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A Comparative Analysis Of The UK And US Health Care Systems


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- Published a comparative review of health systems of the National Health Service in the United Kingdom and the varying approaches to health systems in the United States
- Developed research question, conducted interviews, utilized PubMed and similar research database systems, performed literature review, and prepared and submitted for publication

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A Comparative Analysis Of The UK And US Health Care Systems

  1. 1. The Health Care Manager Volume 26, Number 3, pp. 190–212 Copyright # 2007 Wolters Kluwer Health | Lippincott Williams & Wilkins A Comparative Analysis of the United Kingdom and the United States Health Care Systems Abbie McClintock Roe, MSHSA; Aaron Liberman, PhD With America entering a new period of debate about the future of its health care system and with several alternative models now being tested in individual states, this article explores the similarities and differences between the National Health Service of the United Kingdom and America’s varying approaches to addressing the health services needs of its citizens. The focus of this article is in identifying opportunities to benefit from the relative strengths and avoid or correct the weaknesses inherent in each system. Key words: employer-based system (USA), National Health Insurance, National Health Service (UK), universal health care are provided ‘‘free at the point of delivery,’’2 EALTH CARE FINANCING and delivery H systems are popular topics of study generally speaking, these national health throughout the world. Their popularity is care systems provide services predominantly through the means of citizen taxation.1 due not only to the universal human need for health care, but also to the various means Americans are considering increased gov- of the delivery systems and financing around ernment involvement in health care; there- the world. These many differences depend fore, it is important to understand how this greatly on each country’s political culture, could be accomplished and the impact it history, and level of wealth.1 could have on society. As a topic that has a profound impact on This article is designed to review 2 the current and future generations, health countries’ health care financing and delivery care is a central theme of the political and systems: the United States of America and the social culture in the United States. In par- United Kingdom. These 2 countries have ticular, access to health care is frequently close historical and cultural ties, but when highlighted on television news programs, it comes to health care, the United States heard throughout political ‘‘promises,’’ and and the United Kingdom are significantly dif- discussed within social groups. This sug- ferent. Because they differ so greatly, both gests that the American public is coming countries could learn from each other to closer to demanding better access to health create better policy and systems and thus care. A common misconception through- improve health care delivery to their respec- out the United States is that countries who tive citizens. offer national health care systems, such as INTERNATIONAL COMPARISON Canada and the United Kingdom, provide ‘‘free’’ health care. Although many services The World Health Organization, a United Nations agency, issued a report in June 2000 that ranked the health systems of Author Affliations: Department of Health Professions, 191 countries across the world, which was University of Central Florida, Orlando, Florida. the first of its kind to include such a large Corresponding author: Aaron Liberman, PhD, scope of the globe. The United Kingdom Department of Health Professions, University of Central ranked 9th and the United States ranked 17th Florida, 4000 Central Florida Blvd, Orlando, FL highest in overall system performance. These 32816-2200 ( 190 Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  2. 2. 191 Comparative Analysis of the UK and US Health Care Systems results were behind France (first), Italy total and per capita on health expenditure (second), Spain (third), Austria (fifth), and than many other comparable countries and Portugal (sixth). The study also showed that that it is the American people and private only 57% of the UK population said they organizations that are spending the majority were either fairly or very satisfied with their of this money. It is important to focus on health system. That percentage was even the percentage of GDP because of the eco- lower for the United States at 40% fairly or nomic concept of opportunity cost, which very satisfied.3 says that the higher the percentage of GDP The Organisation for Economic Co-operation spent on health care, the lower GDP avail- able for other goods and services.7 and Development (OECD) is an organization headquartered in Paris, France, that studies The OECD releases many other pieces of comparative data of 30-member countries.4 comparative data, including life expectancy These 30 industrialized countries are Aus- at birth, remuneration of health profes- tralia, Austria, Belgium, Canada, Czech Re- sionals, health expenditure by function, and public, Denmark, Finland, France, Germany, tobacco consumption. Taking 2 comparative Greece, Hungary, Iceland, Ireland, Italy, Japan, pieces of data, in 2004, 25% of the popula- Korea, Luxembourg, Mexico, Netherlands, New tion in the United Kingdom and only 17% of Zealand, Norway, Poland, Portugal, Slovak the population in the United States reported to partake in daily consumption of tobacco.8 Republic, Spain, Sweden, Switzerland, Turkey, and of course, the United Kingdom and the And as of 2003, the life expectancy at birth United States.5 was 78.5 years in the United Kingdom and 77.5 years in the United States.9 There are According to a 2006 OECD comparative data study, the total health expenditure in many factors that could play a role in these 2004 by the United Kingdom was 8.3% of results; however, taken factually, although their gross domestic product (GDP) and the United States has a lower rate of tobacco the United States was 15.3% of their GDP, consumption and spends a higher percent- whereas the mean of all 30 countries was age of their GDP on health care, the United 8.9%. This same study reports health expen- Kingdom has a higher life expectancy at diture in the United Kingdom as US $2,546 birth. These results are a clear indication that per capita and US $6,102 per capita in the it is essential for the American public and United States, whereas the 30-country mean health care managers to understand health was US $2,550. Not surprisingly, public care spending and delivery to progress to a spending differs quite significantly between more productive and effective health care the United States and the United Kingdom system in the United States. as well. Of their respective 2004 total health TYPES OF HEALTH CARE SYSTEMS expenditure, public spending in the United THROUGHOUT THE WORLD Kingdom was 85.5% and in the United States was 44.7%, whereas the 30-country mean was 73%.6 There are many trends and patterns of health The United States ranked highest by far of systems throughout the world. Olin Anderson all 30 countries in total health expenditure and Milton Roemer both developed analytical percentage of GDP and per capita spend- models to chart these different types of sys- ing and lowest of all 30 OECD countries in tems, and each of these 2 models places the public expenditure percentage. The United United States and the United Kingdom at Kingdom was slightly lower than the mean opposite ends of the spectrum. As illustrated for both health expenditure percentage of by Anderson’s model, all health systems in the GDP and per capital spending and the fourth world can be placed on a ‘‘continuum based on highest of the 30 countries in public health the level of government involvement in the expenditure.6 This tells us is that the United financing and organization of health services.’’1 States spends considerably more money in Anderson describes the role of government as Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  3. 3. 192 THE HEALTH CARE MANAGER/JULY–SEPTEMBER 2007 either market maximized, characterized by lim- contributions made by workers and em- ited government, or market minimized, char- ployers. The German health system is an acterized by government programs based example of a mandated insurance model. In on distributive justice1 which promotes the the early 1990s, the Clinton administration equal allocation of goods and services to all borrowed from the German System in an members of society.10 On this scale, Anderson attempt at US health care reform.1 Although places the United States at the far end of market- the Clinton administration was unsuccess- ful at full-scale national health care reform,13 maximized and the United Kingdom’s National Health Service (NHS) at the far end of market- on April 12, 2006, Massachusetts Gov Mitt minimized.1 Romney signed Chapter 58, what is better As defined by his work in National Health known as Massachusetts’ ‘‘universal’’ health Systems of the World, Roemer’s analytical insurance bill. Chapter 58 is based on the model places health systems into 3 base mandated insurance model as it is designed categories. These categories are the entrepre- to provide health insurance to nearly all res- idents of Massachusetts.14 neurial model, the mandated insurance model, and the NHS model, which are each orga- The NHS model is ‘‘characterized by univer- nized by wealth and degree of government sal coverage, general tax-based financing, and involvement. The entrepreneurial model is national ownership and/or control of the factors of production.’’1 This model is exem- one based on the purchasing of private health insurance by individuals or employers. The plified by both the United Kingdom and United States’ health system is an example of Canada’s national