Would universal healthcare be more expensive or less than the current US system?

Great Debates
101

The crux of the problem is not whether or not everyone can afford insurance. The crux of the problem is the high cost of health care overall in America stemming from our current system. This affects not only the uninsured, but also those who believe they have adequate coverage.

Often, in times of crisis, they will find out that their coverage is not so adequate after all.

Again, the question for debate is whether some form of UHC might save us some money or productivity. With how the debate is going so far, I’m really interested in seeing what people project the tax increases to be for such a project and whether or not that is more than what Americans (both companies and individuals) pay out of pocket for health care or insurance.

102

I watched a Frontline program called “Sick Around the World” ( http://www.pbs.org/wgbh/pages/frontline/view/ ) recently, where the host, Tom Reid, traveled to 5 ‘freemarket democracies’ to examine how they provide and pay for healthcare.

Summary of the 5 different countries examined:
"Each has a health care system that delivers health care for everyone – but with remarkable differences.

United Kingdom
Percentage of Gross Domestic Product (GDP) spent on health care: 8.3

Average family premium: None; funded by taxation.

Co-payments: None for most services; some co-pays for dental care, eyeglasses and 5 percent of prescriptions. Young people and the elderly are exempt from all drug co-pays.

What is it? The British system is “socialized medicine” because the government both provides and pays for health care. Britons pay taxes for health care, and the government-run National Health Service (NHS) distributes those funds to health care providers. Hospital doctors are paid salaries. General practitioners (GPs), who run private practices, are paid based on the number of patients they see. A small number of specialists work outside the NHS and see private-pay patients.

How does it work? Because the system is funded through taxes, administrative costs are low; there are no bills to collect or claims to review. Patients have a “medical home” in their GP, who also serves as a gatekeeper to the rest of the system; patients must see their GP before going to a specialist. GPs, who are paid extra for keeping their patients healthy, are instrumental in preventive care, an area in which Britain is a world leader.

What are the concerns? The stereotype of socialized medicine – long waits and limited choice – still has some truth. In response, the British government has instituted reforms to help make care more competitive and give patients more choice. Hospitals now compete for NHS funds distributed by local Primary Care Trusts, and starting in April 2008 patients are able to choose where they want to be treated for many procedures.

Japan

Percentage of GDP spent on health care: 8

Average family premium: $280 per month, with employers paying more than half.

Co-payments: 30 percent of the cost of a procedure, but the total amount paid in a month is capped according to income.

What is it? Japan uses a “social insurance” system in which all citizens are required to have health insurance, either through their work or purchased from a nonprofit, community-based plan. Those who can’t afford the premiums receive public assistance. Most health insurance is private; doctors and almost all hospitals are in the private sector.

How does it work? Japan boasts some of the best health statistics in the world, no doubt due in part to the Japanese diet and lifestyle. Unlike the U.K., there are no gatekeepers; the Japanese can go to any specialist when and as often as they like. Every two years the Ministry of Health negotiates with physicians to set the price for every procedure. This helps keeps costs down.

What are the concerns? In fact, Japan has been so successful at keeping costs down that Japan now spends too little on health care; half of the hospitals in Japan are operating in the red. Having no gatekeepers means there’s no check on how often the Japanese use health care, and patients may lack a medical home.

Germany

Percentage of GDP spent on health care: 10.7

Average family premium: $750 per month; premiums are pegged to patients’ income.

Co-payments: 10 euros ($15) every three months; some patients, like pregnant women, are exempt.

What is it? Germany, like Japan, uses a social insurance model. In fact, Germany is the birthplace of social insurance, which dates back to Chancellor Otto von Bismarck. But unlike the Japanese, who get insurance from work or are assigned to a community fund, Germans are free to buy their insurance from one of more than 200 private, nonprofit “sickness funds.” As in Japan, the poor receive public assistance to pay their premiums.

How does it work? Sickness funds are nonprofit and cannot deny coverage based on preexisting conditions; they compete with each other for members, and fund managers are paid based on the size of their enrollments. Like Japan, Germany is a single-payment system, but instead of the government negotiating the prices, the sickness funds bargain with doctors as a group. Germans can go straight to a specialist without first seeing a gatekeeper doctor, but they may pay a higher co-pay if they do.

What are the concerns? The single-payment system leaves some German doctors feeling underpaid. A family doctor in Germany makes about two-thirds as much as he or she would in America. (Then again, German doctors pay much less for malpractice insurance ($1400.00 US), and many attend medical school for free.) Germany also lets the richest 10 percent opt out of the sickness funds in favor of U.S.-style for-profit insurance. These patients are generally seen more quickly by doctors, because the for-profit insurers pay doctors more than the sickness funds.

