The Emerging Paradigm in the United States
Posted: 25 Jun 2007
Date Written: June 2007
Abstract
In contrast to most countries in Europe, which have organized their health care financing into publicly-funded universal systems, the United States relies on a heterogeneous mix of arrangements to finance health insurance. Employer-based insurance covers 63% of the non-elderly. Medicare provides nearly universal coverage for the elderly, financed largely by the federal government. Federal and state funding supports Medicaid, the program for low-income and disabled persons. A variety of state and federal programs pays for medical care for persons with specific diseases (e.g. HIV/AIDS).
There are a number of U.S. examples of multi-level internal markets for insurance that resemble the "emerging paradigm" employed by many European countries. In the first internal market, the Federal Employees Health Benefit Plan offers federal employees a choice of 350 plans. The federal government makes a defined contribution and employees pay the marginal premium cost for the plan they choose.
Adopting an "emerging paradigm" model to structure the entire U.S. health care system would provide several advantages because it would: 1) eliminate overlaps and gaps in coverage, which would end the cost-shifting across programs and help to reduce administrative costs (currently 24% of health spending); 2) fit with American values of private provision of care and choice among health plans and providers; 3) free employers from the costs of arranging health care; 4) allow markets to convey information about consumer preferences; 5) provide a mechanism to rebalance spending on medical care and public/population health.
Adopting a variant of the "emerging paradigm" that would allow integration of medical and public/population health would capitalize on new knowledge on the importance of social/behavioral determinants of health and help the U.S. to address the cost pressures building as a result of the expected increase in the elderly and the introduction of costly new technologies.
Keywords: U.S., health reform, emerging paradigm
JEL Classification: I19
Suggested Citation: Suggested Citation