health programs and uses an entrepreneurial model. Scientific medical general tax revenue for the majority of its advancement in technology and research and financing. In NHS countries, the government cost-saving practices are both beneficial re- itself is most likely to own the health care resources and employ the health care staff.1 sults of the entrepreneurial model. One of the key disadvantages of the model, how- THE UNITED KINGDOM ever, is the apparent inequality of the distri- bution of health care resources. An example of this inequality is seen in the rising num- The United Kingdom of Great Britain and ber of uninsured in the United States.1 As of Northern Ireland is more commonly known the most recent Census Bureau data avail- as the United Kingdom. This country is made able, there were approximately 46 million up of 4 constituent countries, which in- uninsured Americans in 2005, which is ap- cludes the 3 occupying the island of Great proximately 15.9% of the US population.11 Britain: England, Wales, and Scotland, and This figure has risen steadily since the expan- the northeast territory of the island of sion of Medicaid in the 1980s.12 Entrepreneur- Ireland, simply called Northern Ireland. The ial models, such as the United States, operate UK government estimated the population under a voluntary insurance market, which is in the United Kingdom in mid-2005 to be one where ‘‘employment-based health insur- 60.2 million, and of this total, 50.4 million, or ance is purchased from private companies.’’1 83.7%, lived in England.15 According to De- These countries also tend to encourage, partment of Health: Departmental Report produce, and depend on the private owner- 2006, England’s ‘‘Identifiable Expenditure ship of health care resources and private on Services’’ for the 2003-2004 fiscal year employment of health care staff.1 was GBP £58.3 billion, whereas Scotland reported GBP À£18.3 million, Wales re- The mandated insurance model is one ported GBP À£148.4 million, and Northern in which insurance coverage is compulsory Ireland reported GBP À£1.9 million.16 Each and is generally funded by social insurance. Social insurance, also known as social secu- of these 4 countries has its own operating rity, is one in which the health system is NHS. There are similarities and ties between all funded through insurance purchased with 4 organizations, so essentially, they are all Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  4. 4. 193 Comparative Analysis of the UK and US Health Care Systems NHSs, but they operate separately to serve a means to control and limit the spread of the needs of their respective citizens.17 infectious disease. The 1867 Metropolitan The government of the United Kingdom Poor Act began the development of Poor guarantees the right to health care access Law infirmaries, which were actual separate to all citizens through its program called buildings from the workhouses that pro- the National Health Service.1 The NHS is vided health services to the poor. Although a market-minimized, national health service this Act seems to have been in direct con- model1 and is the prominent means for one flict with the 1834 Poor Law Amendment to obtain health care services in the United which sought to limit outdoor relief, it Kingdom.18 It is made up of multiple sub- served as an important step toward the rec- systems broken down by each of the 4 coun- ognition of the state’s responsibility to pro- tries and further into local organizations or vide hospitals to the poor and thus the development of the NHS.20 ‘‘trusts.’’ The NHS, however, is essentially one system, one organization that provides Other notable public health policies in health care access to the citizens and res- British history include the 1906 Education idents of the United Kingdom. This fully (Provision of Meals) Act that led to the comprehensive system includes health care development of a school meals service and facilities and staff, technology and phar- the 1907 Education (Administrative Provi- maceuticals, financing, coverage, and de- sion) Act that began school medical service. livery.17 There is a growing private health The 1911 National Insurance Act provided care industry in the United Kingdom,18 its free general practitioner (GP) care for certain 2 largest private insurers being AXA PPP groups of working people who earned less Healthcare and BUPA.19 However, for pur- than GBP £160 per year, and the 1929 Local poses of this discussion and for direct Government Act resulted in the government comparison, the NHS in England will pre- control of administering workhouses and dominantly be explored during this analysis. infirmaries at the county level. Only 17 years before the National Health Service Act, the Evolution of the UK health care system Local Government Act was yet another step to- Although it has only been approximately ward a government-provided and government- controlled health system.20 60 years since the establishment of the NHS, not surprisingly, there were quite a few Before the NHS’s inception, receiving ap- health policy provisions introduced through- propriate health care in the United Kingdom out British history before the NHS. Dating tended to be a luxury, not a right. Those who back to the 17th century, workhouses served could not afford to pay for traditional health as institutions where the poor of Britain could care relied upon sometimes dangerous home find the means to meet such basic needs as remedies, on the charity of medical profes- nourishment, shelter, health care, and avail- sionals providing free services to the poor, able work. Although the conditions at the or from those services provided within the workhouses were notoriously horrendous, deplorable conditions at workhouses. The these establishments served as the public Great Depression encouraged the popular solution to meet the basic needs of the poor. perception in Britain to demand health care as a right, not a privilege.21 The creation of As a means to control their health services, the 1834 Poor Law Amendment Act was in- the NHS did not essentially begin as a means tended to limit outdoor relief, defined as medi- to provide new or different health services cal care provided outside the workhouses, to the population, but as a way to provide and encourage indoor relief, defined as medi- appropriate and responsible health services cal care provided within the workhouses.20 to all, regardless of the ability to pay.20 It As another public health initiative, the began as a political and social movement 1848 Public Health Act was established to at the end of World War II which led to the National Health Service Act in 194620; construct the water and sewage systems as Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  5. 5. 194 THE HEALTH CARE MANAGER/JULY–SEPTEMBER 2007 however, the NHS itself did not begin ope- at a local level by organizations known as rations until July 5, 1948.22 strategic health authorities (SHAs) and trusts. There are 10 SHAs throughout England, and UK health care systems and each is responsible for a number of various infrastructure types of trusts. Primary care trusts (PCTs) are made up of GPs, dentists, pharmacists, and Department of Health—The government opticians and tend to be at the heart of body responsible for the NHS in England orchestrating the health care delivery and is the Department of Health. The Depart- experience to patients. National Health Ser- ment of Health’s objectives are simply to im- vice trusts, also known as acute trusts, are prove the overall well-being of the people of a secondary level of care and are made up England. This is executed by directing, sup- of NHS, or government-run, hospitals. Am- porting, and leading NHS and social care bulance trusts are the local organizations organizations to provide fair, high-quality responsible for responding to and assess- health services and to offer choices to pa- tients and value to taxpayers.23 ing emergency situations. Care trusts are es- This government body is led by democrat- sentially social services organizations that ically elected members of parliament (MPs) are designed to coordinate multiple services and headed by the Secretary of Health, cur- to meet the needs of those patients who rently Patricia Hewitt MP. The additional might require a more complex level of treat- roles leading the Department of Health are ment. Mental health trusts provide services Minister of State for Health Services, Minis- to those patients who have more severe mental health conditions.17 ter of State for Delivery and Reform, Minis- ter of State for Quality, Minister of State The NHS also offers many other services for Public Health, and Parliamentary Under besides those that are directly provided by Secretary of State for Care Services. Each of trusts. National Health Service walk-in cen- these roles is filled by elected MPs, par- ters, NHS direct and NHS direct online, the liament being the legislative body in the Information Centre for Health and Social United Kingdom which is similar to the US Care, and non–NHS-related key partners are Congress. Although these MPs are elected also important functions and services pro- vided through the NHS.17 by the masses, they are appointed to their respective roles in the Department of Health Strategic health authorities—Strategic by the Prime Minister of the United King- health authorities are the strategic body dom, currently Gordon Brown.23 of the NHS at a local level, and as of July There are many other levels of individuals 1, 2006, there were 10 SHAs throughout who make up England’s Department of England. They support and link their local Health leadership. These roles include depart- citizens, PCTs, and other local and national ment directors and board members such as NHS organizations by monitoring service the NHS chief executive, permanent sec- performance, developing improvement plans, retary, chief medical officer, chief nursing and increasing the health services and re- officer, and director of finance and invest- sources available. Strategic health authorities ment. There are also national clinical directors are also the governing body to carry out the for such areas as emergency access, mental initiatives and programs of the national NHS brought down to the local level.17 health, heart disease and stroke, primary care, learning disabilities, cancer, diabetes, chil- Primary care trusts—Introduced in April dren, influenza, and kidney services.23 2002, PCTs are predominantly responsible National Health Service—Introduced in for meeting the health needs of their local 1948, the NHS is the name given to the community. They are local organizations to overriding government national health or- which most patients of the NHS must use as ganization in the United Kingdom. Since their initial points of health care delivery. 