Why America is the only rich country without universal healthcare
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Why America Is the Only Rich Country Without Universal Health Care
Universal health care is a system that provides quality medical services to all citizens. The federal government offers it to everyone regardless of their ability to pay.
Despite some similarities, Obamacare is not universal health care. It is simply a program that offers subsidies to participants to purchase insurance. U.S. programs that are more similar to universal health care are Medicaid and Medicare. The first provides health care to everyone below an income level. The second provides it to those over 65 who have paid into the system. Many democratic candidates promote universal health care under the title "Medicare for All." 1
The sheer cost of providing quality health care makes universal health care a large expense for governments.2 Most universal health care is funded by general income taxes or payroll taxes. Some countries mandate that everyone buy health insurance. While Obamacare had a mandate, it had too many exceptions to be truly universal. A few countries rely on prepayment. Most universal health care systems are funded by more than one of these funding methods.
In most countries, the government pays for health care provided by private companies. These include the systems in Australia, Canada, France, Germany, Singapore, and Switzerland. U.S. examples are Medicare, Medicaid, and TRICARE. The United States also provides subsidies to health insurance companies through Obamacare.
When the government both pays for and provides the services, that is socialized medicine.3 The United Kingdom has this. The United States has it with the Department of Veterans Affairs and the armed forces.
Countries often combine universal health coverage with other systems to introduce competition. These include pay as you go, prepay, and private insurance models. These options can lower costs, expand choice, or improve care.
When governments pay for health care, they work to ensure doctors and hospitals provide quality care at a reasonable cost. They must collect and analyze data. They can also use their purchasing power to influence health care providers.
The demand for universal health care began in 1948, the year the World Health Organization declared health care a basic human right.4
Universal health care lowers health care costs for an economy. The government controls the price of medication and medical services through negotiation and regulation.
It eliminates the administrative costs of dealing with different private health insurers. Doctors only deal with one government agency. U.S. doctors must deal with many private insurance companies, Medicare, and Medicaid. It standardizes billing procedures and coverage rules. Companies don't have to hire staff to deal with different health insurance company rules.
It forces hospitals and doctors to provide the same standard of service at a low cost. In a competitive environment like the United States, health care providers focus on new technology. They offer expensive services and pay doctors more. They try to compete by targeting the wealthy. They charge more to get a higher profit. It leads to higher costs.
Universal health care creates a healthier workforce. Studies show that preventive care reduces the need for expensive emergency room usage. Before Obamacare, 46% of emergency room patients went because they had no other place to go.5 They used the emergency room as their primary care physician. This health care inequality is a big reason for the rising cost of medical care.
Early childhood care prevents future social costs.6 These include crime, welfare dependency, and health issues. Health education teaches families how to make healthy lifestyle choices, preventing chronic diseases.
Governments can impose regulations and taxes to guide the population toward healthier choices. Regulations make unhealthy choices, such as drugs, illegal. Sin taxes, such as those on cigarettes and alcohol, make them more expensive.
Universal health care forces healthy people to pay for others' medical care. Chronic diseases, like diabetes and heart disease, make up 85% of health care costs.7 These diseases can often be prevented with lifestyle choices. The sickest 5% of the population consumes 50% of total health care costs.8 The healthiest 50% consume only 3% of the nation's health care costs.
With free universal health care, people may not be as careful with their health. They don't have the financial incentive to do so. Without a copay, people might overuse emergency rooms and doctors.
Most universal health systems report long wait times for elective procedures. The government focuses on providing basic and emergency health care.
Governments limit payment amounts to keep costs low. Doctors have less incentive to provide quality care if they aren't well paid. They might spend less time per patient to keep their costs down.9 They have less funding for new life-saving technologies.
Health care costs overwhelm government budgets.10 For example, some Canadian provinces spend 40% of their budget on health care. That reduces funding for other programs like education and infrastructure.
