HEALTHCARE

Leadership in Health Care Service in the United Kingdom

Leadership in Health Care Service in the United Kingdom

UK health care expenditures increased dramatically during the past two decades, growing from $714 billion in 1990 to $2.5 trillion in 2009. Growth of health care expenditures exceeded the UK inflation rate in both 2008 and 2009, growing at a rate of 4.7 percent and 4.0 percent respectively. The cost of providing health insurance also continues to rise. Premiums for employer-sponsored health insurance plans increased 131 percent between 1999 and 2009 (Sridhar, 2009, 1363). Due in part to the soaring costs of health insurance, approximately 49.5 million Englishmen, about one in six, were without any health insurance in 2010. Most Englishmen that do have health insurance are limited to just a few options. Private insurance is theoretically an option to everyone, but is too expensive for many individuals and families to purchase on their own (Malterud, 2001, 397). Most often consumers secure private health insurance through employers that offer it as a fringe benefit. Low-income consumers and those with certain medical conditions are eligible for Medicaid, a form of public insurance offered by each state. Medicare, a federal public insurance program (O'Neil, 2008, 10), is available to almost all American citizens and legal residents age 65 and over as well as those with some particular medical conditions. Previous research has focused on the impacts of these choices. Some estimate the impact of consumer health insurance choice by evaluating how it affects utility and efficiency. Others have estimated consumer demand for certain health insurance options (Michie, S., & Williams, S., 2003, pp. 3).

The most common source of health insurance in the UK is private insurance. Of those with health insurance, 78.8 percent had private health insurance in 2008. Of those with private insurance, the majority receive insurance through employer-based programs. Typically, employees and employers split the cost of the health insurance premium, with individual employees picking up about 16 percent of the bill and employees with families paying about 27 percent of the bill (Mays & Pope, 1995, 109). Only about 13.3 percent of individuals with private insurance purchase it directly from the insurance company. Private insurance operates through employment for two primary reasons: risk pooling and an employee tax subsidy. Private insurers who insure a large group of people in a risk pool, such as a business, will have a client base with a predictable distribution of medical risk (Sridhar, 2009, 1363). Pooling risk via large groups of people allows health insurance companies to collect enough money in premiums to cover the medical costs of the pool. The second benefit of providing insurance through employers is the tax subsidy. When employees opt into employer sponsored health plans, they do not have to pay taxes on the income used by the employer to purchase their health insurance (Wright, 2000, 1202). If the employer paid the employee the same amount of money used to purchase the employee's health insurance, then the employee would be taxed on ...