a comparison between the health systems of the united states and australia

Running head: A COMPARISON BETWEEN THE HEALTH SYSTEMS 1

A Comparison between the Health Systems of the United States and Australia

Gina Ferrara

Alvernia University

A COMPARISON BETWEEN THE HEALTH SYSTEMS 2

The United States’ health care system in comparison to that of Australia’s is similar yet

different. Deborah Stone’s policy paradox approach is often used to evaluate a system based on

goals, problems, and solutions. This model will be used to compare the healthcare systems of the

United States and Australia. A discussion on the public and private healthcare systems, the life

expectancy of each country, and their overall health status will also be incorporated with

Deborah Stone’s model in this comparison.

Australia has a commission on the safety and quality of its health care. “Much of

Australia’s health reform is aimed at improving access to care, improving efficiency, increasing

public information about health service performance and ensuring more transparent funding of

public hospitals” (Australian Safety and Quality Goals for Health Care). The goals of the

Australian Safety and Quality for Health Care speak in regards to the safety of care,

appropriateness of care, and partnering with consumers. It is a goal, according to the Australian

Safety and Quality Goals for Health Care, that people receive health care without experiencing

preventable harm. The commission aims to “reduce harm to people from medications through

safe and effective medication management” (Australian Safety and Quality Goals for Health

Care). Receiving treatment without harm encompasses medication safety, healthcare associated

infections, and recognizing and responding to clinical deteriorations. Their next goal is "that

people receive appropriate evidence-based care" within this goal, areas such as transient

ischemic attack and stroke, and acute coronary syndrome have become the focus. For both of

these areas it is aimed that people with coronary syndrome or transient ischemic attack or stroke

receive appropriate, evidence-based care. Effective partnerships between consumers and

healthcare providers and organizations, is a goal aiming to have these partnerships at levels of

healthcare provision, planning, and evaluation. Through this goal it is expected that consumers


become empowered to manage their condition as clinically appropriate and desired. It is also

expected that consumers and healthcare providers understand each other in regards to care and

treatment communications.

Australia "provides universal health coverage for citizens, permanent residents, and

visitors from countries that have reciprocal arrangements with Australia" through public and

private forms. Their Medicare program is offered to all individuals as a form of health insurance

but it does not cover all costs. For example it does not cover the cost of private hospital care, to

have this coverage people need private insurance in addition to Medicare. "Hospital services

(both public and private) received a total of $535 billion in 2011-12. The main funding sources

were state and territory governments ($22.9 billion or 42.8% of total hospital funding) and the

Australian Government was the main funder providing $23.1 billion (46.7% of total primary

health care funding)" (How much does Australia spend on health care). Medicare provides

universal access to subsidized medical services and pharmaceuticals and free public hospital

treatment. It is funded through a 1.5% levy on taxable income. People with low income are

exempt from this tax or pay a reduced levy. Those in the higher income bracket income

equivalent to $67,151-$134,299 US Dollars who do not have an appropriate level of private

insurance need to pay an additional Medicare surcharge of an additional 1% of taxable income.

Other federal, state, and territory government health expenditures are funded from the general

tax revenue, goods and service tax, patient fees, and other government sources. The Veterans

Affairs covers eligible veterans and dependents by directly purchasing public and private

healthcare services. Free or subsidized access to most medical and some optometry services and

prescription pharmaceuticals is also provided under this plan. Other health services that are


provided by the Australian government include "population health, mental health, limited dental

health, rural and indigenous health programs, and health services for war veterans".

