With policy shifting away from Covid relief toward more long-term goals such as shoring up infrastructure and promoting competition, US lawmakers have a rare opportunity to address the American economy’s deep structural issues. And because the pandemic caused unprecedented disruption to businesses, workers in danger of displacement want some sort of reassurance that their lives won’t be upended. Now is therefore the perfect time to revisit a big idea that seems to have fallen by the wayside: national health insurance.
The dream of national health insurance seems to have died with the end of Vermont Senator Bernie Sanders’s presidential campaign. Though some socialists may still forlornly talk of “Medicare for All,” the truth is that Sanders’s expansive plan, with its lavish benefits and effective ban on private health insurance, was never going to make it through Congress even had he won. Politicians seem to be content to patch up the obamacare system and move on to what they feel are more pressing matters.
For everyday Americans, though, health care is still a very pressing matter. In a recent Harvard/Harris poll, health care was cited as one of the top issues facing the nation, behind only the economy, Covid, and immigration.
The obvious reason is that the US health-care system is dysfunctional in many ways. The biggest problem is ruinous cost. Americans spend about twice what people in other rich countries pay for health care, while receiving about the same level of quality. That excess cost filters down to every part of the system — high deductibles, painful copays, surprise hospital bills and insurance so expensive that people who have to purchase it on their own can’t afford it. As a result, medical bills are one of the biggest sources of economic uncertainty for many Americans, threatening to bankrupt households at any moment.
The experience of other countries shows that national health insurance is a proven strategy for driving down health costs. A national health insurer can leverage its buying power to counteract the monopoly power of hospitals and other health-care providers. In fact, Medicare already does this, getting cheaper prices than private alternatives for the same services.
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Using the current Medicare system to cover all Americans would be the simplest and easiest way to implement national health insurance. Unlike Bernie’s plan, this would leave a role for the private health insurance industry — because Medicare doesn’t cover 100% of costs or all types of care, people buy supplemental insurance. This substantial cost sharing would also help restrain expenses by discouraging over-consumption of health services (another departure from Sanders’s vision). Simply covering everyone under the existing Medicare system would bring the US health insurance system roughly in line with those in Japan and South Korea, which achieve excellent quality for a low price.
Cutting costs in the health-care sector would not only put money in Americans’ pockets and save them from the risk of financial ruin, it also would give a boost to the broader economy. Nations that spend a smaller percentage of their gross domestic product on health have more resources to put into higher-value industries.
A national health insurance system would provide another huge benefit: It would unleash dynamism in the business world. In recent years, new business formation has fallen substantially and workers have been moving less and less between jobs. America’s sclerotic, outdated health-insurance system might be partially at fault.
In the US, employers are usually expected to be the main providers of health insurance. Workers fear to leave their jobs and spend time searching for something more lucrative or better-suited to their talents because of the interruption of their coverage. Small businesses are at a disadvantage to their bigger rivals, both because they have smaller employee risk pools (and thus have to pay higher premiums) and because large companies have the infrastructure to handle the health-insurance bureaucracy more efficiently.
National health insurance would address both of these problems, allowing workers to switch jobs without fear and giving scrappy upstart businesses a fighting chance against the big boys.
These clear advantages explain why politicians ought to take another look at the idea of national health insurance. And I’m not just talking about big-government progressives, either. Republicans are casting about for an issue that could cement their status as a working-class party, and this could be it. It would free regular Americans from a lot of fear and hassle while also helping the small businesses whose owners form an important constituency for the GOP. And by embracing a sensible Japan-style system that preserves a role for private insurance and requires substantial cost sharing, conservatives could inoculate the nation against the future possibility of a more radical, Bernie-style plan.
The US health-care system is such a perennial problem that it’s easy to turn away and focus efforts on other things. But the problem is still there, looming in the background, eating away at the nation’s material well-being, the security of its citizens and the dynamism of its corporate sector. National health insurance is almost certainly the only way the country can get out of this trap.
Bloomberg
