The United States has four decades of experience with the combination of public funding and private health care management and delivery, closely analogous to reforms recently enacted or proposed in many other nations. Extensive research, herein reviewed, shows that for-profit health institutions provide inferior care at inflated prices. The U.S. experience also demonstrates that market mechanisms nurture unscrupulous medical businesses and undermine medical institutions unable or unwilling to tailor care to profitability. The commercialization of care in the United States has driven up costs by diverting money to profits and by fueling a vast increase in management and financial bureaucracy, which now consumes 31 percent of total health spending. The Veterans Health Administration system—a network of government hospitals and clinics—has emerged as the leader in quality improvement and information technology, indicating the potential for public sector excellence and innovation. The poor performance of U.S. health care is directly attributable to reliance on market mechanisms and for-profit firms, and should warn other nations from this path.
Get full access to this article
View all access options for this article.
References
1.
HimmelsteinD. U.Illness and injury as contributors to bankruptcy. Health Aff. (Millwood), Web Exclusive, February 2, 2005 [Epub ahead of print].
GuyattG.A systematic review of studies comparing health outcomes in Canada and the United States. Open Med.1(1), 2007. www.openmedicine.ca/article/view/8/1 (August 28, 2007).
Standing Senate Committee on Social Affairs, Science and Technology. The Health of Canadians—The Federal Role. Volume Six: Recommendations for Reform. Ottawa, October 2002.
6.
JeffcoateW.Mismanagement as a prelude to privatization of the UK NHS (comment). Lancet368:98–100, 2006.
7.
DyerO.European subsidiary of US group wins Derbyshire GP contract. BMJ332: 194, 2006.
KimC.-Y.The Korean economic crisis and coping strategies in the health sector: Pro-welfarism or neoliberalism?Int. J. Health Serv.35:561–578, 2005.
10.
Office of the Actuary, National Center for Health Statistics. Table 1: National health expenditures, aggregate and per capita amount, percent distribution and average annual percent growth, by source of funds: selected calendar years 1960–2005. www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf (August 27, 2007).
Medicare and Medicaid statistical supplement, 2004. Health Care Financ. Rev., 2006, suppl., tables 6 and 16.
17.
MorganR. O.The Medicare-HMO revolving door—The healthy go in and the sick go out. N. Engl. J. Med.337:169–175, 1997.
18.
ShaughnessyP. W.SchlenkerR. E., and HittleD. F.Home healthcare outcomes under capitated and fee-for-service payment. Health Care Financ. Rev.16(1): 187–222, 1994.
19.
RetchinS. M.Outcomes of stroke patients in Medicare fee for service and managed care. JAMA278:119–124, 1997.
20.
WareJ. E.Jr.Differences in 4-year health outcomes for elderly and poor, chronically ill patients treated in HMO and fee-for-service systems: Results from the Medical Outcomes Study. JAMA276:1039–1047, 1996.
21.
SchoenmanJ. A.Impact of HMO withdrawals on vulnerable Medicare beneficiaries. Health Care Financ. Rev.26(3):5–30, 2005.
22.
Physician Payment Review Commission. Risk selection and risk adjustment in Medicare? In Annual Report to Congress, chap. 15. Washington, DC, 1996.
23.
PacifiCare announces changes for Secure Horizons Medicare HMO health plans in 2002. Medicare HMO Data Report, September 21, 2001. www.medicarehmo.com/mrepnr04b.htm (June 13, 2006).
24.
PearR.Medicare actuary gives wanted data to Congress. New York Times, March 20, 2004.
DavisK.CooperB. S., and CapassoR.The Federal Employee Health Benefits Program: A Model for Workers, Not Medicare.Commonwealth Fund, New York, November, 2003. www.cmwf.org/usr_doc/davis_fehbp_677.pdf (June 13, 2006).
27.
DevereauxP. J.Comparison of mortality between private for-profit and private not-for-profit hemodialysis centers: A systematic review and meta-analysis. JAMA288:2449–2457, 2002.
28.
DevereauxP. J.A systematic review and meta-analysis of studies comparing mortality rates of private for-profit and private not-for-profit hospitals. CMAJ166:1399–1406, 2002.
29.
DevereauxP. J.Payments for care at private for-profit and private not-for-profit hospitals: A systematic review and meta-analysis. CMAJ170:1817–1818, 2004.
30.
WoolhandlerS., and HimmelsteinD. U.Costs of care and administration at for-profit and other hospitals in the United States. N. Engl. J. Med.336:769–774, 1997.
31.
JhaA. K.Racial differences in mortality among men hospitalized in the Veterans Affairs Health Care System. JAMA285:297–303, 2001.
32.
OliverA.The Veterans Health Administration: An American success story?Milbank Q.85:5–35, 2007.
33.
HendricksA. M.RemlerD. K., and PrashkerM. J.More or less? Methods to compare VA and non-VA health care costs: Developments in cost methodology. Med. Care37(VA suppl.):AS54–AS62, 1999.
34.
WoolhandlerS.CampbellT., and HimmelsteinD. U.Costs of health care administration in the United States and Canada. N. Engl. J. Med.349:768–775, 2003.
35.
Health Policy Network of the National Health Service Consultants' Association and the National Health Service Support Federation. In practice: The NHS market in the United Kingdom. J. Public Health Policy16:452–491, 1995.
36.
ConeyS.Relentless unraveling of New Zealand's health-care system. Lancet347:1825, 1996.
37.
WillcoxS.Promoting private health insurance in Australia: Do Australia's latest health insurance reforms represent a policy in search of evidence?Health Aff. (Millwood)20(3):152–161, 2001.
38.
DuckettS. J., and JacksonT. J.The new health insurance rebate: An inefficient way of assisting public hospitals. Med. J. Aust.172:439–442, 2000.
39.
HydeR.An end to Germany's bureaucratic nightmare?Lancet367:1717–1718, 2006.
40.
BravermanH.Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century.Monthly Review Press, New York, 1974.
41.
GottliebM.EichenwaldK., and BarbanelJ.Biggest hospital operator attracts Federal inquiries. New York Times, March 28, 1997.
42.
EichenwaldK.Health care's giant: Artful accounting. Hospital chain cheated U.S. on expenses, documents show. New York Times, December 18, 1997.
43.
EichenwaldK.$100 million settlement seen in Tenet suits. New York Times, July 30, 1997.
44.
EichenwaldK.How one hospital benefited from questionable surgery. New York Times, August 12, 2003.
45.
PollackA.Tenet reports new investigation of its deal with doctors. New York Times, July 16, 2003.
46.
PollackA.Tenet Healthcare reports $55 million quarterly loss. New York Times, April 11, 2003.
47.
LowryT.Columbia's new caretaker physician heal thy firm: Tall task ahead of CEO. USA Today, July 28, 1997.
48.
GalloroV., and BenkoL. B.Are they worth it? Executive compensation, company performance don't always relate at top hospital, post-acute and insurance companies. Modern Healthcare, August 4, 2003, pp. 6–14.
49.
ReevesJ.The Scrushy case: Health South founder begins 7-year sentence. Houston Chronicle, June 30, 2007.
50.
DashE.Executive pay: A special report. Off to the races again, leaving many behind. New York Times, April 9, 2006.
51.
AndersG.As patients, doctors feel pinch, insurer's CEO is worth a billion. Wall Street Journal, April 18, 2006.
52.
Committee on the Future of Emergency Care in the United States Health System. Hospital-Based Emergency Care: At the Breaking Point.National Academies Press, Washington, DC, 2006.
53.
KronickR.The marketplace in health care reform—the demographic limitations of managed competition. N. Engl. J. Med.328:148–152, 1993.
