Government Payment for Health Care

Causes and Consequences

Governments of high-income countries generally provide national health insurance; the United States is an exception. Health care in America is costly relative to care in countries with national health insurance because of the role of special interests in the American political system and because of a lack of emphasis on the redistribution of resources.

Special interests are frequently blamed for high American health care spending, and are able to exert influence over health policy, in part, because of their involvement with election campaigns, congressional committees, and the like. Countries with national health insurance have greater redistribution of health care resources than the United States through taxes and wider access to care. Greater redistribution leads to lower spending: because governments pay for 70-90 percent of medical care, they can restrain costs so redistributive taxes do not become burdensome.

Although the U.S. government pays for almost 50 percent of health care, it does not restrain costs. There are benefits to the high expenditures in the United States, including superior amenities and less waiting time for procedures. The government's failure to restrain health care costs, however, means that Americans have the costliest health system, and pay taxes so that the government can pay for health care even while the cost of health care remains high.