2002, the NHS in England is essentially run Although few, there are some circumstances Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  6. 6. 195 Comparative Analysis of the UK and US Health Care Systems when it is not required by the NHS for to register with their local GP, and NHS pa- patients to first visit a PCT when seeking tients are never charged to visit a GP. If the medical treatment.17 When PCTs were first GP is unable to provide the service needed, introduced, if a patient needed to visit a he or she should then refer the NHS patient to an NHS hospital or specialist.17 medical professional, one would be required to visit the PCT based on the postcode of his National Health Service trusts (acute or her registered place of residence. Al- trusts)—The NHS trusts, also known as acute though these assigned PCTs still exist and trusts, are responsible for the NHS hospi- NHS and the PCTs encourage compliance tals. Acute trusts manage the hospitals’ de- to the assignment, it has only been recently livery of high-quality health care and fiscal that NHS patients can visit a PCT outside efficiency, as well as develop strategic im- their designated area.24 provement of health services. Acute trusts As the nerve center of the NHS, PCTs are may be training hospitals attached to medical in control of approximately 80% of the total universities or a regional or national center NHS budget.17 The NHS organization per- for specialized care, or may also provide ad- ceives the use of these local PCTs as the best ditional community services such as health centers, clinics, or home health services.17 way to understand the needs of the com- munity on a local level. The role of the PCT is Introduced in April 2004, NHS foundation to direct the health needs of each individual trusts, also known as foundation hospitals, to the correct practitioner or group to re- are hospitals with exceptional performance ceive health services, such as to GPs, hos- ratings and are distinguished through an pitals, and dentists. Primary care trusts also NHS application process. Foundation hospi- act as representatives to the NHS of their tals are run by local managers, staff, and local community and assess the GP practices members of the public with little bureau- in their area.17 Primary care trusts truly serve cratic control from the centralized NHS. Al- as the lead organization in providing and though they still operate as a part of the NHS orchestrating the health care needs of the and within NHS standards, foundation hos- population in England.25 pitals have much more freedom in manag- There are many services and practitioners ing and providing health services to their provided through the PCTs. Primary care local community than the other nondistin- trusts manage one’s primary care, which is guished NHS hospitals. There are currently 54 NHS foundation trusts in England.17 considered the initial contact when one seeks medical services. These organizations National Health Service hospitals and are made up of multiple GP practices, dental acute trusts employ a significant amount of offices, optical care locations, and pharma- the NHS workers. This includes not only cies. There are currently 152 PCTs, and each clinicians, such as doctors, nurses, and phar- reports to 1 of the 10 SHAs. Each PCT has macists, but also physiotherapists, radiolo- a headquartered location, such as at a hos- gists, language therapists, psychologists, and pital, and is governed by executive manage- nonmedical professionals such as adminis- ment and board members.17 tration, reception, information technology, engineers, and security.17 National Health Service general practices are those that are made up of GPs and nurses National Health Service hospitals operate and can include many other health profes- as a means to meet the demand for second- sionals such as midwives, physiotherapists, ary care in the United Kingdom. Secondary and occupational therapists. They provide care is considered either emergency care or a wide range of diagnosis, treatment, edu- elective care. Elective care is usually when cation, and medical testing to their NHS an NHS patient is referred to the hospital population. There are approximately 300 mil- through primary care services, such as by a lion visits to a GP per year in England. Every GP, for specialized medical care. Examples citizen of the United Kingdom has the right of elective care are hip replacements or Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  7. 7. 196 THE HEALTH CARE MANAGER/JULY–SEPTEMBER 2007 kidney dialysis. Emergency care is attended of combined effort, such as the elderly to in the hospital department known in who tend to need multiple levels of service. the United Kingdom as accident and emer- There are currently only 10 care trusts in gency department (A&E). Patients are treated operation in England; however, there are plans to introduce more in the future.17 in or admitted through the accident and emergency department generally because of Mental health trusts—Mental health trusts their need for health services in response to work with local council social services sudden trauma, such as chest pain or an departments to provide health and social automobile accident.17 care to those who have mental health Ambulance trusts—Ambulance trusts are problems. These services range from psycho- responsible for responding to conditions that logical therapy to specialized care for severe require immediate action, the transportation mental health conditions. Less severe mental of patients in need, and certain after-hours health problems, such as depression, be- care needs. Urgent needs are generally reavement, or anxiety, are traditionally generated through the 999 emergency sys- treated by primary care services and are not tem (similar to the United States’ 9-1-1 necessarily managed by the mental health emergency service). When a call is placed trusts. These services can include medica- tion, counseling, and/or support groups.17 to 999, the ambulance trust control room will categorized the emergency as either Other NHS services—There are many ad- category A: immediately life threatening; ditional services offered by the NHS that do category B: serious, but not immediately life not necessarily fall under the direct responsi- threatening; or category C: nonurgent, non– bility of any of the aforementioned trusts. life-threatening condition.17 National Health Service walk-in centers are For all 3 categories, a rapid response team designed to offer NHS patients access to may be sent to the scene. The ambulance or health care services without the need for paramedic team will assess if the patient appointments. They are often located near needs to go to the hospital and, if so, treat and accident and emergency departments of NHS stabilize the patient for transportation. For hospitals or in public locations such as train those patients who have been assessed to stations and ‘‘high streets’’ which is the term not be transported to the hospital, the highly used for the central business district of UK towns.17 trained medic team may treat on the scene and then provide advice for follow-up care. National Health Service direct and NHS If the ambulance trust control room does direct online offer health advice and infor- not feel it necessary to send an ambulance mation 24 hours a day, 365 days a year. Na- to a category C condition, then they are tional Health Service direct is available via trained to provide over-the-phone suggestions live telephone discussions with staffed such as treatment advice, referral to one’s nurses and health advisors. National Health GP, or even a referral to a local NHS walk-in Service direct online provides NHS informa- center.17 tion and health advice via the internet at Care trusts—Care trusts are NHS trusts in Services pro- England that coordinate the health care and vided on NHS direct online are a self-help social care service needs of an NHS patient. guide, a health encyclopedia, answers to com- They provide combined health and local mon health questions, a mind and body authority social care under one organization magazine, as well as the ability to search for one’s local health services.17 as a means to protect the patient from falling through the cracks when one is in need of Current initiatives and future proposals services from multiple organizations. Care in the United Kingdom—The NHS Plan trusts may carry out such services as primary care, social care, and/or mental health care Announced in the year 2000, ‘‘The NHS and cater to those who require this type Plan’’ is a 10-year government program Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  8. 8. 