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Running head: CONTROLLING HEALTH CARE COST
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Controlling Health Care Cost
Author
Institution

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CONTROLLING HEALTH CARE COST
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Controlling Health Care Cost
Letter To the Congress
Free market system is a system in which individuals are responsible for their own
insurance coverage. Most people support single payer health insurance whereby the state
finances health care although it is not engaged in delivering the care. One of the outstanding
downsides of a free market system is that it leaves millions of people without healthcare
coverage. As a result, a free market system is perceived to be cost prohibitive besides leaving
most Americans without financial means of paying for medical expenses (Shi & Singh,
2010). Free market system is often accused of encouraging increased spending on aspects
such as administrative costs. This leads to high insurance premiums and enhanced costs for
out-of-pocket expenses for medication.
One of the underlying principles of a socialized healthcare system revolves around the
notion that every citizen has an unalienable right to receive at least the lowest standard of
medical attention. The pros of a socialized care system include extending care and reducing
medical costs. Some of the downsides of the system include raised taxes, eliminating
competition, and longer wait times. The downsides of a free market system include high
administrative costs, an ineffective liability system, and a shift in cost from uninsured to the
insured. Socialist approach appeals to large sections of people and bears a number of benefits
such as the ease of access for all people irrespective of their social or economic status
(Friedman, 2011). Proponents of socialized medical system cite the high number of
uninsured citizens in countries in which free market healthcare is the norm.
A comparative analysis of healthcare in the US with healthcare systems in other
countries manifests that the present healthcare systems is wasteful. For instance, when

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CONTROLLING HEALTH CARE COST
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Canada instituted its present healthcare financing system in 1968, the percentage of
healthcare share of the national GDP was fairly comparable to that of the US (Canada had
6.9% as compared to 7.1% in the US). Since then, healthcare provision within the US has
become dramatically more expensive as compared to other advanced economies (Niles,
2011). For instance, in 1971, per capital healthcare spending in the US rose by more than
$6,900 compared to an increase of less than $3,600 within Canada and just $3,200 in other
countries (from 7% of GDP in 1970 to the present 16% of GDP).
The disparity between the US experience and that of Canada is cited to emanate from
Canada’s single-payer system lower administrative costs. In fact, healthcare costs have been
twice as high compared to those in countries such as Canada, France, UK, Sweden, and
Germany. The administrative costs in the US are approximately twice as high compared to
those of Canada (31% in the US vs 17% in Canada). The US gain in life expectancy since
1971 ranks low compared to that of other advanced economies (5.4 years for women
compared to 7.3 years). The relatively low increase in life expectancy is blamed on gross
inefficiency of the US private healthcare system. Had the US increased life expectancy at the
same dollar cost commensurate with other countries such as Canada, the US would have
saved approximately $4,500 per person (Armstrong, Armstrong, & Fegan, 1999).
Analysts point out that the rising costs in healthcare provision are attributable to
transaction costs accompanying the administration and coordination of a system fashioned at
reducing the access. Coordination and cooperation between diverse healthcare providers are
critical for the enhancement of effectiveness and efficiency within the healthcare system.
Yours Sincerely,
James.

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CONTROLLING HEALTH CARE COST
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References
Armstrong, P., Armstrong, H., & Fegan, C. (1999). Universal health care: What the United
States can learn from the Canadian experience. New York, NY: New Press.
Friedman, G. (2011). Universal health care: Can we afford anything less? Retrieved from:
https://www.commondreams.org/view/2011/07/01-3
Niles, N. (2011). Basics of the U.S. health care system. Sudbury, MA: Jones and Bartlett.
Shi, L. & Singh, D. (2010). Essentials of the U.S. health care system. Sudbury, MA: Jones
and Bartlett.