Conventional Wisdom
Millions of Americans have no health care and no way to get it, because they can't afford it.
Facts
For years, we've heard that upwards of 45 million Americans do not have health insurance, as if this statistic alone proves the need for nationalized health care. The problem with this piece of information is that the number is misleading and the implications are false. First, the statistic ignores the fact that 10 million of the uninsured are residents but not American citizens. Even with nationalized health insurance, most of these people would not be covered. Secondly, as reported recently in the New York Times, the totals cited by alarmists include more than 14 million Americans who are eligible for Medicaid but, for whatever reasons, have not enrolled. Medicaid is available to those who are unable to pay for their own medical care. And, finally, these figures also include large numbers of people who can afford to pay for their own medical care, and who can afford health insurance if they so desire, but don't want it.
Another claim we often hear is that "as many as 40 million people in this country do not have access to health care," which is also a false and misleading statement. Every American has access to health care of one kind or another, whether or not they have health insurance. The Public Health Service provides care for poor and indigent patients, including many illegal aliens. On average, each individual treated in the public health system receives $1,500 in free medical care per year, and as much as $6,000 per year for a family of four.80
The fact is, by federal law, no one can ever be denied treatment in an emergency room. While the cost, both to the hospital and the government, for this accommodation is excessive and generally unfair to those who ultimately pay the costs, it is nevertheless a fact of life. And the result of currently existing entitlement programs--including compassionate care in medical emergencies--is that the U.S. government pays for and controls more than half of all health care in this country, and the American taxpayer is already footing the bill.81
No country on earth spends more money per person on health care than the U.S. According to statistics published by the Cato Institute, health care consumers are annually spending more than $1.8 trillion for overall health costs, which is more than we spend on housing, food, national defense, or automobiles.82 And according to one recent report, the government pays directly or indirectly for more than half of the nation's health care. Third party payment systems, however, actually come from a wide variety of private insurers, for-profit hospitals, and employers who often add cost without adding any individual incentive to question or control cost.
Assessment
The U.S. spends more on health care per capita, and spends a larger percentage of its GDP on health care and medical systems, than any other industrialized nation. In effect, more than 85% of Americans have health insurance of some kind, and 100% of Americans have access to basic medical care, whether or not they can afford to pay.
Many who complain about the current system don't realize that the government (i.e., taxpayers) is already paying over half of all health care costs, which is a dramatic change from forty years ago when the government only paid about 10% of health-care costs. Yet those who argue that the high cost of health care somehow justifies nationalized health care and total government control often don't recognize how much of that high cost is due to current government programs, medical providers high insurance costs and federally mandated regulations.
Facts
According to the Bureau of Labor Statistics, health care is the largest industry in America, providing 13.6 million jobs for wage and salaried workers, and about 438,000 jobs for the self-employed. Seven of the 20 fastest growing occupations in America today are health-care related, and it's projected that between now and the year 2016, the industry will generate more than 3 million new jobs--more than any other industry.
Physicians and diagnostic practitioners are among the country's best educated workers; however, most of the workers in hospitals and health-care facilities occupy positions that require less than a four-year college education. That's a lot of involvement, and a lot of brainpower dedicated to maintaining and improving the system.
Another way to see the level of public involvement in this industry is to look at how much of a country's national income is spent on health care. The chart below, prepared by analysts of the Kaiser Family Foundation, shows that in 2003 health expenditures in this country came to 15.2% of U.S. GDP--at least three percentage points higher than for any other country in the analysis. Since the 1970s, the U.S. has committed a higher share of GDP to health care than most other nations, although several other countries had comparable spending levels in 1970 and 1980.
Total Health Expenditures Per Capita, U.S. and Selected Countries 2003
Insert Chart 16_A (Per Capita Health Expenditures)
Note: Amount in U.S. Dollars PPP 83
Since that time, however, health-care spending as a share of GDP has grown more rapidly in the U.S. Between 1980 and 2003, the U.S. share of GDP devoted to health grew by 6.4%, which is more than 2% more than any other country analyzed in the Kaiser study. A separate report by Uwe Reinhardt of Princeton University estimates that health care costs may top 28 % of U.S. GDP by the year 2030.
Conventional Wisdom
Universal health care would solve all our problems and improve health care for most Americans.