197 Comparative Analysis of the UK and US Health Care Systems designed to modernize and improve the needed improvement. Lastly, The NHS Plan NHS system.26 Because there had not been introduced an initiative for more infor- significant reform since the NHS’s incep- mation and choices for patients, including tion in 1948, The NHS Plan has been de- more highly responsive health services from the NHS.31 scribed as the biggest overhaul since its founding.18,27 The NHS Plan’s purpose is to Some of the patient-specific initiatives create a 21st century health care system28 of The NHS Plan in 2000 were to cut hospital that puts the patients at the heart of deci- waiting times to 3 months for outpatients sion making26 and creates a more consumer- and 6 months for inpatients by 2005, provide driven service.2 In part, The NHS Plan for GP appointments within 48 hours by places blame for its current problems on 2004, and offer a free NHS retirement health the politicking it took in 1948 to create check. Some of the workforce-specific ini- physician buy-in for the new program and tiatives were to create new quality-based GP contracts32; develop 335 mental health that it will take a great effort for physi- cians to give up power to the people.29 teams to increase crises response time, cre- The NHS prepared to fulfill The NHS Plan ate new roles, responsibilities, and better through increased funding and organiza- training for NHS staff; and to employ 20,000 tional renovation. In fact, the NHS is the more nurses, 7,500 more physician con- only health system in the industrialized sultants, 2,000 new GPs, and 6,500 other world that is committed to increasing, not health professionals. General service and or- decreasing, its health expenditure. The goal ganizational initiatives were to create 7,000 of The NHS Plan is to mirror the European extra hospital beds and 100 new hospital Union’s average spending of 8% of GDP plans by 2010, provide an extra GBP on health care.2,27 It has been several years £900 million to develop intermediate care since the launch of The NHS Plan. Some of to improve patient recovery, make medical nursing care in nursing homes free,28 cre- the initial goals have been and are on their way to being achieved26; however, there ate agreements between the NHS and the have also been some new and reformed private sector for use of private facilities, goals since 2000.24 develop a national independent advisory This national program was the first of its panel for major hospital changes such as kind. There were 4 key initiatives set forth closures, and merge the budgets of social services with the NHS.33 by The NHS Plan. First was the general uti- lization of 2 new health service programs. As a result of The NHS Plan, the NHS National service frameworks were set to budget had doubled from 1997 to October 2006, and it is expected to triple by 2008.18 create national treatment standards for such medical illnesses as diabetes, cancer, and As of March 2007, there have been a number kidney conditions. Originally established in of The NHS Plan initiatives addressed and accomplished within the NHS in England.26 1999, the National Institute for Health and Clinical Excellence was created to attain the In January 2007, the number of people on highest level of care in the NHS by provid- the inpatient waiting lists was 774,000, one ing guidance on public health, health tech- of the lowest since the NHS began collect- nologies, and clinical practice.30 Another ing the data in 1988. This wait list total initiative set forth by The NHS Plan was a is down 2,000 from 776,000 in December change in the financial rewarding and train- 2006 and down from 1,158,000 in 1997. ing of health care professionals to improve There was an increase by 42% of critical quality and better meet patient needs. Yet care beds from 2,362 in January 2000 to another initiative of The NHS Plan was to 3,359 in January 2007, which includes an create a higher level of autonomy for those increase of 84% of high-dependency beds. health services and systems that performed Responding to urgent GP referrals for can- well and greater support for those that cer treatment, more than 95% of patients Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  9. 9. 198 THE HEALTH CARE MANAGER/JULY–SEPTEMBER 2007 only waited a maximum of 2 months their patients regarding the medical services at the GP practice.37 (62 days), which exceed the NHS opera- tional standard.34 Between 1997 and March Pricing structure and responsibility of 2007, a total of 116 new hospitals and 188 payment in the NHS new primary care facilities have opened throughout England, which exceeds the goal National Health Service medical services of 100 new hospitals proposed in The NHS received by NHS patients are considered Plan in 2000.35 Also since 1997, there are ‘‘free at the point of delivery.’’2 Therefore, 85,305 more nurses in the NHS in England, when an NHS patient uses an NHS service, and approximately 30,000 NHS nurses have such as a PCT, acute care trust, NHS walk-in benefited from leadership programs.36 De- center, or NHS direct online, they do so free tailed earlier, care trusts and NHS founda- of charge—they are not asked for money up tion trusts were both results of the initiatives front, nor do they receive a bill for services laid out in The NHS Plan in 2000. received. However, it is important to under- In 2005, the Department of Health ques- stand that NHS subsystems and their respec- tioned and surveyed more than 140,000 tive providers receive compensation for people on their thoughts, ideas, and con- treating NHS patients, just not directly from cerns for the NHS in England in relation to the patient at the time services are received. The NHS Plan. The Department of Health National Health Service compensation is funded by general taxation,38 and because publication, Our Health, Our Care, Our the NHS is made up of government-salaried Say: A New Direction for Community Services, addresses the results of this na- employees, provider compensation is usually tional quest and sets a new and extended in the form of a salary and/or bonuses, and course for improvement in the NHS in subsystem funding is usually based on a con- tract between the provider and the NHS.24 England over the subsequent 5 years. This resulted in numerous new and extended In 2004, 8.3% of the UK total GDP ex- penditure was spent on health care.6 The initiatives within the NHS. For example, information prescriptions are to be directly percentage of public expenditure of health provided to long-term patients and their care GDP in the United Kingdom was 85.5%,6 which would make private expendi- caregivers to further educate them on their condition and where within the NHS sys- ture 14.5%. Although the NHS is ‘‘free at the point of delivery,’’2 this private expenditure tem they could gain further access to infor- mation and services. The new NHS life amount clearly shows that there are some check is a self-assessment tool designed to instances where private parties do contrib- help to determine one’s health risks and ute toward the purchasing of health care decide whether to consult a health trainer to products and services. establish a personal health plan. Individual There are some NHS services that are not budgets were to be introduced within the ‘‘free at the point of delivery.’’ The Depart- NHS for those long-term care patients in ment of Health imposes flat charges to NHS need of health and social care, and by 2008, patients to receive pharmaceutical, dental, all PCTs should provide access to an in- or optical products or services. For exam- tegrated personal health and social care ple, when an NHS patient fills a prescription plan to these patients through a joint health at the pharmacy in England, they must pay a and social care team. The prime minister’s flat rate to receive the pharmaceutical prod- 1999 Strategy for Carers, which promotes uct. As of April 1, 2007, the fee per prescrip- caregivers’ rights and provides financial tion is GBP £6.85, which is up from the grants, was to be updated to provide further former GBP £6.65. This is a flat fee and does support to caregivers. To meet the needs not depend on the price of the pharma- of their communities, GPs will be required ceutical; therefore, the out-of-pocket (OOP) to conduct and respond to surveys given to cost to the patient is the same whether the Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  10. 10. 199 Comparative Analysis of the UK and US Health Care Systems care to its population42; therefore, in direct pharmaceutical is a high-cost specialty med- ication or a low-cost maintenance medica- opposition to the United Kingdom and all tion such as for diabetes or high blood other industrialized nations, access to health pressure.39 care in the United States is not guaranteed by the government.1 The US government has This charge of GBP £6.85 per prescription is only some of the total health care historically played a passive role in health expenditure spent by private parties in the care. Not only does the government not United Kingdom. Another example of money mandate universal health care, but it also paid by private parties is by those that does not require citizens to obtain health choose to purchase access to private health insurance coverage on any level. Under the care. Although the NHS is funded through Employee Retirement Income Security Act of general taxation,38 there is a growing market 1974, the United States allows full employer discretion on health insurance offerings.12 for private health care in the United King- dom.18 The private health care system in the The health care system in the United States United Kingdom is provided through private differs greatly from that in the United health insurance, private physicians, and Kingdom. Whereas the United Kingdom private hospitals, all of which are separate is considered a market-minimized national from the NHS services.19 United Kingdom health system, the United States health care residents are not mandated to use the health system operates as a market-maximized care services provided by the NHS; however, entrepreneurial system. This is one in which there is no concession to those who pur- the government has minimal influence and chase their own private insurance to visit financial responsibility for the health care of private physicians and hospitals. This means the masses and where private parties are that those who purchase private insurance encouraged and promoted to reign responsi- ble.1 Also as stated earlier, the United States still are paying for the NHS services