December 12, 2007

A Conservative Case for Universal Health Coverage

By Randall Hoven

I am a small-government conservative/libertarian and have hated the concept of socialized medicine almost all my life.  But now, I could live with universal health coverage in the U.S..  Here's why. 

We now have the worst of both worlds: we are paying for universal health coverage, but not getting it.  In fact, we pay more for health care in taxes than countries that provide universal coverage.  Then we pay more than that amount again in private coverage.  Additionally, what we have now in the U.S. is nowhere near a free market in health care.  Defending the status quo is not defending a free market.  And if socialized medicine is your fear, we already have it.

I've heard no one, on either side of the political spectrum, play up the fact that the government in the U.S. already spends more on health care than almost every other country on earth.  I'm talking government spending, not private spending.  According to the U.S. Statistical Abstract, government spending on health care in the U.S was $2,168 per person in 2001 (the last year for which comparison data are available).  Here were the top 10 government spenders on health care in 2001.

  • Norway:          $2,550
  • U.S.:               $2,168
  • Denmark:        $2,098
  • Iceland:           $2,025
  • Sweden:          $1,832
  • Germany:        $1,803
  • France:            $1,599
  • Canada:           $1,531
  • UK:                 $1,518
  • Belgium:           $1,417.
If we add in private spending as well, it's not even close.

  • U.S.:              $4,887
  • Switzerland:    $3,690
  • Norway:         $2,982
  • Denmark:        $2,545
  • Iceland:           $2,441
  • Germany:        $2,407
  • Canada:           $2,161
  • Sweden:          $2,149
  • Netherlands:    $2,134
  • France:            $2,104.
Note that the countries frequently cited as models of universal health care, Canada and the U.K., spent less on public health than the U.S. did.  Sweden, the notorious welfare state, spent 15% less than the U.S..  The only country to spend more, Norway, has about the size and population of Colorado, with oil exports over 3 million barrels per day.

Even as a fraction of GDP, government in the U.S. spent a comparable amount  to other nations (6.6% in 2002).  Canada spent just slightly more (6.7%), and Japan and the U.K. spent less (6.4%).  Only seven countries of the 28 countries listed spent a greater fraction of GDP on public health funding than the U.S..

What about the private side, the "free market" side?  There, government regulates the health industry and mandates what health insurance must cover. 

While the U.S. does not have universal health coverage, it has had universal health care since 1986.  Any person who goes to an emergency room in virtually any hospital in the country must be examined and then either treated or transferred to another hospital for treatment if the condition requires immediate care.


According to the Council for Affordable Health Insurance (CAHI), "By the late 1960s, state legislatures had passed only a handful of mandated benefits; today, CAHI has identified more than 1,900 mandated benefits and providers.  And more are on their way."  According to CAHI, such mandates include:

  • Providers such as chiropractors and podiatrists, but also social workers and massage therapists;
  • Benefits such as mammograms, well-child care and even drug and alcohol abuse treatment, but also acupuncture and hair prostheses (wigs); and,
  • Populations such as adopted and non-custodial children.
Then there are federal mandates such as minimum hospital stays for  baby deliveries, equal coverage caps for both mental and physical health benefits and reconstructive surgery after mastectomies.

According to the CATO Institute, the net cost of health regulation in the U.S. is over $169 billion, or an average of $1,500 per household.

So let's review.  The government provides Medicare for the old, Medicaid for the poor, veterans' hospitals for veterans, medical research funding and whatever else adds up to 6.6% of GDP.  The federal government forces hospitals to provide emergency treatment to all comers.  State governments mandate over 1,900 types of coverage on health insurance.  Health care regulations cost the average household over $1,500.

We already have socialized medicine and we are already paying for it -- twice: once in taxes and once privately.  What we are not getting is universal coverage.

But if universal care (via emergency rooms) is already mandated, what's the problem?  First, it is not the best way to get treatment.  For one thing, the condition has to be regarded as a medical emergency.  Also, the law does not relieve you of having to pay for that treatment.  In fact, medical bills are the leading cause of bankruptcies in the U.S., accounting for half of them.