Facts
When it comes to health care, the old saying, "There's no such thing as a free lunch," is correct. In their assessment of the U.S. health-care dilemma published in the Chicago Tribune, Dr. Ezekiel J. Emanuel, who is chair of the department of bioethics at the Clinical Center of the National Institutes of Health, and Dr. Victor R. Fuchs, a professor of economics at Stanford University, offered the following strong dose of reality:
Americans believe employers pay the bulk of workers' premiums, government pays for Medicare, Medicaid and the State Children's Health Insurance Program, and individuals pay some premiums as well as deductibles and co-pays. This is wrong. Business, government and individuals do not share the financial responsibility for health coverage. Individuals bear the full cost of health care through lower wages and taxes.84
Unfortunately, a lot of Americans aren't getting the picture. An ABC News/Washington Post poll conducted by telephone in October 2003, with a random sample of 1,000 adults, found that 62% of those surveyed would prefer a national program of universal health care to the current employee-based system in this country, while just under a third said they preferred to leave things alone. However, respondents also said that if a nationalized system would mean restrictions on patients' choice of physicians or longer waiting lists for non-emergency treatment, fewer than 40% would favor the idea of universal health care.85
For the first time in the last twenty years, more than half of respondents to the ABC poll (54%) said they're dissatisfied with the quality of health care in this country. However, it was also noted that 82% of those with existing coverage have a positive view of the health care system. And among respondents who said they had experienced a serious or chronic illness in their family during the previous year, 91% said they were satisfied with the care they received, and 86% said they were satisfied with their medical coverage.
Among all Americans, including those who lack health insurance, large majorities expressed overall satisfaction with their quality of health care (85%), with their ability to see a doctor (83%), their ability to see a specialist (78%), and their ability to get the most sophisticated treatment available (77%). With such high approval ratings for the current system, one has to wonder what the 62% who said they favor universal health care can be thinking.
Among those without health insurance, ratings were generally lower; however, 69% of those respondents still rated the quality of their health care positively; 73% were positive about their ability to see a doctor; 55% were satisfied with their ability to see a top-quality specialist when needed; and 58% were satisfied with their ability to get the latest treatments.
Assessment
What the opinion polls actually show is the degree to which the public has been confused and divided by media coverage of this issue. Older Americans are naturally nervous about the availability and quality of health care and, in some cases, may be led to give unrepresentative answers to polls of this nature, in order to express their concern. Those few younger Americans who actually respond to polls of this type tend to report what they hear from friends, news reports, or the conventional wisdom of their peers.
A 2007 Harris/Wall Street Journal poll found that 76% of respondents thought that a nationalized health insurance plan for individuals who are uninsured under the current system was a good idea. However, when asked if they were willing to pay higher taxes to support the Medicare and Medicaid expenses of those individuals, the numbers flipped, with only 26% responding in the affirmative. In the abstract, most Americans think it would be a good idea to help the poor and disadvantaged; but when they understand the social and economic realities involved, most people tend to take a much more practical view.
A 2008 study from the Harvard School of Public Health reported that Americans are split by political party over whether they think socialized medicine would make the U.S. health-care system better or worse. In a survey conducted by university researchers, 70% of Republicans said national health care would be worse than the current system, while 70% of Democrats said it would be better.86 Again, the issue isn't whether or not the existing system is satisfactory or if the quality of care is adequate, but other factors, such as economic feasibility, or belief in the government's ability to manage this massive and diverse industry.
Managing an Unruly Giant
A comprehensive study of the cost of government health-care regulation and the cost of medical care by Christopher Conover, a research professor at Duke University, reveals that the total cost of health services regulation in this country exceeds $339.2 billion. That figure includes regulation of health facilities, health professionals, health insurance, drugs and medical devices, and the medical tort system, including the costs of "defensive medicine."
Even if the analysts were to subtract the $170 billion in savings provided by certain beneficial regulatory measures, the net cost of health-care regulation still tops $169 billion annually. In other words, as the report's author concludes, the costs of health services regulation outweighs the benefits by a factor of two-to-one, and government's involvement in overseeing existing systems costs the average household more than $1,500 per year.87
But the darkest chapter of this story isn't necessarily the skyrocketing financial costs, but the costs in terms of human dignity and well-being. In the U.K., Canada, Scandinavia, and other places where national health care has been implemented, it can take from four to six months simply to get an appointment to see a physician. At that point, it may take more weeks and months to be admitted for treatment, even when the treatment is for serious illnesses, including heart disease, cancer, or other potentially fatal conditions.
Since costs and access to treatment in these national programs are rationed by government regulators, elderly patients often find themselves at a distinct disadvantage, and may be denied care altogether. Younger patients with longer life expectancy are generally given first priority in these systems. And because everything from the price of medicine to the salaries paid to doctors and nurses are regulated by the government, patients can suffer because of cost-cutting measures that hold down costs but penalize the individual patient.
