BY GUEST CONTRIBUTOR DOULAS GAHN
President Donald J. Trump lately has been on the warpath against Obamacare again, saying he will take his case all he way to the Supreme Court. “We will have a plan far better than Obamacare,” he promised. “The Republican Party will soon be known as the party of healthcare.”
Republicans in Congress kept their silence, avoiding any talk of such an honor or a plan. Which brings us to major question we’ve failed to answer for generations: isn’t it time we went to Medicare for all? Or a single-payer system of healthcare?
The reflexive Republican response is that we can’t afford either. Yet a review of our current system reveals that healthcare is too costly, unsustainable, and results in the unequal delivery of care, with overall health outcomes near the bottom of countries with the 30 largest economies. More to the point, we can’t afford not to have Medicare for all, or a single-payer system. The present mishmash costs the United States, as a whole, significantly more than most other developed nations to provide healthcare to its citizens, which means it is costing us individually, in dollars and health, for not moving to a more rational system.
Let’s look at the spending comparison below (from 2017, courtesy of the Kaiser Family Foundation) and why it matters. What leaps out is that the United States spends more per capita and a higher percentage of our GDP than any other nation. And not by a little, but a lot.
So not only does the United States spend roughly 50 percent more per capita on healthcare, but our spending is very inefficient. The other nations listed above all have excellent, state-of-the-art healthcare provided at roughly half of our cost.
Let’s review the many ways that this inefficient over-spending affects our overall economy.
First, it means lost opportunities to spend more on education, infrastructure, research and development, and affordable housing. This makes our nation and our nation’s businesses less competitive on the world stage.
Second, when large U.S. businesses spend more on employee healthcare, they either raise the cost of producing goods and services or lower profits when you account for their employees’ health insurance. That also means less money to devote to research and development, spend on new equipment, and divert to employee training. Result? Their competitiveness suffers internationally.
Third, the negative impact on our economy is the burdensome costs to small businesses (often cited as the backbone of our economy), where a significant amount of our economic growth and innovation occurs. Because they have higher insurance costs compared to large corporations, small businesses suffer growth lags, and new startups are fewer. It is worth noting that the number of new business startups have been decreasing over the last four decades in the United States. This is partly due to the cost of healthcare and the time and effort required to provide it; such distractions are the last thing a new entrepreneur needs in today’s fast-paced business environment.
Not only are the costs for small businesses higher per capita, but the businesses generally try to reduce their costs by either offering less-generous benefits or passing on to their employees more of the costs, which makes the businesses less likely to keep quality employees, thereby reducing their competitiveness.
Fourth, our inefficient spending suppresses entrepreneurship. An individual looking to start a new business has a great challenge ahead to begin with, but adding the extremely high cost of individual or single-family coverage poses an even higher hurdle. Many with talent and a good idea choose to stay put and give up their dreams rather than put their families at risk with expensive and inadequate healthcare.
Fifth, inefficient healthcare spending indirectly discourages workers from looking for other jobs. Because they fear losing insurance coverage or getting stuck with lower-quality insurance, workers stay locked into jobs they may not want due to work conditions, hours, location, or pay; they feel they can’t risk losing their insurance by seeking more satisfying opportunities. This fear can force some people to work full time when they would prefer part-time work due to age, family situation, or medical conditions. (In addition, if healthcare were decoupled from the workplace, it would discourage employers from hiring people part time in order to avoid paying for their health insurance.) In short, worrying about insurance costs decreases workers’ productivity—unhappy workers are unproductive workers.
Sixth, rural access to good healthcare is decreasing rapidly, resulting in inappropriate use of costly emergent care and poor outcomes; often patients wait too long to get preventive care, and their medical conditions have worsened unnecessarily. In a for-profit system, providers have no incentive to bring healthcare to rustics at a reasonable cost, or at all, in low-density areas.
Seventh, and as important as any other ill effect, medical bills are the leading cause of bankruptcy in the United States. Between 55 and 60 percent of all bankruptcies are traceable to medical expenses, and over 80 percent of them involve individuals whose health insurance is inadequate.
Market economics may work well in most sectors, but not healthcare, where the more private the system the greater the costs. Switzerland, for example, has a larger private system than almost the rest of the countries listed above and it has the second highest costs, behind only the United States.
Add it all up and what do you get? Making healthcare a right and not a privilege is not only the moral thing to do, it is the economically smart thing to do.
Douglas Gahn is co-founder of Silver Summit Financial, which specializes in financial and retirement planning.