Universal Healthcare (again)

Let me start by saying that I think Universal Healthcare would be a good thing. I just think it's complicated.

 First of all, health care is NOT free any place in the world. When people talk about “free” healthcare what they mean is that you don’t pay for it at the point of service.

Basically everyone chips in all the time whether you’re using medical care or not in the same way that everyone pays their insurance premiums whether they’re using the benefits or not.

The BIG difference is the government doesn’t have to make a profit while insurance companies typically do.

I saw someone say “Americans could decide today to have free healthcare.” Aside from my previous point that it’s NOT free, there are some issues. Note that none of these issues are insurmountable if the will is there but they need to be adequately studied and addressed.

Now for some back of the envelope calculations.

Let’s start with the cost. What we spend as of 2021: Medicare $901 billion, Medicaid $734 billion, Private Health Insurance Spending $1,211 billion, out of pocket $433 billion. That's a total of almost $3.3 trillion.

A University of Massachusetts study showed that we would save $5.1 trillion over 10 years in healthcare costs with Universal Healthcare. That would bring the total cost down to about $2.8 trillion per year. We’re already spending $1.6 trillion in Medicare and Medicaid so that leaves a potential shortfall of $1.2 trillion.

But going to a single payer government healthcare plan is going to save employers what they’re now paying for employee healthcare insurance so a reasonable place to go for additional funding would be a per employee payroll tax. There are about 160 million workers in the US so that’s about $7,500 per employee. Employers are paying between $6,800 and $7,500 per employee now so let’s assume a payroll tax of $6,000. That leaves us short by $1,500 per employee or about $240 billion.

The US Income tax revenue is $4.9 trillion so that would mean about a 5% tax increase across the board.

All of the above might cover the cost but lots of luck getting this through Congress.

Second, we provide universal healthcare for no cost at the point of use and the demand for healthcare services is going to skyrocket. I don’t think that’s going to affect the cost much but it could reduce the quality of service and it will put an enormous strain on our medical infrastructure. I’m not sure it can handle the additional load. So that might mean a required investment in additional infrastructure of an unknown amount of money.

Third, we need to be careful about assuming what works in Canada (42 million people), the UK (70 million people) or even Germany (84 million people) is going to scale to a nation of 340 million people spread out over a ridiculous amount of area. Russia has 145 million people and is bigger than the US but does anyone really want healthcare on a par with Russia? The Chinese arguably have it worse than the US since reportedly often only about half of medical costs are covered (I don’t know how true this is. I’m relying on Google).

So it’s not like flipping a switch. There’s a lot of preliminary work to be done in order to put together a workable strategy. What the government should be doing is organizing a committee of experts, medical, educational, financial and tax, to study the problem for a year and produce a set of recommendations.

I suspect that will never happen with either the Republicans or the Democrats in charge.