American Journal of Law & Medicine

Reforming the health care system: the universal dilemma. (Implementing U.S. Health Care Reform)


The human condition surrounding the delivery of health care is the same everywhere in the world: the providers of health care seek to give their patients the maximum feasible degree of physical relief, but they also aspire to a healthy slice of the gross national product ("GNP") as a reward for their efforts. Patients seek from health care providers the maximum feasible degree of physical relief, but, collectively, they also seek to minimize the slice of the GNP that they must cede to providers as the price for that care.

In other words, while there typically is a meeting of the minds between patients and providers on the clinical side of the health care transaction, there very often is conflict on the economic front. It has always been so, since time immemorial, and it will always be so. It is part of the human condition. Health insurance does not lessen this perennial economic conflict; it merely transfers it from the patient's bedside to the desk of some private or public bureaucrat who is charged with guarding a collective insurance treasury.

However, health insurance does realign the parties to the economic fray. Because insurance shields patients from the cost of their medical treatments at the point of service, it tends to move them squarely into the providers' comer when they are sick. Usually, in that corner, patients rail, with little chance of success, against the heartless bureaucrats who refuse to finance procedures. On the other hand, when patients are healthy and faced with mounting taxes or insurance premiums, they are typically found in the bureaucrats' corner. In that corner, patients rail against health care providers' voracious financial appetite and holler for cost controls.

In this Article, I explore how different nations approach the universal twin problems of modern health care: the provision of access to health care on equitable terms and the control of health care costs. It is true that there is a rich variety of alternative approaches to these twin problems. It is also true that virtually every developed nation is now dissatisfied with its health care system and seeks to reform it. Unfortunately, there does not seem to be a single ideal solution.


Society can control the total annual transfer of GNP to health care providers through the demand side of the health care market, the supply side, or both. Nations differ substantially in the mix of approaches they use. Their choice of cost-control policies hinges crucially on the social role that they ascribe to health care. The two extremes of the spectrum of views on this issue are:

1. Health care is essentially a private consumption good, whose financing

is the responsibility of its individual recipient.

2. Health care is a social good that should be collectively financed

and available to all citizens who need health care, regardless of the

individual recipient's ability to pay for that care.

Canadians and Europeans have long since reached a broad social consensus that health care is a social good. Although their health systems exhibit distinct, national idiosyncracies, they share an obedience to that overarching, ethical precept.

Americans have never been able to reach a similarly broad political consensus regarding the point at which they would like their health care system to sit on the ideological spectrum that is defined by these two extreme views. Instead, American health policy has meandered back and forth between the two views, in step with the ideological temper of the time. During the 1960s and 1970s, the American health care system moved toward the social good end of the spectrum. On the other hand, during the 1980s, a concerted effort was made to move the system in the opposite direction. This meandering between distinct, ethical precepts has produced contradictions between professed principles and actual practice that confuse and frustrate even the initiated in the United States.

Table 1 presents a menu of alternative approaches to financing and organizing health care. It makes explicit distinctions between the ownership of the health insurance mechanism and the production of health care. Almost all health care systems in the world fit into this grid, and most extend over more than one cell in the grid. [TABULAR DATA 1 OMITTED]

For example, the health systems of the United Kingdom and Sweden occupy primarily Cell A in Table 1, though private medical practices in the United Kingdom occupy Cell C. One may think of Cell A as socialized medicine in its purest sense because the production of health care is substantially owned by the government. Clearly, the health care system of the United States Department of Veterans Affairs also resides in Cell A, as does the bulk of the health care system for the United States armed forces.

The Canadian health care system occupies primarily Cells A, B, and C, as does the American federal Medicare program and the federal-state Medicaid program. Systems falling into Cells A, B, and C represent government-run health insurance, not socialized medicine, because the delivery system is largely in private hands. This distinction between socialized insurance and socialized medicine is often lost on American critics of foreign health care systems.

Germany's health care system is best described by Cells D, E, and F. Health insurance in Germany is provided by a structured system of not-for-profit sickness funds that are privately administered, albeit within a federal statute that tightly regulates their conduct.(1) This statutory health insurance system has evolved gradually over the span of 100 years and now covers eighty-eight percent of the population.(2) The remainder is covered by private, commercial insurers more akin to commercial insurers in the United States.(3) On the other hand, Germany's health care delivery system is a mixture of private and public, for-profit and not-for-profit, providers that is similar to the mix of providers found in the United States. In other words, the German health care system also does not represent socialized medicine, but socialized insurance.

As noted above, parts of the American health system fall squarely into Cell A. Others fall into Cells A, B, and C. Together, Cells A through C accounted for about forty-four percent of national health care spending in 1991.(4) The rest of the system, its private sector, is spread from Cells G to L. As part of the impending reform of the American health care system, this private sector is likely to slide toward either Cells D, E, and F, or even toward Cells A, B, and C. The concept of "managed competition," for example, fits into Cells D, E, and F, as would an "all-payer" system, under which multiple private insurance carriers would be subject to common fee schedules. On the other hand, if Congress legislated a single-payer system based on the Canadian model -- or "Medicare For All" -- the American system would rest in Cells A, B, and C. …

Log in to your account to read this article – and millions more.