People can also opt for private health insurance and are incentivized to do so with taxes

and subsidies. "Private treatment complements the public system and offers choice of doctors for

hospital admissions, choice of hospitals (including private hospitals), and timing of procedures;

services such as physiotherapy, dental, optometry, and podiatry; and complementary medicine

services" (How much does Australia spend on health care). Private insurance costs are

responsible for 7.6% of the total health expenditure. Since 1999, 30% of private health insurance

premiums are paid by the government through a rebate. Those between the ages of 65 to 69 years

of age getup to a 35% rebate on their health insurance. Those 70 or older get up to a 40% rebate

on their health insurance. As of 2009, 44.6% of the population of Australia had private health

insurance while 51.3% had general tax coverage. Everyone in Australia is encouraged to join a

health fund before the age of 31. By joining a health fund the person will have a lower premium

for life regardless of their health status. After the age of 31 there is a 2% increase in premiums

for every year delayed in joining. These funds are provided by for-profit and not for profit

insurers and regulated by the federal government.

“Australia has one of the world's best life expectancy rates...Life expectancy rates in 2009

ranked Australia equal forth with Israel, behind Japan, Switzerland and Spain” (Life expectancy).

It is “estimated health spending would increase by 78% between 2010 and 2050, partly due to

the expected rise in preventable conditions. While Australia's external health risk factors such as

access to clean water and sanitation were low, Australians' internal health factors such as body

weight, sedentary lifestyle and alcohol consumption could be modified to further prevent

potential unnecessary disease and death” (Life expectancy). Life expectancy in Australia


according to the Australian Government's Institute of Health and Welfare is at 82 years for males

and females as of 2011. It is “one of the highest life expectancies of any country in the world”

(Life expectancy).

The term quality of life is a means of measuring the health status of a population, group,

or region. The health and wellbeing of people depend on the prevalence of disease and risk

factors for that population. These measures can be used to summarize a society's wellbeing and

any social, economic, and environmental conditions. Australia has been shown to have a very

good quality of life for its people. "It ranks second out of 187 countries according to the Human

Development Index," which is an international measure of quality of life (Australia's health

2012). This measure is based on life expectancy, literacy, education, and gross domestic product.

Problems in the Australian Health Care system have been brought to light by the

Australian Health Care Reform Alliance (AHCRA). They are “a coalition of peak health groups

working towards a better health system for Australia’s future” (Australian Health Care Reform

Alliance). Currently the AHCRA has identified problems within the existing health system and is

working to find solutions to them. Some of the problems they have identified are the increasing

out-of-pocket costs for services, shortages of doctors, nurses and other healthcare professionals,

a health gap between Indigenous and non-Indigenous Australians, an insufficient focus on

prevention and primary care, and many others.

Solutions to these problems have been developed. In regards to the high cost of health

care, the Australian Health Care Reform Alliance "believes that future health care will need to be

much more heavily focused on prevention and early intervention in order to remain sustainable"

(Australian Health Care Reform Alliance). It is estimated that within twenty years the rising cost

of health care will be well over the annual inflation rate. The solution the AHCRA has found to


make the States' and Federal Governments' health budgets affordable is "to become better at

preventing ill-health and promoting wellness, identifying and treating it early, and managing

ongoing conditions in the community" (Australian Health Care Reform Alliance). A national

Health Care Waste Commission has been developed to "identify areas of ineffective health

spending so that funding or health professional time could be redirected to better effect"

(Australian Health Care Reform Alliance). The waste refers to "failures of care delivery; failures

of care coordination; overtreatment; administrative complexity; pricing failures; and fraud and

abuse" (AHCRA Priorities).

The United States in the last four years has begun implementing new comprehensive

health insurance reforms. On March 23, 2010, President Obama signed the Affordable Care Act

which has put in place these reforms. The Affordable Care Act has enabled millions of

Americans to receive health insurance that had previously been uninsured. Previously health

insurance can only be obtained through a private plan offered by an employer. Currently people

can receive health coverage through the insurance marketplace or their employer. Besides these

private plans there are public plans for certain groups of individuals like Medicare, Medicaid,

and Children’s Health Insurance Program (CHIP).

The United States Department of Health and Human Services (HHS) has a series of

Strategic Goals to improve the health care system. Their first goal is to strengthen health care.

