The ABCs of Healthcare and Reform

The Language of Healthcare Reform

Talking about healthcare reform can be confusing. Different people use terms differently, and some words are used as synonyms when they really aren’t. In order to understand the broad strokes of the healthcare debate, it is important to have a clear idea about the meaning of at least the following terms:

• Government-run healthcare
• Government-run health insurance
• Healthcare
• Health insurance
• Healthcare coverage
• National health insurance
• Public option
• Single-payer system
• Socialized medicine
• Universal coverage

Healthcare refers to the all the goods and services that patients receive to get or stay healthy. Health insurance or healthcare coverage, in contrast, is the financial arrangement through which these goods and services are paid for. Although the current debate touches on healthcare itself—for example, by dealing with the quality of care—the big issues are about how to pay for the medical services we need. Under every one of the current proposals, private doctors and hospitals will continue to deliver most of our healthcare.

Many countries have some form of national health insurance or universal coverage. This means they have laws to ensure that everyone gets coverage for the healthcare they need. Universal coverage looks different in different countries, and the role of government may be larger or smaller depending on the particular system. One kind of universal system is a single-payer system. In a single-payer system, all medical bills are paid by one entity, usually the national government. Medicare, which is pretty much universal coverage for Americans over age 65, is also a single payer system (except for Part D drug coverage and managed care plans). The federal government and no other entity pays for healthcare provided under Medicare.

Although no one has said exactly what government-run healthcare means, it seems to mean a system where government controls the provision of healthcare, not just of health insurance. The U.K.’s National Health Service is like this as is the U.S. Veterans Health Administration. Government-run health insurance would refer to a single-payer system like Medicare. The current proposals are neither government-run healthcare nor government-run health insurance. Some include a public option, or a health insurance plan provided by the government for Americans who do not have health insurance of any other kind. Because the public plan would compete with private plans, we would still have a multi-payer system like the one we have now. Some opponents of the public option fear that for various reasons, private insurers will not be able to compete with a public plan that does not have to earn a profit to stay in business.

Opponents also fear that a public plan will limit choices. If a public plan competes with private plans, some feel that private insurers will go out of business and will therefore be unable to give Americans (usually employers) a choice of where to buy insurance. Some also feel that a public plan will limit a patient’s choice of doctors, hospitals, and levels of care. All insurance plans, public or private, already limit these choices based on that plan’s certificate of benefits, and private plans often establish restricted provider networks. For example, many private plans have different coverage rates for in-network and out-of-network services. If you see someone the plan determines to be “in-network,” the insurance plan pays more for that care and you pay less. If you see an out-of-network provider, you pay more and the insurance plan pays less. A public plan, like a private insurance plan, would likely include similar limits based on the certificate of benefits but the network would include all providers who agree to be reimbursed at the public plan’s payment rates.

Socialized medicine is a term without much meaning. It is usually used in arguments about healthcare reform to imply that if government pays the bills, private ownership of the healthcare system will no longer be possible. If that were true, Medicare would have had this result, and it did not.

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