through general taxation.40 sits at the far end of highest health care Primary care trusts control 80% of the spending per capita, highest health care NHS’s budget.17 Because of initiatives set spending percentage of GDP, and least pub- forth by The NHS Plan, contracts between lic financial contribution of the 30-member countries in the OECD.4 the PCTs and GPs are considered quality- based, because although the NHS still pro- Of the approximately 300 million people in motes its recipients to register with the PCT the United States, 46 million were considered to have been uninsured in 2005.11 In the assigned to their postcode, these new con- tracts have introduced the ability to visit United States, those without insurance cover- trusts outside their geographic region.24 age are meant to pay for the health care Primary care trusts are funded through services they receive. That being said, the allocation from the Department of Health. most common reason for bankruptcy in the The Advisory Committee on Resource Allo- United States is due to unmet health care bills. cation uses a weighted capitation formula A recent study done by Harvard University to determine the distribution of resources found that 68% of those who filed for medical across primary and secondary care in Eng- debt bankruptcy had some form of health land. Weighted capitation allows for re- insurance, 50% of all bankruptcies involved source commissions at similar levels of medical debt, and every 30 seconds someone health care for populations with similar in the United States files for bankruptcy be- health care needs.41 cause of a serious health problem.43 Evolution of the US health care system THE UNITED STATES OF AMERICA By the end of The Great Depression and The United States is the only industrialized World War II, there was a significant hospital country that does not offer universal health bed shortage in the United States. Not only Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  11. 11. 200 THE HEALTH CARE MANAGER/JULY–SEPTEMBER 2007 did hospital construction slow during this States. The Act required states to enact time, but many hospitals closed because of certificate-of-need laws that required hospi- the economic downturn of the country. The tals to apply for a certificate of need from Hospital Survey and Construction Act of their host state before acquiring major 1946, more commonly known as the Hill- equipment or beginning construction. Al- Burton Act, represented the United States’ though many states still require some kind of involvement in regulating the availability of certificate of need, federal funding to the health systems agencies ceased in 1986.44 hospital beds by providing funding through federal grants. This Act essentially called for The current private health insurance in- the construction and refurbishment of the dustry, which is extremely complex and hospital systems throughout the United multifaceted, grew out of the managed care States. At the inception of the Hill-Burton movement in the early 1990s. Managed care Act, 3.2 community hospital beds per 1,000 is essentially a term coined as an attempt to people in a geographic region were avail- control health care costs by controlling, or able, and although the Hill-Burton program limiting, the access to care. Before the man- was terminated in 1974, its goal of 4.5 per aged care movement, in fee-for-service or 1,000 was accomplished by the 1980s.44 cost reimbursement models, providers had Private health insurance in the United much more leniency to decide what services States also grew out of The Great Depres- to provide and what fees to charge for those sion. In 1929, Baylor Hospital began allow- services. The managed care movement at- ing for 21 days of hospital stays per year tempted to control what health insurance to those who paid a 50-cent premium each companies and employers saw as an overuti- lization of medical services by providers.45 month. This ‘‘prepayment’’ concept spread with encouragement from the American US health care systems Hospital Association. Also in 1929, the first and infrastructure Blue Cross plan was established to guaran- tee hospital coverage for childbearing-aged Health care services in the United States schoolteachers in Dallas, Texas. Blue Shield can either be public health care or private began in the early 1900s in the Pacific health care. Public health care is the health Northwest when mining and lumber camps care that is considered a function of the paid physicians to provide medical care for public or the government. Areas in which their laborers. The Blue Cross and Blue public or government agencies provide a level Shield Association is the merger between of public health care are in the prevention of the two, Blue Cross representing hospital diseases, the promotion of health, the report- coverage and Blue Shield representing phy- ing and controlling of communicable diseases, sician services. Today, approximately 25% the control of environmental factors such as of insured Americans are covered by a Blue air and water quality, and the study and plan, which is a part of a network of 43 analysis of indicators of data on the health of the public.45 independently and locally run Blue Cross and/or Blue Shield organizations.45 The US Department of Health and Human As one of the first attempts to curtail the Services is the principal federal agency that increase of health care spending in the controls many of the subagencies that United States, the National Health Plan- perform these government health care ser- ning and Resources Development Act of vices. These organizations include the Cen- 1974 created a network of government ters for Disease Control, Food and Drug health planning organizations, called health Administration, National Institutes of Health, systems agencies. These health systems and the Agency for Healthcare Research and Quality.45 agencies were intended to control the al- location of health resources and the in- Each geographic region in the United States creasing cost of medical care in the United tends to be made up of multiple regional Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  12. 12. 201 Comparative Analysis of the UK and US Health Care Systems health delivery systems. In most metropoli- ous urgent care/walk-in facilities located tan areas, there are many different systems. throughout the United States. These urgent For instance, in the central Florida area, care/walk-in facilities can either be affili- there are 3 health systems: Florida Hospital, ated with a hospital system or as an in- dependent entity.45 A new phenomenon in Orlando Regional, and Healthsouth. Each sys- tem traditionally is made up of networks of the United States is called retail health care, health professionals and institutions such as where retail stores such as Wal-Mart, are physician practices and hospitals. offering walk-in health care facilities that When one seeks medical attention in the are often run by nurse practitioners and United States for an episodic or nonchronic provide limited services for fairly minimal fees.46 condition, it is typical for one to first visit a primary care physician. Primary care is de- Tertiary care is really considered a higher fined as the first point of contact with level of specialized, or subspecialized, sec- medical services with the intent to provide ondary care. It requires intensive inpatient initial diagnosis and treatment. Primary care care and often a prolonged length of stay in providers (PCPs) are typically GPs, pediatri- the hospital. Patients receiving tertiary care cians, internists, obstetricians, nurse practi- often have complex illnesses that require tioners, physician’s assistants, and midwives. highly technical medical care, such as coro- Primary care providers tend to see patients nary artery bypass grafts or organ transplants. from all ages, genders, and ethnicities who Tertiary care centers and providers are often are experiencing a wide range of medical affiliated with academic medical institutions. conditions. Therefore, PCPs must be widely Similar to secondary care, tertiary care pro- educated on a large variety of illnesses and viders work closely with the patient’s PCP frequently work with secondary and tertiary to gain access to the patient’s medical and personal history.45 care specialists in providing a full level of treatment to the patient.45 Health insurance and coverage in the Secondary care is a stage of medical ser- United States vices when a patient is in need of specialized medical attention often received in the hos- As of 2000, 84.2% of the non-elderly US pital setting and attended to by specialty population had some form of health insur- physicians. Whereas primary care focuses on ance coverage, and two thirds of this cover- age was employer sponsored.45 The United episodic or nonchronic conditions, second- ary care addresses more chronic, persistent, States is essentially an employer-based system, or traumatic conditions. Often, a secondary which is a large contributor as to why the unemployed are also generally uninsured.44 care physician works with PCPs to treat the patient and return them to the PCP’s care. There are multitudes of health coverage Secondary care represents a growing propor- organizations, plans, and systems through- tion of the health care needs of Americans out the United States. The basic concepts of due to a growing level of chronic conditions some of the more popular means of health in the United States.45 coverage will be discussed in this article. Emergency care is a form of secondary Health insurance is a contractual relation- care and is defined as the care received when ship and a shared financial risk between the the absence of immediate medical attention insured (ie, patient member) and the insurer may result in permanent injury or death. (ie, insurance company). The insurer is Depending on the severity, emergency care providing or reimbursing all or some of the is usually treated in a hospital as triaged cost of medical care provided to the insured through the emergency department. Urgent if the insured seeks medical attention cov- care services attend to less severe emergency ered under the policy or contract. The in- care, and if one does not choose to visit a sured is paying a premium usually in the hospital or physician office, there are numer- form of a monthly payment to protect Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  13. 