universal-coverageIt’s less than two weeks before election day and it’s just been announced that Obamacare premiums are increasing significantly next year. In a normal election cycle this would have been the October surprise that could have sunk the Clinton campaign, but Donald Trump has already damaged his own campaign so much that it’s likely to make little difference to the final result.

However, it’s a headline that people will remember and most don’t process the nuances: that subsidies will also increase, that this doesn’t affect most people, that premiums are increasing at a slower rate than they used to, and approximately 77% of Obamacare recipients will still be able to get ‘Silver’ packages for less than US$100 per month (which hasn’t changed since Obamacare started). Those people who will be affected by increased premiums are those at the upper end of the income range who are more likely to be able to afford them anyway.

stupid-1Donald Trump also proved he’s an imperfect messenger for his party on this issue. In the past he’s praised the healthcare systems in both Canada and Scotland (which both have single-payer systems) and has said he doesn’t want anyone to be without healthcare. Further, following the announcement of the increases, he was immediately out on the campaign trail complaining about how his own employees were having a “terrible” time “because of Obamacare.” They’re not: he provides the insurance for at least 90% of his employees so they’re not affected by this.

Barack Obama signed the Patient Protection and Affordable Care Act (Obamacare) into law on 23 March 2010. According to Wikipedia:

The Affordable Care Act was intended to increase health insurance quality and affordability, lower the uninsured rate by expanding insurance coverage and reduce the costs of healthcare… The law requires insurers to accept all applicants, cover a specific list of conditions and charge the same rates regardless of pre-existing conditions or sex.

The law fixed much that was broken about healthcare in the United States. Issues included the fact that tens of millions of people couldn’t afford access to a doctor, many were refused coverage by insurance companies because of pre-existing conditions (including conditions they were born with), and tens of thousands went bankrupt because of the cost of healthcare even when they had insurance.

aca-benefits

 

In the United States whether or not you have healthcare was, and often still is, attached to your employment status. Large employers (more than 50 employees) are required to provide health insurance as part of employment packages, but many others do too in order to attract and retain the best people. This is fine for people who have jobs but often also has a stifling effect on job mobility and satisfaction, especially if you or a family member has an ongoing health issue.

It’s also has a stifling effect on economic growth. It prevents wages from increasing because wage rises are taken up by increases in health insurance premiums when considered as part of the whole package, and employers would rather pay health insurance costs than wages because they are tax deductible. Research by Katherine Baicker and Amitabh Chandra of Harvard University found that the last twenty years have seen both the lowest increase in wages and the highest increase in premiums. (Leonhardt, Kindle Locations 470-480)

The number of people with health insurance has increased markedly since the introduction of Obamacare. At the end of last year the number of uninsured was estimated to be only 11.9% of the population. That’s a great improvement, but it still means around 40 million people don’t have access to the sort of healthcare everyone else in the developed world takes for granted.

us-uninsured-to-jan-2016

Healthcare is an area in which the political divide is stark in the United States. Unlike most developed nations where quality healthcare is seen as a basic human right, many in the United States see it as a privilege you have to earn by hard work. The idea of equal access to quality healthcare for everyone is one that has been a leftist fringe idea and has only become more widely accepted even amongst liberals in the last twenty years or so.

In the last couple of days, I’ve lost count of the number of times I’ve heard Republicans complaining about their taxes subsidizing the cost of healthcare for those less fortunate than them. (I guess it doesn’t count that their employer gets a tax rebate for paying their insurance premiums, so all the people who are paying tax but have no insurance are subsidizing them already.)

mine-works-fineThe strong libertarian streak in the USian psyche has meant the right reject universal coverage instinctively. It’s difficult to work out exactly how many times the Republicans have tried to repeal Obamacare aince 2010, but it’s at least 62! Instead, they could have been working with Democrats to fix it. In fact, Republicans will insist that pre-Obamacare, the US system was just wonderful, they have the best healthcare in the world, and everyone is coming to their country to get care. At the same time, they’re constantly willing to pick holes in the systems of other countries.

world-healthcare

Except for Norway, which provides extremely generous benefits such as 46 weeks parental leave at 100% of pay (or 56 weeks at 80% pay) of which up to 14 weeks can be taken by the second parent, no other country spends anywhere near as much per capita as the United States:

world-health-expenditure-2014

For this extra expenditure, you’d expect that the health of the population would be better than that of everyone else, but it’s not. New Zealand, Australia, Canada, Japan, South Korea, France, Germany, the United Kingdom, Sweden, Norway, and others all have a significantly higher (at least a year more) life expectancy than the the United States. Because so many poor people don’t have adequate health care, the United States has the highest infant mortality rate in the OECD. The United States does do better than most in the survival rates for some cancers, but even there, New Zealand, for example, does better in several paediatric cancer survival rates.

oecd-infant-mortality

During the current election campaign, the Republican mantra has been that they will “repeal and replace Obamacare” though I have heard no concrete ideas of what they would replace it with except a few mutters about health insurance accounts. Health insurance accounts are all very well if you are young and healthy, and remain relatively healthy your whole life, but they are not a solution. They are, in my opinion, a typically selfish idea of the type that regularly spews from the Libertarian party and only sound good if you don’t think about them deeply or don’t care about your fellow citizens.

In the meantime, repealing the legislation would mean that tens of millions of people who are either too poor to afford health insurance without help, or one of the 25 million (including 17 million children) too sick for insurance companies to be interested in, will be dumped back on the scrapheap by the party that constantly trades on its Christian values.

gonna-liveThere’s no doubt that Obamacare isn’t perfect, and reform is needed. The cost of healthcare has continued to rise and in some states the public has only one insurance option. It really is time though that the Republicans began to accept that Obamacare isn’t going anywhere and they cooperate with the Democrats to find a path forward.