In June 2001, a study of patient care under Britain's National Health Service (NHS) showed that more than 1,038,000 citizens of that country were on the hospital waiting lists, with no guarantee they would ever see a physician. Of those, 76,000 had been on the list for more than three months. Some had been waiting for as long as eighteen months, and many of these had long-term and potentially fatal diseases.
But the citizens of Britain and Canada aren't the only ones complaining. Other studies report that thousands of British and Canadian doctors are immigrating to this country because of their government's limitations on what they can and cannot prescribe for their patients. Physicians' requests for treatment authorization for serious health issues are frequently, and inexplicably, refused by the bureaucracy. In some cases this is reportedly due to cost controls; in other cases it appears to be the whim of the particular bureaucrat who fields the request.
A Bureaucratic Nightmare
The left-wing filmmaker Michael Moore boasted in his mockumentary, "Sicko," that the national health services of Britain, Canada, and even Cuba, were far superior to the American system. But, in fact, large numbers of Britons and Canadians are forced to go abroad to get the treatment they need, traveling to other parts of Europe, Asia, and even farther away for better and faster access to medical care. Needless to say, Cubans aren't free to travel anywhere.
Most of the European and Canadian "health tourists" wind up paying for treatment out of their own pockets, despite the fact that most are already paying as much as 20% in taxes in their home country for "free health care." According to a report in the London Sunday Telegraph, more than 70,000 Britons traveled abroad for medical treatment in 2007 alone. And the NHS estimates that as many as 200,000 Britons will choose to leave the U.K. for treatment by the end of this decade.88
Patients are reportedly traveling to Germany, Poland, Spain, Hungary, and Turkey, and some even travel as far as India, Pakistan, and Malaysia for treatment. The Internet website TreatmentAbroad.com reports that Britons have traveled to 112 foreign hospitals in 48 countries to find safe, affordable care. Because of crowding, inattentive health-care providers, and other lax conditions in many of Britain's public hospitals and clinics, there has recently been a chilling rise in serious infections from the spread of Staphylococcus bacteria and other viral illnesses in unsanitary conditions.
The Telegraph article indicates that there has been a 500-percent increase in diagnosed cases of the deadly superbug Clostridium difficile in just the last 10 years. No wonder a spokesperson for Britain's Patients' Association told reporters that, "People are simply frightened of going to NHS hospitals, so I am not surprised the numbers going abroad are increasing so rapidly." The emotional stress and expense of escaping from the NHS can be extreme, and those who go are often forced into difficult financial straits as a result. But a nationwide survey reported that almost all those who have traveled abroad for treatment say they would gladly do it again if the need should arise.
What About the Clinton Plan?
The main components of the nationalized health plan first promoted by Senator Hillary Clinton in 1993, and modified slightly in her 2008 presidential campaign, is essentially a federally mandated insurance program. What the candidate has called the "American Health Choices Plan" is an "individual mandate" that would require all Americans to purchase health insurance, with the guarantee that the government will make insurance available to everyone at "affordable prices." To accomplish this, her plan would create a government-regulated national pool from which individuals would be able to purchase the insurance they need. Those already insured under existing programs would be able to choose whether or not to keep their current health coverage or switch to the national plan. But health insurance would no longer be optional.
The Clinton plan would also force businesses that don't offer health insurance to pay a new "Health Choices Tax." In order for a health insurance provider to sell its policy in the national pool, the federal government would demand that insurers cover all applicants, regardless of pre-existing health conditions or ability to pay, and that premium levels would be indiscriminate, regardless of the individual's health status when they apply. All premiums would be determined by the government and wouldn't be allowed to exceed a predetermined percentage of the insured's total household income. Senator Clinton's advisers have said the plan will cost U.S. taxpayers an additional $110 billion per year.89 But if biased proponents of the plan admit to an annual cost of $110 billion, we can only wonder what the actual cost would turn out to be.
The Senator says her program would provide universal coverage for all Americans, but this also means that the program will be mandatory and will impose a universal tax to pay for it. Still, there's no guarantee the quality of care provided by the plan would be comparable to the care currently available in the free market system. Most of those who are currently uninsured are individuals who are not willing to pay for insurance, whether private or public. Some may be healthy enough not to feel the need for health insurance. Others may simply want to avoid another large monthly expense. A sign of the lack of enthusiasm for such programs is the fact that only about half of those qualified for coverage under the State Child Health Insurance Program (SCHIP) have bothered to enroll.
