Healthcare in the United States: Why are there so many different insurance plans?

Vox reader Mike Lovely asks: Why does the US continue to create new health insurance programs (CHIP, ACA, Medicaid expansion alternatives, etc.) instead of consolidating them into one big one? program in which all insurers participate and where everyone chooses their coverage?

Health insurance in America is a constellation of brands and acronyms: Medicare, Medicaid, VA, TriCare, ACA, CHIP, United Healthcare, BCBS. I get a headache just listing them.

In most rich countries, people don't have to worry about sifting through a dozen different health plans and they don't live in fear of losing their health care after losing their job, and they receive more affordable and better quality care than Americans. The paradox that the world's richest nation has one of the weakest health systems among developed countries has long been a thorny political problem with no easy solution.

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Why does it work this way? It was more of a historical and cultural accident than an intentional plan. Today, the American system works just well enough, which is not to say that it works very well and that building a better system is simply not a policy priority.

Why does American health insurance work this way?

American health insurance, as we understand it today, began to take shape in the 1920s, as the medical profession became standardized and modern hospitals were built. Some employers have begun offering payments for hospital services as a benefit to their workers. Companies had large groups of employees, some in good health and some in poor health, to spread the risks and make the finances work much like modern insurance does.

This system quickly gained enough traction that President Franklin D. Roosevelt circumvented plans to include national health insurance as part of the New Deal. Then came World War II, accompanied by government-imposed wage controls on private-sector employees to keep the war machine running. Prohibited from offering raises to motivate their workers, companies began increasing their health benefits, and the government agreed to exempt these benefits from wage and tax controls.

By the 1950s, employer-sponsored insurance had become popular among those who benefited from it, and progressive unions urged the government to make the tax exemption permanent. Congress agreed and in 1954 enshrined the subsidy for corporate health plans into federal law. Doctors and hospitals, whose industry was becoming the Leviathan it is today, became accustomed to working with private insurers rather than the government directly.

Today, these workplace health plans still cover about half of Americans.

So far so good: but there's a downside, isn't there?

The problem with the employer-based system was that it excluded too many people because they weren't working or didn't have a job that offered health insurance. To begin to fill these gaps, in 1965 Congress created Medicare and Medicaid to cover two of the largest groups of people without coverage: the elderly and people in poverty.

After this expansion, we had a system that covered most Americans, which made it difficult to change because people feared losing what they had.

These fears, bolstered by the medical industry's campaign against socialized medicine, doomed health care reforms proposed by Presidents Richard Nixon and Bill Clinton, which would have consolidated most Americans into a national insurance plan. Certain trends in American culture, consumerism and reliance on private markets, have made it easier to persuade the public that they would lose out under a government-run health plan.

Meanwhile, the U.S. healthcare system still had obvious shortcomings. Rather than threaten the status quo, policymakers added new fixes.

CHIP was approved in the 1990s, covering children from working-class families whose incomes were not low enough to qualify for Medicaid. (Their parents, however, were often left without any coverage.) The Affordable Care Act of 2010, also known as Obamacare, was designed to fill this gap by covering people who did not have insurance illness through their employment but were not eligible for Medicaid.

Yet even after a half-dozen incremental health care reforms over five decades, about one in 12 people in the United States lack health coverage, and Americans are far more likely than people in other developed countries to to report that they avoid medical care because of its cost.

How do other countries provide health insurance?

Other countries have built their health systems more deliberately.

After World War II, the United Kingdom sought to extend medical security to all its citizens, creating the National Health Service; many other European governments followed suit.

Half a century later, another wealthy island nation made the same choice. Taiwan, building a modern democracy after decades of authoritarian rule, abandoned a fractured and inequitable health care system to establish a national insurance program that would cover everyone. It was a proclamation of solidarity following the end of a tumultuous military dictatorship.

Not all countries have opted for a single government program, but their systems remain simpler than those in the Americas and cover the entire population. In 2006, the Netherlands chose to replace a dysfunctional two-tier insurance system with a universal program based on private coverage but nevertheless designed to insure everyone. The uninsured rate there today is less than 1 percent (some people opt out).

But the United States? We have never taken the time to build a fairer, simpler and more uniform health care system.

As Uwe Reinhardt, a distinguished health care economist at Princeton, said, Canada and virtually all developed countries in Europe and Asia reached a political consensus decades ago to address health care. health as a social good. In contrast, in the United States we have never achieved a politically dominant consensus on this issue.

Will we ever simplify health care in the United States?

The 2020 Democratic presidential primary, in which several candidates presented proposals for Medicare for All, may have marked the high point for Americans who want to see a streamlined health insurance system that covers everything the world in a single program.

First supported by Sen. Bernie Sanders (I-VT), Medicare-for-all would cover all Americans through a federal government insurance plan with minimal fees. But moderates balked at this proposal. Joe Biden has instead pledged to continue his iterative reforms, and Kamala Harris is now taking the same approach.

A public option, which would give more people the choice to participate in a government insurance program like Medicare or Medicaid, seems more feasible than a single-payer system. But Biden didn't even try to pass this policy, despite his campaign, because he didn't want to jeopardize his other policy priorities with a politically risky health care proposal that could spark opposition from the public. medical industry.

Yet if you asked me what the path to a healthier health care system might look like, it would be the model: voluntary adoption by Americans. Proponents of public options have long argued that if the government could compete directly with private insurers, it could win. Three states recently implemented their own public options, so we may soon have an idea of ​​whether or not this proposal is true.

In my own reporting, I've heard that employers are grappling with whether or not they want to take on the costly and burdensome responsibility of managing Americans' access to health care. Some companies abandoned their plans and instead chose to pay their workers to purchase insurance through the ACA marketplaces.

It could be that the flaws in the U.S. health care system will eventually lead us to the same point that virtually all of our peer countries have reached, seeking to start over with a universal program. It is more likely, at least in the short term, that we will maintain our unnecessarily complicated system, make marginal improvements, and hope for the best.

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