Universal Healthcare — Coverage for One, Coverage for All

Universal healthcare has been at the top of the political debates for the past decade, and it seems that to some people, those two words together are the dirtiest in the English language. Of all the industrialized countries in the world, the United States has the highest healthcare costs. In 2015 the per capita healthcare cost was pegged at $9,451, far ahead of Norway, the country with the second highest per capita cost at $6,567.¹ Many Americans agree that healthcare is expensive, but that’s because the system is an excellent one. They are wrong: The United States ranks 28th in the quality of its healthcare, below almost all other wealthy countries, according to a 2016 article sponsored by the United Nations and authored by well over 500 collaborators.² The Affordable Care Act, the closest thing the United States has to universal health coverage, made an impressive stride in cutting the number of uninsured Americans by 20 million, yet it left 30 million without coverage, and it burdened middle-income Americans with higher insurance premiums, and the government with higher subsidies.³

There are three universal healthcare models, and it is important to understand that they are not alike. Some countries mix universal coverage with other systems to maximize competition. An example is the two-tier system: The government pays for basic healthcare, and those who can afford it can purchase secondary coverage. The healthcare systems in several countries — such as those in France, Ireland, and Israel — operate in this manner. In the United States, the Medicare system operates in a similar fashion, under which covered individuals can purchase private supplemental insurance, often referred to as Medigap insurance, to cover expenses that Medicare does not. Overall, the advantages of universal healthcare are obvious: Healthier populations due to increased access to preventative care, including early childhood care, which has been linked to future social costs such as crime and welfare dependency; lower administrative costs for medical providers, thereby eliminating the need for those with otherwise limited access to medical services to use emergency room personnel as their primary care providers; and more. However, the disadvantages are just as obvious: Medical providers may cut costs and reduce care if they aren’t reimbursed by the government at a high enough rate, healthy people are forced to pay for the medical care of those in ill health, and government budgets can be overwhelmed, to name a few.

Three Models of Universal Healthcare

In the single-payer model, the government provides free healthcare, funded by income tax revenues. The state owns the service facilities, and its providers are government employees. The United Kingdom developed the single-payer system — the National Health Service — in the early years after World War II. At that time, it had become apparent that the state would have to provide for the healthcare of salaried workers and their dependents, since private businesses weren’t offering health benefits. In addition, the state wanted to preserve the voluntary hospitals — nonprofit and funded in part by voluntary contributions — that opened during the war and were at risk of failure without government support. Technically, the U.K. system can be classified as socialized medicine, as the government owns most of the hospitals and employs the medical providers. However, the one country with true socialized medicine is Cuba, which has a national health system in which the government has the fiscal and administrative responsibility of providing care to all its citizens. Private hospitals and clinics do not exist there. The United States also has socialized medicine, though to a very limited extent. For example, the Veterans Health Administration owns the hospitals and employs the medical personnel who provide free healthcare to active-duty, retired, and deceased service members and their spouses and dependents.

The social health insurance model requires all citizens to purchase health insurance, usually through their employers. The system is funded mainly by payroll taxes, which are deposited into a government-run health insurance fund. Medical services are provided by private doctors and hospitals. In this model, the government controls health insurance prices and has a heavy influence on the prices charged by private providers. Social health insurance was pioneered by Germany in the early 20th century prior to World War I.⁴ The ACA is similar in that it requires citizens to purchase insurance — albeit with many exemptions — and provides subsidies to insurance companies for low-income enrollees. The national insurance model uses public insurance to pay for healthcare delivered by private medical providers. Every citizen is required to pay into the insurance plan, and administrative costs are lessened because there is only one “insurance company” for providers to deal with. This model also gives the government significant clout in keeping medical costs down. Canada uses the national insurance model, and in the United States, examples of this model can be seen in the Medicare and Medicaid systems.

Universal Healthcare in the States

Any debate over universal healthcare is dead at the federal level — at least for now — but not so in the states. Over the past few years, several states have conducted or commissioned studies to examine the feasibility of implementing such a system within their jurisdictions. There are many, many questions concerning how universal healthcare could be implemented, but a central question is how to pay for it.⁵ A recently released study in Maine on the feasibility of universal healthcare concluded that a state-level program had “the potential to deliver significant benefits to the state and its people,” and could “substantially decrease overall health care costs in the state, [but] it would require a significant increase in state revenue.”⁶ The study estimated that a state universal healthcare plan would cost $4.9 billion, 80 percent of which would be paid through individual and employer taxes, thus recapturing the funds now being spent on premiums, deductibles, and out-of-pocket costs. The remaining $1 billion would have to be paid for by raising taxes. The study offered several suggestions on how this might be achieved: For individuals, the state could create two new income tax brackets, a 10.15 percent rate for couples earning over $200,000 annually, and a 12.15 percent rate for couples earning over $500,000 annually. State tax deductions for medical, health savings accounts, and self-employed health insurance costs would be eliminated. All other itemized deductions on the state tax return could be eliminated, and retirement income could be recharacterized as regular income. Funds could be raised from increasing excise taxes on alcohol and tobacco, increasing restaurant and lodging taxes, eliminating inefficient tax expenditures that primarily benefit wealthy corporations and do not promote job growth, broadening the sales tax base to include services (especially recreational services), and restoring the estate tax.⁷

In California, political support for a single-payer system is strong, but there are many stumbling blocks, such as the need for a federal waiver to divert funds intended for federal and military retirees, as well as others, to pay for a state plan. Still, included in the state’s 2018-2019 budget was a bill establishing “the intent of the Legislature to provide coverage and access through a unified financing system, to control health care and administrative costs, to limit out-of-pocket costs . . . and to ensure all Californians have timely access to necessary health care.” The bill created a five-member Council on Health Care Delivery Systems tasked with drafting a plan for universal healthcare, including a financing system, by October 1, 2021.⁸ However, despite the political support, a single-payer healthcare bill had not been introduced in the California Assembly before the deadline in February 2019, and what happens this year remains to be seen. However, it is useful to note that two analyses of S.B. 562 — a single-payer bill introduced in 2018 — pegged its cost at $330 billion and $400 billion annually, or twice the state budget.⁹ This would have required new taxes to cover health insurance costs for state residents, which would have been a non-starter among voters. According to a 2018 study conducted by the nonpartisan Public Policy Institute of California, most California voters said they supported a single-payer system, but only if it doesn’t raise their taxes.¹⁰

Conclusion

The United States is the only industrialized nation in the world without universal healthcare. Under the present system, healthcare is expensive, access to healthcare is spotty (especially for the poor), and the quality of healthcare delivered is ranked among the lowest of the industrialized countries. However, the United States does have some forms of universal health coverage, exemplified by Medicare and the health benefits available to members of the military and their dependents through the Veterans Health Administration. In the federal arena, universal healthcare is a hot election issue, and what will come of it after the November elections remains to be seen. The states, however, are pushing ahead. Several states have conducted or commissioned studies to determine the feasibility of implementing universal health coverage — Maine being the latest — and the single-payer plan seems to be heavily favored. California has made moves to enact a single-player plan, but the effort has been stymied over complexity of implementation and the costs involved. Still, there are some who believe these roadblocks can and will be overcome. As California Gov. Gavin Newsom (D) says, “I think it’s inevitable in this country, and I think states will play an outsized role in advancing the debate.”¹¹