Before we suddenly decide that government ought to be paying more for our health care, we need to pause long enough to see who's really paying these costs. The health-care specialists cited above make the point very well in their Chicago Tribune article, where they write:
The government's funds for health care don't come from governors, senators, representatives or the president. When government pays for increases in health-care costs, it taxes current citizens, borrows--asking future taxpayers to foot the bill--or reduces other state services that benefit citizens. Health-care costs are now the single largest state expenditure, exceeding even education.90
Whenever "government" is asked to pay for anything, they simply increase your taxes. And the bigger the program, the more you will pay.
Conventional Wisdom
The private Health Savings Accounts (HSA) promoted by the Bush administration would not be adequate to handle the medical needs of most Americans.
Facts
One of the major benefits of the Health Savings Accounts (HSA) proposed by the Bush administration is that these tax-protected accounts will allow consumers to avoid higher taxes and, at the same time, escape the rising costs of health care. Because they offer lower premiums and a high-deductible approach, HSAs will make health insurance more affordable for most Americans. An indication of how dollar-smart they are is the fact that many banks, insurance companies, and mutual funds have switched to HSAs for their employees. Many financial analysts are now saying that HSAs are superior to the Roth IRAs, which have served a similar purpose in the past.91
It's true that the federal government is picking up more of the tab for America's medical bills. Studies by the Centers for Medicare and Medicaid Services report that total spending on personal health is expected to double over the next eight years to more than $4 trillion. At that point, they say, government programs such as Medicare, Medicaid, and SCHIP will account for about half of all health spending, and taxpayers will be less free to choose private health insurance for their families.
Assessment
Ever since proposals for universal health care first began making headlines in this country in the early-1990s, university researchers, sociologists, and pundits in some of America's liberal think tanks have been at the forefront of the debate, offering ideas, proposals, and theories to support the prospect of universal health care. Recently, however, as pointed out in a new study from the National Bureau of Economic Research (NBER) at Harvard University, some of these public figures seem to have changed their minds and decided that socialized medicine doesn't actually work. In a survey of academics in 20 developed countries, the NBER survey found the following surprising conclusions:
1. There is no general relationship between the way countries pay for health care and their ability to control costs. Public versus private financing, general revenue versus payroll taxes, third-party versus out-of-pocket spending--nothing seems to matter very much.
2. Government provision of health care is only modestly progressive. In Canada, people in the bottom two income quintiles--which represents 40% of the population--receive about 50% of all the health care benefits. Moreover, relative to health care needs, Canada's health care spending may not be progressive at all. That is, the benefits of the subsidized programs may not be going to those at the lower end of the economic spectrum. Among people with similar health conditions in the European Community, "higher income people use the system more intensively and use more costly services than do lower income people."
3. Marginal increases in health care spending may actually be regressive, meaning that the benefits of the program may be serving those who are least in need of government assistance, while those with the greatest need often go unserved. This is especially true if extra spending buys specialist services and elective procedures. "In Canada, high income people make disproportionate use of elective surgical procedures, such as hip and knee replacements."
4. Most surprising perhaps, the academics concluded that government provision of health care has little impact on the general well-being of society. When economists assign a dollar value to health care and add it to monetary income, national health insurance has very little impact on overall economic inequality. Providing universal health care does not elevate the status of the poor, and does not heal all of society's wounds, as some had expected.
5. On the other hand, increases in health care spending crowd out other government programs. Redistribution through government-funded health care partly replaces other redistributive government programs, the report says, and penalizes the broader spectrum of government-funded initiatives. What low-income people gain in health services may be offset by reductions in housing or education benefits. Which means that, in the end, there is no good reason to change what we're doing now, particularly since the American health care industry is universally recognized as one of the best, if not "the best," in the world.92
Toward a Real World Solution
Unfortunately, health care is never a "one size fits all" affair. The needs of adults and children can vary greatly, and the variance in the treatments prescribed for accident victims, the chronically or terminally ill, and those who opt for elective surgery are as different as night and day. There are significant differences in treatments for men and women, as well, and under today's system of private care and personal health insurance, individuals are free to opt for clinics and board-certified physicians who specialize in the areas of medicine that are most helpful to their needs. By its very nature, however, this is not an environment in which government customarily succeeds.
Catastrophic health insurance can be a god-send for those who find themselves incapacitated by strokes, cancers, heart disease, or other debilitating conditions. But, again, this is not an area where government-funded health insurance is likely to be of much help. When the state is paying for it, there's no guarantee of a high level of personal care. It's in the best interest of physicians and other health-care providers to please their clients, and in a government-funded system where Uncle Sam is paying the bills, that means the well-being of the patient may not be the health care provider's first priority.