To cut costs, the government may limit services with a low probability of success. It may not cover drugs for rare conditions. It may prefer palliative care over expensive end-of-life care. On the other hand, the U.S. medical system does a heroic job of saving lives, but at a cost. Care for patients in the last six years of life makes up one-fourth of the Medicare budget.11 In their last month of life, half go to the emergency room. One-third wind up in the intensive care unit and one-fifth undergo surgery.
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Lowers overall health care costs
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Lowers administrative costs.
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Standardizes service.
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Creates a healthier workforce.
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Prevents future social costs.
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Guides people to make healthier choices.
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Healthy people pay for the sickest.
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People have less financial incentive to stay healthy.
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Long wait times.
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Doctors may cut care to lower costs.
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Health care costs overwhelm government budgets.
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The government may limit services that have a low probability of success
Out of the 33 developed countries, 32 have universal health care.12 They adopt one of the following three models.
In a single-payer system, the government taxes its citizens to pay for health care. Twelve of the 32 countries have this system. The United Kingdom is an example of single-payer socialized medicine. Services are government-owned and service providers are government employees. Other countries use a combination of government and private service providers.
Six countries enforce an insurance mandate. It requires everyone to buy insurance, either through their employer or the government. Germany is the best example of this system.
The nine remaining countries use a two-tier approach. The government taxes its citizens to pay for basic government health services. Citizens can also opt for better services with supplemental private insurance. France is the best example.
Australia: Australia adopted a two-tier system.13 The government pays two-thirds, and the private sector pays one-third. The public universal system is called Medicare. Everyone receives coverage. That includes visiting students, people seeking asylum, and those with temporary visas. People must pay deductibles before government payments kick in. Half of the residents have paid for private health insurance to receive a higher quality of care. Those who buy private insurance before they reach 30 receive a lifetime discount. Government regulations protect seniors, the poor, children, and rural residents.
In 2016, health care cost 9.6% of Australia's gross domestic product. The per capita cost was US$4,798. The Organization for Economic Cooperation and Development disclosed that 22.4% of patients reported a wait time of more than four weeks to see a specialist. On the other hand, only 7.8% of patients skipped medications because the cost was too high. In 2015, the Australian life expectancy was 84.5 years.
Canada: Canada has a single-payer system.14 The government pays for services provided by a private delivery system. The government pays for 70% of care. Private supplemental insurance pays for vision, dental care, and prescription drugs. Hospitals are publicly funded. They provide free care to all residents regardless of the ability to pay.15 The government keeps hospitals on a fixed budget to control costs. It reimburses doctors at a fee-for-service rate. It negotiates bulk prices for prescription medicine.
In 2016, health care cost 10.6% of Canada’s GDP. The cost per person was US$4,752, and 10.5% of patients skipped prescriptions because of cost. A whopping 56.3% of patients waited more than four weeks to see a specialist. As a result, many patients who can afford it go to the United States for care. In 2015, the life expectancy was 82.2 years. Canada has high survival rates for cancer and low hospital admission rates for asthma and diabetes.
France: France has an excellent two-tier system.16 Its mandatory health insurance system covers 75% of health care spending. That includes hospitals, doctors, drugs, and mental health. Doctors are paid less than in other countries, but their education and insurance is free. The French government also pays for homeopathy, house calls, and child care. Of that, payroll taxes fund 40%, income taxes cover 30%, and the rest is from tobacco and alcohol taxes. For-profit corporations own one-third of hospitals. Patients give care consistent high ratings.
In 2016, health care cost 11% of GDP. That was US$4,600 per person. In 2013, 49.3% of patients reported a wait time of more than four weeks to see a specialist. But only 7.8% of patients skipped prescriptions because of cost. In 2015, the life expectancy was 85.5 years.
Germany: Germany has mandatory health insurance sold by 130 private nonprofits.17 It covers hospitalization, outpatient, prescription drugs, mental health, eye care, and hospice. There are copays for hospitalization, prescriptions, and medical aids. There is additional mandatory long-term care insurance. Funding comes from payroll taxes. The government pays for most of health care. It limits the amount of the payments and the number of people each doctor can treat. People can buy more coverage.
