

What the U.S. can learn from Australian health care

The kinds of health systems in place around the world are generally the product of each country’s particular history, culture and politics. Comparisons between the U.S. system and other systems are sometimes dismissed because of the differences between the United States and other countries. Yet decades of data compiled by the World Health Organization show that the United States spends far more on health care than any other country, and has poorer health outcomes and a less effective health system than many other developed countries. Some claim “American exceptionalism” as a basis for declaring our system the best in the world, notwithstanding the evidence. Like the “exceptionalists,” I believe we live in a great country, but I can’t help but wonder if we might learn something from those countries that spend less and get more from their health systems.

As the Supreme Court debates the ACA‘s constitutionality, I’m traveling in Australia, talking to people from all walks of life about our two very different health systems. Since the early 1970’s, Australia has had a taxpayer-funded national health insurance program called Medicare. In many ways, it is like U.S. Medicare, but for people of all ages. The federal government’s role is to fund Medicare while public and private hospitals and physicians deliver the care. Some people buy private insurance with government subsidies, similar to our Medicare Advantage plans, and some buy additional private insurance, like our Medicare Supplement plans. The system has been tweaked over time (a pharmacy benefit has been added) and Australians wrestle with cost containment and primary care provider supply. But the basic structure of Australian Medicare — a taxpayer-financed health plan providing access to a basic set of health services for all — is well accepted by all parts of society and all major political parties. Australians don’t understand how the United States can still be debating whether all Americans should be paying members of a health insurance system.  And when you look at their lower health costs and better outcomes, you have to wonder whether they’re onto something.

The Affordable Care Act is far from perfect, but it has many features that will move us in the direction of countries like Australia whose systems deliver superior results at a lower cost. First, the individual and large employer mandates will result in more people paying into the health insurance system. Second, the ACA incents investment in lower cost outpatient and primary care through the health insurance exchanges (which allow individuals and small businesses to buy insurance) and support for the growth of the primary care workforce. Third, payment reform efforts that reward quality over quantity are designed to drive inefficiencies from the system. Unlike the Australian system, and in line with our American experience, the market and not the government will provide insurance for most of us.

If we aren’t ready for a single payer system like Australian Medicare, shouldn’t we at least try the modest steps of the Affordable Care Act?


Rice University’s Baker Institute for Public Policy