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10 Reasons Why Fiscal Conservatives Should Reconsider Universal Healthcare

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Author: Craig Berlin
Created: 28 March, 2017
Updated: 21 November, 2022
9 min read

After 7 years of the controversial PPACA and promises by candidate Donald Trump to repeal and replace, Republicans found themselves unable to pass their own bill. With critics ranging from conservative Republicans who saw the AHCA as “Obamacare Lite” to others worried about short-term loss of coverage, Speaker Ryan couldn’t garner the votes and Republicans pulled the bill, leaving Obamacare as “the law of the land.”

The failure to pass any kind of bill, much less an improvement, leaves Democrats with a political victory but many Americans without good options.

Obamacare has been a savior for some, but a nightmare for others, and dissatisfaction was one primary factor in Trump’s election and the GOP’s continued hold on Congress and state governments. Yet their failure to pass a healthcare bill that doesn’t just pass their ideological muster but creates more problems than it solves is likely to be political suicide in addition to a failure for the American people.

Since I wrote about possible alternatives for fiscally responsible approaches to healthcare reform, Obamacare’s problems have only gotten worse and the GOP hasn’t presented a viable solution.

The United States remains one of the few developed countries that doesn’t offer some sort of universal healthcare and discussing such a system continues to exemplify the ideological divide: those who want more government involvement in healthcare and those who want less. Ultimately, what matters most is what works.

Serious attempts to institute some sort of national health insurance go at least as far back as the Truman administration and mandates leading up to Obamacare date back to Nixon. The right largely continues to object to government involvement in healthcare, particularly at the federal level, while many on the left believe the only solution is single-payer. The path to a solution would seem simple enough if we were developing some sort of new product to compete with similar successful models already on the market.

Some of the debate revolves around where the Constitution delineates the duties of the federal and state governments. Obviously, medical care is not mentioned as the concept as we understand it did not exist. Developments the Founders could not have envisioned complicate the argument: interpreted strictly, there is no provision for the FAA or NASA and many other things. Obamacare, as with Social Security and Medicare, gets around this issue as a tax.

Let’s be clear: contrary to the claims of some, healthcare and anything else that must be provided by someone else is NOT a right; however, that does change that it is a basic human need -- one we should consider important enough to ensure affordable access for all. Does the end justify the means?

For those who wish to avoid the slippery slope of entitlements and federal overreach, we should focus on things that are fundamental. Yet Irish president Michael D. Higgins pointed out some time ago that working up to three jobs in the United States without a social floor -- including basic healthcare -- doesn’t seem reasonable in a country with our technology and resources.

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In studying the highly-touted system in Singapore for the Brookings Institution, William A. Haseline wrote, “such a healthcare system can only be imposed by a controlling government. My answer to these challenges is that I am a scientist trained to look at what works. “

We’ve been through a lot in creating the system prior to more recent attempts at reform and the partisan back-and-forth nonsense leading up to the passage of Obamacare. I have yet to find anyone who advocates a completely market-based system who can tell me how those of lesser means will be taken care of. Nevertheless, people should consider what might help to create an excellent market-based system regardless of what we do to fill in the gaps. A free market is also not one with zero regulation and some may be needed to avoid anti-competitive situations and unfortunately, much of what we've created is just that.

Some basic concepts for moving forward:

1.  If we do not reduce the cost of care in this country, no version of reform will be sustainable.

While many people believe that only government-run or supervised healthcare is the answer, it is not a panacea for everything as evidenced by the VA and the UK's National Health Service. Market reforms, some of which involve rescinding bad legislation, are imperative no matter what course we choose.

The McCarran-Ferguson Act, which gives certain antitrust exemptions to the medical industry, the excruciatingly long FDA approval process, lack of transparency in medical costs and inefficient payment systems, among other things, are severely problematic. I’ll address these in a future article, which will illustrate reforms that would make dramatic improvements without a government-sponsored healthcare program and should be reviewed no matter what direction we go.

2. Universal healthcare and “government-run healthcare” or “socialized medicine” are not synonymous.

There are examples of these, such as the VA and the NHS but other options such as public-private partnerships, partially socialized health insurance or individual mandates are successful abroad.

3. Government may be called upon to address deficiencies in the private sector.

James Kwak, co-author of White House Burning: The Federal Debt and What it Means to You, observed:

“[Can government] provide equivalent service at lower prices? For the vast majority of consumer goods and services, it can’t. That’s why we buy our phones and computers from private companies like Apple, not from government agencies.

