Tailor-Made Healthcare: Subsidiarity’s Potential Effects on Healthcare Efficiency in the United States

Abstract

The United States’ immense level of spending on healthcare has long been a well researched and debated topic. Even with the theorizing of advanced economist and policy experts, healthcare costs continue to rise. The increase in medical expenditures has not corresponded to a more healthy population, further highlighting the inefficiency that exists within American healthcare. The opacity and ineffectiveness continues to anger the public, even with the onset of the Affordable Care Act. While reasons behind high costs and poor patient outcomes are extensive, a key potential reason behind such issues is the lack of specialization in the utilization of healthcare resources. While certain social programs have regional groupings, United States healthcare is largely federally regulated. The inability to adjust health policies for state-specific demographics is a major downside for the American System. Another country, Switzerland, serves as a valuable resource for analyzing the potential effects of enacting more subsidiarity into US healthcare. Subsidiarity relies on decentralization and advocates for institutions to be regulated at a more local level. Switzerland, in the aftermath of its most recent massive healthcare legislation, witnessed drops in the variation in quality-of-life indicators while the composition of healthcare inputs differed across Switzerland’s member-states. This thesis utilizes both macro-level and micro-level data and OLS regressions to quantify interstate variation of American health systems in order to better understand the potential benefits behind increased healthcare subsidiarity. My research finds that the large interstate disparity within cost and utilization of healthcare plays a strong role in America’s excess costs. Further, the data imply that the composition and payment of healthcare professionals is misallocated. Both of these considerations highlight the possible benefits of state-regulated healthcare within the less powerful oversight of federal authorities.