If we take the political debate out of healthcare for a moment and take a step back, we can make some interesting observations. Apart from the widely publicized fact that the US is the only rich world country that does not provide some form of basic healthcare for all its citizens, as an article in The Economist magazine pointed out last month, the US has had a form of socialized healthcare for some time now.
It seems that labeling something as “socialized” is the death knell for any proposed policy in the US. However if socialized is loosely taken to mean a taxpayer funded service for all, we already have many things in our daily lives that are socialized: defense, roads, education, sewers, drinking water, air traffic control, so on and so forth.
The difference is that this socialized healthcare only applies to its military veterans through The Department of Veterans Affairs, or the VA. Most Americans do not realize that the VA system is an entirely parallel, government run healthcare system outside of the private healthcare system that most of us use. This system shows the issues many conservatives fear that may come with a government run healthcare system: cost overruns, stifling bureaucracy and delays that may make some people worse than they would have been under a private system. However, as many can testify, for those that don’t have the means to pay for it privately, the VA can be a valuable lifeline to quality care that they wouldn’t otherwise receive on their own.
We Are the Products of History
Healthcare evolved differently in other rich countries such as those in Europe as a result of some of the global conflicts that began in the late 19th and 20th century. The Franco-Prussian War and the Boer War required the mobilization of large numbers of civilians in Britain, France and what was to become Germany (Prussia). In Prussia, universal healthcare, along with other facets of the welfare state were seen as a concession that the ruling class gave to the masses as a tradeoff for fighting for the (unelected) aristocracy. In Britain, the discovery that many men who presented themselves to the recruitment offices for the Boer war were physically unfit for service prompted increasing levels of government administered services that culminated in universal healthcare after 1945. In these instances, and especially during the two world wars, large proportions of the population were mobilized and required government run healthcare during and after their service due to the scale of the population fighting.
By contrast in the US, the only time a comparable proportion of the population was serving in the military was during the Civil War (where 13% of the population was mobilized), which ended up being a bit too early for universal healthcare to develop as a concept. As The Economist article pointed out, large numbers of Americans were drafted and mobilized during the Vietnam War but the proposed universal healthcare system went down along with the Nixon presidency.
We Already Subsidize a Population the Size of Entire Countries
Any person that served active duty in the US military can receive benefits from the VA but the VA maintains a priority system with most benefits going to those with the greatest health or financial need. This sounds eerily similar to the rumor of “death panels” under Obamacare which turned out to be a falsehood. According to the VA the projected veteran population numbers approximately 21.7 million people. To give you an idea, that is a population a bit smaller than the country of Australia in the US, that is eligible to receive some form of universal healthcare.
It seems a bit strange that we have as a society, deemed it permissible to receive government run healthcare only if you meet certain criteria: are too poor, too old or have served in the armed forces. Anyone not falling into those camps cannot receive free healthcare. If you add veterans to those eligible to receive Medicaid and Medicare (although they are not mutually exclusive, you can get 2 out of 3 of these at any one time) the population covered jumps to 134 million people (note I used pre-Obamacare figures for Medicaid via the Kaiser Family Foundation). This back of the envelope figure represents about 42% of the population which is about the figure The Kaiser Family Foundation arrives at for the number of insured not on an employer’s health plan.
The Kaiser Family Foundation is a good resource for providing statistics on all the insured and uninsured in the US, so I decided to take a more conservative figure of 36% of the population which is insured by some government program which they provide here. This represents about 115 million people and to put that in context puts the population that is insured in some form by the government in the US to the size of somewhere between the size of the countries of Japan and The Philippines.
Why Can’t We Get Behind Repealing a Tax on Business?
It is also interesting to note that no politician in the US seems to have made the case that healthcare is a burden on business, especially small business. How many people have considered starting their own business only to be dissuaded by the sticker shock of buying their own health care or having to pay for it through their own company. If the burden of healthcare was taken on by the government and lifted off of business, it would be the equivalent of a tax cut for businesses across the US. It doesn’t have to mean government crowding out the market either. Those who want top notch service can opt to pay for their own private health insurance just as they do now.
In addition, due to economies of scale, large companies already pay lower healthcare costs per worker due to the number of workers they cover. These large companies are able to play the insurers off against each other to win the company wide insurance contract so that they can squeeze the lowest cost per worker out of them. The result is that the small business ends up paying more for healthcare on a per worker basis. Taking this into account, government taking the healthcare burden off of business would actually make the biggest difference for small business and not for big corporations. Is it any wonder that we hear a lot more talk about overhauling the corporate tax code than we do about the healthcare burden on small business?
Looking at Healthcare as a Service
There is another curious phenomenon that seems to defy the laws of economics. If we look at healthcare as a service like any other service, why have Americans who can’t afford the price of healthcare in the US opted to go to other countries where the quality is comparable and the price is much cheaper?
Taking away the cost of getting there and time one may need to stay locally while recovering, this should be an alternative you would think that more could consider given the prohibitive cost of much of the care in the US. So I decided to do some research into this and it seems this is exactly what is slowly happening. According to a release from Business Wire:
The North America outbound medical tourism services market is projected to register a CAGR of 25.5% during the forecast period and is expected to be valued at US$ 150.36 Bn by the end of 2026. Outbound medical tourism in North America is rising substantially as a result of an increasing number of people from the region opting for cross border treatment. Cross border countries offer medical treatments at significantly lower costs.
According to a 2014 International Medical Tourism Journal study, the cost of treatment in the U.S. is 85% higher than that offered in countries like India, Mexico, etc. For instance, treatments such as knee replacement costing around US$ 35,000 to US$ 60,000 in the U.S. costs less than US$ 20,000 in Costa Rica and India, inclusive of lodging and airfare costs. This is prominently leading to a rise in potential for the North America outbound medical tourism services market.
Essentially, with the population aging and more and the prospect with the current political climate of a significant portion of people in the US not having healthcare, it seems the only logical choice more and more people will make will be to simply get it done elsewhere.
Just Do It Already
Taking all these factors into account the fact that the US doesn’t have universal healthcare by now just seems silly. Just to recap:
- More than a third of the population is already insured in some way through the government which equals a population the size of some of entire countries.
- We already have a parallel government run healthcare system with bipartisan support
- Healthcare is a tax on business and disproportionally affects small business and entrepreneurs
- The outlandish cost the systems produces is already pushing many people to simply leave the largest economy and richest country as a whole in the entire history of the world to get it done cheaper elsewhere, which just doesn’t make any sense
So if healthcare was socialized long before Obamacare why don’t we just admit it and make it universal already?The information provided by www.cashchronicles.com is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs. www.cashchronicles.com does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any tax or investment decision without first consulting his or her own financial advisor or accountant and conducting his or her own research and due diligence. To the maximum extent permitted by law, www.cashchronicles.com disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. Content contained on or made available through the website is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. Your use of the information on the website or materials linked from the Web is at your own risk.