Taiwan

Percentage GDP spent on health care: 6.3

Average family premium: $650 per year for a family for four.

Co-payments: 20 percent of the cost of drugs, up to $6.50; up to $7 for outpatient care; $1.80 for dental and traditional Chinese medicine. There are exemptions for major diseases, childbirth, preventive services, and for the poor, veterans, and children.

What is it? Taiwan adopted a “National Health Insurance” model in 1995 after studying other countries’ systems. Like Japan and Germany, all citizens must have insurance, but there is only one, government-run insurer. Working people pay premiums split with their employers; others pay flat rates with government help; and some groups, like the poor and veterans, are fully subsidized. The resulting system is similar to Canada’s – and the U.S. Medicare/VA programs.

How does it work? Taiwan’s new health system extended insurance to the 40 percent of the population that lacked it while actually decreasing the growth of health care spending. The Taiwanese can see any doctor without a referral. Every citizen has a smart card, which is used to store his or her medical history and bill the national insurer. The system also helps public health officials monitor standards and effect policy changes nationwide. Thanks to this use of technology and the country’s single insurer, Taiwan’s health care system has the lowest administrative costs in the world.

What are the concerns? Like Japan, Taiwan’s system is not taking in enough money to cover the medical care it provides. The problem is compounded by politics, because it is up to Taiwan’s parliament to approve an increase in insurance premiums, which it has only done once since the program was enacted.

Switzerland

Percentage of GDP spent on health care: 11.6

Average monthly family premium: $750, paid entirely by consumers; there are government subsidies for low-income citizens.

Co-payments: 10 percent of the cost of services, up to $420 per year.

What is it? The Swiss system is social insurance like in Japan and Germany, voted in by a national referendum in 1994. Switzerland didn’t have far to go to achieve universal coverage; 95 percent of the population already had voluntary insurance when the law was passed. All citizens are required to have coverage; those not covered were automatically assigned to a company. The government provides assistance to those who can’t afford the premiums.

How does it work? The Swiss example shows that universal coverage is possible, even in a highly capitalist nation with powerful insurance and pharmaceutical industries. Insurance companies are not allowed to make a profit on basic care and are prohibited from cherry-picking only young and healthy applicants. They can make money on supplemental insurance, however. As in Germany, the insurers negotiate with providers to set standard prices for services, but drug prices are set by the government.

What are the concerns? The Swiss system is the second most expensive in the world – but it’s still far cheaper than U.S. health care. Drug prices are still slightly higher than in other European nations, and even then the discounts may be subsidized by the more expensive U.S. market, where some Swiss drug companies make one-third of their profits. In general, the Swiss do not have gatekeeper doctors, although some insurance plans require them or give a discount to consumers who use them."

The US spends 16% of the GDP (with about 45 million uninsured) on healthcare making it the most expensive healthcare inthe world, but is only rated 37th in quality and fairness by the World Health Organization.

Plus we seem to have about a million or so medical bankrupticies per year, unheard of in any of the above highlighted countries.

103

Sure it does. I work and earn a good salary, and spend it on all sorts of things. If I get sick with no insurance, I can’t afford care (since it costs WAY beyond what is reasonable *), so I stop working and stop spending money. The economy suffers.

  • A friend had a recent visit to the emergency room for possible kidney stones. After three hours, he saw the doctor for about 2 minutes, was given two pills to take (one for pain and one to deal with the stone), and was billed $9,000.
104

I’d be more than happy for this (but as a PPO). What we have now means if I get sick I either go bankrupt if it is an emergency, or buy the first flight out of the US if it is not.

105

I would be more than happy to pay for insurance. I am not “choosing to do other things”. As one who is “uninsurable”, but has spent less than $10,000 on health care since I was an chile, this hits hard.

106

http://www.msnbc.msn.com/id/6895896/
It is not just that half the bankruptcies are due to health problems, but that most of them had coverage. The insurer just refuses to pay. Our system in broken.

107

The normal definition of a public good is that which is non-rivaled and non-excludable. As you suggest, national defense is one such good. Another example is clean air. Public goods justify government intervention in order to solve collective action problems–especially free riders.

But fire services, education, police services, etc., do not meet the definition of public good. We could easily charge people for fire services. We could easily charge people for education. Indeed, there are private schools, and private police forces.

So the distinction is clearly not what is and is not public good.

