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.