A new health insurance system in the United States

Donald Trump may be finding it difficult to repeal the Patient Protection and Affordable Care Act (aka Obamacare). But what is he trying to replace it with? It seems nothing that will contain costs and provide a reasonable level of health care to all Americans. Capitalist or socialist or communist one should not in a first world country accept a health care system which fails many people.

If Trump wants to look overseas for a new model, he could do worse than adopting the Australian system. While our Medicare and private health insurance system has a number of deficiencies and needs substantial reform, it is far and away better than the US system where an initial simple consultation to a doctor costs a minimum of USD 200.

According to OECD data, the cost of health care in the United States is $9451 per capita compared to $4420 in Australia. The World Bank has Australia’s health costs at 9.1 per cent of GDP while in the US it is 17.1 per cent of GDP. The European Union average is 10 per cent  of GDP.

Think of the implications if the US could bring its health costs down to Australian levels. It would save USD 1.5 trillion each and every year. And by bringing in a Medicare-like system the US would give better access to health care by all Americans.

If Trump wants to go down as a hero in the United States he should work in that direction. No other President or Congress has been able to make such major health care reforms in the USA or to address the powerful lobby groups which work to maintain the status quo.

About Lucius Quinctius Cincinnatus

I'm a retired general who occasionally gets called back to save the republic before returning to my plough.
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18 Responses to A new health insurance system in the United States

  1. johno

    Forget Obamacare, Trump’s latest attacks on his own team shows he has lost the plot. A massive meltdown is coming and it is going to be very ugly.

  2. amortiser

    The single most important determinant of high health costs in the US is the legal system. If Trump wants to have effective heart car reform he has to reform tort law. The courts have become another form of welfare where if anything goes wrong then the courts will provide generous redress irrespective of whether there is negligence involved and the payouts have become ginormous.

    The insurance premiums paid by medical practioners required to pay court awarded damages drive the heavy fees as well as the practising methods of doctors. Highly defensive medicine is practised where unnecessary and costly tests are performed not for the benefit of patients but to satisfy the unrealistic standards set by the courts. At the end of the day it is the patient and the taxpayer who pays for this stupidity.

    The suggestion that the US should follow the Australian model is nonsense. Insurance premiums for practitioners are rising rapidly as our courts follow the American experience. Insurance premiums for some specialties amount to hundreds of thousands of dollars so it’s no wonder that fees are high and patients are out of pocket when such costs have to be covered before the practitioner makes a dollar.

    The standard that should be followed by the courts is what a prudent practitioner should have done in the circumstances. The courts are moving ever more to a standard of infallibility which is making the costs unsustainable.

    Advocating a socialised system for the reduction of medical costs is a recipe for disaster.

  3. James In Footscray

    Even commentators like Mark Steyn are suggesting a basic government system and private system running in parallel. It’s not a bad political compromise.

  4. one old bruce

    Um no, johno. Trump is following a management style exactly like his mentor George Steinbrenner, which is an effective style in the US. The point is to get the job done, and various ways are possible. By bringing the Steinbrenner style into staid effete politics (now full of sociopaths and parasites) Trump may well be blazing a trail for all of us.

    ‘George Steinbrenner, Who Built Yankees Into Powerhouse, Dies at 80’. etc. (NYT)

  5. Bronson

    LQC advocating a system that is failing in Australia through its unaffordable to another country. Is this the reverse Tesla effect?

  6. Glynn

    $450 for initial 20 minute consultation with a Specialist in Sydney this week, with less than 1/2 the cost refunded by Medicare. Is this not an Australian medical system rip-off?

  7. flyingduk

    I am a senior Dr working in SA. The health system has become Godzilla. It is a rampaging beast eating every resource thrown at it and producing little of value in return. Our hospitals and our ambulances are packed full of hopeless cases and self inflicted disasters. We are pointlessly throwing ever more $ at elderly people with complex, end of life medical conditions. We are spending enormous amounts on meth addicts, alcoholics and the morbidly obese. Most of this money evaporates with nothing to show for it. The ‘health’ system has ceased to be a health system. It has become an ‘illness’ system. It cannot go on like this. Its going to collapse.