13. 202 THE HEALTH CARE MANAGER/JULY–SEPTEMBER 2007 oneself against the risk of a full payment on July 1, 1966, with 19.1 million enrollees, for seeking medical care. Many times, the and as of 2004, there were approximately insurer is not only responsible for the 42 million enrollees. Medicare has a power- monthly premium, but is also responsible ful influence on the US health care industry, to pay for some of the medical care received because it is a major source of revenue for in a form of deductibles, coinsurance, co- health care providers and its policies and payments, and OOP maximums.45 regulations tend to have a ‘‘ripple effect’’ on US health care delivery.47 Government-sponsored health care in the United States—As discussed previously, al- Medicare coverage is broken down into 4 though the United States health system is distinct parts, A-D. Part A is considered considered predominantly funded by private institutional care (ie, hospital care). Part B parties, there is a considerable contribution is a voluntary enrollment plan that requires a (44.7% of health care GDP6) made by pub- small monthly premium and covers profes- sional services, such as physician visits.45 lic funding. Medicare, Medicaid, which in- cludes the State Children’s Health Insurance Part C is a mandate of the Balanced Budget Program (SCHIP), and Veteran Affairs is con- Act of 1997 and offers parts A and B re- sidered government- or public-sponsored cipients the option to enroll in one of many health care. The Centers for Medicare and private managed care plans to combine the two under one benefit.44 Part D is a pre- Medicaid is a federal agency that is respon- sible for the administration of the US Medi- scription drug benefit that operates under a care and Medicaid programs. As a result of complex system of multiple private entities 1965 Amendments to the Social Security and formularies. In December 2003, the Act, both Medicare and Medicaid serve as Medicare Prescription Drug, Improvement, the major forms of public health insurance and Modernization Act was signed in by in the United States and are the combina- the president of the United States; however, tion of previously smaller programs.45 Al- the benefit itself was not available until its launch in February 2006.48 though Medicare and Medicaid are both government-funded health programs in the Medicare is not a fully comprehensive United States, both are generally adminis- health coverage program and in fact relies tered through private intermediaries, such on significant OOP expenses from Medicare as Blue Cross, Blue Shield, or other managed recipients. To cover these OOP expenses, care organizations.12 most Medicare recipients enroll in additional Medicare—The Centers for Medicare and coverage such as Medicare health main- Medicaid is the federal agency that manages tenance organizations (HMOs), retirement the Medicare and Medicaid programs in the coverage from former employers, Medigap plans, and Medicaid.45 United States. Medicare is a federal health insurance program designed to provide cov- Medicaid—State Medicaid programs are erage to those older than 65 years as well as combined federal and state-funded health to the disabled. Recipients must be a citizen insurance plans that are offered to qualified or permanent resident of the United States recipients who fall below a particular level of and must have worked themselves or been income and also take into account one’s married to someone who has worked for assets and resources. Most Medicaid recipi- Medicare-covered employment for at least ents are children, the elderly, blind, disabled, 10 years. Medicare-covered employment de- and those who qualify for federal income ducts payroll taxes under the Federal Insur- assistance. The cost share formula between ance Contributions Act as a means to fund state and federal funding is based on the ratio the Medicare program.45 Medicare has been of state to federal per capita income. Each one of the fastest growing federal programs state can differ in their income qualification in the United States, growing at 15% each and in the means of providing Medicaid. A year in its first 30 years. The program began significant difference between Medicare and Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  14. 14. 203 Comparative Analysis of the UK and US Health Care Systems Medicaid is that Medicaid programs tend to tends to offer less expensive premiums cover long-term care (ie, nursing homes) and because of the risk of the insurance company in fact are the largest single contributor to paying out claims is lower when the risk is spread out over the entire group.44 long-term care services at more than 44% of its total expenditure in the United States.45 Of the insured non-elderly Americans, As a function of Medicaid programs, the approximately 6.6% purchase their health insurance individually.45 Individual insurance SCHIP was created as a result of the Bal- anced Budget Act of 1997. The SCHIP serves is usually the same type of health insurance as a way for states to meet the growing offered through an employer, but the pre- number of uninsured children. There are miums tend to be higher because the risk is not shared among a group51 and many 3 options under SCHIP, which are to create a fully standalone program, expand the require the recipient to submit a physical Medicaid program to include children, or examination. Because of the concept of risk use a combination of both strategies.45 sharing, group insurance usually does not Veterans Affairs—The US Department of require the individual member of a group policy to take a physical examination.45 Most Veterans Affairs, formerly called the Veterans Administration, offers health care benefits states allow for insurers to deny coverage to those who qualify through the Veterans due to an undesirable risk, such as in the case of pre-existing conditions.51 Health Administration. Eligibility for Veterans Affairs benefits is based on those nondishon- There are generally 4 types of health orably discharged from active military service insurance in the United States: conventional in the army, navy, air force, marines or coast coverage, HMOs, preferred provider organi- guard (as well as the merchant marines who zations (PPOs), and point-of-service (POS) served during World War II). The Veterans plans. As of 2002, of the Americans workers Affairs is a complex health care system that covered under employer-sponsored pro- provides medical services to qualified recip- grams, 5% were in a conventional plan, 26% ients at a number of hospitals, long-term were in an HMO, 52% in a PPO, and 17% in a POS plan.45 Conventional coverage is a type facilities, medical centers, and clinics, includ- ing dental, mental health, and substance of health insurance that offers coverage abuse, located throughout the United from practically all physicians and hospitals States.49 in the local region, sometimes including cov- erage throughout the United States.45 Private-sponsored health care in the United States—There are many different ways one Health maintenance organizations were can obtain private health care coverage in the created as a direct attempt to control access United States, but the most common means and cost. Traditionally, in HMO plans, a is through an employer benefit program. It gatekeeper is used as a means to authorize is estimated that two thirds of non-elderly a referral to a specialist, a pharmaceutical Americans who carry health insurance are product, or a procedure. These gatekeepers covered under employer-sponsored pro- can either be nursing staff of the HMO plan grams.45 This is where an employer contracts or health professionals at primary care with one or more private health care compa- physician practices. In fact, HMOs tend to nies to provide health insurance to its require insured members to register directly employees. Those employees are usually only with a primary care physician. Health main- eligible if they meet a minimum required tenance organizations are essentially a net- number of hours of work per week, such work of health care providers throughout a as 30 hours. Because employer-sponsored health designated region who are contracted to insurance is usually offered to a large group provide health services to the enrolled pa- of employees, it is also known as group in- tient population of the HMO network. surance.50 Group insurance is a beneficial Those insured under the HMOs must attend means of obtaining health insurance as it these network providers for the HMO to Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  15. 15. 