The U.S. Healthcare System Explained: UK Expat Guide

If you are thinking of moving to the USA from the UK, or already have firm plans in place, then you will need to know as much as possible about how life will change for you.

One very important factor, whether you are moving by yourself or with your family, is healthcare. Unlike the UK’s NHS, the U.S. operates on a primarily private healthcare system that can be complex, costly, and varies significantly based on factors like employment, location, and coverage options.

Let 1st Move International give you a breakdown of how the U.S. healthcare system works.

The U.S. Healthcare System Explained

The U.S. healthcare system is known for being one of the best in the world, with access to top professionals and cutting-edge technology, largely due to the funding provided through Americans’ health insurance. However, the way healthcare is funded presents significant challenges. Many Americans remain without coverage simply because they cannot afford it.

Obamacare attempted to address these imbalances by making healthcare more affordable and accessible to a broader population, but it faced resistance and underwent changes with subsequent political shifts. It’s crucial for anyone moving to the USA to thoroughly research this aspect of living and incorporate healthcare costs into their financial planning.

Key Features of the US Healthcare System

The US healthcare system is a complex mix of public and private financing. Publicly funded programs like Medicare and Medicaid coexist with private insurance plans. As of recent data, approximately 50% of citizens receive private insurance through their employers, while about 20% rely on Medicaid and 14% on Medicare. Despite these options, there remains a significant portion of the population, around 9%, who are uninsured.

Healthcare Financing Structure

Hospitals in the U.S. receive payments from both public and private sources. Payments are often made through diagnostic-related groups (DRGs) for inpatient care, assigning a fixed amount for specific conditions regardless of actual treatment costs. Outpatient services use Ambulatory Payment Classification (APC) codes, which follow a fee-for-service billing structure.

Physician fees are separately billed using Current Procedural Terminology (CPT) codes, highlighting the fee-for-service nature of U.S. healthcare. Private insurers employ various payment schemes, such as case rates and per diems, often resulting in reimbursements that exceed hospital service costs, unlike Medicare and Medicaid, which typically reimburse less.

To aid your understanding of available services and costs, here are some leading health insurance companies in the USA:

• United Healthcare
• Kaiser Foundation
• Anthem
• Cigna

Medicare and Medicaid

Medicare was introduced as a federal health insurance program for Americans who are 65 or older and for people with certain disabilities such as Alzheimer’s, Parkinson’s and Multiple Sclerosis.

There are 4 parts to Medicare coverage:

• Part A covers hospital insurance
• Part B covers medical insurance
• Part C covers Advantage plans, which include both parts A & B plus other benefits
• Part D which is coverage for drugs.

Each part has different costs, and these are funded by both payroll taxes and premiums paid for by beneficiaries.

Medicaid is a joint federal and state program providing health coverage to families and individuals on low incomes, utilised by around 20% of Americans. This provides services such as primary, hospital and long-term healthcare. Some services not covered by Medicare, such as optical and dental services, are covered by Medicaid, as well as coverage for children and pregnant women.

The Affordable Care Act (ACA)

Healthcare in the USA has continued to evolve and, in 2010, the then President Barack Obama introduced the Affordable Care Act, which came to be known as “Obamacare”. The idea was to make health insurance more accessible for Americans, as well as more affordable, by expanding Medicaid and by introducing “health insurance marketplaces”.

These “health insurance marketplaces” provide the opportunity for Americans to have government subsidies towards insurance plans, based on their income. The ACA also required insurance companies to cover pre-existing conditions, prohibited lifetime limits on coverage.

The ACA really reduced the number of Americans who did not have health insurance, but faced a lot of opposition in the government. When President Trump came into power, changes were made meaning that there was no provision to fine anyone who did not health insurance, and also giving individual states more leeway to seek certain waivers where they so wished.

Comparing the UK and USA Healthcare Systems

Moving from the UK to the USA highlights significant differences between the two countries’ healthcare systems. Here are the main differences in the UK and US healthcare systems explained.

Funding Model

In the USA, healthcare is provided largely by private companies, and is funded predominantly by individuals purchasing their own insurance, or through health insurance policies provided by their employers. This means that the result is a fragmented system that gives varying levels of access and healthcare depending on how much you are able to afford.

In contrast, the UK’s National Health Service (NHS) is publicly funded through taxation and provides care free at the point of use. This ensures that healthcare is available to all residents, generally at a consistent standard nationwide. However, the NHS faces ongoing challenges related to funding and resource allocation.

Government Involvement

Another difference is with the level of involvement that the government has in the UK and USA in respect of the provision on health services. Healthcare is largely publicly provided in the UK, so hospitals and clinics are government-run, and doctors may be NHS employees or contracted. In the USA the government has a smaller role, so the system is predominantly private, including hospitals and insurance companies. Some public hospitals and programs exist, but most services are privately managed.

Costs

One major difference is the cost of healthcare. Thanks to the UK’s NHS, almost all healthcare services are free with the exception of some prescriptions, dental care, and optician services. Even then, the NHS keeps the cost of prescriptions low for patients. Even with insurance in the U.S., patients face high out-of-pocket costs for all services. Limited regulation in the U.S. means prescription drugs are much higher.

Health Outcomes

In the UK, access to healthcare is equal, resulting in more consistent health outcomes across income levels. The U.S. on the other hand suffers with large health disparities by income, race, and geography. High spending doesn’t necessarily correlate with better outcomes.

US Healthcare Services Costs vs UK

Healthcare costs in the U.S vary depending on your insurance status and the type of plan. Here is a comparison of some common healthcare services and how much they cost on the UK’s NHS and with insurance in the U.S. It’s important to remember that without health insurance, costs are extremely high in the U.S.

Service	NHS Costs	U.S Costs (With Insurance)
GP Visit	Free at point of use	$20–$50 copay
Emergency Room	Free	$100–$500 copay + deductible
Ambulance	Free	Often partially covered
Prescription Medications	£9.90 per item (England); free in Wales, Scotland, and Northern Ireland	$10–$50 copay
Hospital Stay	Free	$1,000–$5,000 per stay, can be up to $20,000 per night without insurance.

US Healthcare System Pros and Cons

Pros of the US Healthcare System:

• Access to advanced medical technology and treatments.
• Some of the best hospitals in the world.
• Highly trained workforce of doctors, nurses and other healthcare professionals
• Provides top quality care

Cons of the US Healthcare System

• High cost
• Large disparity of healthcare access amongst different racial and ethnic groups
• Lack of universal coverage, leading to many individuals without health insurance and no access to basic healthcare services.

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