The U.S. Healthcare System is not the best in the World!- But It Could Be -4/4-

Administrative Complexity and Cost Drivers of US Healthcare and Other Countries

The U.S. healthcare system is notorious for its administrative complexity. Multiple payers, varying insurance plans, and complex billing practices contribute to administrative costs that consume a significant portion of healthcare spending. According to a study by Chernew et al. (2020), administrative costs in the U.S. are disproportionately high compared to countries with simpler, single-payer or unified insurance systems. In contrast, countries like Canada, the U.K., and Japan, which have streamlined administration, can redirect funds that would otherwise be used for administrative purposes toward providing actual care, thus improving overall system efficiency.

The proliferation of private insurance companies in the U.S. creates further fragmentation, leading to inefficiencies in terms of care coordination and insurance billing. In other developed nations, the existence of either public health systems (e.g., the NHS in the U.K.) or regulated private insurance (e.g., Switzerland) ensures that the focus is on patient care rather than navigating the complexity of private insurance networks.

Progress Toward Universal Coverage

Though the U.S. does not have a universal healthcare system, Massachusetts and several other States have made significant improvements in coverage since the passage of the ACA.  Massachusetts, for example, has reduced its uninsured rate to below 3% (Vox, 2023).

State Innovation and Flexibility

Some states have used the flexibility provided by the ACA to implement creative solutions that are tailored to their unique populations. For example, Massachusetts, which has long been a leader in healthcare reform, not only has the lowest uninsured rate but has also streamlined the enrollment process, integrating both Medicaid and ACA marketplace options into a single portal. This has reduced bureaucratic hurdles for individuals trying to access care, ensuring that fewer people "fall through the cracks" due to the complexity of the system.

Additionally, Massachusetts and other states, like New Mexico, have also implemented state subsidies to reduce premiums and out-of-pocket costs. These subsidies help make healthcare more affordable for low- and moderate-income individuals, ensuring that the benefits of the ACA reach more people. These efforts are particularly significant because they help make healthcare affordable for populations who might otherwise be excluded from comprehensive coverage.

The Basic Health Plan Model

Minnesota and New York have taken advantage of a unique provision within the ACA known as the "Basic Health Plan" (BHP). The BHP is designed to offer affordable insurance to individuals with incomes between 138% and 200% of the federal poverty level—those who do not qualify for Medicaid but also struggle to afford marketplace plans. In both states, the implementation of the BHP has led to a significant increase in enrollment among these low-income individuals. In New York, for example, enrollment in this plan increased by 42% after its adoption in 2016. This success showcases how integrating Medicaid and marketplace coverage can reduce the financial burden on people who fall in between traditional Medicaid eligibility and marketplace coverage.

Challenges and Opportunities

While these state-level efforts are promising, they also highlight the significant disparities in healthcare access across the U.S.  Some states have yet to implement state subsidies or public health options, and the political climate in certain states continues to hinder the full realization of universal healthcare.

Furthermore, even in states that have made significant strides, the lack of a single, cohesive national policy means that healthcare access remains uneven, and the remaining uninsured are often those who are hardest to reach—such as low-income workers, employees of small companies whom do not provide employee insurance, and those living in rural areas.  Without further reforms or a national approach to healthcare, the disparities between states will likely persist, leaving millions without adequate healthcare coverage.

One of the most significant obstacles to any form of universal healthcare in the US is the incredible inefficiency of the US system.  The price tag of $3,900 Trillion (a per capita cost of over $13,000 x 30 million Americans) when presented to politicians and tax payers has been too expensive.  Perhaps an analysis of the several States who have implemented universal healthcare would suggest a path.

Conclusion

The progress made by states like Massachusetts, New York, Minnesota, and Colorado demonstrates that, while universal healthcare is not yet a reality in the U.S., it is possible to make significant strides toward comprehensive coverage. The flexibility granted by the ACA allows states to adopt innovative solutions that address their unique populations and healthcare needs. However, the lack of a national solution means that disparities in healthcare access will continue to exist for the foreseeable future.