But you seem to use public good in an unconventional way. You suggest that these other services provide benefits to the wider community. That seems to be true of some, but not all, of the instances of fire protection or police protection. But that is also true of some, but not all, of the instances of health services. Aside from contagious disease (which we obviously cannot exclude), because we believe in not letting people die in the ER because they don’t have insurance, we pay through the nose for people who have serious but preventable health problems that could have been prevented on the cheap at some earlier stage. There are also significant benefits to healthy citizens across the board which are similar to the benefits of general crime reduction.

So the distinction is also not what provides general benefits to the community.

108

Nonsense. Not dieing, facing bankruptcy, or life long crippling injury due to treatable conditions is in everyone’s interest. Many tens of millions of Americans face this problem. That they do is fucking shamful. We’re an economic super power yet we can’t get our heads out of our ass and fix it.

Also Virtually every other first world country with universal healthcare.has higher life expectancies, lower infant mortality, better health, and significantly lower costs over all.
That excess baggage is reflected in the costs of trading with us. Keeping an American worker insured costs more then keeping a Canadian worker insured.

How do you think that reflects on the prices of American goods?
Meanwhile all Canadian workers are insured, and 40+ million Americans are expected to just crawl off and die.

It retards our selling ability and it’s just retarded.

109

Do you think that the cost of medical care would go down simply because a UHC was paying the bills rather than a private insurance company? The reality is that medical care beyond the average is expensive. We are able to save many more lives these days, but that ability costs money. The only difference a UHC would make would be that the taxpayers will have to cover insurance premiums for those who are not currently insured. It certainly isn’t going to drive down the cost of good medical care.

110

A PPO would be much more costly than an HMO. I am just not interested in paying even more taxes to cover people who don’t have Medicaid or insurance by providing them with a PPO. Particularly when noone seems to want to tell me why they don’t have insurance.

111

You’d need to explain. Obviously, you didn’t pay for your health care when you were a child, so how is it that you went from your parents home to being uninsured? “Uninsurable” only applies to private policies - are you in an industry that never provides group coverage? Are you completely uninsurable or just cannot get coverage for one or two problems? Are you sure that it isn’t because of choices you made that you are now uninsurable?

And the big one - how common is your situation? Is a UHC advocated to cover just a few people or is being completely uninsurable a common problem? If so, wouldn’t it make more sense to deal with the current insurance industry rather than start up a huge government bureaucracy?

There are always going to be folks who will slip thru the cracks, unless we go to a completely socialist system. I may end up being a slipped thru the cracks person myself if SSDI rules against me next month, which they are likely to do given the economy. So, I can’t work and I can’t get my SSDI that I’ve paid into for almost 40 years, but I’m certainly not going to insist on an automatic nationwide disability payout just because SS would rather give money to Octomom’s kids than to disabled workers in their 50’s. My mistake, not really my choice but sort of, was to trust the government to give me back my money when I needed it. Silly rabbit…

112

Is it?

Medical bills were the cause in part. What else triggered the bankruptcy? What other choices did these folks make that resulted in their not having enough money for decent insurance and/or to cover medical bills? Note that births, deaths and gambling apparently lead to bankruptcy when a serious illness strikes half the time.

For an average of $14,000, these folks went bankrupt. Have things changed so much in the past 20 or so years that 2 million people are unable to come up with that much credit? Remember, we aren’t talking poor people here, as they would be covered by Medicaid. And —>

How is it that a middle class person, who owns a home and apparently had a decent job couldn’t come up with an average of $14,000? We have one wage earner in our household yet we could put that on one credit card. What is going on out there that so many people can’t do that? I think that it is more likely that what is broken these days is the concept of financial responsibility.

113

Are you even reading this thread? This is the issue under discussion, you can’t just dismiss it out of hand.

How is it that many countries cover everyone yet pay less in both actual dollars per capita and as a percentage of GDP, if you’re just declaring it here to be impossible?

You seem to be in the (not insignificant) group who is more concerned with seeing people punished for what they consider character flaws or bad behavior than the benefit of everyone. You’d take unnecesary hardship on yourself as long as you felt those who deserved it more got it even worse. Cutting off the nose to spite the face and all that.

114

I would wager that serious illness not only caused medical bills, but also took many of the individual’s livelihoods away from them. Workers in this country tend to get few paid sick days.

Also, perhaps just as influential, is the fact that Americans aren’t so hot on saving money for a rainy day. Even our middle class has gotten to the point where any given family depends on credit for it’s annual financial stability. When you combine existing liabilities with sickness and loss of income, it could be a very unhappy outcome.

