Analysis

Competition in a publicly funded healthcare system

BMJ 2007; 335 doi: http://dx.doi.org/10.1136/bmj.39400.549502.94 (Published 29 November 2007) Cite this as: BMJ 2007;335:1126
  1. Steffie Woolhandler, associate professor of medicine,
  2. David U Himmelstein, associate professor of medicine
  1. Department of Medicine, Cambridge Hospital, Harvard Medical School, Cambridge, MA, USA
  1. Correspondence to: D U Himmelstein, 1493 Cambridge Street, Cambridge, MA 02139, USA david_himmelstein{at}hms.harvard.edu

    Are the UK and other countries right to adopt a market based model for improving their health services? Steffie Woolhandler and David Himmelstein believe that the appropriate response to the US experience with such policies is quarantine, not replication

    Why would anyone choose to emulate the US healthcare system? Costs per capita are about twice the Organisation for Economic Cooperation and Development average. Forty seven million people are completely uninsured. Many others with insurance face high out of pocket costs that hinder care and bankrupt more than a million annually.1 Mortality statistics lag behind those of most other wealthy countries, and even for the insured population, clinical outcomes and patient satisfaction are mediocre.2 3

    This dismal record arises, we contend, from health policies that emphasise market incentives. Even as the public share of health spending in the US has risen to 60% (box) investor owned firms have eclipsed the public, professional, and charitable bodies that previously managed the financing and delivery of care. The development and effect of US policies that mix public funding and private management has wider relevance because politicians in Europe and beyond are pushing analogous schemes.

    Tax financed health spending in US

    • Official figures for 2005 peg government's share of total health expenditure at 45.4%, but this excludes:

      • Tax subsidies for private insurance, which cost the federal treasury $188.6bn (£92bn; €129bn) in 2004 and predominantly benefit wealthy taxpayers

      • Government purchases of private health insurance for public employees such as police officers and teachers. Government paid private insurers $120.2bn for such coverage in 2005: 24.7% of the total spending by US employers for private insurance

    • Government's true share amounted to 9.7% of gross domestic product in 2005, 60.5% of total health spending or $4048 per capita (out of total expenditure of $6697)

    • By contrast, government health spending in Canada and the …

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