A lot of the talk from Republicans has been that what Democrats wanted all along was a single-payer system, and that they deliberately designed a flawed system to make that possible. I think it’s probably true that many Democrats wanted a single-payer system, but many of the problems with the system that was eventually implemented are because they made changes to the original Bill to try and get Republicans to support it. They never received that support, but the changes remained.

In my opinion it’s about time all USians began to look at implementing a single-payer system in their country. The topic doesn’t appear to have ever been seriously debated in the United States and as a result there is little understanding of what it would mean. (And at the risk of sounding like a conspiracy-theorist, I think industry lobbyists have got a lot to do with that.) However, there is a good reason almost all developed countries have universal health coverage – it’s better. The systems in each country are different and none are perfect, but they are all an improvement on what the United States has currently.

There are several aspects that need to be looked at. Firstly, there’s the issue of separating healthcare provision from employment, which is a major economic benefit of a single-payer system. There are multiple reasons for this:
1. An employer is more likely to take on a new employee if he or she doesn’t have to worry about the hassle of arranging health insurance and the additional cost of providing health insurance.
2. The work force as a whole is more dynamic and more likely to be employed in roles that suit them and their talents best if their healthcare remains consistent whatever their employment status. It takes a certain amount of power away from employers too, and thus makes employment contract bargaining slightly more balanced.
3. There is no barrier to increasing an employee’s hours, or changing their status to make their employment more secure as doing so adds no extra costs related to providing health insurance.
4. The cost of health insurance is not a barrier to a business increasing in size, making expansion more likely.
5. The provision of health insurance doesn’t give large companies an advantage in hiring employees, so smaller employers are on a more equal footing when it comes to attracting the best. Therefore, smaller businesses have a better chance both of growth and success.
6. Smaller and more rural states have a better chance of retaining their people and attracting new ones because healthcare becomes more evenly available. Thus the divide between rural and urban states will reduce. Currently in New Zealand the regions are experiencing stronger economic growth than the cities. This is for a variety of reasons, but quality healthcare is not a barrier to this as it is available wherever you live. For example, every GP is required to have arrangements in place for their patients to be seen out of hours.
7. The cost of healthcare will reduce for all because the whole population will be involved in paying for it via their taxes. Obamacare said there’d be reductions, but this relied on people recognizing that taking out health insurance was the responsible thing to do and failed to recognize that people don’t always act in their own best interests. They build beautiful new homes in the tornado belt, each trying to out-compete their neighbours, then are killed because they failed to spend $20 thousand less on impressing others and including a storm cellar instead.

compassionSecondly, universal coverage is better for the whole economy. Again, there are many reasons:
1. Society as a whole is healthier, which improves the output of the economy, reduces crime, and increases overall well-being.
2. As everyone has access to primary healthcare, people do not wait until they are so sick they need to attend the Emergency Room at the hospital. Taking care of problems at an early stage is much cheaper for everyone, and also means people spend more time in work or education.
3. Policy makers can focus on prevention issues which have long-term benefits for the country. One of the things the New Zealand government (whichever party is leading it) has been working on for some time is to stop smoking by 2025. Long-term, this both improves the health of all and reduces healthcare costs. Another is teaching primary school children how to grow and prepare their own food. This is of course a very long-term strategy that will not have benefits for many years.
4. Employers have access to a healthier pool of workers, that they can rely on to stay healthy for longer.
5. People are less stressed because they don’t have to worry about what will happen to them if something goes wrong. They know quality healthcare is available to them.
6. A population that is better looked after when it is younger will be healthier when it is older, thereby reducing the inevitable cost of looking after the elderly. This is particularly true because those who can’t afford health insurance are those that are more likely to be less healthy and therefore cost more as they age.
7. Because they don’t have to worry about affording healthcare, people are more likely to take the risk of starting a new business. Small businesses are the lifeblood of any economy, and making it easier to start a business is a boon to any economy.

There are other issues too with a system set up the way it is in the United States. At the moment there is little or no incentive for healthcare providers to look at cutting costs or increasing efficiency. (Having said that, there are some who are doing good work in this ares.) Hospitals and other health providers put their costs up, insurance companies pay the extra, and those costs are passed on in the form of increased insurance costs. The cost of healthcare has been consistently and significantly ahead of inflation for decades. Some of this is due to things like technological advances and the availability of new treatments, but much of it is not.

This is because in reality people have little or no choice when it comes to health provision. They just do what the medical professionals tell them and pay the bill. The prevailing wisdom from the right is that the market is the best model to sort out these issues, but it’s not a valid one when it comes to health. In reality, people don’t have a choice, and when they are ill they are often not able to make that choice.

fear-and-liesDrug costs are also an issue in the United States. In California, the ballot this election includes Proposition 61, which prevents the state paying any more for drugs than what the Department of Veteran’s Affairs (VA) pays. The VA negotiates its drug costs in the same way that Pharmac does in New Zealand. This means that the VA pays by far the lowest cost for drugs in the United States. Drug companies have donated over US$100 million to campaigns in just this one state to oppose Proposition 61. There has been a lot of what looks like misinformation to me in relation to this issue in California. As a result, groups like Veterans of Foreign Wars have come out in strong opposition to the Proposition because they have been convinced that it will increase drug costs for veterans. This is just one example of how those with a stake in maintaining their profits muddy the information water.

Real people are suffering every day in the United States because of the failure of her politicians to address this issue. It’s not going away, and it’s not going to get any easier. Policy makers have the advantage of being able to look at several models around the world and choosing the best bits from each to design an exceptional American system. For the sake of her population, let’s hope they find the courage.

 

Reference (and highly recommended)

Leonhardt, David. Here’s the Deal (Kindle Single). Byliner Inc.. Kindle Edition.

 


 

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