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Sacremento, CA

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Springs, CO

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Les Vegas, NV

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NY city, NY

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Los Angeles, CA

Know about the Affordable Health Care Is Better for You in USA

I often buck orthodoxy... on markets and specific investment plays, for example. I fit that mode well, especially when it comes to public policy issues. For example, I'm a contrarian on health care. Personal liberty? We're no freer to choose our own doctors under most private insurance plans than we would be under a single-payer system. Unaccountable bureaucracy? Insurance company administrators are just as horrible as the government variety. Costly subsidies? If you get your insurance from your employer, you get a massive tax subsidy. Your insurance benefit isn't taxed even though it's every bit as much a part of your compensation as your paycheck. But the big issue for me is this: The economy-wide benefits of having affordable health care outweigh the costs. Here's my case... and I want to know if it's a convincing one to you.

How Did We Get Here?

The U.S. doesn't have a health care "system." What we have evolved from a deal between the United Automobile Workers and Detroit automakers in the late 1940s. Workers would accept lower pay if they got cheap health coverage on the company's tab. But nobody expected that deal to be permanent. They assumed that the postwar U.S. citizens, so many of whom had just sacrificed to preserve their country's freedoms, would eventually get government-sponsored health care to support the private system. But that didn't happen. Instead, the company-based insurance system expanded until it covered all industries. Eventually, government-sponsored programs like Medicare and Medicaid emerged to fill in the gaps for those without jobs: the unemployed (Medicaid) and retired (Medicare). Then both the company and government systems became entrenched by special interests. For a variety of reasons - basically, employers, employees, insurers and the health care industry had no incentive to rein in costs and premiums - the system got to the point where the U.S. has one of the worst health outcomes of any developed country. And the highest rate of bankruptcy due to medical bills. In other words, our health care "system" is a hodgepodge of temporary fixes and counterfixes that became permanent because nobody could agree on anything else. It damages our economy enormously. The U.S. spends more of its gross domestic product (GDP) on health care than any other country - 16%. But other economy-wide effects of our employer-based insurance system lower our GDP below its potential. Let's consider three.

  • Job lock: Many people take and keep jobs because they get health coverage. They stay in those jobs longer than they would otherwise. That means overall job mobility in the U.S. economy is lower, which undermines labor market efficiency.
  • Lower rates of entrepreneurship: The U.S. has one of the lowest rates of new company formation in the developed world, and it's getting worse. That's because starting a business here is riskier than in other countries... because until it turns a good profit, you can't afford health insurance. Young people in the prime of their lives don't start businesses for that reason, which hurts job creation.
  • Delayed retirement and a weak job market: Older workers tend to stay in their jobs longer in the U.S. to keep access to company insurance. That means less space for younger workers, keeping them underemployed and damaging their long-term career prospects.
  • In addition to $4 trillion of annual direct costs, by some estimates these dysfunctional aspects of our health care system cost the U.S. economy 3 to 5% of GDP every year.

    Could You Afford a Private Highway?

    So, is favoring some form of public support for health care "socialist"? Hardly. Here's how I see it: Health care has similar economy-wide effects to the highway system, the justice system and national defense. Each one is more than the sum of its parts. If done right, such "public goods" contribute more to economic activity than they cost. If you try to do these things individually, you sacrifice a lot of economic dynamism. The typical argument, of course, is that public health care ends up rationed. We hear horror stories of Canadians or Britons in endless queues for medical procedures. (Of course, under a private system, there's also rationing... if you can't afford it, you're not in the queue at all.) But a U.K.-style National Health Service isn't the only option. Many countries, including most of the Latin American nations favored by U.S. retirees, have hybrid systems. The most common is to have a public system for primary and preventive care - neighborhood clinics where you can take your kid with the sniffles or get a vaccination - and a private system for more advanced health needs. If you want to obtain private insurance and go to a private hospital for surgery, nothing stops you. If you can't afford it, you might have to wait in line for public care. But there are considerable advantages. First, we'd avoid job lock, low rates of entrepreneurship and delayed retirement. Second, the availability of low-cost primary and preventive care would reduce the incidence of chronic long-term conditions that end up costing us all a lot of money when uninsured people show up at the emergency room - diabetes, heart disease and so on.