So while you might not die, the U.S. health care system does give you the age-old offer of "your money or your life".

As small-government conservatives or libertarians, we could say, "That is the individual's choice: get the insurance or suffer the consequences."  But if that is our policy, then why is our government paying over $2,100 per person per year and regulating health care at a cost of $1,500 per household?  What are we getting for that money?

If we are to be consistent libertarians, then the government should stop meddling in health care and health insurance altogether.  End Medicare.  End Medicaid.  Close down veterans' hospitals.  Stop funding medical research.  Stop funding pharmaceutical research.  Stop mandating vaccines.  Stop mandating emergency room treatment.  Stop mandating health insurance policies.  Stop doing those things that cost us 6.6% of our GDP when we have to kick in another 7% or more of our own.

If our government stopped all those things, then I would a happy libertarian.  But the government will not stop them.  If politics is the art of the possible, it is not possible to end all the programs and policies cited above.  So ... if we are going to be forced to pay for something, then we ought to get it.  Either provide us the coverage, or give us our money back.

Full disclosure:  My daughter needed a heart transplant at age 15.  We had full coverage from my employer, so cost was never a personal issue to us.  I'm not sure what these things cost (neither did her cardiologist), but I believe the surgery and resulting hospital stay would be a few hundred thousand dollars.  Testing and diagnostics beforehand could exceed $100,000.  Anti-rejection drugs and follow-up testing could run to six figures yet again.  I believe a total cost of $500,000 is not out of the question, with annual post-surgery costs in the five figures.

This was not a matter of elective treatment.  There was nothing that could have prevented it.  In my daughter's case it was a rare condition, with cause unknown, unforeseen and unforeseeable.  The choice was do or die.  And there was no decision on our part that could have reduced the cost in any significant way.  There are no low-cost heart transplants.  There or no alternative treatments.  A bake-sale here or poker-run there would not come near the required amount.

If you are struck with such a catastrophic health crisis, you simply must have a very good health insurance policy or a net worth into the millions to avoid both death and bankruptcy.

And health insurance is not a trivial cost.  Family coverage goes for about $13,000 per year or more.  The median family income in 2001 was $51,407.  The choice for some families is to pay over a fourth of their after-tax income on health insurance, or risk relying on emergency room care only and then going bankrupt should a catastrophic health issue come up.  Many chose no or inadequate coverage, and many went bankrupt.

The cost problem is not one just for poorer families.  At $13,000 and up per year per family, and growing faster than inflation, health insurance affects everyone.  We now spend 15% of our GDP on health.  Any Chief Executive Officer would love to have health insurance taken off his worry list.  Any state governor would love to have Medicare removed from his federal mandates.  It is impacting our productivity and competitiveness.

Let me make something else clear: universal health care coverage is not the same as single-payer health care.  Canada and the U.K. have nothing to brag about regarding either the quality of health care or the cost of it.  But those are not the only models of universal coverage.  Germany, Japan and others have universal, or near-universal, health coverage without a single-payer system.

It would be naïve of me to propose a specific plan.  But a true conservative ought to be able to work within the following guidelines.

  • Public health spending in the U.S. not to exceed current costs as a fraction of GDP (currently 6.6% of GDP).
  • Coverage of all U.S. citizens.  The definition of "coverage" could be debated, but should include catastrophic type coverage as a minimum.
  • Consolidation and integration of all aspects of public health programs should be on the table, including Medicare, Medicaid, veterans' hospitals, research and all federal health programs and policies.  That is, Medicare reform should be part of the deal.
  • Preservation of private choices in health care.
  • Medical tort reform.
  • Reduced mandates on individuals, insurers, health providers and states regarding health care policies and practices.
I don't see why a small-government conservative or libertarian would think the above is worse than what we have now.  I also don't see why the above should be impossible, even politically.

Someday, some sort of universal coverage is going to happen in the U.S.  What plan would you prefer -- one consistent with the above, or one dictated by Hillary Clinton, Barack Obama or John Edwards?  When Iraq becomes yesterday's news, Republicans need to be ready with this issue.

Randall Hoven can be reached at randall.hoven@gmail.com.
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