This is a follow-up to my series last year, Universal Healthcare Week.  My posts on the pros and cons of a universal health care system continue to be popular pages on Weakonomics so I thought I’d touch on the subject again.  For a quick refresh, universal health care is a system of providing health coverage for any and all willing participants.  This is usually through a government program, funded by taxes.  The United States is the only developed country in the world to not have a universal health care system for its citizens.  Medicaid and Medicare do not count because they target a select group of citizens.  Many people support universal health care claiming it is a birthright and everyone should have access to care.

It is important to note the distinction between universal health care and socialized medicine before we proceed.  Many people confuse the terms.  Under universal health care hospitals, doctors, drug companies, nurses, dentists, etc can all remain independent.  They can be for-profit or non-profit.  In socialized medicine the whole industry is the government.  So if you wanted to be a doctor, you would work for the government.

So let’s dig into the pros and cons of universal health care, starting with the pros.

Pros of Universal Health Care:

If you lost your job next week your insurance would likely go with it.  Excluding temporary programs like COBRA, losing your job basically means losing your health insurance too.  Sure you can buy your own, but that can get expensive and there are often holes in the policy than with employer provided health insurance.  Under a universal system, you don’t have to worry.  Imagine you had to pay each month for access to use the police.  If you lost your job and couldn’t afford the police bill and called 911, you wouldn’t get service.  That sure sounds awful.  The most fundamental underlying basis of universal health care is the fact that in the system, you don’t have to worry about not being covered.

The United States spends more on health care as a percentage of GDP than any other developed nation.  Countries that have some kind of universal coverage generally spend less.  This is because the costs of a universal system are less than private.  Drugs can be purchased in greater bulk, prices for services can be negotiated at a lower rate due to the larger pool, and a large singular system would reduce the overhead involved in processing insurance and medical services.

Furthermore we already have laws in the US that require emergency rooms to see patients even if they don’t have any insurance.  This costs the hospital money which they pass on to consumers and insurance companies.  Under a universal health care system those that normally go without insurance would now be required to pay into it in the form of taxes.  The distributed cost would bring down the personal expenses of those that already pay for insurance.  Those that might object to forced taxation should know this is no different than the shared costs of road construction, school funding, or space exploration.

That all sounds pretty good right?  You can take your insurance from job to job or even be covered if you lose your job, the total cost for health coverage would decline, and the actual out of pocket expenses you pay would also go down.  But not so fast.  We’re only looking at this farm from the other side of the fence.  Let’s walk on over and find out exactly what life is like with universal health care.  To Europe!

Cons of Universal Health Care:

Competition rocks.  Competition fosters innovation.  There is a reason pharmaceuticals and biotechnology are two of the fastest growing industries in the United States.  There is some serious money to be made with a breakthrough product.  Universal health care funded by the government would really hold back the potential for new medical breakthroughs because the government would insist on sharing the breakthrough, to the detriment of the company’s profits.  This would end up with these companies leaving the industry.  No profit to be made, no reason to invest.  Competition in the medical community has done much to help support the American economy over the past couple of decades.  So much so that our GDP growth outpaces other developed countries with universal health care systems.

Take a closer look at the universal healthcare programs in other countries and you’ll find not everything is so great.  In Canada, wait times to see specialists have sent many people with the funds to private care.  I’m pulling statistics here, but it takes 22 months for residents of Saskatchewan to get an MRI.  57% of Canadians report having to wait a month just to see a specialist.  As a result long wait times and certain services not covered in the national plan many citizens in universal health care provided countries must still obtain private insurance.  That negates the whole purpose of a universal system because many people would opt out of getting private insurance creating the same problem the US currently faces.

Perhaps the most important disadvantage of universal health care is the fact that the government would be in charge.  Medicare/Medicaid and Social Security are run by the government. Both of these programs are on track to bankrupt themselves.  Bloated bureaucracies are sort of an American icon.  We set up massive social welfare programs and they are abused by citizens and politicians alike.  If a US universal healthcare plan were to generate a surplus, our idiot government would then borrow from it and ruin the whole system from everyone.  The simple fact is that our government can’t be trusted to handle social programs.

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These aren’t all the pros and cons of universal health care but it’s enough to get you started.  Here are a couple of interesting facts and thoughts of note about universal healthcare:

• Almost 59% of the US health care system is already publicly financed through taxes and subsidies.
• It’s unfair for a parent to choose not to cover a child.  The child should have coverage.
• A commonly cited statistic shows the quality of health in the United States lags behind countries with universal health care, however the study used biased criteria and results are manipulated to make it look worse than it actually is.
• The most recent opinion polls of doctors in the US show the majority support a universal system.
• The American Medical Association (the largest of its kind) more broadly supports reform of the current system.
• “Health Care” and “Healthcare” are both widely accepted terms.  This author prefers the latter, but has used both in this post.

What could universal healthcare in the United States look like?
There are a number of methods to implement universal health care.  You can collect taxes from everyone, including businesses; this is how we support Medicare.  This would provide blanket coverage to anyone and everyone and you would only need to prove you’re a citizen to get care.  Another method would be for the government to offer a national policy.  If you wish to participate you can opt-in, then your premium would be deducted from your paycheck just like a normal tax.

In the united states we would probably tax everyone.  It is conceivable that we would be taxed as a percentage of income, instead of a flat rate.  This could negatively impact higher income earners because they would pay more into the system than they would get out.  In order for a universal system to work this would likely be the implemented method.  Perhaps it could be a fixed percentage up to a certain income level, at which it either curbs or cuts off.  A system like this would best benefit lower income families and families with more children than average.  The result would be that these demographics would get more out of the system than they pay in, with folks without children and higher income earners getting the short end of the stick.  They would however get a stick.

We could also use a system where everyone pays in and gets at least something out of it.  It could be the most basic coverage, perhaps all children up to 18 covered and all adults getting just simple coverage.  This could perhaps cover basic dental and eye, as well as a yearly check-up covering all the normal tests someone would get at their particular age.  Adults could purchase additional coverage through the government and it would be deducted from their paycheck, or they could use a private insurer to supplement the basic care.

The possibilities are endless, just about anyone could come up with a plan, it’s just a matter of which one would be the most useful and provided the greatest coverage per dollar.

Finally, what does The Weakonomist think about universal healthcare?
The universal healthcare argument almost always excludes one key point - portability.  Many folks talk about universal care as either you’re in or you’re out.  Half of the people in the United States (as conducted by a poll of the most reliable sources - 4 people in my office) just want to be able to take their insurance with them from job to job.  Let’s say I left my employer to go work for a small bank in town.  That small bank requires 90 days of service before benefits kick in.  This means that I go three months without having insurance!

Like my car insurance or my Roth IRA, I’d like to simply take my health insurance with me wherever I go.  I will pay the full price, and a company (as a part of my benefits package) could offer to pay for some or all of my coverage.  When I leave the company they stop paying.  I have to pay it all on my own again or until I find another company that would help me pay for it.  Companies could be incented to help by making this contribution a tax deduction.

At this point I still don’t believe a universal system is the best way to go.  I really want to just take it with me wherever I go, and get some big time reform and modernization to the medical system. Gun to my head with only two options though, I’ll take universal health care over what we’ve got right now.

At least 1% of the people reading this will care what I think, but for the most part my opinion doesn’t matter.  Educate yourself, form your own opinion.  I know I’ve got some readers with more information out there, please share it.  This is not a forum for debate, but merely a quest for statistics and facts.