The debate over health care brings out all the major differences between a capitalist society structured to maximize corporate profits and a society that aims to promote the well-being of its members.
The United States is unique among developed countries in the extent to which the “free market” determines who gets health care and how much. The result is that people here are less healthy and die younger than people in other countries, while we spend about twice as much per person on health care.
The U.S. rate of infant mortality, the proportion of babies who die before their first birthday, is 5.8 per 1,000 live births, according to the CIA World Factbook. In Norway, which has a higher gross domestic product per capita, it is 2.5. In France, it is 3.3. In Cuba, which has a GDP per capita of less than one-quarter of the United States, but a very well-developed health-care system, it is 4.6.
Other countries not only do better in terms of caring for people: They spend far less on health care. In 2012, the United States spent an average of $8,233 per person on it, according to Organization for Economic Cooperation and Development figures. Norway, the next most expensive country, spent $5,388. France spent $3,974, less than half as much as the United States.
Where does all that money go if it doesn’t go into making people healthier? The answer begins with the U.S. reliance on a “free market” system for the allocation of health-care resources, particularly on for-profit private health insurance. The amount spent by individuals accounts for more than half of total expenditure, while in other “developed” (OECD) countries, it is typically less than a quarter.
In a “free market” the rich get more and better health care than everyone else, just as they live in better housing, eat better (or at least more expensive) food, and enjoy fancy vacations. When rich people get sick and need medical care, they can afford to pay for treatment that can cost millions of dollars, and prolong their lives. Regular people who get sick are likely to go bankrupt and die sooner. That’s how the market works. Health care is just another commodity that people purchase.
The additional taxes people would have to pay would be less than what the vast majority now pay to private insurers.
Replacing private, for-profit health insurance with “Medicare for all” presents a fundamental challenge to this. It asserts the universal right to “life, liberty and the pursuit of happiness” regardless of income — and that includes the right to health care, to be provided on the basis of need, not income.
What we have been offered, however, is not the right to health care, but a limited right to health insurance. President Barack Obama’s Affordable Care Act aimed to provide this in two ways. One was by expanding Medicaid, the federal-state system that pays for health care for the poor. The other was by subsidizing the insurance premiums of people who are somewhat better off, paying for that with a tax on those who still chose not to take out insurance.
When people without insurance require health care, they have to rely on emergency care from hospitals. If hospitals can’t get them to pay the bill, they have to raise the amount they charge the insurance companies of patients who have coverage. It is understandable that people, particularly those who are currently healthy, would opt not to take out health insurance and gamble that they will stay healthy. But their health-care costs will eventually have to be covered somehow. In other parts of our insurance system, such as that for cars, insurance is thus compulsory. The Medicare system, which recognizes that older people will almost inevitably require health care, is not optional—but it is mostly financed by taxes.
Even if everyone in the United States had health insurance, however, that would still not change that the system both has poor health outcomes and is extremely expensive. A “good” insurance policy will cover all health-care expenses or require only a small copayment. A “bad” plan will require large out-of-pocket expenses. The wealthy will buy the more expensive plans, while the rest of us find ourselves with costly premiums, high copayments and deductibles, and significant limitations on what is covered. A large part of the opposition to “Obamacare” has been based on recognition of the high cost, even after subsidies, of “bad” policies.
Why are health insurance premiums so high? The corporations that provide health insurance are driven by the need to profit. They charge as much as they can for it, and they structure their policies to minimize the payments they make to the actual providers of health care. Before Obamacare, they regularly denied policies to people who weren’t in perfect health, those who had “pre-existing conditions.”
Medicare uses only about 1-3 percent of the tax money it collects in for administrative costs, with the remaining 97-99 percent going to health-care providers. In contrast, only about three-quarters of the premiums private insurance companies collect go to providers. Obamacare tried to increase that proportion to 80-85 percent. The remainder goes not only for profits, but also for administering this profit-making system.
The system is also grossly wasteful for providers and patients. Doctors and hospitals have to employ large numbers of people to be intermediaries between patients and their insurers, to follow the procedures for what insurers will pay for and dispute what they deny. There is no systematic collection of data on how much time patients and their relatives spend on the horrendously complex paperwork required for even a relatively simple illness. That is the point when many find out how the “fine print” in their policies limits their coverage.
A single-payer system would, to a large degree, cut out the private insurance industry. As with Medicare, health-care providers would be paid by only one central organization, rather than by the many different insurance companies.
Medicaid, a federal-state system, avoids some of the problems of a profit-making system. But in its place is substituted the goal of minimizing total expenditures. Thus it is designed to limit coverage to those who are judged to be the “deserving poor.” This creates a lot of delays, paperwork and often arbitrary denials of coverage or care. In addition, it pays providers less than Medicare does, so many doctors simply refuse to take Medicaid patients. A system of Medicare for all could integrate Medicaid and Medicare into a single system.
For some people, employer-provided health insurance seems to be satisfactory. Large companies typically have some such plan, although usually only for their own full-time employees, not their part-time or temporary workers or their subcontractors’ employees. (Very small businesses usually find any such coverage too expensive.) The advantage of this way of providing insurance is that individuals can’t be denied coverage for pre-existing conditions. However, insurers charge companies premiums based on the general characteristics of their workforce, an incentive for employers to hire healthy, young workers. A bigger problem is that the coverage ceases when a worker leaves the company. When workers or members of their families get sick, those whose health insurance is provided by their employer are essentially trapped. They have to stay on the job if they want to keep their health care. “Medicare for all” would cost less and not have these problems.
Medicare for all would solve only some of the problems of the U.S. health-care system. A thorough reform would have to address the vast and complex web that includes the certification of health-care providers, the organization of hospitals and the entire pharmaceutical system. But reforming the insurance system would be a major step forward.
Medicare is far from perfect. One-third of all Medicare recipients sign on for privately provided Medicare Supplement plans that, for a fee (that could be $300 per month), cover copayments, prescription drugs and other uncovered costs.
What are the prospects for a single-payer “Medicare for all” system? How would it be organized and financed, and how could it be achieved in our political system?
As similar systems in other countries have shown themselves to be far more efficient, it is almost absurd to argue that it would be “too complicated.” It would, of course, have to be financed by taxpayers. But the additional taxes people would have to pay would be less than what the vast majority now pay to private insurers, and it would provide health care for all.
Politically, it is far from a utopian dream. A significant section of the U.S. capitalist class resents the share of total profits that is extracted by the insurance industry. This puts them at a competitive disadvantage against other countries whose health-care systems are more efficient and less expensive. The U.S. capitalist class as a whole, however, is ideologically committed to defending the basic “free market” system. It will, therefore, resist a movement that insists health care is a human right. That is a principle that we must fight for.
Paddy Quick is a Professor of Economics at St. Francis College and a member of the Union of Radical Political Economists (URPE).
Illustration by Beth Whitney.