Currently, in US politics, healthcare is probably the most discussed and most important public policy challenge. It is essential for every potential presidential candidate and it may turn out to be as important as immigration in the previous elections.
The election of new Congress members and the potential Democratic candidates with somewhat of ‘Medicare for all’ attitude acknowledges this fact. There are around 28.5 million uninsured people in the US or 8.8 percent of the population is without health coverage.
The National Health Expenditure Accounts (NHEA) are the official estimates of total health care spending in the United States. Their numbers show that Americans are spending $10,739 per person on healthcare and roughly 18 percent of the nation’s Gross Domestic Product – GDP. These are high numbers if you compare it with the other countries in the OECD where health spending is estimated to have accounted for 9.0% of GDP on average.
USA healthcare system
The US has a very complicated scheme of multiple players in the sector which involves private and government health options. Most of Americans have private health coverage 67.2 percent while 37.7 percent have government-based coverage. The most prevalent type is employer-based covering 56 percent followed by Medicaid (19.3 percent), Medicare (17.2 percent) and 16 percent by direct- purchase coverage.
The two major government types are Medicaid and Medicare who are responsible for ensuring the older and the economically week part of the population. Medicare is a national health program who provides insurance to Americans aged 65 and older and also younger people with disability status. Medicaid is a different program jointly funded on a federal and state level which helps with medical cost for people with low income and with limited resources.
The Affordable Care Act (ACA) or Obamacare significantly raised the funding and the categories of people that are eligible but it also left millions of Americans still uninsured. A public opinion poll of Gallup highlights that 71% say the system is “in a state of crisis” or “has major problems” with Republicans becoming more critical in the past decade.
It is also worth as mentioning that as one party takes the presidency the other becomes more critical of healthcare and they are basically canceling each other out. But besides this fact, the numbers are really high and have an upright trend of dissatisfaction with the healthcare sector.
The everlasting higher costs for healthcare while life expectancy is declining have turned the public opinion into seeking a better solution. As a reference point are taken other healthcare sectors from the countries of the OECD who are having a single-payer model.
What does single-payer healthcare means?
In the US, the current model is based on multiple payers who are competing in the sector. It is based on the premise of a free market that can deliver better healthcare for everyone. But this complicated network is pushing administration costs up, and it is fundamentally flawed because it doesn’t have price control.
Furthermore, insurers can decide who is eligible for insurance depending on their health because they will lose profits if they are insuring unhealthy people. Many countries have acknowledged this distortion of the free market in the healthcare industry and established single-payer systems.
Single-payer means there is one single government agency that takes the responsibility of providing healthcare for every citizen. It is basically a monopoly state on healthcare with one provider with something like “Medicare for all.”
Monopolies are bad and are distorting sectors in the economy but in healthcare it is giving advantages to the insurers to have access to universal healthcare plans established by the government agency. The government is in a superior position to take down costs and establish healthcare plans for every citizen. It can arrange bulk prices on medicine and materials which can end the privately determined prices of the hospitals for their services.
It takes away the possibility for the hospitals to reject the government because they will become uncompetitive. In this way monopoly on the sector provides leverage for the economically weak and less fortunate parts of the population.
Single-payer healthcare models
It is worth mentioning that Universal Health Coverage is not the same as Single-Payer Health Care. While with Single-payer models, almost everyone has insurance, it means that healthcare is provided by one source. In a single-payer system, every country has its structure established by the country needs.
The main concern is cost, how to provide the funds, and what to be included in the insurance plans. Depending on how the government develops its structure, it can develop ‘socialized’ medicine, insurance mandate or a two-tier structure.
In the first system, the government collects taxes from its citizens for healthcare, and the services and employees are government-owned. The best example of this system is the United Kingdom.
An insurance mandate requires everyone to buy insurance either by their employer or the government. Germany uses this system.
In a two-tier approach, the government uses taxes to provide basic government health service while leaves room for supplemental private insurance for better service. This system is used by France and it is very similar to the newest proposal form senator Bernie Sanders. Sanders’ Medicare for all’ plan proposes to enroll everyone into nation-wide insurance plan which will eliminate deductibles or co-payments, and there will be no opting out. But in the two-tier model citizens will have the option to buy supplemental insurance coverage for their needs.
What is the real cost of single-payer healthcare?
For supporting a single-payer system, there is a need for bigger taxes which can turn the public opinion against this option. To fund the bill Sanders proposes 7.5 percent payroll tax, plus a 4 percent income tax on all Americans and other taxes for high-income Americans. But these are only options and are not included in the latest version of the bill.
The Mercatus Center at George Mason University estimates that the proposal would lead to a $32.6 trillion increase in federal spending over a 10-year period. But it also suggests that national health expenditures could decline by about $2 trillion over the same 10-year period.
It is also true that national health expenditures refer to all spending and not only for federal spending and with current high pharmaceutical and administrative costs it may prove that this is an exaggerated increase.
It may be that the political implications are greater than the financial for establishing a single-payer with plenty of powerful stakeholders opposing this movement. Health insurers, organized medicine, and pharmaceutical companies are powerful lobby groups that can easily invest and shifts the public towards the cons of a single-payer system.
For every citizen to have healthcare, there are trade-offs that need to be addressed and these are strong arguments for the opposers. In this system, costs are lower but it leaves little incentive for quality healthcare because doctors will probably need to have smaller wages.
There will be fewer funds for new research and life-saving technologies and also there will probably be some problems with the waiting periods for insurers.
For the American public, to get the whole picture there needs to be a productive public debate across party lines to see all the pros and cons of such a system. One thing is true, the healthcare in the US is unsustainable if we compare it with the other developed industrial countries.
It is confusing and has unhealthy competition over the end consumer-the patient. This is best depicted by the incident reported by NPR for the 44-year-old teacher and triathlete Drew Calver who had a heart attack.
With huge numbers of citizens going bankrupt over healthcare and in a time of distress and life-threatening conditions, the first thing they are wondering “does my insurance covers this” is undoubtedly a system that needs to be changed.
