American · Domestic Issues · Economics · Politics

An Evaluation of the Healthcare System

On Tuesday night, Bernie Sanders and Ted Cruz went on CNN to have a debate on the Affordable Care Act and how we ought to fix our healthcare system moving forward. You can watch the debate here:

https://www.youtube.com/watch?v=B46K_NGivQQ&t=1927s (debate footage starts at 30:50)

Sanders and Cruz, being the two ideological extremes of the each side of the political spectrum in our Senate, had vastly different ideas clash. This dynamic led to the debate illuminating the fact that, contrary to what some moderate forces might want to tell you, there are some very fundamental differences in the endgames of the Left and the Right in the healthcare debate.

Sanders, while being placed in the role of defending the ACA, is actually in support a government-run single payer healthcare system with the explicit aim of giving healthcare for all of Americans, which is a step ahead of what the current law is doing. Cruz’s case is predicated on pointing out all of the problems with the ACA, and then arguing that getting government out of healthcare would be the solution to this. The problem with how Cruz presented his argument is that the evidence he provides is more of an argument against the ACA then it is an argument FOR non-public healthcare. You see, Ted Cruz is known to be somewhat of a populist on the Right, often using rhetoric regarding the “establishment” and being a voice for frustrated Americans. Because of that style, in the debate he talks about the aim to protect struggling Americans, even being the one to cite the fact that insurance profits have doubled since Obama took office. However, when it comes to the issue of healthcare, the position of the Conservatives is fundamentally not in any way “populist”. Cruz and many other Republicans are not willing to take the political cost of owning up to this truth, which is why they often push the statement of “getting everyone access to healthcare”, which as Sanders points out in the debate, “doesn’t mean a damn thing”.

At one point in the debate, a woman with breast cancer asks Cruz about her concern regarding getting coverage with her pre-existing condition in the wake of the ACA’s likely repeal, and Cruz states that most of the Republican-proposed plans will protect people like her. This Obamacare Facts article sums up the overall points of the Republicans’ visions for health care, and Rand Paul has submitted an explicit plan recently. Paul’s plan would take away protections of people with pre-existing conditions after a two-year period, unless someone could maintain “continuous coverage” for life. Paul has said that

We should legalize inexpensive insurance, which means that we get rid of the ObamaCare mandates that prevent insurance companies from selling inexpensive policies.”

This idea fits within the general aims of most of the Republicans, as essentially all of the plans also seek to get rid of mandates, which have been part of how the ACA has brought insurance prices down for some people. All of these plans would lead to more people losing health insurance, but having more accessible coverage isn’t the aim for the Republicans. Like I said, there’s a fundamental divide in how the Left and Right perceive the health care situation. The Republicans do not prioritize trying to get everyone health care as much as they prioritize making the market as profit-friendly for the health industry. Sanders points out this fundamental difference in goals in his assertion that “we have enormous rationing in this country”, because as of right now, the system rations out health care based on how much money someone has. At the core, this is the system that the Right largely want to preserve, rhetoric about “universal access” aside.

Now obviously, this sounds quite damning, so why does the Right have this stance then if it doesn’t come across as popular? Let’s take a look at some of the main points the Right often take against the Left counterpart to Healthcare, which is a Single-Payer system:

  • Healthcare is not a right.
  • Government-run health care would be inefficient, and thus force rationing and wait times.
  • A market-centered healthcare system incentivizes greater medical innovation, thus meaning our system provides higher quality care.

While there are presumably other points, these were arguments that I have often heard from Republicans and I heard them in the debate from Cruz. How true are they?

Healthcare is not a right

At one point in the debate, Sanders asks Cruz whether or not health care is a right. While Cruz did not explicitly say “no”, we can infer from his statement that “rights means that you have a right for government not to mess with you” and his references to free speech and gun rights as examples, he does not believe that healthcare is a right. I have also heard that rights are things that you inherently have no matter what anyone else does (for example, government may make certain speech illegal, but that can’t change the idea that speech is your right), which means that healthcare cannot be a right because people would have to get it through services and taxes of other people. I like that assessment of what constitutes a “right”, but I also think that the problem with making this kind of argument is that how we have defined “rights” has changed, and that can be seen in the different amendments that we have added. The 16th Amendment was hardly about inherent rights, and more about allowing the government to provide citizens with an army and infrastructure to protect and improve people’s lives. The amendments regarding voting rights also end up on a slippery slope because upon initial creation of the country as a Constitutional Republic, there were clear ideas of certain people NOT having a “right” to vote, ideas that were late refuted with time. Nevertheless, even if I concede that healthcare doesn’t fit what we constitute as a right today, there are several reasons why I believe people SHOULD spend money for both theirs’ and other people’s access to healthcare.