According to an insightful commentary in the Wall Street Journal, the most important change government can make to improve health care in America would be to reduce the amount of regulation on health care providers, insurers, and the medical service industry. As previously stated, the real culprit in this whole business is the high cost of medical care imposed by federal regulations. As the Journal article points out, "Each percentage-point rise in health-insurance costs increases the number of uninsured by 300,000 people." 93 In other words, the escalating cost of the annual insurance premium will drive large numbers of Americans out of the market.
This, in turn, creates a vicious spiral, because when healthy individuals opt out of insurance, the costs for those who remain in the program will naturally rise. For many employees, the rising cost of health insurance can be a serious drain on disposable income, and this is one of the major reasons for the large numbers of uninsured so often cited by the media.
The long and short of it is that the answer to America's health care problem is not more regulation, more taxes, and more federal control. A free-market system is the best way to rein in costs, to encourage innovation in treatment and care, and to improve quality overall. The first step in fixing the system ought to be recognizing that current federal regulations and policies mandated by Congress are preventing the market from doing its job. If Congress would spend as much time simplifying the bizarre network of rules and regulations that restrict free enterprise as they do erecting hurdles for the health care industry to leap over, things would get better before you know it.
Poorly conceived federal tax policies, insurance regulations, and barriers to participation in the system have taken the decision-making away from the consumer and put it into the hands of third-party payers, which has devastated competition and led directly to today's health-care crisis.
A Critical Assessment
The key to reducing the U.S. health-care system's excessive cost without damaging its ability to innovate is to allow competitive market forces to operate. These forces have worked in every other market to keep costs low and improve quality. There is no reason why they won't work in health care. Attacking the tax code's bias against efficient and cost-effective health insurance is fundamental to creating an economically sound health-care system.
--John F. Cogan94
We can only concur with the authors cited above when they say that America's health-care policy has arrived at a dangerous crossroads. What we decide in the coming months will make a huge difference in how well we live, and how dependable our health-care options will be for the foreseeable future. Either we will continue on the march toward a government-regulated nightmare of a health-care system, or we will decide at long last that a free-market solution that puts consumers back in charge of their own destiny is the only reasonable option.
The federally-controlled policies and promises being made by politicians in Washington can only lead to fewer choices and a serious lack of innovation. A free-market solution, on the other hand, will put the future of our health-care system back into the hands of consumers and their doctors, where it belongs.
John C. Goodman, "A Plan for Real Health Reform," Heartland Institute: Health Care News, May 1, 2008. [http://www.heartland.org/ Richard E. Ralston, "Private Health-Care Options Must Be Defended," For Health Freedom, July 24, 2007. [http://forhealthfreedom.org/ March 18 Policy Analysis ^ Break in series; see "Comparability over time" at http://www.irdes.fr/ecosante/ * OECD estimate. Source: Organisation for Economic Co-operation and Development. OECD Health Data 2006, from OECD Internet subscription database updated October 10, 2006. Copyright OECD 2006. Available at: http://www.oecd.org/health/ Ezekiel J. Emanuel and Victor R. Fuchs, "Who really pays for health care?" Chicago Tribune, Mar. 27, 2008 . [http://www.chicagotribune. Gary Langer, "Health Care Pains: Growing Health Care Concerns Fuel Cautious Support for Change," ABC News, Oct. 20, 2003. [abcnews.go.com/sections/ "Poll Finds Americans Split by Political Party over Whether Socialized Medicine Better or Worse than Current System" Harvard School of Public Health, Feb. 14, 2008. [http://www.hsph.harvard.edu/ Christopher J. Conover, "Health Care Regulation: A $169 Billion Hidden Tax," Policy Analysis No. 527; Oct. 4, 2004. [http://www.cato.org/pubs/pas/ Laura Donnelly and Patrick Sawer, "Record numbers go abroad for health," London Sunday Telegraph, Oct. 28, 2007. [http://www.telegraph.co.uk/ Kevin A. Hassett, "Hillary and Health Care Prove a Toxic Mix Again," Bloomberg.com, Sept. 24, 2007. [http://www.aei.org/ Ezekiel J. Emanuel and Victor R. Fuchs, op cit. Richard E. Ralston, "Health Savings Accounts (HSAs) Ease Tax Burden," Americans for Free Choice in Medicine, Malcolm Kline, "Academics Downgrade Socialized Medicine," Accuracy in Media, Mar. 25, 2008. [http://campusreportonline. Daniel P. Kessler, John F. Cogan, and Glenn Hubbard, "Healthy, Wealthy, and Wise," Wall Street Journal, May 4. 2004. [http://healthpolicy.stanford. John F. Cogan, "Bringing the Market to Health Care," Wall Street Journal, Sept. 15, 2007. [http://online.wsj.com/
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