The American health system is, once again, in a state of crisis. Despite paying twice as much as any other developed nations per capita for health care, there are serious and growing coverage problems in the United States.

The crisis is twofold: there are now 42 million Americans with no health coverage at all; and those with coverage are facing skyrocketing premium costs, high deductibles, and reduced services and choice.

The American system of health care lies at the heart of the problem. 67 % of Americans (about 80 million) under the age of 65 receive their health insurance through their employers. Under the American system, employees typically get a choice of several different types of health insurance from their employer who then pays the insurance premiums for the selected provider on behalf of the workers.

This is the market-driven approach to health care that Ralph Klein, Mazankowski, and other opponents of the Canadian system find so attractive. On the surface, it seemed to be working relatively well in the early 1990’s – with the cost of health insurance and coverage remaining stable.

However, the dismal performance of the American economy in the last few years has exposed the structural weaknesses of the market approach.

When Americans lose their jobs, they lose their health insurance. In 2001, 2 million Americans lost their coverage because of layoffs. But, that is not the only way Americans can lose coverage. Employers – driven by falling profits and a sharp rise in the cost of health care services and insurance are reducing their health care costs.

Their solution has been to either stop offering coverage for their workers, or to increase the employees’ share of premiums, or to reduce the overall quality of insurance available.

The cost of drugs and of hospital care has risen at an incredible rate in recent years in the United States. Employers’ health insurance costs have risen accordingly. Those costs rose by 8% in 2000, 11% in 2001, and 13% already in 2002 (over seven times the inflation rate). A survey released in late September, 2002 by Towers Perrin predicts that those costs will rise a whopping 15% in 2003.

Larger employers are reacting to the rising costs by passing more and more of the burden on to workers. Smaller employers and the self-employed are simply going without coverage at all.

Typically, employees have paid about 27% of the cost of their insurance plan premiums, not including deductibles and costs for doctors visits and prescription drugs. More than half of insured workers now have two and three-tiered drug plans – where some people get more comprehensive coverage than others.

Some employers are instituting a "health reimbursement account" for where employees get a set amount of money to spend as they choose on health care – but when it runs out, they face steep increases in deductibles (much higher than in traditional plans).

The Kaiser Family Foundation reports that 18% of insured Americans postponed seeking medical aid, 15% had a problem paying medical bills, and 10% did not get prescription drugs they needed.

Among insured Americans who postponed seeking medical aid because of finances, 36% said it resulted in a temporary disability that included significant pain and suffering. 14% said it caused along-term disability.

Researchers estimate that 20% of insured Americans have inadequate coverage – increasing the likelihood of an even greater incidence of delayed or voluntarily refused medical care.

The irony in the current American health care crisis is that at $5000 per year, Americans spend twice as much per capita on health care than other developed nations. The problem is that virtually half of the money spent on health care in the United States does not go to health care.

According to Marcia Angell, a senior lecturer in social medicine at Harvard Medical School, "Private insurers regularly skim off the top 10 percent to 25 percent of premiums for administrative costs, marketing and profits. The remainder is passed along a gauntlet of satellite businesses – insurance brokers, disease-management and utilization review companies, lawyers, consultants, billing agencies, information management firms and so on."

By the time the health care dollar reaches doctors and hospitals – who themselves have high overhead costs for administration and insurance – as much as half of it is gone.

By comparison, Canadian Medicare administration costs approximately 3 percent of health expenditures.

For those Canadians and Americans who point out the longer waiting lists in Canada, Angell says "…that’s because they [Canadians] spend far less on health care than we do.

If they were to put in the same amount of money as we do into their systems, there would be no waits. For them, the problem is not the system, it’s the money. For us, it’s the system, not the money."

As well, if the 42 million Americans who have no medical coverage were covered, and no one deferred medical treatment because they couldn’t afford it, there would undoubtedly be wait lists in the U.S. today, despite the amount of money that is being spent within the system.