Refinancing the American Health Care System
Vertical and Horizontal Equity
Health care policy makers should consider refinancing the American health care system through vertical and horizontal equity principles. The application of vertical equity seeks to tax in a proportional way whether progressive or regressive. Currently, the United States is predominantly a privately financed system that is highly regressive in which increases in income reflect decreases in proportional contributions. Measures should be taken to ensure that individuals pay taxes according to their income; people with more ability to pay should pay more.
A transformation into a more progressive tax system will require an internal shift within one or two dimensions of health care system (financing, provision, or regulation). This may require greater reliance on direct taxes such as income and payroll. Political rhetoric attempts to mask the mere mentioning of tax increases due to the negative connotation for middle and low income individuals. Politicians and policy makers will experience high levels of resistance that will challenge the effectiveness of transforming the public health care system into a progressive system.
Consideration of horizontal equity ensures that individuals pay the same amount of income tax with identical distributions of wealth and protects against arbitrary discrimination based on race/gender/different types of work/education, etc. The application of horizontal equity, from a policy perspective, seeks to give equal treatment for equals. The challenge with the concept of equals suggests that the way in which one defines equals determines the effectiveness of this approach in terms of equality of health care finance and delivery. A horizontal equity policy must be sure to explicitly or implicitly set a normative criterion that specifies the meaning of equal(s) that is relevant in all aspects of equality in health care, such as income, gender, race/ethnicity, geographic location, employment, or education. One proposal for achieving horizontal equity suggests implementing a single-payer health care system.
Universal Health Care: Benchmarking the Success of Other Countries
Advocates for universal health care and fair financing urge regulating the market and redistributing resources from the rich to the poor or the healthy to the sick to provide better health opportunities for those in need. The government has tried to regulate the market through the creation of public health insurance plans: Medicare (elderly) and Medicaid (low income). However, it is improbable to control costs in a market-driven system. Valuing health care as a basic right requires focus on efficiency and equity in health care provision, financing, and in the elimination of health disparities. The United States can learn a great deal from benchmarking the success of other countries.
Horizontal equity from a policy perspective is the fundamental approach to restructuring the health care system in terms of both alleviating health disparities and improving access and delivery of health services. France relies on mandatory payroll tax as England relies on general revenue taxation; both countries spend less on health care and have higher life expectancies than the United States. This is a clear indication of the inefficiency of the American health care system and justifies the use for a single-payer health care system. France and England both have successfully eliminated financial barriers to health care access. South Korea is an excellent example of a complete health care system transformation. Following the first-, second-, and third-order change model, South Korea has completely restructured a multiple-scheme insurance system into a unified health insurance system. Through incremental changes, South Korea successfully mobilized resources for health care, expanded public coverage through public and private pooling, and contained health care expenditures.