  8. Jack Lacton

    All comparisons of the US health system to others is invalid because the US spends two-thirds of all the world’s health research dollars and the rest of us get the benefit without the development cost. If a way could be found to add that in then I’d be more inclined to listen to the arguments.

    Yes, the US health system has cost issues. The largest part could be dealt with by allowing competition across state lines. Many, many vested interests involved that need to be overcome.

    What’s always missed in the comparisons is that the US health system delivers the best overall outcomes on the planet. Other countries might have one or two areas that are superior because they specialise in, say, heart surgery but the US still has a clear lead, which is what you’d expect given the money they spend.

  9. Tom

    Australia’s health system was stuffed the day Whitlam brought in Medicare, when 80% of the population had affordable health insurance. Now that the premiums and out of pocket expenses have soared, with a small pool, we are left with barely 30% are now covered.
    For the rest, it’s downhill all the way, long waits, even longer referral appointments, and longer still lines for surgery. Once you get that far, the doctors and nurses do a great job.

  10. Walter Plinge

    This link explains it. Not sure whether I got this here or Powerline:

    http://www.commonwealthfund.org/interactives/2017/july/mirror-mirror/

    “The United States ranks last in health care system performance among the 11 countries included in this study…The top-ranked countries overall are the United Kingdom, Australia, and the Netherlands. In general, the U.K. achieves superior performance compared to other countries in all areas except Health Care Outcomes, where it ranks 10th despite experiencing the fastest reduction in deaths amenable to health care in the past decade. Australia ranks highest on Administrative Efficiency and Health Care Outcomes, is among the top-ranked countries on Care Process and Access, but ranks low on Equity. “

  11. Gavin R Putland

    What’s the matter with you, LQC? Don’t you know this is a fact-free zone?

  12. Confused Old Misfit

    Regrettably, the system suffers from a variant of the tragedy of the commons. Entry costs are minimal, there are no penalties for over usage, there are no competitive organizations outside the private insurers.
    Governments have used the health care lure to buy votes. Insurers and medical organizations take their lawful shares and the patient thinks it’s all cost free and complains about wait times.
    “flyingduk” is at the pointy end and it’s getting to him. I hope he can find a way to deal with it or make a career change. I listen to ATC radio in Adelaide and I swear there are more “Flydoc” callsigns in and out than commercial flights.
    He’s right>

    It cannot go on like this. Its going to collapse.

  13. flyingduk

    😉 bulls eye Misfit: usually about 15 a day when I am coordinating, and don’t even start me on the increasing % who are both ‘too fat to treat at the country hospital’, and ‘too big to fit in the plane’

  14. Confused Old Misfit

    flyingduk – Married a nurse. She had to quit the system(s) (Canada & Australia) and retrain as a ward clerk due to back problems. That was back in the days before hydraulic lifters. You know the story, the ward orderly was on his union mandated coffee break but the charge nurse wanted the patient move and moved now!

  15. Dave Owen

    Amortiser, I believe you are correct. A relative, who works for the government sector as a medical specialist, has to top up his medical insurance out of his pocket because the government cover for its employees is deemed inadequate. He told me recently of a very sad case where the hospital was sued for problems arising from a premature birth. One specialty blamed the other until a senior doctor intervened presenting the true situation and presented a case so convincing the lawyers ( a well known litigation firm) dropped the action. What annoyed my relative was that the hospital gave generous compensation anyway because they felt sorry for the mother. Your taxes at work for you.
    In Joh Bjelke Petersen’s day, you could not sue the public hospital if the treatment was free. That is how it should be.

  16. danger mouse

    Singapore 4.9% of GDP. There’s a fact

  17. Norman Church

    I am with danger mouse. If one were starting from scratch, the Singaporean model would be the ideal template. By giving citizens a vested interest in acting prudently and with restraint, it achieves first world outcomes at a much lower percentage of GDP. And there is an efficient mechanism for ensuring that strugglers or the unfortunate are not left in the lurch.

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