Have you been watching the news? Granted, the credit squeeze has really only started to get bad in the last couple of months, but even before this year $14,000 is a lot of money. In my home state, $14,000 is $2,000 more than half the average yearly income for an individual!

If your one wage earner (and I sincerely hope this doesn’t happen) got, say, cancer of the thyroid gland; how would that affect your budget in all its dimensions? If the person then had to take leave from work for expensive surgery? If your family then had to fork over $800 in drugs a month plus doctor’s visits?

How would you further deal with the psychological impact of this heavy financial burden and the fight with your insurers? How much stress would this put on your wage-earner’s shoulders? And, with the thyroid condition, the former wage-earner is now tired all the time and moody. It looks like an especially difficult way to get back to health.

An illness doesn’t have just one price tag that you pay and it’s over with. An amputation, other surgery, chronic conditions, etc. make you pay for a long time under our current system. Considering those factors, I think it’s easy to see how $14,000 in credit can go up in smoke without you being able to pay for it later.

$14,000 paid to insurers and pharmacies does not a cured individual make.

115

I’ll gladly tell you why I don’t have insurance.[ul][li]I’m an independent contractor. I don’t qualify for any sort of group plan. If I want insurance I will pay the full freight of it out of pocket. The nature of the field that I am in is such that I will likely never be a employee rather than contractor until such time as I switch fields, which I hope to do, but this will not be for at least five years (when I complete different education/training).[]I have been diagnosed with a chronic and incurable condition that right now has no actual effect on my health. It’s an annoyance, but it doesn’t debilitate me, I don’t need medication, it has no daily impact on my life at all - it was diagnosed secondary to something acute and easily curable. This chronic condition, however, can cause and/or be linked to all sorts of not so pleasant issues including hypertension, diabetes and heart disease, my risk is marked (but not specifically quantified) as higher because of the underlying ailment, thereby deeming me a “bad/high” risk.[]I weigh more than is deemed acceptable according to the arbitrary charts and lists.][]I am female, and still within my childbearing years.[]Years of tenuous employment and iffy income, as well as outstanding medical debt from an unpredictable/unpreventable illness several years ago (which affected my employment) have damaged my credit rating.[*]It has been a number of years since I had insurance coverage, so the HIPAA protection regarding my pre-existing condition is long expired.[/ul][/li]As a consequence, many insurers won’t touch me as an “individual policyholder” at all, including insurers that would cover me (and have covered me in the past) were I an employee of the company I work with rather than a contractor.

For the companies that will cover me, and give me a plan that doesn’t have limited coverage that could still leave me owing thousands in case of serious illness or injury, or needing to meet a 4 figure deductible every year on top of premiums, I was recently given quotes for four companies that ranged from 48 to 64% of my (admittedly low, but not that low) monthly income.

Each of those companies noted that for the first year of coverage, they would either reject or significantly cap any and all claims for care relating to the pre-existing condition. Because it’s a systemic ailment that can affect numerous systems, they would have carte blanche to refuse to pay for just about anything in that first year, even while I paid my premiums.

So I’m not technically “uninsurable” I’m just situationally so. While I’d love to say “sure, I can pay for that, eeny meeny miney mo, okay, this month I don’t put gas in my car or pay the light bill, next month I’ll skip food and electric, that’ll make up the deficit” it’s just not realistic.

I don’t really care if I can get access to affordable healthcare through a private company or the government at this point. I just want something that I can pay for with the money I earn from the honest living I make, and will actually allow me to see my GP and gyn when I need them without breaking my financial back. If I’m where I am now in several years time and the chronic ailment does start causing me to have cardiovascular problems, or diabetes, I will go bankrupt or die or perhaps even both. And that’s pretty damned horrifying.

116

Around here, only about 50% of employers provide health insurance. Most small business don’t. So once I turned 18, I lost my parent’s insurance. When I was about 25, I got back on a group plan (my first one) through a new job. Everything was fine. During that employment, i was diagnosed with an “uninsurable” condition. That company went out of business in 2002 and because it went out of business, no COBRA was available. So I became uninsured.

I am a software developer and consultant and self-employed or contracted - almost never an employee. Even at jobs in my industry around here, I have only been able to get insurance at 1 out of 5 of them. I have a genetic condition (so I was born with it) that companies class in the same group as AIDS and Diabetes.

I just tried again last month to obtain insurance as was told: “I am sorry to say that the companies I checked with won’t cover you at all. There are certain conditions that cannot be ridered and the insurance companies just tell us brokers that the individual is not eligible for health insurance.”

My condition affects about 1 in 3000 people.

