Only about six percent of Americans actually get their insurance through those exchanges. Now, that’s obviously very important to those six percent of people, but it’s by far the smallest slice of the American health insurance pie. And I think the relentless focus on them in our political discourse speaks to a larger inability to have, for lack of a better phrase, a grown-up conversation about health care.
OK, so health care is very complicated and I’m going to paint this in the broadest possible strokes. If you want far more information about health and health care, please check out Healthcare Triage.
But let’s start with what health insurance does. Health insurance takes money from healthy people and uses it to buy care for sick people. you can do this through private insurance, which pools people together and takes money from them in the form of monthly premiums, or you can do it through a public insurer which pools people together and takes money from them in the form of taxes. In the United States, we have both: Almost everyone over the age of 65 is in this publicly funded insurance pool called Medicare.
Many military veterans are in a similar pool run by the Veterans Administration and there’s a third public pool that covers many low-income and disabled Americans called Medicaid but just over half of Americans get their insurance through private insurers. This includes the six percent of people covered through the Obamacare exchanges, but mostly people who get their insurance from their employers. Because large companies are required to offer health insurance plans to their employees.
Then, you have the nine percent of Americans who don’t have any health insurance at all. That number has dropped a lot in the last five years, but it’s still higher than any other wealthy nation’s. So, the current U.S health care system is widely considered to be, if I can use a technical term, bananas. We spend so, so much on health care. About eighteen percent of our total economic output goes to health care.
The average among other wealthy nations is closer to twelve percent. And we also don’t get particularly good health care outcomes. Like, we come up short in many, many metrics, including life expectancy, where we trail countries like Chile and Slovenia, both of which spend less than ten percent of their GDP on health care and, for the record, both of which also have higher rates of tobacco usage.
Now, you would think with lots of private participation in health care markets, costs would be driven down, right? Like, private companies can make refrigerators or cars much better than governments can make refrigerators or cars. But health care’s a weird market on a few levels.
First, there’s the problem of inelastic demand. Like, if I need a medicine to keep me alive, I can’t effectively negotiate the price of that medication because, in the end, I’m going to pay whatever it costs. And then there’s the problem of competition being something of an illusion. Like, for instance, if you’re having a heart attack, it’s generally not considered a good idea to call around to a bunch of area hospitals to find out who has the best deal on heart surgery this week.
There should be competition among private insurers but plans are often extremely confusing. Like, you might pay less up front and think you’re getting a good deal, only to find out later that what you need to be covered isn’t covered. Like, it’s hard to compare cell phone plans effectively, let alone health insurance plans that might or might not cover literally thousands of different procedures.
Plus, having your insurance status depend partly on whether you work for a big company is a huge disincentive to innovation and entrepreneurship. It tells people, “Don’t start a new business,” “Don’t strike out on your own because you won’t be able to get affordable health insurance.” So, all in all, we’ve ended up with a health care system where more tax dollars per person go to publicly funded health care than in most other countries, and yet we don’t have publicly funded health care for most people.
And most Americans agree on this: only about thirty-two percent of us think that our health care system is good or excellent. And yet, around seventy percent of Americans think that their personal health care is good or excellent and therein lies the problem. Most serious reform proposals would involve big changes for many people in that seventy percent.
And, as the Republican Party has lately learned, it’s easy to talk about health care reform in the abstract but when you put pen to paper, it gets complicated. So all health care reform boils down to three factors: Quality, cost, and access. Obamacare sought to improve access: It didn’t do much to change quality or cost. And to do that, it spent a huge amount of money. Like, a trillion dollars in the first decade. Now, it increased some taxes and cut some spending, to be deficit-neutral, but it spent a lot of money to get a lot of people health insurance.
So today, fewer people are uninsured, but it cost a lot to get there: That was the trade-off. The Republican bill sought to reduce government spending on health care, but that also comes with trade-offs. In this case, it would have resulted in millions of people losing their insurance, which was a hard sell to moderate Republicans, so the GOP bill offered tax credits to help people buy private insurance, but that meant more spending, which made it a hard sell to conservative Republicans.
Like the ACA itself, the GOP bill would not have done a lot to address the overall cost of health care in the United States or the fact that our quality of care isn’t great. Because to have those conversations, we need to accept, that, as Healthcare Triage always says, “Trade offs are inevitable.” Side note: I just realized my collar is turned, so I fixed that, but I bet it was annoying to a lot of you; sorry. Right: So the most commonly cited solution to the US health care problem is a single-payer health care system, or Medicare-for-all, as Bernie Sanders calls it.
In this proposal, all Americans would be able to get the publicly-funded insurance that seniors now get and studies have shown that this would lower overall U.S. health care costs, although probably not to the rate seen in most European countries. Still, there would be less money spent on administration and advertising and also on care itself, because a bigger insurance pool can negotiate prices more aggressively and this would be, like, a huge insurance pool.
But there are trade-offs: Like it’s accurate to say that Medicare-for-all would lower overall U.S. health care costs, it’s also accurate to say it would cost hundreds of thousands of jobs.
And many of them would be good-paying jobs: From medical device sales people to insurance adjusted to marketing managers. And with less money being spent per procedure, lots of other people would see their incomes go down, including many doctors and nurses. Also, it would be good to spend twelve percent of our GDP on health care instead of eighteen percent if we could get similar outcomes, but there is a word for what happens when six percent of your total economy goes away overnight: Recession.
Now, the economy would recover and reallocate capital fairly quickly, but it wouldn’t be painless. It’s also important to note that we currently have a single-payer health care system in the United States: in Medicare, and it’s not a bargain. Compared to other single-payer systems around the world, it’s very expensive because we resist the kind of government regulations and price controls that are ultimately necessary to rein in spending. So a single-payer system on its own would not solve all of our problems and there would be trade-offs.
Alternative, some on the right have argued that to increase competition and let market forces work, it’s necessary to dramatically scale back or even eliminate government funding for health care. And that, too, might lower prices, but at the cost of many millions of people losing insurance. Similarly, decreasing regulation might lower prices, but it increases the risks of being treated by an inadequately trained professional or taking an unsafe medication: Trade-offs. We can talk about over-regulation or tort reform or market places or competition, but none of them will be a magic bullet. Because there is no magical solution with our health care system where everyone wins and no one loses.
Now, we can continue to make incremental changes, like the ACA or alternatives to it, but as Dr. Carol put it on Twitter, however you want to reform healthcare, there will be tradeoffs. Those who promise you everything are lying. If we want a better health care system in the United States, we need to talk openly about those trade-offs. Because when we allow ourselves to be pandered to, our elected leaders seem more than happy to oblige us.