The American Healthcare System The world’s Best and Worst


by Kumar David

Remember Dickens? “It was the best of times; it was the worst of times. It was the age of wisdom; it was the age of foolishness”. America has the finest medical technology, its operating theatres are superb (when you walk past one it looks like a NASA space control centre), the surgeons, doctors, support staff (anaesthetists, nurses) and rooms and toilets are excellent. At the same time American healthcare is the most expensive, and the universal grouse is that hospitals and doctors earn more than justified.

The diagram that I have displayed with this column shows the flow of funds in US healthcare. Households pay local State (say California) and Federal Income tax. The Federal Government (Washington) is the big paymaster into the healthcare system through what are known as Medicaid and Medicare payments to healthcare providers (hospitals for example) and top-up transfers to States. Households, or companies on behalf of their employees, also take insurance policies because government Medicaid and Medicare is insufficient to pay for surgery, drugs and specialist fees.

In the case of serious illness people may have to make out of pocket payments. I am not saying doctors knowingly cheat, overprescribe, make excessive consultation references to other doctors, or have deals with hospitals. The excesses are simply built into the way in which the system functions. Often the old and invariably the poor cannot afford payments and forego some services. Political pressures have brought about changes in recent decades. Now anyone can walk into a hospital in the US and cannot be denied emergency medical attention and provision of immediate medication – creeping social democracy you might say!

A recent book by Ed Down however asserts that “people must come to understand that the alleged healthcare providers are actually legal drug dealers who base their diagnosis and recommendations primarily on their profit potential. Not wilfully but at least that’s the model they have been taught and most follow”.

The countries with the eight highest per-capita annual healthcare costs in 2022 were as follows.

United States – $12,300

Germany- $7,400

Switzerland – $7, 200

Norway – $7,000

Austria – $6,400

Denmark – $6,400

Sweden – $6,300

Netherlands – $6,200

All these including the US have an ageing population and this pushes up per capita cost. All hire healthcare workers and professionals from other countries – the US from Mexico and the Philippines, Germany from Eastern Europe and the UK from Commonwealth and Eastern European countries. Still the nearly two-to-one cost ratio between the US and most others is difficult to explain except in terms of profiteering by hospitals and healthcare institutions and overcharging by doctors. Medical professionals and institutions take insurance against what is called malpractice where an accidental error may expose a professional or an institution to law suits of several millions of dollars. This adds a great deal to costs; America is a highly litigious society and there are law firms specialising in screwing doctors and hospitals.

Comparison with the UK

The UK is where well to do Sri Lankans still seek treatment. Costs are lower and the National Health Service (NUS) provides a good service at a lower price than the US. In 2022 compared to the eight high spenders I listed previously, UK healthcare spending on the NHS came nineteenth – below $4500 per annum. The biggest complaint is that the waiting time for non-essential surgery is very long. My friend and late comrade Prof. Sivaguru Ganesan had a complex open-heart procedure five years ago in the UK and never stopped lauding the NUS. “If not for the NUS I would be long dead!” was his constant refrain.

I have quoted above the most expensive per capital health budgets in the world. The US healthcare price tag of over $4 trillion is 55 times Sri Lanka’s entire GDP at the current exchange rate. There are those who say that despite a comparatively tiny budget Ceylon/Sri Lanka has a healthcare system that caters well to the needs of the population, like our education system. I have heard this often from Prof. Carlo Fonseka. I think there is truth in this though conditions here have been sliding downhill steeply in the last two decades.

The following is a summary of a write up prepared for me by Velupillai Kuhanendran, a political comrade of Ganesan and mine and an activist in the Global Tamil Forum and the Labour Party. Sri Lanka/Ceylon is much influenced by the British model. Since the affluent classes still travel there for medical care I am quoting at length (three paragraphs).


“The post-war Bevan model was for a population aged 20 -50 years and not 70 – 90. The pension industry too was based on this assumption. Medical technology was low and health services dealt with general problems and people were kept in hospital until they were discharged as fully fit. Open heart or major surgery was rare and cancer issues infrequent. The situation has changed dramatically. The population has aged; medical technology has advanced, people live beyond 80, it is common for a man to have two or more surgical interventions, cancer treatments is common, hip and knee replacements very common, the need for beds is high. The demand on the health services has increased exponentially but unlike the US investment and infrastructure have not kept pace.

“General medical services can deal with demands from day-patients but the system has not been modernised. Due to the economic austerity of the last 12 years the government did not invest in building hospitals so there is a massive shortage of beds. The government reaction has been to arrange social-care services but adequate funds are not allocated for these services either. Patients brought by ambulances were kept there till a bed could be found. Ambulances were used as substitute beds and prevented from performing their function. The government promised to fix it by allocating more funds but it did not.

“Though the UK has not invested in the NHS the lower and middle classes who are a majority of the population rely on it. The older population which is now numerically (electorally) significant depends on it. No government (Tory or Labour) has the backbone to run it down; no political party can afford to alienate it. The NHS is here to stay. No one dares to abandon it. More immigration of doctors and nurses is part of the solution. Private medicine is no match for the NHS”.

END OF QUOTE From Kuhanendran.

While the US healthcare system is the most advanced in the world it is also the most expensive. It is paid for by the American taxpayer, meaning by the Federal and State government budgets and by households via insurance companies. I think it is not unfair to say that the principal beneficiaries are the medical institutions (hospitals etc) and doctors and medical personnel. The burden is carried by households via Federal and State taxes and Medicare payments, and by employers both small and large via payments to private Health Insurance companies. Though technically cutting-edge the US system is also the costliest. I think it is not unfair to say that the principal beneficiaries are the medical institutions (hospitals etc) and doctors and medical personnel. It is an arrangement that fits in with the ideology and practices of American market capitalism.

It will be challenged and overthrown as America moves in the direction of social democracy. (Some things like the defacto joint Israeli-US occupation of Arab lands will not change). Biden’s four-trillion-dollar economic package is putting more money into the hands of consumers, for example there are two vacancies for every job seeker, and folks are on a spending spree, despite sustained inflation. The social and political complexities of this period overlap in ways not seen before in a century. Everything points in the direction of significant change in the days ahead. I will return to these themes in the weeks and months to come because America changes its mind rather rapidly.

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