Three Roadblocks on the Road to Health Reform - American Enterprise Institute
08.01.09
In fact, many health policy analysts point out that Medicare and Medicaid adopted the basic payment policies of private insurance, thereby making overall reform even more difficult. As we have seen time and again, making a lot of noise about health reform does not guarantee change.
What do we want from reform, and what will it take to get us there? To answer this question and see why reform is so difficult, let us look at the three largest components of our health care system--private health insurance, Medicare, and Medicaid--and look at how they work. Each of these major sectors of our health care system creates a roadblock to reform. Each is an open-ended system of payment that encourages everyone involved--consumers and providers--to use more resources than they would in a more normal, less-insured market.
First Roadblock: Private Health Insurance
In 2007, private health insurance and direct payments by individuals accounted for 46 percent ($1.04 trillion) of total health expenditures ($2.3 trillion). The modern form of private health insurance began in the 1930s, but the industry's major growth occurred after World War II. The percentage of those with hospital coverage increased from 10 percent (12.3 million) in 1940 to almost 90 percent (178 million) by 1975.
Source: American Enterprise Institute, DC