Paying the Hospital: American Problems and Foreign Solutions

Abstract

Hospital financing in the United States suffers from many problems. Many persons lack access because they lack third-party coverage. Among those covered, benefits vary, and persons receive unequal services. Costs are high and are uncontrolled. The hospital is burdened by complicated relations with many payers. In order to cover their costs and earn extra cash, hospitals overcharge the more generous third parties, and recriminations result. All other developed countries have either statutory health insurance, national health services, or full public financing of privately managed hospitals. Whatever the financing method, all countries avoid the problems prevailing in the United States. All citizens are covered, all have access, and hospitals reject no one for financial reasons. All citizens have equal benefits and receive the same basic services. Regulation by government and negotiations with health insurance carriers guarantee the hospital's operating costs to service its catchment area adequately, but also prevent the hospital from installing excessive equipment and excessive staff. Each hospital is paid by all-payer standard rates, administration of reimbursement is simple, and shifting of costs among payers is both unnecessary and administratively impossible. Costs are contained by the total management of the system, not by fragmented efforts by separate insurance carriers. Considerable strategic thinking by government, the providers, and other interest groups sets guidelines for spending levels every year to meet the country's clinical needs but also to stay within its fiscal capacity. Capital investment for new treatments depends on government grants and evaluation of needs.