Critical analysis of a contemporary social, political, or medical issue

¶ … American Healthcare Reform

There are several fundamentally important issues that require comprehensive change in American healthcare. Among the most important are: (1) the elimination of the fee-for-services model of physician and other healthcare service provider compensation; (2) the elimination of the third-party, for-profit private insurance company-based health insurance model; and (3) the entire framework of political lobbying by special interest groups.

The fee-for-services model of healthcare payment is tremendously ineffective, primarily because it provides little incentive to healthcare professionals to deliver the best possible service or to initiate a proactive approach to improving the health of their patients (Reid, 2009). By contrast, the results-based compensation scheme rewards service providers for the meaningful benefits they confer to their patients and motivates a much more conscientious approach to healthcare. In countries where physicians are paid in relation to the improving health of their patients, such as in Britain, the results have been dramatic (Reid, 2009).

The annual cost of healthcare in the United States is well over $2 trillion (Kennedy, 2006; Reid, 2009). Fully one-third of that amount (approximately $750 billion) is absorbed by administrative costs that actually contribute nothing to medical services. That figure is substantially attributable to the health insurance premiums collected by for-profit private health insurance companies that reap enormous financial profits in the process. This system greatly adds to the overall costs of American healthcare in several specific ways.

First, it charges millions of Americans an exorbitant amount of money for administrating healthcare services. By comparison, even the notoriously inefficient government healthcare programs such as Medicare and Medicaid perform essentially identical functions for one-tenth the cost; they operate with total administrative costs of approximately 2%-3% of the cost of billed medical services instead of 30% (Kennedy, 2006).

Second, the fact that medical costs are billed to health insurance companies is responsible for an industry-wide culture of financial irresponsibility where little concern is given to avoiding unnecessary or duplicated costs of healthcare services (Kennedy, 2006; Reid, 2009). Unfortunately, political opposition to healthcare reform throughout 2009 made it impossible for the Obama administration to achieve this essential goal but it is likely that the current system cannot be sustained without bankrupting the nation.