In 2016, health care cost 11.3% of GDP. That averaged US$5,550 per person. Only 3.2% of patients skipped prescriptions because of cost. Also, 11.9% of patients reported a wait time of more than four weeks to see a specialist. But most Germans can get next-day or same-day appointments with general practitioners. In 2015, the life expectancy was 83.1 years.
Singapore: Singapore's two-tier system is one of the best in the world.18 Two-thirds is private and one-third public spending. It provides five classes of hospital care. The government manages hospitals that provide low-cost or free care. It sets regulations that control the cost of the entire health care system. People can buy higher levels of deluxe care for a fee. Workers pay 20% of their salary to three mandated savings accounts. The employer pays another 16% into the account. One account is for housing, insurance, or education investment. The second account is for retirement savings. The third is for health care. The Medisave account collects 7% to 9.5% of income, earns interest, and is capped at the $43,500 income. More than 90% of the population enrolls in Medishield, a catastrophic insurance program. The Medifund pays for health costs after the Medisave and Medishield accounts are exhausted. Eldershield pays for nursing home care. Once an employee turns 40, a portion of income is automatically deposited into the account.
In 2009, Singapore spent 4.9% of its GDP on health care. That's US$2,000 per person. In 2015, life expectancy was 83.1 years.
Switzerland: The country has mandatory health insurance that covers all residents.19 Quality of care is one of the best in the world. Coverage is provided by competing private insurance companies. People can buy voluntary insurance to access better hospitals, doctors, and amenities. The government pays for 60% of the country's health care. Dental care is not covered. Vision is only covered for children. The government subsidizes premiums for low-income families, about 30% of the total. There is a 10% coinsurance cost for services and 20% for drugs. These out-of-pocket costs are waived for maternity care, preventive care, and child hospitalization. The government sets prices.
In 2016, health care spending was 12.4% of GDP. It was USD$7,919 per person. There were 11.6% of patients who skipped prescriptions because of cost. Also, 20.2% of patients reported a wait time of more than four weeks to see a specialist. In 2015, life expectancy was 83.4 years.
United Kingdom: The United Kingdom has single-payer socialized medicine.20 The National Health Service runs hospitals and pays doctors as employees. The government pays 80% of costs through general taxes. It pays for all medical care, including dental, hospice care, and some long-term care and eye care. There are some copays for drugs. All residents receive free care. Visitors receive care for emergencies and infectious diseases. Private insurance for elective medical procedures is available.
In 2016, health care costs were 9.7% of GDP. The cost was US$4,193 per person. Only 2.3% of patients skipped prescriptions because of cost. But 29.9% of patients reported a wait time of more than four weeks to see a specialist. To keep prices low, some expensive and uncommon drugs aren't available. Hospitals can be crowded with long wait times. But most measures of health, like infant mortality rates, are better than average. In 2015, life expectancy was 81.2 years.
The United States has a mixture of government-run and private insurance.21 The government pays most of the cost, but also subsidizes private health insurance through Obamacare. Health care service providers are private. Sixty percent of citizens get private insurance from their employers. Fifteen percent receive Medicare for those 65 and older. The federal government also funds Medicaid for low-income families and the Children's Health Insurance Program for children. It pays for veterans, Congress, and federal employees. Despite all these, there are 28 million Americans who have no coverage. They either are exempt from the Obamacare mandate or can't afford insurance.
In 2016, health care cost 18% of GDP. That was a staggering US$9,892 per person. Exactly 18% of patients skipped prescriptions because of cost. But only 4.9% of patients reported a wait time of more than four weeks to see a specialist. In 2015, life expectancy was 79.3 years. The third leading cause of death was a medical error.22 The quality of care is low. It ranks 28th according to the United Nations.
