Nearly 50 million Americans are currently without health insurance, and many with insurance are still struggling to pay their medical bills. Everyone agrees that healthcare should be accessible to all, but the debate still rages on as to whether a universal system would be a wise or realistic solution. Is universal healthcare the remedy for what ails America?
By Dr. Merrill Matthews, resident scholar with the Institute for Policy Innovation
Almost every claim proponents make about single-payer health care systems—where the government taxes the public and then pays their health care bills—is wrong, or at least should be qualified.
They don’t cost less, but they do spend less. That’s an important distinction. The U.S. spends about 16 percent of its gross domestic product (GDP) on health care; most other developed countries with single-payer systems (or something close to it) spend between 8 percent and 12 percent of GDP.
The key distinction is that in the single-payer countries the government, not the market, decides how much will be spent on health care. That means health care spending is a political decision, not a medical one. Because there are several valid claims on taxpayer money (e.g., education, defense, welfare, etc.), the government has to weigh and balance them with the funds it has available. Thus the fact that single-payer countries spend less than the U.S. on health care tells us nothing about their efficiency. Their governments have simply made an arbitrary decision to spend less, but they will also get less.
Now, that doesn’t mean that there isn’t waste in the U.S. health care system. Almost every health economist believes there is—perhaps as much as 25 to 30 percent. The question is where is the waste and how do we get rid of it. Single-payer systems try to do so from the top down by restricting access and imposing price controls. The better way is from the bottom up, by giving patients a reason to be value-conscious shoppers in the health care marketplace. Consumers will root out most of the waste if only they have the necessary economic incentives to do so.
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