On a personal level, while I might not consider healthcare to fit the concept of a right, at least not how we currently view it, I believe that universal healthcare is fair. This is a largely emotion-fueled argument, so I’ll try to keep it short, but I don’t believe that when there is certainly the capability to provide care, it is fair that potentially up to 45,000 people die annually possibly due to not having the money to have health coverage. Overall though, this is a viewpoint that won’t persuade anyone who disagrees with me, so now that I’ve laid this out, I’ll swiftly move forward.

Another reason that I believe people should be willing to pay the costs of a universal healthcare system is the economic benefits that can come from this. Healthcare is a far-reaching issue that has negatively affected a very sizable chunk of the population. That is why this is such an important issue on the political stage, and it is why fixing this problem would have a largely positive effect on the economy, since it’s a problem that’s burdening so many people from giving the country more economic efficiency. In 2010, around 40 percent of working Americans had problems with medical debts and owing money to collection agencies. Healthcare is also in the lead for amount of debt collected from consumers (with student loans being second):

Screen-Shot-2014-10-06-at-2.51.56-PM.png

These statistics should matter to people who don’t have problems with affordability because of the economic costs of these debts. Consumer debt is bad thing for the economy because it indicates that these people are not in a place to consume products and drive the demand in the economy, because they don’t have the money to plausibly buy anything. This issue has become particularly prescient because as health care costs have continued to rise over the years, wages have remained stagnant despite growing productivity.

HealthPremiumsRiseChart.jpgEPI_productivity_compensation.png

The importance of the relationship is that a correlation between average wages not growing and costs of something as universally needed as health insurance is what contributes to suppressed demand. A way that the government can stimulate the economy is by implementing a universal healthcare system, which would almost serve as a stimulus for middle class workers. Part of having a strong economy is having a healthy distribution of income, which the United States currently does not have, and measures like universal healthcare would be a form of stimulus policy that actually targets the group of people currently unable to contribute more to the economy because of insurance burdens.

Even if you have your health coverage and don’t consider healthcare to be an inherent right, you might want to consider supporting a more efficient, taxpayer-funded healthcare system for universal coverage because of the purchasing power it would be able to give to a great number of struggling consumers in the economy.

Government-run health care would be inefficient

Part of Cruz’s argument in the debate was predicated on portraying a government-run system as one that would be hindered by bureaucracy, and would thus be bloated and inefficient. He also referred to Great Britain’s Single Payer System, the National Health Service (NHS), as an example of these inefficiencies, talking about wait times that result due to the rationing of health services. Cruz and many other Conservatives point to the rationing and wait times as a sign of how universal healthcare would make quality worse off for everyone, kind of like how inflation would cause everyone to be worse off. The problem with this assessment is that the overall results do not seem to suggest this to be the case.

You see, in a Single Payer System, Britain essentially rations care based on need, so if you’re dying, you’ll get priority, and if you’re not, then too bad, you’ll have to wait. Meanwhile, in America, as I mentioned Sanders says, we essentially ration based on how much money we have, and considering how much unequal distribution in income we have in this country, it’s no surprise that as many as 29 million people are still don’t have health coverage. Conservatives think the way we ration is better than what single-payer countries like Britain and Canada do, but our health results don’t indicate this.

Among 34 OECD countries, we rank 30th in lowest infant mortality rate at 6.5 deaths per 1000 births and the lowest life expectancy of 11 developed countries reviewed in a study of 78.8 years as of 2013 (In 2016, I believe it was 79.8 years). If you don’t believe these statistics are related to the quality of our healthcare system, you should know that Cuba, which has implemented a universal healthcare system, has a better infant mortality rate of 4.5 deaths per 1000 births and a slightly worse life expectancy of 78.7 years. Cuba has these comparable numbers to the United States in spite of the fact that in 2013, Cuba’s GDP per capita was $6156.52, which is 12.3% of of the the $49941.5 GDP per capita of the United States that year. This is hardly to say that this means that I want to live in Cuba over the US, but citing a Communist dictator-led country shouldn’t disqualify me in your eyes because my point is that a Capitalist country with far better overall quality of life has the capabilities to greatly outperform said Communist country.

