Australian vs. American Healthcare Systems

This is a great article from John Hempton's blog Bronte Capital called, Health Care Reform and Single Payer- an Australian Perspective. There is some great insight as the author offers his perspective as an Australian who has experienced both systems. He covers an overview of how the Australian system works, the pros (savings and results), the cons (wait times, doctor salaries), and also how these observations apply to the United States.

One point that I found interesting was in the section on why Australia's system would not necessarily work in the States, at the end of the article.

The outcomes in Australia are surprisingly good – but they depend at least
in part on the fact that Australia is small. Australia can shave margins for
research driven medical products to very low levels because the research is not
funded from Australia. If the US were to push margins too low they would crimp
medical research.

This makes me wonder how much the healthcare systems of places like Canada, the U.K., and Australia are in a way subsidized by the U.S. system. If these countries are able to have the results that they enjoy in part due to research done in the U.S. where there are better profit incentives, what would happen if the U.S. no longer provided those incentives? Hempton does point out that, from an investing perspective (Bronte Capital is primarily an investment blog) the medical industry would be hurt from such reform. He says of the Australian system, "suppliers in general get squeezed." Canada would be even more interesting to look at from this angle as they are so close to the United States. So there may be drugs and treatments not as easily available in Canada as in the States. Thus, a Canadian could go south of the border and the Canadian system sees the savings of not having to spend on the treatment (while the drug company will still see the profits). As a specific example, I know of a Breast Cancer treatment drug called Herceptin which has not been approved by Health Canada. So Canadians for whom this treatment is necessary must seek treatment in the U.S.

Some other points of interest from the article and the Australian system are the inability to discriminate against pre-existing conditions or age. Also the private insurance in Australia,

was originally and remains almost entirely community rated. That means that
a private health insurance company charges the same amount to a 31 year old as a
75 year old... and it is still not age rated provided you took out private
health insurance before you were 30 and you maintain it continuously. If you
took it out for the first time at 35 you will pay a “five year surcharge” for
the rest of your life.

Also, somebody pointed out in the comments, reiterated in the post, the problem with the U.S. tort system and the costs that those impose. Hempton says, "Insurance premiums are MUCH cheaper for Australian doctors and that benefit is passed on to patients."