US Healthcare Update

One of the major economic differences between the US and UK is in the manner which healthcare is delivered and financed.

US healthcare is primarily provided by the private sector. Hospitals are owned by commercial or charitable organizations. Care is paid for through the combination of private health insurance and government programs (Medicare and Medicaid). UK funding of care is the result of a national tax-based system versus the private risk-based financing in the US system.

The US system is complex and evolving as successive government administrations attempt make structural changes to support escalating costs associated with an aging population. The approach is sharply divided along political lines with neither party currently able to implement legislation in its original form.

The Affordable Care Act (ACA), enacted on March 23, 2010 by the Obama administration, aimed to ensure health insurance was available to all citizens by:

  • making more employers responsible for their workers’ health insurance
  • extending subsidies to middle income persons who had no employer insurance
  • providing Medicaid to more people.

Financing was to be met by new taxes, fees and mandates. Larger employers were required to either offer health coverage that was “affordable” to their full-time employees or potentially be assessed a penalty.

The new “repeal and replace” position is in the process of implementation by the new Republican administration. Congress has narrowly approved legislation to repeal and replace major parts of the ACA, with the American Health Care Act. (AHCA). The bill is still a work-in-progress as it requires Senate approval before it can be signed into law by the President. With several key elements of the current law retained, there are several key changes proposed including:

  • rolling back the ACA’s expansion of Medicaid
  • eliminating tax penalties for people who do not have health insurance
  • repealing taxes used to finance the current healthcare law
  • offering tax credits to buy insurance for people without coverage
  • allowing insurers to charge higher premiums to retirees
  • delaying the introduction of tax on employers who provide high cost health insurance—from 2020 to 2025.

It is evident that the obligation of the US employer will change as new laws are passed. I would recommend engaging US based expertise to ensure compliance.

Leave a Comment