June 10, 2017    7 minute read

The US Health System: Not The Cheapest And Not The Best

Underlying Issues    June 10, 2017    7 minute read

The US Health System: Not The Cheapest And Not The Best

It seems like no one likes the current US healthcare system, but no one seems able to come up with a replacement. Universal healthcare seems to be a nonstarter, at least under that label.

In many politicians would consider an embarrassing blunder while meeting Australian Prime Minister Malcolm Turnbull, President Donald J. Trump said, “We have a failing health care – I shouldn’t say this to our great gentleman and my friend from Australia, because you have better health care than we do.”

No one believed Trump was making an honest or informed statement. He was just schmoozing, blindly praising his guest and criticising the US Patient Protection and Affordable Care Act – colloquially referred to as the ACA or Obamacare – on the theory that any health care would be better than what the US currently has.

He most certainly did not know that Australia has a form of universal health care, which is anathema to his Republican Party.

Universal Health Care

The irony is that Trump, a businessperson, once espoused universal healthcare (in so many words) in his 2000 book ‘The America We Deserve’. He made similar statements while campaigning to be President in 2016 and as president-elect, adding that everybody would have health insurance whether they could pay for it or not.

That includes treatment for substance abuse – alcohol, prescription pills, illegal drugs – one of ten essential health benefits mandated by Obamacare. Trump promised to help addicts get and stay clean. Although he has reputed to never have abused any drugs, Trump’s elder brother was an alcoholic, and the President probably knows many businesspeople who have gone into executive rehab for drug abuse. Perhaps this has made him compassionate towards addicts.

If Trump was indeed in favor of universal health care, it is odd that he was so enthusiastic about the proposed American Health Care Act of 2017 (AHCA) recently passed by the US House of Representatives. AHCA would eliminate Obamacare’s modest steps towards federally mandated universal health care in favor of state-managed universal access.

And while it does not remove the essential benefits requirement, including substance abuse treatment, it allows states to opt out. If they did – proponents say few states would – substance abuse treatment would be available only if you could afford it on your own, at a bare bones facility or at a luxury executive rehab.

Demonising Socialised Medicine

Resistance to universal health care is in part due to it being demonised as socialised medicine, or even socialism, since at least 1920. The term was used again in 1947 by the American Medical Association (AMA) to scuttle a national health care system proposed by President Harry S. Truman. Since the Cold War with the Soviets began, anything described as socialism has been guilty by association.

Then there is the fact that Americans hate being told what to do, including paying taxes. (That is why the pre-Revolutionary War incident in which US colonists, dressed as Native Americans, threw crates of British tea into the harbor in Boston, Massachusetts – affectionately known now as the Boston Tea Party – is remembered as a tax revolt. Instead, it really was a protest of artificially low taxes on tea, which made the colonists’ smuggled tea unprofitable.)

Americans even hate taxes if they cover costs that they would otherwise pay for out-of-pocket, like healthcare insurance, prescription drugs, and fees for doctor office visits. Many politicians in the US believe that one has the right to make uninformed decisions, including on subjects about which you know little – such as health care – especially if it will save richer and smarter Americans some money.

Employer-Provided Health Insurance

Rather than government-provided health insurance, the US typically has employer-provided health insurance. This is because during World War II, when price controls did not allow employers to lure employees away with higher wages, they started offering other, nonsalary enticements, such as health care. Soon it became a conventional, accepted, and expected benefit, though it was not required by law.

Since younger people tend to be healthier and poorer, they often put off purchasing health insurance, expecting they will eventually receive coverage from an employer. That is no longer as safe a bet. As the economy changed, unemployment rose and health care costs increased (faster than in Europe), smaller employers are no longer as willing or able to pay their employees’ insurance. Some even decline to hire employees full-time to avoid paying benefits.

Without employers providing insurance and with wages stagnant, even people with good jobs have found it difficult to afford or obtain insurance. (Estimates of the number of Americans without health insurance range from 15m to 45m, depending in part on whether you include undocumented immigrants.)

Higher health insurance costs may be partially responsible for overall wage stagnation. The Medical Expenditure Panel Survey (MEPS) found that the average premium for an individual health insurance plan more than doubled from 2001 to 2015, from $2,889 to $5,963.

The Costs of the American Health Care Act

According to the Organisation for Economic Co-operation and Development (OECD), in 2015 the amount of health spending per person in Australia, Canada, France, Germany, and the United Kingdom ranged from $4003 to $5267, while in the U.S. it was $9451.

The U.S. cost as a share of gross domestic product also is higher – in the U.S., 16.9%, as opposed to 9.3% to 11.1% in the other five countries – while life expectancy is shorter. Something needs to change, but the AHCA may not be the way to go.

An analysis of the AHCA by the nonpartisan Congressional Budget Office estimates that it will remove 23m Americans from health insurance, either voluntarily (they will no longer be required to purchase it) or involuntarily (fewer employers will offer it, fewer employees would be able to afford it).

According to a Crain’s Detroit Business reading of the AHCA, if the legislation passes, $6bn in tax credits that defrayed the cost of small businesses offering health insurance to their workers will be eliminated over the next decade. The AHCA also would eliminate $625m from the Prevention and Public Health Fund in 2019, which includes assistance for the opioid epidemic.

Under the AHCA, insurers might be able to deny coverage to Americans with a pre-existing condition, or force them to enroll in more expensive high-risk pools. The rates for everyone else could be lower, while the insurers’ profits could remain high.

Preventive Care Saves Money and Lives

Politicians for whom it was expedient to maintain the status quo suggested that no one was really denied health coverage in the US, even if they do not have insurance. They can always go to the emergency room of a hospital, where the staff is legally required to treat sick or injured individuals, even if they cannot pay.

Recently one U.S. Congressperson, Representative Raul Labrador of Idaho, argued that “Nobody dies because they don’t have access to health care.” Spoken like a tone-deaf executive. Rehab can be difficult to find, even for the insured.

Of course, hospitals pass those costs onto their paying clientele in the form of higher fees. And the uninsured who must rely on emergency treatment often require more expensive treatment than someone who does not wait until the last minute. Sometimes it is too late and they die; for the wealthy executive, however, rehab is always available.

Basic healthcare should be a right, even in the US. Whatever the costs of providing health care, the cost of not providing it is too high a price.

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