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Health Care Financing 101: T.R. Reid’s Primer for Health Care Advocates

By Robert Fischer, HCAO-Bandon, June 2013

T.R. Reid’s The Healing of America* should be required reading for single payer advocates. The book is virtually a primer on health care financing. Reid says health care systems around the world tend to follow general patterns, and there are four basic arrangements.

The Bismarck Model –
The workers and their employer share the cost of premiums for health insurance policies purchased from a for-profit insurance company. Patients must pay a sizable deductible, and make co-payments at the point of service.

The Beveridge Model –
All health care professionals work for the government in government-owned clinics and hospitals. Medical treatment is a public service. Patients receive no medical bills.

The National Health Insurance Model –
A government run, universal health insurance. All health care providers are paid by a single payer – either the state or federal government.

The Out-of-Pocket Model –
To receive medical care one must be able to pay the bill out of pocket at the time of treatment, so the rich get medical care and the poor stay sick or die.

The United States uses all four models, and your place in society determines which model you get.

Bismarck Model – Working people under sixty-five, providing the company they work for offers insurance to its employees.

Beveridge Model – The Veterans Health Administration is America’s largest integrated health care system with over 1,700 sites of care, serving 8.3 million veterans each year. The Indian Health Service provides a comprehensive health service delivery system for approximately 2.1 million of the nation’s estimated 3.4 million American Indians and Alaska Natives.

National Health Insurance Model – That’s Medicare. It’s a single payer system for those over 65 and those with certain disabilities or specified illnesses.

Out-of-Pocket Model – 48 million Americans are uninsured, and 36 million are underinsured. Being underinsured means there are gaps in your health care coverage that put you at great risk from unaffordable medical bills.

T.R. Reid points out that there are two things that set the United States apart from the other industrialized nations: (1)The U.S. maintains separate systems for different classes of people, and (2) the U.S. relies very heavily on for-profit private insurance plans. The result is a fragmented array of providers, payers, and overlapping systems that are tangled, confusing, and overpriced.

All of the other industrially developed countries have settled on one model for everybody, because that is simpler, cheaper, and fair.

Germany, France, Japan, Belgium, Switzerland chose the Bismarck Model.

Great Britain, Italy, Spain, most of Scandinavia, Hong Kong and Cuba chose the Beveridge Model.

Canada, Taiwan, and South Korea chose the National Health Insurance Model.

It’s time for the United States to choose one model for everybody.

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  • T.R. Reid, The Healing of  America, The Penguin Press, New York, 2009.