Diametric post

Public discourse on whether the public or private sector should be the prevailing power over specific industries has been an integral part of the United States since the nation’s early years. Two parties, the Federalists and the Democratic-Republicans, were at the center of this debate. Alexander Hamilton was a leading figure among the Federalists, and Thomas Jefferson was the figurehead for the Democratic-Republicans. The central focus of these debates was whether the central government should possess more substantial power over the nation’s affairs. Some other contenders for holding power were the states, the private sector, and the citizens. And with that, all the various stakeholders of the nation have been laid out.

Healthcare is among the many categories that fall into this ongoing discussion. In other words, should the nation convert to a single-payer national health insurance? Under such a system, private hands would still provide medical care, but payment would come from one source: the government. We already experience a form of this with Medicare. Some have called the progressive policy for universal healthcare in America Medicare for All. The main objective of this policy is to provide healthcare benefits to all. In the past, the government has taken steps to provide greater health insurance coverage to more people. Although the Affordable Care Act (ACA) was a method to bring healthcare and insurance to more, the act does not qualify as universal healthcare. The ACA enabled millions more to receive insurance, but the number of uninsured remains in the millions. The leading reason for those who remain uninsured is the high cost of obtaining insurance. The single-payer system is a far superior option compared to the private sector. The remainder of this writing will explain why that is the case.

One of the core points of division is whether healthcare is a right or not. Such a debate is undoubtedly philosophical and will not be covered in this writing. Instead, this writing will focus on the tangible benefits or detrimental effects the government would provide as the sole payer for a healthcare system. As such, another source of divide is the cost of implementing such a system. To accomplish this, I will also look at some of the costs associated with the current system and compare it to how it may look under a single-payer.

Healthcare in America is notoriously expensive. Despite being the only country among a list of high-income countries to not have universal healthcare, the United States pays far more for healthcare than any other country. The countries within that list are Australia, Canada, France, Germany, Japan, the Netherlands, New Zealand, Norway, South Korea, Sweden, Switzerland, and the United Kingdom. As a percent of GDP, the United States paid 17.8% of the nation’s income on healthcare costs. Germany was in second place, having paid 12.8% of its income in the same category. South Korea is at the bottom of this list, paying only 8.8% of its income into health costs. In comparison, one study found that conversion to a universal healthcare system could lead to $450 billion in annual savings for the country. A separate study performed an economic analysis of the literature. It determined that 86% of the studies predicted cost savings for a universal healthcare system starting in the first year, and 91% predicted savings would occur over several years.

Looking at the actual cost differentials is valuable, but it leaves much room for interpretation. What are some reasons the cost of healthcare is so much higher in America? According to David Cutler, a professor in the Department of Global Health and Population at Harvard University, there are three primary sources of the high cost of medical care in America. One of the most frequently cited reasons is administrative costs. Cutler acknowledges this stereotype as his first reason for the high cost. Nearly one-third of the cost of healthcare is spent on administration alone. Hospitals have to deal with a wide variety of health insurance organizations, all with varying payment methods and codes that go into each company. As a result, an entire profession has been built to handle the receipt of payments from insurance companies.

One of the core benefits of a single-payer system is the standardization of payment. Instead of having hospitals deal with hundreds of different insurance companies, there would be one payer to deal with. Consequently, the army of payment clerks associated with the high cost of administration would be significantly reduced in size – a direct benefit to the bottom line cost for consumers. Cutler claims that the government is the only entity capable of enforcing the standardization necessary to reduce administrative costs.

