Universal Health Insurance? Why?

The Congressional health care debate has become a war between two seemingly irreconcilable extremes, coverage versus budget control. Health care is a right, thunders Bernie Sanders (I-VT). There’s no free lunch, roars back Rand Paul (R-KY). We think both sides miss the boat. Forcing health care into this simplistic left-right straitjacket misleads the nation. It is time to recast the issue properly.

Public Investment

Universal health insurance is better viewed as neither owed to us by government nor a govern­ment give-away; both labels misinform. A more insightful analogy is universal public edu­cation. Does government owe people a public education? Is universal public educa­tion a handout to “takers” who ought to go out and buy it on their own?

Universal public education, for all its present shortcomings, is in fact a proven extra­ordinary public investment. An educated population provides both a more effective citizenry and a more productive workforce. That investment by government to improve our workforce returns far more to national prosperity than it costs in tax dollars. It promotes the general welfare while it puts money in our pockets. It is both right and smart.

When universal public education was first proposed, many of the privileged might have said, what do you want to educate “those” people for, you are just throwing away our tax dollars; if people wish education for their children, let them go out and buy it … ignoring that many could not afford it. Fortunately, we did not listen. We wisely invested in public education for all, and the productivity of our workforce boomed.

In the same way, universal health insurance is a wise public investment. Done right, it will return far more to our national prosperity than it costs in tax dollars. This is more relevant than ever as the world grows interdependent: If you want to outcom­pete a billion Chinese, you better have a workforce not only better-educated but healthier than anyone else.

Sickness is costly, it shrinks the workforce and makes it less produc­tive. Good health, like education, expands the workforce and makes it more productive. One reason other countries have better health than the United States at substantially less cost is because they cover everyone starting at birth. Good, inexpensive prenatal and infant care make healthy children, and healthy children make healthier, less costly adults. We are foolish not to do the same and make affordable coverage universal.

Perverse Incentives

The crucial caveat is “done right.” Neither Medicare, nor Obamacare, nor the unsound private health insurance market have yet done that kind of broad public investment right. All three lack serious incentives on providers to focus on the long-term, reducing cost while raising quality and keeping people healthy; indeed, the incentives are to raise cost no matter the quality. In particular, all three totally lack either means or incentives for patients to iden­tify and choose providers who are better for less over those who are more costly.

That is why American health care has suffered outsized runaway cost beyond all other advanced countries for 50 years. Despite such a high price tag, our health, including the health of our workforce, has fallen well behind these other countries; Americans live shorter lives and bear more chronic disease. We emphasize, this is not due to the caring, skill, or character of our health professionals, it is due a malstructured health care system that severely misdirects effort. In fact, this system greatly rewards exces­sive medical services but impedes and penalizes efficient care that maximizes health, and professionals in the system are helpless to change it. That is policy’s job. We have a broken, bloated health care system, eating up all other social dollars, starving programs that would produce far more health and wellbeing than more super­fluous medical care. It is time, indeed long overdue, to seriously fix it. Until the nation is willing and prepared to seriously fix these underlying systemic problems, simply extending coverage will only serve to pour gasoline on a fire.

The left’s faith in “single-payer” has proven ill-founded; we have had a public single-payer program for 50 years, Medicare, that absolutely controls the over-65 market. Yet despite the best efforts of the agency its costs still balloon out of control. The right’s faith in the private health care and insurance markets has proven equally ill-founded because both are severely unsound and, as Adam Smith taught us, unsound markets do not self-correct. As a consequence, in the same five decades the private market has done no better than Medicare on cost control. Five decades of efforts by both approaches using bureaucratic controls, micro­manage­ment, and token bonuses to make providers efficient have failed to contain run-away cost.

And here is the fallacy of both: You cannot ask providers to be efficient—i.e., produce steadily better health outcomes while earning less on each patient—unless they can win more patients from costlier providers by doing so. Neither single-payer nor private insurance presently give patients valid comparative information to know which providers are better for less, nor incentives to choose them if they did.

Further complicating matters, 40 percent of the workforce (and rising) are either self-employed or in multiple part-time jobs. Affordable group coverage through an employer is no longer an option for them. Providing coverage through employment was never a smart idea; it has left most employees locked into traditional, uncoordinated, open-ended fee for service. Too many Americans—and the number is increasing—cannot afford adequate individual coverage on their own. It is our broken health care system and this steadily declining financial access—these two causes—that account for our lagging health. Congress must find a new mechanism if it is to make affordable coverage available fairly and universally for the entire American work force, starting at birth, at a cost the nation can afford.

Looking Beyond The Symptoms

If the object is to broaden and improve the productivity of our workforce, then trying to contain cost by butchering eligibility, benefits, or quality of care and coverage is false economy of the worst order. As the great conservative statesman Edmund Burke remarked:

 Mere parsimony is not economy. Expense, and great
expense, may be an essential part in true economy.