“HHS is committed to strengthening and sustaining Medicare, Medicaid, and the Children’s

Health Insurance Program (CHIP), as well as connecting all Americans with quality health care

and access to affordable health insurance options through the Health Insurance Marketplace”

(Strategic Plan). HHS is also helping to ensure that the Health Insurance Marketplace is in every

state to increase the amount of insured Americans in addition to working with states to expand


Medicaid coverage for low-income Americans. "HHS is providing guidance, resources, and

flexibility for states to enable them to construct competitive, affordable insurance Marketplaces

that best meet the needs of their citizens" (Strategic Plan).

The second goal of Health and Human Services is to advance scientific knowledge and

innovation. Within this goal they aim to improve the speed of the process of scientific discovery

to improve health, enhance food safety, improve medical production, and support tobacco

regulation; and increase understanding of what works in public health and human services

practice. To increase public health knowledge the HHS aims to “identify three effective system

interventions generating the implementation, sustainability, and ongoing improvement of

research-tested interventions across health care systems; increase the percentage of Community-

Based Child Abuse Prevention (CBCAP) total funding that supports evidence-based and

evidence-informed child abuse prevention programs and practices” (Strategic Plan).

The third goal of Health and Human Services is to advance the health, safety, and well-

being of the American people. “HHS programs are addressing the unique needs of vulnerable

populations through improved program coordination within HHS and across government

agencies, through policy development, evidence-based practice, and research” (Strategic Plan).

These populations include children and youth. This population depends on adults to keep them

safe and at their full potential. "HHS collaborates with state, local, tribal, urban Indian,

nongovernmental, and private sector partners to sustain an essential safety net of services that

protect children and youth, promote their emotional health and resilience in the face of adversity

or trauma, and ensure their healthy development from birth through the transition to adulthood"

(Strategic PLan). Early intervention and home visiting programs will help make sure children

have a good start in life. They also aim to promote prevention and wellness across the life span,


reduce the occurrence of infectious diseases, and protect Americans' health and safety during

emergencies within this goal

The final goal of Health and Human Services is to ensure efficiency, transparency,

accountability, and effectiveness of HHS programs. “HHS is dedicated to developing the

systems, workforce, and infrastructure that can address complicated and emerging challenges to

improve the health and well-being of the nation” (Strategic Plan). Through this goal they will

improve HHS environmental, energy, and economic performance to promote sustainability.

Medicare is a health insurance program that is available to people age 65 or older, people

under 65 with certain disabilities, and people of all ages with End-Stage Renal Disease,

according to the Centers for Medicare and Medicaid Services. It provides hospital insurance,

medical insurance, and prescription drug coverage. Part A refers to hospital insurance that is

funded through payroll taxes the beneficiary or spouse already paid when they were working.

This part of the insurance plan is available to all beneficiaries at no additional cost and "helps

cover inpatient care in hospitals, including critical access hospitals, and skilled nursing facilities.

It also helps cover hospice care and some home health care. Beneficiaries must meet certain

conditions to get these benefits" (Medicare Program General Information). Medicare Part B

encompasses medical insurance that covers medically-necessary services like doctor visits and

outpatient care. Preventive services like screening tests and immunizations, diagnostic tests,

some therapies, and equipment like walkers and wheelchairs are also included in this coverage.

Part C or Medicare Advantage, combines Parts A, B, and D. These plans are managed by private

insurance companies that are approved by Medicare. The approved plans must cover medically

necessary services despite charging different co-payments, coinsurance, or deductibles for these

services in addition to Medicare. Part D is Medicare Prescription Drug Coverage which helps


pay for outpatient prescription drugs and may help lower prescription drug costs and protect

against higher costs in the future. Supplemental coverage to Medicare is often times necessary

for beneficiaries to cover their medical costs. In order for a beneficiary to sign up for

supplemental coverage they must first have insurance from both Parts A and B. Supplemental

coverage options are Part D, prescription drug coverage, and Medigap which covers Part A and B

cost sharing, or Part C a Medicare Advantage Plan.