The usual argument...is a blind assertion that the government can never provide services that rival the private sector. That’s what you learn in Economics 101; therefore, it must be true. But real economists have known for more than half a century that healthcare doesn’t behave like ordinary consumer goods.”

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4. While no system is perfect, there are systems that work well.

Opponents of UHC routinely point to problems with the NHS, the VA and Canada or Cuba. However, many other countries provide UHC without a single-payer model and regardless of methodology, have lower costs and better outcomes with higher patient satisfaction.

5. Universal healthcare is generally not provided “free.”

With the exception of the poor or disabled, 100% participation is a huge actuarial benefit so premiums or taxes can be low because the tax base is broad. This could be via a transaction tax, meaning everyone would contribute including the large underground economy and everyone who might otherwise avoid paying into the system.

Further, we currently foot the bill for unpaid emergency room visits, either via taxes or increased costs, and also subsidize low cost providers. A simpler, more comprehensive system makes sense.

6. Countries with UHC spend less than half of what the U.S. spends on healthcare per capita and less as a percentage of their federal budgets and GDP.

We currently spend more than any other advanced nation in the world and cover far fewer people.  This doesn’t mean higher taxes either: in Australia, the program is funded by the Medicare Levy, currently set at 2% of a person’s taxable income with adjustments for low earners and families. This also funds national disability insurance. As of 2016, there is an additional levy of 1-1.5% for individuals on incomes starting at approximately $69,000 USD for individuals and $137,000 for families. Doing a little math, that means someone earning $70k/year (taxable) pays $2100/year or $175/month.

7. Having public options does not have to eliminate the private sector.

Most countries do not have exclusively government providers. In Australia, doctors are mostly private sector and 47% of citizens also retain private insurance even though they are entitled to free treatment in public hospitals. They receive a means-tested tax credit of 10-30% of their premiums, increasing to 35% or 40% for people over 65.

In Switzerland, doctors are also not employed by the government and their system is based entirely on buying insurance from private companies.

8. Universal healthcare does not mean no personal responsibility.

It is not reasonable to expect people who live healthy lifestyles or those who are ill or injured through no fault of their own to bear the brunt of paying for others who are self-abusers. The system could be structured so that people who strive to be healthy are properly incentivized compared to those who are morbidly obese, use tobacco or abuse alcohol or drugs. As our current system has no effective way of dealing with this problem, any sort of accountability in this area would be an improvement.

In Singapore, a national focus on health has produced some of the best outcomes at the lowest cost in the world by putting “emphasis...on individual responsibility supported by an enabling state.”

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9.  Our government's involvement in healthcare is fractured, and thus is inefficient and lacks cost controls.

Medicare, Medicaid and the VA, among others, are involved in providing medical care to only some U.S. citizens need reform. Medicare works fairly well for patients but has sustainability issues. It might seem better to extend that in some way to all citizens rather than continuing on our present course but only if we implement what works well and avoid the pitfalls.

10. Any program does not have to be run entirely by the federal government or its role can be different.

States can be involved in administration and as with Medicare and Medicaid and other countries, private insurance can play a major role.

In Switzerland, individuals are responsible for their own insurance and since companies are allowed to compete nationwide, the Swiss shop for the best deal. The insurers are nonprofit and regulated but over 99% of Swiss citizens are covered. Ross Douthat also commented on Singapore’s system recently in the New York Times, noting “Singaporean structure does not necessarily minimize state involvement or redistribution. It minimizes direct public spending and third-party payments, while maximizing people’s exposure to what treatments actually cost.”

Americans are largely either inherently disdainful or welcoming of the idea of UHC. We should be skeptical but open to unbiased comprehensive data. The USA is large and diverse, yes - but when a country covers everyone spending a smaller percentage of the federal budget than we do with military budget a fraction of ours, that merits investigation.

It should be common sense to study what works—and what doesn’t. That would generally be a good proposition for anything: finding ways to not isolate our conversations to more or less government but rather, priorities and better government. Further, as mentioned earlier, we must address why the cost of healthcare is so much higher in the U.S. regardless.

As I’ve said in the past, the point is not a blanket endorsement of universal healthcare no matter what the circumstances but to learn what best practices we can adopt and problems we can fix. To continue partisan bickering over half-baked non-solutions remains…unhealthy.

Photo Credit: Zerbor / shutterstock.com

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