Before World War II, health insurance was rare. In the following years, the idea that everyone needs health insurance gained widespread acceptance. Among leading industrialized nations, everybody but the United States adopted universal coverage guaranteed by the government, while the US went a with a largely free-market system.
I. The Problem
Nearly a century later, how do these opposing systems compare? Hands down, socialized medicine is the winner. From an article in The Hill by Anders Åslund entitled US health care is an ongoing miserable failure:
"The state of U.S. health care is catastrophic. In no other area is the U.S. lagging so far behind the European Union. Average U.S. life expectancy is 78.7 years to compare with 81 in the 28 countries of the European Union.
U.S. life expectancy has fallen for the last three years, while it rises all around the world. U.S. infant mortality is 5.6 per 1,000 life births, but only 3.6 on average in the EU. American maternal mortality is 14 per 100,000 births and rising. Compare that with a mere 3 deaths per 100,000 births each in Finland, Greece and Poland.
As if to add insult to injury, U.S. health-care costs 18 percent of GDP while the cost is limited to barely 9 percent of GDP in Europe.
This astounding U.S. underperformance raises two questions: How is it possible to perform so poorly; and why has the U.S. failed to do anything about it?"
Åslund goes on to itemize things wrong with the US health care system, including that our free-markets, "do not work because they have been captured by vested interests, reflecting a wider problem of current American crony capitalism."
"While European insurance companies are usually mutually-owned by the insurance takers, U.S. insurance companies work for profit and find it cheaper to harass their customers with innumerable administrative queries than to deliver services."
II. How We Got Here
So why hasn't private health care succeeded? Isn't the profit motive supposed to create greater efficiency than a system run by lazy government bureaucrats? It boils down to two problems:
1. The US health care system is designed to try to create profits rather than to provide care.
We spend about 30% of health care dollars on administrative costs, while other leading nations spend half as much or less. This is the outcome of a system that's built around health care providers trying to get paid by insurance companies for providing care, while insurance companies are trying to protect profits.
2. Even profitable insurers reserve the right to deny insurance to unprofitable customers.
The individual insurance market in Iowa is a complete mess. The number of people in the individual market was small in the first place, which makes it difficult to create a healthy risk pool. Then the decision was made to let folks stay on non-Obamacare-compliant "junk" plans, which many did. Obamacare was actually designed to anticipate the problems insurance companies would have covering smaller pools of high-risk people. It originally had a "risk-corridor" system that would pay insurers if they suffered large losses on a high-risk pool. But of course congressional Republicans managed to kill that program.
As a result, insurers are pulling out of the the Iowa Obamacare market. Wellmark Blue Cross Blue Shield, the state's largest carrier announced it would leave in 2017. But what's really going on here? Consider these observations on Wellmark from Shelby Livingston in 2017 on modernhealthcare.com:
"In a statement, Wellmark said it lost about $90 million from ACA-compliant health plans sold in Iowa over the past three years.
That's not a small sum, and insurers aren't in the business of withstanding losses to prop up a struggling market, said Craig Garthwaite, a health economist at Northwestern University. It's critical that the insurers are able to at least break even on the marketplaces, he said.
Still, the loss is a drop in a bucket relative to the $2.7 billion in revenue Wellmark recorded in 2016 alone, financial documents show.
Given the minor loss, it is likely that Wellmark's exit has more to do with the uncertainty surrounding the future of the health insurance landscape and the prospect of further financial losses if the Trump administration fails to shore up the marketplaces, experts said."
Got that? Even though Wellmark is a very profitable company, it reserves the right to serve only those customers who help make it more profitable.
III. The Future
Can the US make a successful transition from its patchwork system to single-payer? All it takes is the will to do so. Consider the same experience in Taiwan. From Tsung-Mei Cheng of Health Affairs:
"In 1986 Taiwan’s government began planning to provide universal health insurance for its citizens. At the time, 41 percent of Taiwan’s population (8.6 million people) was uninsured and either paid for care out of pocket or went without it. The objective was to provide every citizen with timely access to needed health care, on equal terms, without unduly burdening the budgets of households, but also with effective controls on the growth of overall health spending."
"In the relatively short time from the late 1980s to 1994, Taiwan’s health policy planners carefully studied alternative health care systems around the world. This global survey persuaded the planners to consolidate the more than ten insurance programs then in existence in Taiwan into a single-payer government-run health insurance system modeled after the Canadian provincial health plans, but coupled with a financing scheme inspired by Germany’s payroll-based premium system."
"On its twentieth anniversary, Taiwan’s National Health Insurance (NHI) stands out as a high-performing single-payer national health insurance system that provides universal health coverage to Taiwan’s 23.4 million residents based on egalitarian ethical principles."
"Taiwan’s experience with the NHI shows that a single-payer approach can work and control health care costs effectively. There are lessons for the United States in how to expand coverage rapidly, manage incremental adjustments to the health system, and achieve freedom of choice."
America's private insurers are very afraid that something like Taiwan's transition to single-payer will happen here. Before the first Democratic primary Presidential debate last this, a Republican group ran a scare ad asking, "How long will you wait for care?" "In other countries with socialized health care, patients wait weeks, even months for treatment." Typical of the disingenuous way that Republicans talk about health care, the ad does not inform the viewer in which countries, "patients wait weeks, even months for treatment". For the record, the ad appears to refer to wait times to see a specialist; grasping at straws to find anything about the US healthcare system that isn't inferior to single-payer, Republicans have discovered that wait times for non-threatening surgery are slightly longer in many public systems than in the US.
Get ready for more of the same scare tactics as Democrats continue to debate Medicare for All. Lying all the time about Democratic solutions to the country's problems is how Republicans do business.