“In order to participate in Medicaid, federal law requires states to cover certain

population groups (mandatory eligibility groups) and gives them the flexibility to cover other

population groups (optional eligibility groups)” (Eligibility). Individual eligibility criteria is set

by the individual states within the federal minimum standards. The national Medicaid minimum

eligibility level of 133% of the federal poverty level ($29,700 for a family of four in 2011) for

nearly Americans under age 65 was enacted as a part of the Affordable Care Act. “In order to be

eligible for Medicaid, individuals need to satisfy federal and state requirements regarding

residency, immigration status, and documentation of U.S. Citizenship” (Eligibility).

The United States also offers health insurance from private companies, which it has been

doing for many years. Employers offer these insurance plans as a benefit to employees and their

dependents coverage may vary by plan or group. One of the first insurance companies was Blue

Cross and Blue Shield. "They played a significant role in establishing hospitals as the centers of

medical care proliferation and technology, and by reimbursing for expensive services, they put

hospital care easily within the reach of middle-class working Americans for the first time" (Sultz,

2014). Currently there are many other insurance companies besides Blue Cross and Blue Shield

that provide health insurance to people of the United States. “Most companies writing group

medical care expense insurance offer 'basic' hospital, surgical, and 'regular medical' expense


policies, and probably a majority also write 'major medical' policies” (Reed). Major medical

coverage and basic coverage are terms often used by insurance companies in reference to cost

and how much will be covered or paid out of pocket by the patient. “Policies are written that

provide for (a) 100-percent reimbursement of all hospital expense, all without a deductible, and

(b) 80-percent coverage of all other illness expense after a deductible of, say, $50 or $100”

(Reed). Insurance companies are regulated by the individual state in regards to accident and

health insurance. This allows for “licensure of companies doing business in the State; sets up

standards of solvency including reserves and permissible investments; requires annual statements

and periodic financial examinations; and provides for approval of policy forms and rates,

licensure of agents, and investigations of complaints” (Reed).

The current life expectancy of the United States population “rose in 2012 to 78.8 years.

That was an increase of 0.1 year from 2011 when it was 78.7 years, according to a new report on

mortality in the USA from the Centers for Disease Control and Prevention’s National Center for

Health Statistics” (Copel, 2014). The life expectancy of each gender is also estimated, “females

is 81.2 years; for males, it’s 76.4 years” (Copel, 2014). These estimates are for those people born

in 2012. The ages previously mentioned show the average number of years current infants will

live till. The ten leading causes of death in the United States are “heart disease, cancer, chronic

lower respiratory diseases, stroke, unintentional injuries, Alzheimer’s disease, diabetes, influenza

and pneumonia, kidney disease, and suicide” (Copel, 2014).

Within the realm of the health status of the American population chronic diseases are

very prevalent. “In 2008, 107 million Americans- almost 1 out of every 2 adults age 18 or older-

had at least one of six reported chronic illnesses: cardiovascular disease, arthritis, diabetes,

asthma, cancer, chronic obstructive pulmonary disease” (General Health Status). Health status


can also be addressed by a long-term reduction in a person’s ability to their usual activities. This

is in regards to activities of daily living which include bathing, dressing, eating, transferring to a

chair or bed, and using the bathroom. Instrumental activities of daily living are also included in

this and refer to using the phone, doing light housework, shopping, managing money, and

preparing meals. “In 2006, 5.5 percent of adults ages 18 to 44 had a limitation of activity, while

7.3 percent of children age 18 and 32.6 percent of noninstitutionalized adults age 65 and older

had a limitation of activity” (General Health Status).

Many flaws have been expressed in the Affordable Care Act. A problem with this new

system is that with the increased amount of people seeking medical care providers will not be

able adequately to meet the needs of all the new patients. The healthcare workforce is already

facing a shortage of health professionals throughout the next decade. This expansion of coverage

does not mean an expansion of care. The healthcare industry has been having workforce

shortages for years and this increased amount of patients will put increased pressure on this area

of expertise.

