Well, I have finished reading the mid-term papers, so I
thought I would say a few words about a subject much on the minds of candidates
for the Democratic Party presidential nomination, viz. universal health
care. As I walked this morning, I
imagined myself engaged in a debate with an opponent of the idea. [This was once I had successfully surmounted
my Senior Moment and called to mind the name “Kareem Abdul Jabbar – never mind.] Not having Google at my disposal, I could not
fill in the statistics, but here is the structure of my argument.
I start with four propositions on which I hope there is
universal assent [save for Evangelical Christians who believe in the Rapture
and thus reject the first proposition]:
1. Everyone dies.
2. Other health
related things being equal, it is better to live for a longer than for a
shorter time.
3. Other health
related things being equal, it is better to be healthy than sick.
4. Other health
related things being equal, it is better for a country to spend less money than
more on health.
Now some facts:
1. The Germans,
the French, the British, and the Americans all die.
2. The Germans,
the French, and the British live longer than Americans.
3. While they
are alive, the Germans, the French, and the British have fewer chronic
illnesses than Americans.
4. The Germans,
the French, and the British spend much less per
capita on health care than do Americans.
5. The Germans,
the French, and the British have universal health care systems. The Americans do not.
Conclusion One, from facts 2-4: The Germans, the French, and the British have
better health care systems than do the Americans.
Conclusion Two, from Conclusion One and fact 5: America should have universal health care.
Question: Why does
American health care cost so much more per
capita than German, French, and British health care? This is clearly a complex question requiring
much more data than I have, but let me suggest five reasons:
1. Americans
pay much more for prescription drugs.
2. The private American
insurance system spends money on advertising.
3. The private
American insurance system pays exorbitant corporate salaries.
4. The private
American insurance system takes profits.
5. American
doctors earn much higher salaries than their German, French, and British
counterparts.
How much of the difference in national health care costs is
explained by these facts? I do not know.
Clearly, moving from our current health care system to a
national health care system would be extremely disruptive and very difficult,
quite apart from the massive opposition that rich and powerful interests would
mount. But let me make one point among
many that could be made, this one concerning employer based insurance. According to the Kaiser Family Foundation,
somewhat more than 156 million Americans have employer based health insurance,
which is to say half the country. Now,
let us imagine a firm – United Whatever – with 10,000 employees that offers
group health insurance as a fringe benefit of employment. Let us suppose United Whatever pays Aetna
$6000 per employee, or sixty million dollars a year, to Aetna, and suppose that
$200 a month, or $2400 a year, is withheld from an employee's paychecks as his or her share of the cost.
The reality is that United Whatever is paying the entire cost. Leaving aside tax consequences, which are
complicated, it would not matter whether it paid the entire bill for health
insurance and paid each employee $2400 a year less in wages, or raised each employee’s
wage by $3600 a year and required the employee to pay the entire $6000 for the
insurance. The net effect would be the
same.
Suppose the United States now shifted to universal health
care with a saving of 20%, or $1,200 per United Whatever employee. The only rational way to handle this would be
to tax United Whatever sixty million dollars for the health insurance of its
employees, less the 20% or 12 million dollars saved by shifting to universal
health care.
That is where the
money is going to come from to pay for universal health care.
