A Comparative Analysis of the UK and US Healthcare Systems
This essay seeks to explore the fundamental differences between the healthcare systems of the UK and the US. In order to do so, the structures of the two systems must first be outlined.
Whilst the UK operates a socialised welfare system funded by the state, the US healthcare facilities are, for the most part, owned and operated by the private sector. However it should be noted that public health care does exist in the US.
Medicaid is the largest source of funding for medical and health-related services for people with low income in the US. In 2014, Medicaid covered over 68 million Americans, just over 20% of the population (WSJ 2014). It is jointly funded by the state and federal governments, who determine participant eligibility through means-testing. Participation in the programme is not compulsory, although all states currently partake. In total, Medicaid bankrolls 16% of total personal health spending in the U.S. (KFF 2015)
While the significance of this contribution cannot be ignored, it pales in comparison with the National Health Service, which provides universal coverage for UK citizens. The NHS provides free healthcare, at the point of use, to every legal resident of the United Kingdom. This reflects the ideological underpinnings of the UK system in the Beveridge model. The National Health Service Act, passed in 1948, stipulated accordingly that access to healthcare be available to all regardless of wealth.
These inherent structural differences manifest themselves in several other features of the two healthcare systems. This essay will analyse these differences by exploring the cost, quality, efficiency, and equity of the two healthcare systems, in order to evaluate their relative merits.
The greatest contrast between the two healthcare systems is their respective cost structures. In order to compare these structures, it is first necessary to outline the components of total healthcare expenditure.
Total healthcare expenditure encompasses the final consumption of healthcare goods and services, as well as capital investment. Since UK healthcare is publicly funded, private healthcare expenditure in the nation is dwarfed by that in the US.
Additionally, the prices of prescription drugs in the US are much higher than in the UK. The NHS has monopsony power as a sole buyer in the healthcare market, which allows the NHS to drive down the prices of drugs using their bargaining power (Riley, 2011). This ultimately leads to lower costs, allowing for more treatments overall.
The US has a relative cost disadvantage in this area as the many, small, profit-making insurance companies have relatively little bargaining power against suppliers. Moreover, the US has many cost drivers such as high administrative costs, a fragmented care system and costly medical procedures (Herman, 2014). Furthermore, the US spends large amounts on Research & Development, which further augments total expenditure on healthcare.
Consequently, the UK spends significantly less on healthcare as a percentage of GDP then the US. In 2012, UK healthcare expenditure as a percentage of GDP was just 9.3%, in the US this figure was 16.9% (OECD, 2015).