A study by Steffie Woolhandler and David U. Himmelstein in Health Affairs vol 21, #4 (2002) points out that, if we seriously consider the effect of subsidies, it turns out that the U.S. spends more per capita in PUBLIC money tax expenditure on providing healthcare than it does private money (more than any other nation, even those WITH nationalized health care). That means that we are essentially already pretty close to paying for tax-financed nationalized health care in U.S. (and already above what it costs elsewhere)… and not getting the benefits from it.
The authors calculate that, taking into account subsidy, about 59.8% of total medical spending is tax financed, in contrast to Canada’s 70%. This is a difference of about 130 billion U.S. dollars per year (about the size of the first Bush tax cut). And this is not considering the huge losses in the present system from administrative overhead and the behavior of adverse selected non-insured: which is basically to abuse the emergency care system in lieu of paying premiums for medical care.
I always figured that nationalized health care would be bad because it would drastically increase the tax burden. But if these authors are right, then the tax burden is almost already that objectionably high: and most of this spending is being poured into a system that is ridiculously inefficient. At the very least, if my objection to nationalized health care is that it has an unreasonably high tax burden, then my objection should actually be pretty much just as strong to the present system as it was to the proposed system. In fact, it should be even more stringent, because not only does it seem like we are already paying in taxes what I objected to, but we aren’t even getting any of the benefits of paying that much.
How seriously do people think we can take this sort of calculation? Essentially, the way the figure of per capita spending is looked at normally is to just take “who wrote the check to pay for it at the end stage” approach. The authors point out that this sort of calculation simply ignores the government’s input at all other points of the process. However, a lot of this input is in the form of tax subsidies to middle class, wealthy people, and insurance companies: which, while it is tax expenditure, is not quite the same thing as taxing someone and then spending money directly (though it does make sense if you think the government wants a balanced budget in the long run).
Obviously “what can be done about this situation” is a pretty broad question, but I think that the suggestion that the U.S. is pretty much already paying for nationalized health care without getting it will already be contentious enough so that we don’t even get that far.