204 THE HEALTH CARE MANAGER/JULY–SEPTEMBER 2007 cover the cost of their services. The incen- to health insurance from a health insur- tive to the provider to become a member of ance company, self-insurance is when the the network is often an increase in patient employer has the opportunity to purchase volume. The contracted rates between the a number of health services either di- HMOs and providers can therefore be at a rectly from medical groups or hospitals, significantly discounted rate because of this or they contract as a part of a network increased volume.45 of health services. Third-party adminis- Preferred provider organizations were de- trators are organizations that administer veloped as a result of negative patient and and manage the health insurance of self- insured employers.45 physician reaction to the HMO/gatekeeper model. Although the premiums can be 50% Labor unions are another means for one higher than HMOs, when PPOs were first to obtain health insurance coverage. These introduced, the network of providers tended are organizations of workers who band to- to be less limiting and did not require a gether as either employees of the same or- relationship with a PCP or gatekeeper. Pre- ganization or with those in a similar labor ferred provider organizations encourage industry to negotiate with employers on such their insured members to use their network topics as wages, hours, and working con- providers by covering a higher cost (ie, 90%); ditions. Union members collectively work however, if an insured member chooses to together to accomplish these negotiations attend an out-of-network provider, the PPO to their benefit by threatening to or by may still cover a smaller percentage of cost withholding labor to drive up the price of production.45 Many labor union organiza- (ie, 60%). Because of the popularity of the PPO system, HMOs have begun to move tions provide some level of health insur- away from the need for referrals, allowing ance coverage to their members similar to for what is called open access, and in an employer-sponsored insurance in the form of group insurance.44 attempt to control costs, PPOs have begun to add HMO-like services such as programs There are many different areas of cover- to manage utilization. These current trends age health insurance that organizations can suggest a movement in the US health in- offer to their members. Although most surance industry to merge these 2 concepts health insurance coverage refers specifi- and find a middle ground.45 cally to hospital and/or physician services, Point-of-service plans are thought to be there are additional areas that can be added that middle ground. Those insured under on as a higher level of benefit. These areas a POS plan are encouraged to attend a PCP include prescription, optical, dental, and for a referral to an in-network provider, or mental health, among others. These bene- specialist, when needed; however, it is not fits tend to be managed differently than the required. When visiting an in-network pro- hospital and physician services and can vider, the POS plan–insured patient tends also be managed by outside vendors. For to pay a small amount and little or no example, prescription benefit managers are deductible. If one chooses to visit an out-of- organizations that contract directly with network provider, POS plans tend to re- health insurance plans to manage and quire a deductible to be met, or the patient provide prescription services to their in- must pay a higher coinsurance; however, sured members by providing a network, the out-of-network visit does not require a a formulary, customer service, and claim referral by a PCP.45 processing.45 This can sometimes be rec- Employers can also offer health insurance ognized by the insured as a separate card, through a concept called self-insurance. known as a drug card. Some recognizable Approximately 60% of all US workers are names of national prescription benefit covered by these self-funded health plans. managers are Medco, Caremark, and Ex- As opposed to offering employees access press Scripts. Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  16. 16. 205 Comparative Analysis of the UK and US Health Care Systems Current initiatives and future proposals Altman says the idea of universal health in the United States—universal care has made a charging comeback since health care the most recent elections in November 2006. Although national exit polls in the Universal health care is when an entire 2006 election season did not include any population is guaranteed the right to some questions on universal health care, in early level of access to health care services. Health 2007, health care reform has not only been care is considered a ‘‘public good’’ in many heard throughout statements made by the countries throughout the world, which emerging presidential hopefuls but also means that it is primarily provided by the addressed by George W. Bush, the residing government.51 Universal health care can be US president.54 in many forms such as in the United It is the Democratic Party that is focus- Kingdom as one health system, the NHS, or ing on ‘‘universal health care.’’ Sen John in Germany as a mandated health insurance Edwards of North Carolina, Sen Hillary program.1 Although the United States does Clinton of New York, and Sen Barack Obama not offer universal health care to its entire of Illinois have all announced their intention population, the federal government does of providing universal health care to the provide fairly comprehensive health care ser- entire US population if elected president vices to specific populations, such as to in 2008.55-57 Although as of March 2007, most those who qualify for Medicare, Medicaid, or Democratic candidates had not announced Veteran Affairs coverage. their official plans for health care reform, The United States is the only industrial- there is a common thread in their ideology, ized country in the world that does not offer such as providing health coverage at an universal health care to its population.42 affordable price to individuals and families In 1993, both Democrat and Republican and requiring employers to provide or help leaders, as well as nearly every major health finance employee health insurance by reduc- care interest group including the American ing costs and creating new tax credits.56 Medical Association and the Health In- These candidates’ plans for universal surance Association of America, supported health care are similar not only to the Clinton an employer mandated universal coverage administration’s unsuccessful attempt at health care reform in the 1990s,13 but also health care program in the United States. On September 23, 1993, President Bill Clinton to the 2006 Massachusetts Health Care Re- announced his plan for mandatory insurance form Plan. The Massachusetts bill seeks to to the House of Representatives which re- provide health insurance to all Massachusetts residents14 by requiring employers to pro- ceived positive feedback. But within a year, focus on the economy, the Whitewater scan- vide health insurance to employees as well as dal, and direct opposition ended this health expanded coverage and requirements for covering children and illegal immigrants.58 care reform movement. Americans seemed less worried about access to health care In the United States, Massachusetts is the first because of a decrease in the unemployment of many that have begun to plan or im- rate, and inflation has slowed, leaving em- plement universal health care programs. ployers less concerned about the rising Other states such as Connecticut, Mary- health care costs.52 land, New Hampshire, New Jersey, Vermont, Although universal health care did not West Virginia, and 4 counties in California catch on in the 1990s, it seems as if health have begun to reform their SCHIP programs care reform will be an important topic to widen their coverage for children. Also during the 2008 election season.53 As in 2006, Illinois passed a state bill called president of Kaiser Family Foundations, an All Kids to expand its SCHIP program and organization that has tracked US health provide health care coverage to all chil- dren in the state of Illinois.58 Although the care reform efforts for decades, Drew Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  17. 17. 206 THE HEALTH CARE MANAGER/JULY–SEPTEMBER 2007 pseudomandated insurance model failed in those without coverage are increasing the 1990s,1 because of Massachusetts’ and health care costs to the whole population. As a result of cost shifting45 and increased these other states’ initiatives, a more accept- health care GDP,4 they will likely to put a ing position on universal health care in the United States is gaining momentum espe- strain on taxpayers who finance Medicare and Medicaid.53 The position of the main cially in regard to covering children. There are 4 main alternatives being ex- Democratic presidential candidates is that plored in the United States regarding this universal health care is the solution through mandated insurance.56,57 The current Repub- ‘‘children first’’ approach to universal health care. First is a single federal program to lican position is that, by providing tax cover all children that is similar to the sin- incentives, more Americans will benefit from gle federal Medicare program. The second lower cost health care and be able to invest in the private health care industry.54 Essen- is a hybrid program of the Medicaid and SCHIP programs, which seeks to insure tially, the result is the same behind these those children not covered under employer- 2 concepts—to create access to affordable, sponsored or private plans. The third is a quality health care to all Americans. federal wraparound program that would Pricing structure and responsibility of insure those children not covered under payment in the US health care system employer-sponsored, other private or public programs such as Medicaid and SCHIP. Financing of the health systems in the Although it did not pass in Congress, an United States varies just as greatly as does example of a wraparound program was the the means for access to health care cover- MediKids Health Insurance Act of 2005. age. There are many entities and parties The fourth children-first approach calls for involved in financing the health care sys- an expansion of the current SCHIP pro- tem of the United States. As stated earlier, gram that would relax eligibility criteria and in the United States, 44% of the health care require parents to provide health insurance GDP is spent by government or public to their children.58 funds,12 and therefore, approximately 56% Although President George W. Bush has of health care GDP is spent by private not focused much of his administration’s parties. In 2004, the total percentage of attention on the US health care system, his GDP spent on health care in the United States was 15.3%.1 According to current pro- January 2007 State of the Union address unveiled a new change in the taxation of jections, national health care expenditure health insurance premiums, which is de- will reach US $2.8 trillion in 2011, 17% of signed to help more Americans afford GDP, and grow at a rate of 7.3% between 2001 and 2011.44 Because of this increase, private health insurance. The president’s health care reform plan contains 2 parts. it is essential for US health care managers First, it proposes a standard health care de- and the American public to understand how duction so that all Americans can receive health care is financed to contribute to the the same tax breaks when paying for pri- solution of this ever-growing problem. vate health insurance regardless if they are One of the most unique features of the purchasing health insurance through an health care industry in the United States is employer or individually. The second part its dependency upon agency relationships, is to provide federal funding to states for which is when one party acts on behalf of them to assist their citizens in obtaining another. For instance, a health insurance private health care.54 organization acts as an agent for its mem- Health care reform essentially focuses ber when processing payment for medical on the growing population of uninsured services. A medical group’s administrator Americans. The uninsured patients pose acts as an agent for a physician when ne- a concern to the United States because gotiating a contract. And a physician acts as Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  18. 