Along with that, the government-driven nature of the healthcare system under Britain has allowed far less federal money being put into the healthcare system. Because of the United States’ profit-driven style of healthcare, we as taxpayers are spending a far greater percentage of our total money on a healthcare system that doesn’t cover everyone, like far less costly systems do, and produces less impressive health-related results.

Squires OECD Exhibit 01

Therefore, it’s hard to agree with Cruz that a government-run system would be more bloated and more inefficient, and it seems like the alternate approach of “rationing” produces better overall results than a profit-driven, mostly private system. And also, because of the efficiency of Britain’s program, if they want to prioritize lower waiting times, they can put more money into the NHS, and this is a more acceptable move because the costs as is are not pulling Britain down in the way that it is for the United States.

A market-centered healthcare system incentivizes greater medical innovation, thus meaning our system provides higher quality care.

Lastly, Cruz makes the case that with the current system, we are incentivizing greater medical innovation than any other country and because of this, we are improving not only the general quality of the health care we provide but also the health care of other countries. Essentially, Cruz argues that part of the benefits of all the money that we’re putting into our healthcare system is that the people who do get health benefits are able to access far better drugs and care than other countries. It’s true that our drug innovation is far better than any other countries, but better enough to make up for such high costs that we currently pay?

The United States spends 49% of the world’s total expenditures on pharmaceutical research and development, compared to Britain’s 9%. Except the United States’ population of around 324 is 5 times as many as Britain’s population of 65 million. This means that if we evened out the populations, Britain’s expenditures on pharmaceutical innovation really would not be as far off from the United States’. Not only that, but the United States’ costs for certain prescription drugs are far higher than the costs of those drugs in other countries. So even with drug innovation in consideration, there are many Americans who cannot actually have access to these prescription drugs while people in other countries do have access because Medicare is not able to negotiate drug prices.

Pharmaceutical companies are also far more bloated with administration costs, contrary to the second main point about government inefficiency that Cruz and conservatives argue. Because while they do spend money on research and development, the profit-driven nature of the system also leads to them spending more money on sales and marketing.

imrs-1.png

The argument defending high costs by citing drug innovation and quality has problems because of the fact that the profit-focused system incentivizes higher spending on other administrative-related situations that bloat up costs while not adding better quality for the consumer, thus ending up as an inefficient product.

Conclusion

In general, there aren’t too many people who actually argue that the Affordable Care Act is a good final product to represent the United States’ healthcare system.While 20 million more people were covered with healthcare because of the ACA, 29 million people are still uninsured, and premiums continue to rise in spite of the ACA’s efforts to hinder those rises. These are the fundamental issues with the current healthcare system, and part of fixing it is understanding the roots causing these issues. The reason why I believe Sanders ultimately “won” the debate is that while he may have come across as simplistic, he put his focus on the right issues. While Cruz may have used an array of facts that certainly effectively illuminates the ACA’s problems, but his anecdotal information on international single-payer system horrors and the inefficiencies of government ultimately don’t encapsulate the main problem.

Because healthcare is something that is universally needed, having it be market-driven will naturally allow costs to rise. Unfortunately, this leaves out millions of potential consumers of the product because they cannot afford it, which gives us an inefficient system that requires vastly inefficient spending to try and help the sick people in need and give the health industry profits. The for-profit nature of an industry so universally important has burdened millions of people, taking away their purchasing power, and thus, hindering the economy from greater inefficiency because of the burdens that the lower to middle class Americans face in being victims of a for-profit industry of a necessity.

Transitioning to an efficient, universal healthcare system isn’t simply about being fair and humane to people, but also about stimulating the struggling middle class of America to produce a stronger and more stable economy for everyone. Along with that, being in the richest and most productive country in the world, we have the resources to make a system like this happen, we just have to set it higher on our priorities. If we make the conclusion that protecting hard-working Americans from medical debt burdens and death will reap greater benefits than say, protecting Americans from immigrants, we can make this vision a reality.

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