“It’s an unbelievably complex subject. Nobody knew that healthcare could be so complicated”, an understatement, to say the least, made by President Trump towards the end of February this year. Apart from vaguely voicing the apparent tribulations of healthcare reform, one of the hardest challenges of American domestic policy, this statement has also reflected the dissentious nature of the policy at hand in the failed negotiations among the Republicans during their failed attempt of passing the American Health Care Act (AHCA) of 2017 – a presumably-new healthcare bill that was to replace Obamacare, if it wasn’t for the Freedom Caucus and the moderate Republicans. That is of no surprise, considering the plan’s regressive proposals, like shrinking subsidies and cutting back on the Medicaid expansion, which were to strip off at least 24 million Americans of coverage within the next decade following the enactment of the AHCA. This recent reform failure brought to light and judgement of public scrutiny the issue of US health care – a highly dysfunctional and expensive, albeit less developed system; and the question of what comes next in an attempt to cure the ailing US healthcare system, such as the single payer rhetoric, which I intend to explore in this paper.
In accordance with the foundations of the American government, particularly – classical liberalism, US healthcare was created and developed on the premises of free-market economics; a late start relative to its industrial European counterparts which by the late 19th century laid some groundwork through initiating compulsory sickness insurance systems or subsidizing the mutual benefit labor communities. It was not until the early 20th century when the matter of healthcare was addressed in public. Progressive reformers, who were in support of Theodore Roosevelt for President in 1912, campaigned for mandatory health insurance to shed workers from wage loss and medical costs during sickness, one of the major causes of poverty at the time, but the effort was cut short by Roosevelt’s defeat and the Red Scare propaganda that promoted fear of communism and radical leftism during the two World Wars (and continues to contaminate American politics up to this day), including the state-run public healthcare system. During the depressing late 1920s and early 30s, insurance programs, like Blue Cross in Dallas, Texas, were gradually emerging across the country. This was followed by Franklin D. Roosevelt’s time in office, and his initiated provision of New Deal programs (e.g. the Social Security Act), as well as, the National War Labor Board’s (a panel created to implement wartime wage and price controls) decision, which significantly expanded the healthcare insurance market by establishing fringe benefits (meaning insurance as a benefit provided by an employer to an employee), and thus, employer-based insurance system.
Soon after, in the 1950s, attracted by this new market, big for-profit commercial insurance companies like Aetna and Prudential, began to take over the nonprofit Blue Cross health insurance plans, but operating via experience-rating model. That is, discriminating in their policy offers based on the individual health risks (such as age, lifestyle, pre-existing conditions) as opposed to the traditional same premiums for everyone in the context of the community rate system
Over the years, this unique open market system grew in cost and complexity, while trying to be fixed by various reforms. Some of them, successful: for instance, the well-known 1965 Medicare/Medicaid law that formed a government-run program to offer medical care for older Americans, the poor, and the disabled; or the 1973 Health Maintenance Organization Act which was designed to promote managed healthcare plans with monitored costs and services. Others, not so much: for example the proposal of national health care program presented to Congress in 1949 by President Truman, which was vehemently opposed by the incumbent insurers and hospitals and drug companies; the American Medical Association alone spent around $1.5 million in 1949 on campaigning against the plan and its ‘socialized medicine’.
However, despite all the effort, at the turn of the 21st century and leading up to the 2008 elections, healthcare system has ended up in the state of crisis, characterized by a growing uninsured population, inconsistent outcomes and unsustainable costs. Around 50 million Americans were uninsured. 60% of the nearly one million bankruptcies filed in the US in 2007 were the result of the medical bills. In Commonwealth Fund’s 2007 National Scoreboard on health system performance, US ranked last or next-to-last in all five categories of high performance health system despite spending more than any other country on healthcare. According to the Organization for Economic Cooperation and Development (OECD) health data for 2009, the US substantially overspent the other countires, allocating greater than 17% of its gross domestic product (GDP) to health care relative to the 12% or less in all other countries
For that reason, the Patient Protection and Affordable Care Act (ACA), dubbed ‘Obamacare’, was passed by Congress (without a single Republican vote) and signed into law on March 23rd 2010, as an effort to create a more sustainable and affordable healthcare system. It is regarded as one of the most important pieces of legislation in the healthcare reform history since President Lyndon Johnson’s Medicare/Medicaid in 1965.
Given the negative publicity and strong criticisms sparked with the evolvement of the Tea Party movement, Obamacare has actually achieved significant improvements in expanding coverage and cutting costs, through key elements such as, the individual and employer mandate, government subsidies, banning the denial of insurance based on the preexisting condition, allowing young adults to remain under their parents’ coverage until age 26 among many others. In fact, the number of uninsured American adults decreased from 16% in 2010 to 9.1% in 2015, a historical low, as pointed out by the Centers for Disease Control and Prevention’s National Health Interview Survey. While a Government Accountability Office (GAO 2015) has indicated that subsidies have contributed to the higher rates of insurance coveragexviii.
