Most countries have a combination of five models of health care, although the mix varies between countries and within the same country. A common question is how much each country spends on health care. The answer is often expressed as a percentage of GDP. OECD countries have found a strong correlation between health care spending and life expectancy. Bloomberg’s analysis of the OECD countries suggests that more money does not necessarily mean better. However, life expectancy is only one indicator of the quality of health care systems.
There are many challenges facing health care providers and patients. The number of beds in hospitals continues to decrease. In the U.S., there are 2.6 beds per 1,000 residents. Physicians have seen their income stagnant for the last decade, and they know that working harder isn’t enough to make up for steadily increasing costs. In addition, national retail companies are aggressively going after the primary care market by opening in-store clinics and offering basic services at prices up to 40% less than physician offices.
The demand for health insurance is driven by two factors – the cost of treatment and the risk of illness. According to conventional economics, a higher risk-aversion person is more likely to purchase health insurance. Moreover, the probability of a loss is larger if the potential loss is high. Additionally, the probability of purchasing health insurance also increases with tax incentives. For example, the progressive income tax system implies that higher-income people will buy more insurance.
To make health care more affordable and efficient, healthcare organizations need to improve value to patients. Value can be defined as the quality of health outcomes versus the costs. In short, it should improve outcomes without compromising outcomes. Otherwise, failure will be the result. This is because the goal of health care reform cannot be achieved by incrementally changing existing approaches. It is essential to develop a fundamentally different strategy. So what’s the best way to improve health care value?
The federal government funds the Medicaid program. The remaining 63 percent of Medicaid’s expenses come from state and local taxes. In addition, Medicaid expansion under the Affordable Care Act was fully funded by the federal government until 2017, when the federal funding share gradually decreased. Likewise, CHIP is funded through matching grants given to states. In most states, premiums are charged. In addition, the cost of health insurance is rising faster than the rate of inflation, but this is still less than 1% of GDP.
While the U.S. health care system is a mix of public and private insurers, government programs, and nonprofit providers, it differs from country to country. While the federal government has an increasingly limited role in directly owning or supplying health care providers, it pays for the safety net through taxes. Private insurance is the most common form of coverage, largely provided by employers. And while the uninsured rate has dropped from 16 percent to just eight percent in 2010, it remains above the national average.