The Health Care Debate

The debate over our system of paying for health care continues without pause. Bernie Sanders and a number of Democratic colleagues have introduced a Medicare for Everyone bill. Nancy Pelosi has said that her priority is maintaining the Affordable Care Act. Some in Congress insist that the only way forward is to repeal the ACA. The President appears to have been on all sides of the issue, supporting at different times single-payer health care, repealing the ACA, and a number of different “replacement” bills offered in Congress. Throughout, the rhetoric appears to promise affordable, high quality health care for all.

Several things appear to me to be clear. Most important is the principle that, in order for coverage to be both high quality and affordable, the system must be universal. In any “insurance” plan, if the people paying the premiums are only those most likely to receive benefits, the plan must fail. Insurance in the private sector operates successfully on so long as premiums collected exceed benefits paid. There may be unusual short-term situations in which this is not the case, and those must be covered by retained reserves. This means that any system that does not require mandatory participation cannot by definition be universal, affordable and high quality.

The Affordable Care Act attempted to provide such a system but has experienced mixed success. It has not been able to achieve universality as of now. Younger, healthier people are still electing to pay fines rather than choosing to participate. Some states have elected not to expand Medicaid coverage for less affluent citizens. Political challenges have rendered the payment of government subsidies uncertain in the eyes of insurance companies. All of this has resulted in fewer choices and, probably, higher costs to individuals insured under the act.

Experience elsewhere indicates that the ACA concept is not fundamentally flawed. The Swiss system of health care is much like the ACA. Participation is mandatory. Insurance is provided by private companies. Government subsidizes premiums that exceed an established percentage of individual income. A number of plans are offered with a variety of deductibles and coverages. The system apparently works as designed. This may explain why the basic concept was popular in some conservative circles after the failure of universal health care in the first Clinton administration. The adoption of the basic scheme by the Obama administration must have somehow changed its basic character.

Now we come to single-payer systems of the sort championed by Senator Sanders et al., and practiced in a very large number of industrialized democracies. I have discussed the idea with some citizens of countries with the system (mostly Canadians), and have received generally favorable reviews along with the identification of some problems. Most have given the system high ratings for emergency and acute care. Elective procedures are another matter, and they usually involve surviving a long waiting list. Furthermore, there is alway the problem of defining “elective.” The most common illustration that I have heard involves hip and knee replacements. These are “elective” procedures in Canada. Most of my acquaintances who have required such procedures did not view them as “elective.” For them the alternative was miserable pain. Is this trade-off acceptable? For those currently without any coverage, I suspect that the answer is, “Yes.”

Perhaps the larger problem with Senator Sanders’ proposal is its cost. How is such a program to be funded? I gather that the senator simply says, “higher taxes.” Some analysts believe that he has underestimated costs. In any event, the tax portion of his proposal is coming “later.” A lot of troublesome questions remain. Is the current payroll tax for Medicare to be retained and at what level? Will employers be required to add their payments for health insurance premiums to their share of the payroll tax? If not, will they have to increase employee wages and salaries by the amount of those premiums in order to help employees meet a higher tax burden? (After all, such a requirement will not change the bottom line payroll costs for the employer.) Are private insurers to be forced out of the health care business? Will they be left with only “platinum” policies which exceed single-payer coverage? Will they be able to find a way to participate under something like the current Medicare Advantage program? If anyone has thought all of this out, I have not seen the results.

For now, this leaves me with Representative Pelosi (not one of my favorite government officials). I think that the ACA must be fixable. Why does the concept work in Switzerland? Does the Swiss experience offer us any clues? How do they enforce universality? What role, if any, is played by their cantons (states). What has been the per person cost of government subsidies? Are the Swiss just smarter than we are?

You will notice that this entire discussion has proceeded to this point without mentioning socialized medication. In spite of some of the hysterical rhetoric, neither of these approaches involves “socialized” medicine. Health care providers are free to practice on their own or as part of a private, corporate structure. However, it would be a problem if they would refuse to treat patients under any such universal system. Patients are free to select the doctor of their choice. It has always seemed to me that both providers and patients are severely constrained by insurance companies under our current system. Constraints are surely present under any universal health care system, but we should focus on the nature of those constraints rather than arbitrarily deciding that they are bad if they come from a government and good if they come from a private insurance company.