Even so, there are still disparities that persist by income, race, and ethnicity (O’Hara and Brault 2013; Shane and Ayyagari 2014)xviii. Moreover, not everyone gets an adequate coverage, for instance, in the assessment of affordability it is unclear whether to consider the cost of individual employer-based coverage or the cost of family coverage. The Internal Revenue Service (IRS) focuses on the individual coverage, which is a much cheaper option. Because of this so-called ‘family glitch’, a substantial number of low-to-moderate-income people (estimated 2 to 4 million) may be denied financial assistance (Brooks 2014)xviii.
Even more troubling is the ongoing economic issue of rising premium costs, which continue to increase faster than median family income, inducing individuals to go for high-deductible plans (Collins et al. 2014a; Schoen, Radley, and Collins 2015), leaving the payers to deal with greater out-of-pocket healthcare expenses. At the same time, prescription drug prices soar, with an estimated 11.6% price increase in 2017, faster than either wages or the cost of living, straining numerous household budgets.
Certainly, ACA has its own benefits and losses, and undoubtedly there is much room for improvement. The issue at hand is what constitutes a beneficial reform.
As aforementioned in the introduction, the Republican plan (AHCA) didn’t fulfill this component. On the contrary, offering less coverage through components like the removal of the individual mandate (that helped offset the rising costs of the sick with the enrollment of the healthy throughout the population).
Many people, particularly the left-leaning liberals and progressives, would advocate a single-payer system as the possible solution. A single payer system, as defined by the Physicians for a National Health Program advocacy group, is “a system in which a single public or quasi-public agency organizes health care financing, but the delivery of care remains largely in private hands. Under a single-payer system, all residents of the U.S. would be covered for all medically necessary services….”. What it means is that the government is the sole financing body of the health services, which are delivered by the privately operated health care providers and funded by increased taxation of the population (e.g. through payroll tax), but presumably at a lower cost than the current premiums. Thus, it serves as a middle ground of sorts – between the public and private sectors. This kind of system can also be found in other countries, like Cuba and Canada.
For one, with a single-payer system, US would be able to insure everyone, regardless of socio-demographic group or income. Plus, it would be less expensive, since it’ll cut down the unnecessary administrative costs and competitive advertising expenses spent by the private insurers. When put in numbers, as a recent study showed, in comparison to residents of Finland, Japan and France, US residents spend $97 billion annually in excessive administrative costs to insurance companies, which would not be incurred under a single-payer system.
Although it can be argued, like it has been done by the Republicans, that the prices charged by the insurance companies can be driven down through competition created of private healthcare insurance, as individuals will look at different packages, compare and choose less expensive of a decent quality. But, healthcare system with its language and policies being so “notoriously complex and technical”, it may not be that these individuals would be able to make a rational decision in the first place.
On the other hand, like with any other system, there are potential shortcomings, which are often highlighted by the opponents of single-payer, especially right-wing conservatives. Health care economists too, when assessing such systems in terms of their costs and benefits, aver that due to the lower costs for coverage, more people would want to use the health care services, so that the government would need to find a way to ration care that can potentially mean rigid budgets for the providers (since as a monopsony it can be influential in negotiating prices with the providers). This can decrease the incentive for innovation, because of the limited funding, and, arguably, a reduced quality of care, since there aren’t enough resources to cover all aspects of care. Plus, since the demand would exceed the supply, resulting in a shortage – that means, long waiting periods.
Arguably, multiplayer universal system, like that of France, which has a supplemental private insurance to its single-payer system for extended care can also be a possibility, and perhaps an easier transition for the US private insurance industry.
The biggest obstacle to the viability of the single payer policy option, however, lies in the political realities of extremely divided partisanship, anti-socialist attitude and governmental distrust residing in the United States – so that it is highly unlikely, if not impossible, to be implemented in the near future.
Sometimes it’s not even the ideological views and political beliefs as the general illiteracy on the subject of healthcare, both legislatively and financially, which hinders a more informed political debate among the American people in regards to the healthcare system and its reform. For example, according the 2017 Kaiser Family Foundation poll, only 4 in 10 adults know that the uninsured rate has decreased since the enactment of ACA.
Nonetheless, to lower and stabilize the rising economic costs and eliminate coverage gaps, a single-payer system would serve as a better foundation than a patchwork of past policy decisions, or the future attempts similar to that of AHCA. Still, with Obamacare as a first step to a universal health care system there is a possibility for incremental reforms. For instance, a public option financed by the government, which were to compete alongside the private insurers. So that eventually, healthcare would be regarded as a human right, rather than a privilege.