18. 207 Comparative Analysis of the UK and US Health Care Systems an agent for a patient when treating or deductible of US $500; therefore, that in- referring that patient for treatment. Health dividual must pay for the first US $500 care in the United States is distinguished worth of medical services received before by these agency relationships, specifically the payer will contribute. in the financing of the industry. Third-party Even after the insured members meet their payers, or simply ‘‘payers,’’ is a term used deductible amount, they are usually still for health insurance organizations that pro- responsible to pay for part of each medical vide payment or reimbursement for medi- service received as co-pays or coinsurance. cal services, whether it is a public plan, Co-pays and coinsurance are similar in that employer group, or others. Essentially, pay- they are partial contributions to medical ers are the ones who ‘‘pay’’ on behalf of services received. A co-pay is a flat amount their members.59 paid by the insured for a medical service, The 2 agencies usually responsible for such as a visit to a physician’s office or paying for most of the health care services hospital. Co-pay amounts usually increase provided in the United States are payer with the level of medical services received. organizations and patients. Regardless if For instance, under the same policy, a visit to the payer is for-profit, nonprofit, or public, a PCP may be a US $10 co-pay, whereas a payers must be fiscally responsible and visit to a specialist may be a US $25 co-pay or to the emergency room a US $100 co-pay.44 mindful businesses, not altruistic organiza- tions; therefore, they must make a profit to Coinsurance is when the insured pays for survive. With some exceptions, when one a percentage (ie, 20%) of the total cost of obtains a policy with a payer in the United medical services received. Coinsurance per- States, one is usually contractually obligated centages may remain the same regardless of to pay a monthly or bimonthly premium the level of care, but because the cost for for his or her coverage. It is common services increases from a PCP to a specialist for employers to pay for some or all of to the emergency room, the patient is usually incrementally paying more in coinsurance.44 their employees’ premiums, which is called cost sharing, and they do so at a discount Additional benefit services, such as phar- when offering group insurance.44 Payers macy, optical, dental, and mental health, also seek to make a legitimate profit from these operate under this co-pay or coinsurance premiums as they are taking a financial model, depending on the policies. risk on their members that the premiums Many polices also include stop-loss provi- that they receive for the policy will be in sions called OOP maximums and lifetime their financial favor. Therefore, for this benefit limits. An OOP maximum is an system to be effective and for them to con- amount the policy outlines up front as the tinue to provide insurance, the total money total amount the policyholder would have they take in for premiums must exceed to pay for covered medical services in a the total money they pay out in claims given time period, which is usually 1 year. or reimbursement.45 Amounts paid by the policyholder for de- Most health insurance policies will require ductibles, co-pays, or coinsurance applies to that the insured members not only pay pre- the OOP maximum; however, premiums do miums, but that they also contribute to the not. An OOP maximum will differ between cost of the medical care that they receive individual and family plans and can, for in the form of deductibles, co-pays, and/or example, be anywhere from US $1,500 to coinsurance. A deductible is a fixed amount US $5,000 or more. Some policies may also that the insured must first pay OOP before carry a lifetime benefit limit, which is the the payer will contribute to any medical total amount a payer is willing to pay during services.45 These deductibles vary greatly the lifetime of the policy for all covered medi- from policy to policy, from payer to payer. cal services. Lifetime benefits limits tend to be either US $1 or $2 million.44 For instance, one could have an individual Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
  19. 19. 208 THE HEALTH CARE MANAGER/JULY–SEPTEMBER 2007 It is important for one to take into account uninsured and those with high deductible individual health insurance.62 the medical services that one feels may be in their or their family’s future when selecting The charge for medical services in the a policy. For instance, it might be appealing United States depends greatly on the means if a coinsurance-modeled policy has a lower for providing payment. Payers contract with premium than a co-pay modeled policy. providers at negotiated rates. These rates However, one must keep in mind that tend to be based on either the Prospective payment system (PPS)47 or usual, customary, paying higher premiums yet flat rate co-pays may suit one’s needs if there is an expec- and reasonable charges, which are predeter- tation for a large medical bill, such as for mined charges for medical services based on particular geographic region.50 a chronic condition or birthing delivery. Therein lays the financial risk. It is impossible Prospective payment system was estab- to fully predict one’s future health care lished through the language of Amendments needs. If an insured finds himself or her- to the Social Security Act in 1983. Prospec- self at a financial disadvantage because of tive payment system imposes a system of an unexpected surgery, accident, or illness, reimbursing hospitals for services provided he cannot change his mind midpolicy, es- to Medicare recipients. Hospitals are reim- pecially as a member of group insurance. bursed based on a diagnostic code, or codes, Employer-sponsored group insurance can assigned to the patient called diagnostic usually only be changed or obtained during related groups. Under PPS and based on the a time period called ‘‘open enrollment,’’60 assigned diagnostic related groups, hospitals which many times are offered once a year are paid a set fee to provide treatment to for a 30-day period.60 Generally, if a policy Medicare patients regardless of the cost of offers a high level of coverage, meaning the treatment. When PPS was originally intro- payer is contracted at a higher risk to pay duced, there was a concern that patients may be discharged ‘‘quicker and sicker,’’44 be- more for medical services, the higher the price of the premiums.45 cause the hospital only received that flat Employer-sponsored coverage is federally payment regardless of treatment provided. tax exempted for the employer,12 and cer- This turned out not to be the case as care tain laws allow for personal tax deduction processes were found to have improved and as well. Approved health care contributions mortality rates were found to have either lowered or remained unchanged.44 Many are medical care deductions approved by the Internal Revenue Service such as insurance private and state Medicaid plans have premiums, hospital services, long-term care, adapted the PPS as a means to set charges in their own contracting.47 and dental, chiropractic, and acupuncture treatment.61 There is a growing industry of Capitation is a managed care concept organizations designed to help manage the often used by HMOs as a means to control individuals’ financial contribution to their health care costs. It is when an HMO pays health care. For example, flexible spending a set amount per member per month to accounts can be offered from employers as a a medical care provider in order for that part of a benefits package, which allows for provider to make contracted medical ser- the employee to deduct a voluntary amount vices available to those registered members. from their salary to reimburse Internal The per-member-per-month covers all con- Revenue Service–qualified OOP medical ex- tracted medical services provided to the penses. Health savings accounts are volun- registered member at no additional cost to tary tax-exempted accounts set up with a the HMO. This becomes a problem to the health savings accounts trustee to pay for health care provider when there is a risk of or reimburse Internal Revenue Service– excess utilization because of the need for a high volume of services.59 Capitation is used qualified medical expenses. Health savings accounts are only available to those who are as a means to shift some of the financial risk Copyright @ Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.