Walter McClure, Alain Enthoven, and Tim McDonald
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.