long term benefits, it has the potential to alienate many Americans, actually helping the Republican Party.

Costing the country an estimated $940 billion (£627 billion) it certainly has the potential to go wrong if it doesn’t solve America’s healthcare crisis. In fact, recent opinion polls have suggested that the public is against Obamacare, meaning that it’s already got a tough job before it even starts. Convincing an already hesitant public will be difficult, especially since many believe that it is taking away concentration from areas they see as vastly more important, such as the economy or jobs. With the reforms also leading to higher costs for businesses, as they are forced to provide coverage, it also has the potential to limit grow and increase unemployment, again making many Americans unhappy, as they see the economy and jobs the most important issue in politics.

Obamacare will have affect the two major considerations of healthcare; quality and cost.

Currently, in terms of quality, the United States is amongst one of the world’s best healthcare systems, as long as you can afford to pay. With world leading medical centres, wait times are very low, as well as leading the world in medical research. There is no point in having this if nobody is able to access it, but since 83.3% of people in America do have some sort of coverage, the majority would be disappointed if Obamacare had a negative impact on quality. That’s why it’s important to note that numerous surveys conducted amongst medical professionals suggest that they believe that the quality of healthcare under Obamacare won’t just stagnate, but it will actually get worse. Over 65% believe that in the next five years quality will deteriorate. Not only that, but many doctors believe that it will negative affect them, which isn’t good if you want to attract the brightest into the professional, to help keep the quality high in the long term. Clearly, the quality of healthcare is not a problem with the American Healthcare system, and with the evidence suggesting that it will have a negative effect, the situation doesn’t look good long term.

In 2009, Americans spent $7,960 per person on healthcare, by far the most of any country, with the UK only spending $3487 per person. An MRI costs $1,080 in the US, but only $280 in France. This clearly shows that the main issue with American healthcare is cost, and if this could be reduced, America’s deficits would shrink and people would have a lot more disposable income, helping to drive the economy. Various factors contribute to cost, so it would simply be that Americans are simply using the services available more often, but studies have shown that they actually spend less time than the British counterparts. Therefore, it is clear that the prices are to blame.

You could simply blame the free market for this failure, but upon further inspection, the intervention of government in the way that Obama proposes will actually have a detrimental affect.  Federal spending will increase, leading to bigger problems with taxes and debt. It will also place an additional burden on businesses and individuals who do have health insurance, further increasing the cost, and making insurance even more unaffordable. With coverage, people are increasingly likely to make poor decisions, such as going to the doctor for a minor issue that could be waited out ($100+), adding to the cost for everyone. When you add in the additional administration burden, the picture looks even worse. Obamacare will bring coverage to more people, but will only increase the cost, making it unaffordable for more, which is the opposite of the intended effect.

Unaffordable health insurance is just the sign of a bigger problem: expensive healthcare, and unfortunately, that isn’t being tackled by Obamacare. President Obama is trying to solve the problem by simply covering it up, rather than tackling the root cause.  Health insurance providers are just the middle man in the system, with the providers being the major contributor to the high cost. Don’t get me wrong, the legislation is doing some great things, like stopping the insurance companies from denying customers with pre-existing health conditions, but this could be solved with other intervention. Obviously, rather than big government, the US instead needs to work with the free market to control prices, just like in Germany and Japan. While it has provided fantastic care, the free market it has come at a cost. Obama has tried to solve this, but the evidence shows that Obamacare isn’t the solution.

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