The Best Prescription for Growth?
National Health Care.
A big idea seems to have fallen by the wayside but could
make all the difference as America moves beyond the pandemic.
By Noah Smith
July 10, 2021, 1:00 PM GMT+1
For everyday Americans, health care is still a very pressing
matter.
With policy shifting away from Covid relief toward more
long-term goals such as shoring up infrastructure and promoting competition,
U.S. 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.tp
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 U.S. 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:
What's Not to Like?
Index of per enrollee costs for comparable health-care
benefits*
Source: Economic Policy Institute
* Index 1968 = 100
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 U.S. 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 U.S., 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 U.S. 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.
This column does not necessarily reflect the opinion of the
editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Noah Smith at nsmith150@bloomberg.net
To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net
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