Why does the United States have such high costs and such low quality? Most patients don't pay for their medical services. As a result, they can't price-shop doctors and hospital procedures. There is no competitive reason for providers to offer lower costs.23 The government can negotiate lower prices for those covered by Medicare and Medicaid. But competing health insurance companies don't have the same leverage. Furthermore, insurance and drug companies want to maintain the status-quo. They don't want the government restricting prices. They lobby to prevent universal health care.
Country
Type
% of GDP
Per Capita
Wait 4+ wks
Infant Mortality Rate (2017)
Australia
2-tier
9.6%
$4,798
22%
3.0
Canada
Single
10.6%
$4,752
56.3%
4.5
France
2-tier
11.0%
$4,600
49.3%
3.5
Germany
Mandate
11.3%
$5,550
11.9%
3.1
Singapore
2-tier
4.9%
$2,000
2.2
Switzerland
Mandate
12.4%
$7,919
20.2%
3.7
United Kingdom
Single
9.7%
$4,193
29.9%
3.7
United States
Private
18.0%
$9,892
4.9%
5.7
In 1993, President Bill Clinton pushed for universal health care to lower the Medicare budget. First Lady Hillary Clinton led the initiative. Hillarycare used a managed competition strategy to achieve its purpose. The government would control the costs of doctor bills and insurance premiums. Health insurance companies would compete to provide the best and lowest cost packages. The plan encountered too much resistance from doctors, hospitals, and insurance companies to pass Congress.
In the 2008 presidential campaign, Senator Barack Obama outlined a universal plan. Obama's health care reform plan offered a publicly-run program similar to that enjoyed by Congress. People could choose it or buy private insurance on an exchange. No one could be denied health insurance because of a pre-existing condition. The federal government would expand Medicaid funding and add subsidies.
In 2009, President Obama proposed the Health Care for America Plan.24 It provided Medicare for all who wanted it. Monthly premiums were $70 for an individual, $140 for a couple, $130 for a single-parent family, and $200 for all other families.
Employers could continue offering their plan if it was as good as the national plan. If they elected the national plan, they would pay a 6% payroll tax. The federal government could have bargained for lower prices and reduce inefficiencies.25 That would have lowered health care costs by 1.5% per year. It would have reduced visits to the emergency room by the uninsured.
Too many people were afraid of universal health care. In 2010, Congress passed the Patient Protection and Affordable Care Act. More than half or 57% of Americans incorrectly think the ACA is universal health care. It attempted to enforce mandatory health insurance, similar to Germany's plan. But it allowed too many exemptions. It also allowed states to decide whether they would expand Medicaid. As a result, 13 million people still went without insurance. Trump's tax plan removes the mandate in 2019.
2020 presidential candidate Bernie Sanders proposes a Medicare-for-all universal health plan.26 The government-run program would enroll all Americans. They would have no deductibles, copayments, or out-of-pocket expenses. Sanders would raise taxes to pay for it. The country would transition from Medicare, Medicaid, and all insurance to the new program over four years. The Veterans Affairs and Indian Health Services would remain.
The plan would cover hospital visits, primary care, medical devices, lab services, maternity care, and prescription drugs. It would also cover vision and dental benefits as well as long-term care. Obamacare dropped long-term care because it was too expensive.
The plan would cut administrative costs associated with the variety of insurance plans available today. The New England Journal of Medicine estimates that U.S. administrative costs are double that of Canada.27 A 2011 study estimates U.S. doctors spend four times as much as Canada dealing with insurance companies.28
Although more than half Americans support the idea of universal health care, U.S. health care is not as inclusive as in Germany, Switzerland, France, Singapore, and the United Kingdom. Obamacare is the closest to universality the United States has ever implemented, but it falls short because of its many exemptions.
For universal health care to work, everyone, including healthy people, must pay premiums or additional taxes to pay for health care. This funds the security health blanket for all citizens. Ideally, with a health care system under government regulation, everyone will have access to quality treatments at low costs. Such a system would provide very affordable preventative care and implement strict control of pricing and quality of drugs and medical services.
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