Public Healthcare Provisioning

The Benefits of Public Healthcare Provisioning

After his inauguration in 2009, one of President Obama’s attempt to reform the American healthcare system created a worldwide debate about healthcare efficiency. Although he was unable to create the national “public option” healthcare system he had campaigned on, the issue of public versus private healthcare provisioning reignited more fundamental debates about the nature of government in a liberal capitalist age. Advocates of private healthcare often cited public systems like the United Kingdom’s National Healthcare Service (NHS) or the Canadian system as beacons of inefficiency—untamed by the principles of private sector competition. By contrast, advocates of public healthcare provisioning

The most estimates of US spending on healthcare are between 17 and 18 percent, while most European countries range around 8-11 percent. World Bank (2015) estimates put the UK’s healthcare system around 9.2 percent. Many of the private healthcare systems in the developing world have higher costs than public systems but for the purposes of this essay, the US-Europe comparison will be utilized for consistency. According to one report, higher spending in private healthcare systems cannot be “attributed to higher income, an older population, or greater supply or utilization of hospitals and doctors” but instead to “higher prices and perhaps more readily accessible technology” (Squires 2012, pp. 1). Ironically, the report also points out that obesity in the US is one of the main causes of more expensive healthcare, but this point is also important to understanding why private healthcare can be so expensive. When there is a profit motive, private companies have no incentive to decrease spending. In the US, for example, a public system would focus on wellness and preventative medicine to decrease obesity and other costly phenomena, but in the private system, obesity generates higher spending—hence the higher costs for the

In a private system, there has to be a mechanism to sign up for insurance coverage. In the US, this is through one’s employer—which does not guarantee competition. This also makes health insurance companies a “middle man” which increases costs. The result is a system where access to healthcare is convoluted and inefficient. Yet it does not even cover low-income people, who usually qualify for government subsidies. These subsidies are themselves costly because they create high-risk insurance pools. One study found that in Germany, public and welfare-based systems are more efficient than private programs because the public programs were less profit-driven, making them utilize resources better (Helmig & Lapsley 2001). Ultimately, these public systems operate lower budgets, which forces them to be more efficient with less. This explains why although people complain about the NHS, it costs nearly half of the US private system, which consequently leads to higher efficiency. Private systems, by contrast, are very well funded, which leads to waste, excessive middle men, and high corporate profits that drive of the cost of