117

I would be happy with laws saying that insurance companies are not able to decline people for pre-existing conditions and have to keep rates within a range.

We could however, just eliminate the current huge insurance bureaucracy and replace it with a government run agency that would not be a for-profit entity. That alone would eliminate a huge pile of costs.

How is it that I was able to obtain care in the Czech Republic for $450, while the same thing in the US would be $10,000 or more? Note that the $450 is 100% out of pocket with no insurance company involved as I am not Czech (or EU). My Czech doctor went to Yale medical school and the quality of the care what the same as in the US.

$10,000 vs $450. Tell me why our system is better?

118

Being deliberately flippant here:

The $10,000 paid for the existence of Yale Medical School. You Czech doctor somehow didn’t pay the whole cost of his education, otherwise this would never work.

Doctors in the US get paid something like $1000 per day. It is what motivates them to keep borrowing and spending money on their education six years after their cohorts have started earning money.

In a broader context, people just argue past each other on this. You cannot compare the US to other countries. Just from the experience of my (very large, generally high-achieving) extended family, the US culture is quite different from Europe, Aus/NZ and even Canada. I have a cousin in Australia who makes more working for the tax department of Western Australia than another cousin who is a doctor in Melbourne.

With very few exceptions, the government does not employ the best and the brightest in the USA. No one in my family who went to a top school and got an advanced degree ended up working for any government entity in the US. But in the UK, Canada and Australia these jobs seem to be the first choice for top Uni grads.

So Americans are bit suspicious that their version of the NHS or whatever will be a poor shadow of the UK version, and will end up delivering worse services for higher costs than we have now. We do not have the option of simply importing someone else’s system. We have to make it work with our own people and within our own socio-economic climate. I still think some version of single payor is the way to go, and it will net-net be better than what we have now, which to some extent is the worst of all worlds. But it ain’t going to be utopia either. Some people somewhere are going to be worse off. Possibly most people on an everyday basis will be worse off (pay higher costs and/or receive worse care) but it will remove uncertainty and gaps from the system as well as remove some of the perverse incentives.

I have lived 22 years in the USA and 19 years in other countries. The US is a bit hard to explain to people in Europe and Australia. Just watching our entertainment and visiting Disneyland doesn’t give you the true picture.

The Canadians have a much better idea. Maybe that is why my Canadian cousins are just insufferably contemptuous of the USA. I guess now that we have Obama, I might be able to have a 20 minute conversation with one of them without having to defend Bush, as if I personally created and annointed the guy President.

119

While I have no idea about my Czech doctor’s finances, I do know that he had a practice in the US for many years and as soon as the wall came down, he returned to Prague and opened a practice there. Obviously he took a huge pay cut.

I agree we have the worst of both worlds… highest costs and most uninsured among industrialized nations. Over the past 7 years so so, I have spent more than half a million dollars in the economies of the Czech Republic and UAE. Had I been able to get insurance in the US, this would have been spent in the US. This is direct outflow of capital since it was originally US-based funds.

Our lack of insurance coverage for everyone is a negative influence on the economy.

120

But not as big a pay cut as you might think. The actual amount paid for medical services is only 2-3 times larger in the US than in Western Europe (maybe more vs Czech Republic) not 20-30 times, as $10,000 vs $450 would have you believe. Very few people pay the $10,000, nor do their insurance companies or Medicare or Medicaid. More likely $1,000-$2,000.

And there is a kind of free-rider problem. The vast majority of new drugs are developed because and only because there is a huge payoff in the US market when they are new. In the various degrees of socialized medicine (or heavily regulated pricing and availability) in other countries, it wouldn’t make sense to risk the billions to develop a drug that was only marginally better, but you could charge $300 for vs $20 for an older drug. The Ontario government might simply place a limit of $50 on the price of the new drug, take it or leave it. The Pharma would take it, but only because they can make up their $1b in reserach costs ten times over in the US, so if they make a buck a pill in the UK and Canada, they are happy to take it. No one knows how many drugs will not come on the market if the inflated US market didn’t exist, and how much medical benefit those drugs would bring, not just US consumers but consumers all over the world. Currently the US pays and everyone else benefits almost the same, but only the US pays the premium.

Basically no one (as far as I know) has reliably modeled the response of drug researchers (and other medical innovators - devices, surgical processes, etc) to money incentives, and of course the players involved (whether they are in the private sector, academic world or the government) all have an interest in not revealing their preferences.

I don’t know why you say “we” have the worst of both worlds, if you are living in the CR and UAE aren’t you telling me you have the best of both worlds.