There are numerous examples of governments enforcing standardization within and across industries. A recent example was the European Union ruling that all phones sold must have a USB-C port for charging. Apple, the company famous for selling iPhones, notoriously designs its products to be able to connect within its own ecosystem, largely separate from other ecosystems. One such method was implementing its own charging port known as lightning. However, most of the world uses other charging ports, more recently, the USB-C port. This unnecessarily demanded consumers to purchase and carry two entirely different cords for their phones compared to their other products. This is a relatively small-scale example, but imagine if, instead of carrying two cords with you to charge your products, you needed to carry around dozens. As you can imagine, this would get out of hand very quickly, but this is what the healthcare administration looks like in America today. Hospitals must be equipped with the personnel to manage the immense variety of payment systems to receive compensation for medical care. The added cost this burdens hospitals with does not in any shape or form contribute to the ultimate goal of medical care, which is to treat patients. Such an inefficient system creates a burden for the healthcare system that would not exist under a single-payer.

In comparison to private insurance, Medicare is far more efficient. For instance, administration costs for Medicare run as low as 2% of operating expenses. Private insurance companies tend to run administration costs around a whopping 17%. The cost difference may seem small when looking at the percentage difference between the two. Still, when looking at the multi-trillion dollar expense of healthcare in America, the difference can add up to hundreds of billions of dollars more spent in non-service provided expenses. In other words, hundreds of billions of dollars are spent on something completely unrelated to medical care.

Considering how much more we pay for medical care, you would think that would result in greater health and medical care for those that do receive it. Sadly, the added expense our current system incurs does not result in some of the benefits one would expect from paying more into medical care. For instance, life expectancy at birth is low in America. In 2020, life expectancy was 77 years, while the average life expectancy of countries within the Organisation for Economic Co-operation and Development (OECD) was 80.4 years. The cost of medical care and the number of uninsured directly contribute to the discrepancy in life expectancy.

Medical care costs are so excessive that they deter people from seeking it. As a result, people wait much longer to get diagnosed with certain types of diseases, including cancer, at which point the disease may have progressed past the point of curability. One study determined that for those without insurance, there is an additional 13.1 weeks in lag time between when the first symptoms develop and when the disease is diagnosed. Aside from any additional costs associated with waiting to seek treatment, a one-month delay in seeking cancer treatment increases the risk of death by 6 to 13%, depending on the type of cancer. With the average lag time being 13 weeks, it is no wonder medical expenses are higher in America. At the same time, treatment is less effective, and overall health in the country remains lower than in other developed countries.

Another complication that arises from people putting off seeking medical care is the lack of awareness of medical issues. For instance, mental health has been commonly brought up as a source of concern for a variety of reasons. Untreated mental illness has reportedly cost the country $300 billion in lost productivity. Aside from the societal implications this imposes through lost productivity, it also contributes to higher suicide rates and drug abuse disorders. What does this have to do with government-funded healthcare for all? Once again, the main reason people do not seek mental health care is because they cannot afford it. By this point, it is pretty clear to see that expensive medical care prevents millions of people from seeking healthcare, and this contributes to a whole host of other complications ranging from lower life expectancy to losses in productivity. 

So far, it has been discussed how healthcare in America costs more than in other developed economies. Most studies have shown that a single-payer system would result in cost savings for American citizens. Private insurance in America naturally builds in unnecessary operating expenses to the overall cost of medical care. Millions of Americans are currently uninsured, and those who are insured are typically required to pay at least a portion of the costly medical care they receive. An unintended consequence of this added expense is that people put off seeking treatment, which contributes to a lower life expectancy as well as a litany of other issues. The ultimate driving factors for these issues are the high cost of care and the number of uninsured. In our current private health insurance system, not only are you required to pay for coverage, but you generally must pay part of the cost of treatment in the form of a copay or deductible. Under the single-payer system in Canada, 100% of the nation is covered under their government-funded healthcare system, and healthcare is free upon receipt of medical service. This means there are no gaps in insurance, no need to worry about not having it, and when you are faced with medical issues, you do not need to forego treatment due to its expense. Such a system in America would contribute to cost reductions in the entire healthcare system due to decreased administration costs alone. Still, other benefits would also exist because people would no longer suffer from having to choose whether to go into debt for medical care or forego care altogether. A single-payer system in which the government pays for all medical treatment would definitively contribute to a better America for everyone.