Page last updated at 03:01 GMT, Monday, 22 March 2010

Q&A: US healthcare reform

Intensive care monitor
Healthcare reform in the US: A key but controversial issue

US President Barack Obama made reform of the American healthcare system his top domestic priority when he entered the White House.

On 21 March, after a weekend of intense debate, and last-minute appeals to Democrats from the president, the House of Representatives passed the biggest reform of health care in the country for 40 years.

But the House was deeply divided, with no Republicans voting for the bill, and a number of Democrats also opposing it.

What is the current situation?

There is not a universal system of healthcare coverage.

Medicare: government-funded healthcare for over-65s
Medicaid: government-funded healthcare for those on low incomes
Employer-funded health insurance: paid by salary deduction
Military veterans: receive healthcare via government-run scheme
State Children's Health Insurance Programme: coverage for children whose parents do not qualify for Medicaid
Uninsured: treated in emergency rooms only

There are federally funded programmes, the biggest being Medicaid and Medicare.

But generally it is up to individuals to obtain health insurance. Most get coverage through their employers, but others sign up for private insurance schemes.

Under the terms of most plans, people pay regular premiums, but sometimes they are required to pay part of the cost of their treatment (known in the US as a deductible) before the insurer covers the expense.

The amount they pay varies according to their plan.

So what are the problems with the US system?

Firstly, cost. As a nation, the US spent some $2.2tn (£1.36tn) on healthcare in 2007. That amounts to 16.2% of GDP - nearly twice the average of other countries in the OECD (Organisation for Economic Co-operation and Development).

Second, coverage. The US Census Bureau estimates that 46.3 million people in America, out of a population of 300 million, were uninsured in 2008.

However, this includes 9.2 million non-citizens and 18 million people who earn more than $50,000 a year.

There are also millions of Americans who are deemed "under-insured".


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Healthcare reform is a priority for Barack Obama. The US spends about $2.2tn a year on its system - which includes private, federal or employer schemes.
1 in 10 people missed work on Monday and Tuesday
US expenditure on healthcare is the equivalent of about 16.2% of GDP - nearly twice that of some other OECD countries.
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The US falls behind some OECD countries for life expectancy and has a higher rate of infant mortality. Almost 46m US citizens do not have health insurance.
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What are the effects of rising health costs?

When someone without insurance (or with inadequate cover) falls ill, they are obliged to pay their medical costs out of their own pocket.

Half of all personal bankruptcies in the US are at least partially the result of medical expenses.

Rising costs also mean the government is spending more and more on Medicare and Medicaid.

US government spending on the two schemes is projected to rise from 4% of GDP in 2007 to 7% in 2025 and 12% in 2050, making rising healthcare costs one of the biggest contributing factors to the spiralling US budget deficit.

So what changes were proposed?

The broad outlines of the House and Senate bills passed late last year were similar on many issues.

The bills:

  • favour tougher regulations for insurers
  • establish an individual mandate - that is you must get health insurance
  • set up insurance exchanges for those who do not have coverage provided by employers
  • offer subsidies for the less well-off - although their exact size varies from committee to committee
  • pay for most of the reforms by cutting waste in the Medicare programme

The major points of disagreement were on the public option, that is a government-run insurance scheme, and how to pay for the remainder of reform.

What about President Obama?

Mr Obama laid out a relatively broad plan for healthcare reform at the beginning of his presidency, saying he would leave Congress to hammer out the details.

But faced with stalled legislation and broad opposition from Republicans, he outlined a more detailed blueprint for healthcare overhaul in February.

Mr Obama said the proposals would make healthcare more affordable and health insurers more accountable.

The changes, he said, would help reduce the federal deficit by $100bn over the next 10 years, by tackling waste, fraud and abuse.

Why did healthcare reform stall in Congress?

While there is broad agreement that the current system needs reform, there are deep differences over what changes are needed and how to implement them.

Many Republicans argue that the reform envisaged by Mr Obama and Democratic Party leaders will make healthcare "more bureaucratic and expensive".

There are also some Democrats in Congress who are unhappy with the proposed changes, either because they go too far or do not go far enough.

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