The solution to this problem is to incentivize students to go to nursing or medical school

by providing loan forgiveness programs after graduation and completion of their schooling. This

would slowly increase the amount of health care workers that would alleviate this increasing

problem. This will take years to go into effect because of the time it takes for education programs

to be completed. In the long run it will prove to be effective.

The healthcare systems of Australia and the United States have proven to be similar in

having the ideal that everyone should have health insurance yet different in terms of how it is

covered and paid for. Australia gives health coverage to all its people through their public

system, Medicare, and offers additional coverage that can be bought to receive a wider range of


options for providers and hospitals. The United States from the Affordable Care Act offers

private health insurance options that can be bought and public options, like Medicare, Medicaid,

and CHIP, to certain eligible populations. If a person in the United States does not have health

insurance, they have to pay a tax that is determined by a percentage of the income they make

when they file their tax return. This will work to motivate people to have health insurance to stay

healthier through preventative care and the tax dollars that will be accumulated from this will

pay for the cost of the system. Australia pays for its insurance through a portion of their income

tax.

The Australian healthcare system could use some improvements. The distinguishing

between public and private hospitals and who can receive care from them depending on their

insurance should be changed. A person who does not have supplemental private insurance cannot

go to a private hospital but can go to a public hospital. A person that has private insurance can go

to either because they have both kinds of insurance. Anyone should be able to go to either

hospital with the only difference being the copay amount. However, this is not realistic within

their system because Australians pay very little as a copay.

The United States health care system could use improvements as well. Healthcare should

be given to everyone from the time they are born. The cost will be covered through taxpayer

dollars. Not paying co-pays for prescription drugs and doctor's visits and instead paying an

income tax may in the long run save people money. The tax would be based on a person's income

and would thus make health care more affordable for all Americans. There will then be an

increased amount of patients receiving preventative care and in turn being healthier. The life

expectancy will rise to surpass or equal that of comparable countries.


References

Australia's health 2012. (n.d.). Retrieved November 19, 2014, from

http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=10737422169

Australian Safety and Quality Goals for Health Care. (n.d.). Retrieved November 19, 2014, from

http://www.safetyandquality.gov.au/national-priorities/goals/

AHCRA Priorities AHCRA. (n.d.). Chicago: AHCRA Priorities | AHCRA, Retrieved from

http://www.healthreform.org.au/ahcra-priorities/ (accessed November 19, 2014).

Copel, L. (2014, October 9). Life expectancy in the USA hits a record high. Retrieved November

19, 2014, from http://www.usatoday.com/story/news/nation/2014/10/08/us-life-

expectancy-hits-record-high/16874039/

Eligibility. (n.d.). Retrieved November 19, 2014, from http://www.medicaid.gov/medicaid-chip-

program-information/by-topics/eligibility/eligibility.html

General Health Status. (n.d.). Retrieved November 19, 2014, from

https://www.healthypeople.gov/2020/about/foundation-health-measures/General-Health-

Status

How much does Australia spend on health care? (2014, January 1). Retrieved November 25,

2014, from http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=60129547594

Life expectancy. (n.d.). Retrieved November 19, 2014, from http://www.aihw.gov.au/deaths/life-

expectancy/

Medicare Program General Information. (n.d.). Retrieved November 19, 2014, from

http://www.cms.gov/Medicare/Medicare-General-Information/MedicareGenInfo/

index.html


Reed, L. (n.d.). Private health insurance in the United States: An overview. Retrieved November

19, 2014, from https://www.socialsecurity.gov/policy/docs/ssb/v28n12/v28n12p3.pdf

Strategic Goal 4: Ensure Efficiency, Transparency, Accountability, and Effectiveness of HHS

Programs. (n.d.). Retrieved November 19, 2014, from http://www.hhs.gov/strategic-

plan/goal4.html

Sultz, H. & Young, K. (2014). Health Care USA: Understanding Its Organization and Delivery,

8th ed. Jones & Bartlett Publishing: Burlington, MA.

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