Anyone left out (“those people”), and any inadequacy in care and coverage, becomes a liability to a larger, better workforce. Smart countries include everyone from birth.

The correct approach to true cost containment is to drastically improve the quality and productivity of our bloated medical care system. The National Academies estimate at least 30 percent of health expenditures are waste, of little or no benefit and possible risk to good health results. And because of our refusal to objectively measure quality, medical error is now the third leading cause of death. This suggests an efficient high-quality system could achieve health results markedly superior to the present system with perhaps 15-20 percent or more fewer doctors and hospitals, meaning healthier people and billions in savings.

It’s not that we don’t know how to practice this kind of medicine, ample research studies show we do. It’s that the present system punishes providers with less revenue if they seriously try, and the most efficient are hurt most of all. It rewards those who run up costs regardless of quality. And because most medical care is a judgment call, there is no way that bureau­crats can second-guess doctors into serious cost contain­ment. But, patients, if properly informed and incented and thereby enabled to freely choose providers for value, would hold them to account by their choices far better than any regulators, public or private, ever could.

In other words, the runaway cost and compromised quality of our present health care system are symptoms of a deeper diagnosis: powerful perverse incentives. Policy keeps missing the diagnosis and treating the symptoms. We cannot emphasize enough, until those incen­tives are corrected, all the thousands of time-consuming, well-meant policies, studies, and recommend­ations, past and present, to lower cost and raise quality are just so much omnibus tinkering, mere symptom-curing missing the fundamental underlying cause. Have not 50 years taught us, all efforts to educate, encourage, command, or pay token bonuses to providers against incentives that punish them if they comply come to naught. Correct the incentives and, as occurs in all industries with proper incentives, our talented providers will innovate ways to reduce cost and raise quality in their own interest far beyond anything policy could imagine let alone impose.

Moving Beyond ‘Single-payer versus Private Market’

We need patients choosing among provider groups and delivery systems, not individual services. Patients generally don’t know what services they need, that’s why one goes to medical school; so a market of individual services makes no sense. Choosing a provider group, on the other hand is something we can expect of informed patients. And once provider groups learn that patients are choosing them based on the value they provide, those groups will begin choosing to deliver the services and referrals that get the best results at least cost, and may, desirably, begin to consolidate into more efficient integrated delivery systems. In short, if we turn the present perverse incentives around—by giving patients (1) objective ratings showing which provider groups are better for less, and (2) rewards consumers to choose them over costly providers (both objectives feasible in practice)—we can, slowly but surely, turn our health care system around into the high-quality, efficient system we seek for our children, our workforce, and our elderly.

The left must recognize that universal cover­age requires serious cost-containment incen­tives on both patients and providers. In its zeal to get everyone covered, and its unwarranted confidence in government controls, the left has consistently failed to include these incentives so far. That must change. For its part, the right should stop fighting universal coverage and recognize it for the shrewd and crucial public investment it is, and make sure that it gets done right this time, including strong means and incentives for patients to choose providers who are better for less. And policy makers at every point along the spectrum must recognize that single-payer versus private market is a sideshow that entirely misses the point. Done right, universal coverage driven by strong proper incentives is a double win: a healthier more produc­tive workforce and, at last, a reformed high-quality, cost-contained health care system for all Americans.

More generally, on the left we need to recognize there are far more good things to do for people than the nation can afford. Many of those good things consume far more in taxes than they return to the economy. Wise policy, therefore, must be very sparing of such public consump­tion programs; enacting too many—no matter how worthy or labeled as rights—will drain the public purse and the economy.

And equally, on the right we need to recognize that some of those many good things are also shrewd public invest­ments. In looking at our Constitutional obligation to promote the general welfare, one must look not only at the cost to the taxpayer but whether the financial returns to the economy exceed the cost in taxes. If they do, it is not a matter of rights versus free lunches. Rather, we are simply foolish not to make them.

In sum, our present broken health care system is eating the nation out of house and home; the health of our people and workforce are falling behind other nations; adequate financial access to care and cover­age, already beyond millions of Americans, continues to fall, with attendant consequences to health. As a result, illness and medical care now a leading source of personal bank­ruptcy and poverty. We can either do nothing—50 more years of omnibus tinkering—and it will just get worse. Or we can, finally, seriously fix it.

Good public investment programs infeas­ible in the private sector, such as universal public education, return far more to national prosperity than they cost in taxes. If both sides of the aisle will work together to do it right, universal health insurance is just such an opportunity. It will not only provide all Americans better health and security—particu­larly for working people, knowing they’ll never be reduced to poverty by medical expense—its financial returns to the economy from both an improved work force and a reformed health care system will far exceed any cost of the program in taxes.

Universal health insurance stands out as an extraordinary public investment opportunity on which our country remains one of the few advanced nations still missing the boat. It is a chance to profoundly promote the general welfare, no exclusions, that will more than amply pay for itself. If our policymakers will pull together, we can finally get it done… right this time.

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