US Health System: Crisis? If So, A Solution?

Currently in the US, there are tens of millions of uninsured members of the population and the cost for those with insurance is rapidly increasing. This places public emergency rooms under more pressure as the uninsured ill cannot seek treatment early and through a doctor. Those that believe that they do have insurance, often find they aren't, or are excluded by their insurance company, forcing them to long waits on public lists for care.

One of President Obama's major policy proposals was a health care program of some description being enacted. Currently, the White House, Members of Congress and Lobbyists are negotiating to construct a bill to address this complex problem.

Should People have Health Insurance?
The moral dilemma over whether the Government should provide some level of basic coverage to those who are unable to afford or find health insurance. Tradionally in the US, health insurance is provided by the employer for the employee as part of their remuneration. However, in recent years this has become less widespread (due to the cost to the employer) and with rising unemployment, this has exacerbated the problem of more uninsured in the US population. Some people argue that a social safety net should be enacted, to give all citizens a basic health care standard. While others argue that people should have to pay for their own coverage, rather than through taxes on those with higher incomes. If a health care plan is enacted, how much coverage should it provide? How expensive should it be? With risk averse individuals it is economically beneficial in general for risk to be transferred through a form of insurance, having 'saved for a rainy day' so they can function again in society.

Problems with all Insurance types:
The provision of a free or cheap government run program may lead to incentives for some people to abandon paying for private health coverage and receive the less expensive insurance from the government (this oversubscription may bankrupt the program). This adverse selection problem makes the construction of any insurance plan very difficult as more people, who are sicker, are attracted to the better program. This, on average, increases the cost for the insurance provider, which forces increases to the price of the insurance, forcing out the less sick types in a vicious circle.

Another fundamental problem which increases the cost of insurance is moral hazard. This means that once someone has health insurance, they have less incentive to take care for themselves to prevent illness than if they had to pay for their own treatment. As an insurance company finds it difficult to monitor the individuals actions, they tend to increase the price, assuming that people are less careful.

As profit maximising firms, insurance companies want to maximise revenue from customers through high premiums and minimise the costs, the cost and amount of care provided to them.

Difficulties with Legislation:
The US Budget Deficit - The US Government is currently running an annual budget deficit of nearly $1 trillion and has a total government debt of $10 trillion. This position is unsustainable in the long term. The current trend is for further worsening conditions over both the short and long term unless drastic action is taken. This crisis has arisen over a long time and if not resolved may lead to the collapse of the US economy.

Passing Health Care legislation expanding coverage to uninsured Americans, is in the short term, a very expensive measure (current proposals would add around $1 trillion to the national debt over the next ten years) which will further worsen the nation's fiscal position or require spending cuts to existing programs. However, a well incentivised scheme is argued to reduce the deficit in the long term through cost savings, but a poorly constructed one will place more pressure on the national budget.

This is leading to major legislative difficulties in passing a health care bill in an attempt to solve the problem which currently confronts the US, such as whether their should be a public option (essentially the Government acting as an insurance company) or just subsidise individual private health care costs and just how generous/costly/comprehensive the care should be.

Coming Soon: Map of Stakeholders in Health Care Debate and their preferred outcome for reform legislation types based on individual interests.