If the Republicans manage to replace Obamacare, 26 million Americans will lose health insurance.
Enthusiasm for socialised healthcare is suddenly sweeping through the American political landscape, which means the lack of universal care (something that has long made the US an outlier among wealthy nations) may be ending.
Healthcare is a matter of right in every other wealthy industrialised nation, although guaranteed and administered in different ways. In Germany, the state sets prices with heavily regulated private providers for standard treatments and medications and citizens must pay according to their income level, often with state support. In Canada, each province is the ‘single payer’ of health services, contracting with independent providers, although with laws that discourage or prohibit private health insurance. In the UK, the National Health Service is fully socialised and its employees are civil servants, a true single payer system. The care provided by these systems is universal, heavily regulated and funded by the state. In all, medical care is far cheaper than in the US.
The US spends more on medical care, per person and as a percentage of gross domestic product, than any other nation: Costs are expected to hit 18% of American GDP next year, compared to an Organisation for Economic Cooperation and Development (OECD) nation average of around 11%. Despite this enormous expenditure, roughly 10% of American adults have no health insurance and millions more are underinsured, with medical debt the leading cause of personal bankruptcy. Nor is American healthcare yielding especially impressive results on a national scale, with life expectancy and infant mortality rates markedly worse than in peer nations.
Given the cost in the US, it is no surprise that politicians and pundits have viewed universal, state-run healthcare as something the country cannot afford, an inefficient government takeover that would result in higher taxes, lower standards of care and worsening costs. That the evidence from every other industrialised nation with universal care belies this has made little impact. Only 36% of Americans hold valid passports, and relate no more to the example of Danish healthcare than they would to reports of bacterial life on Mars. Yet the idea is suddenly catching on.
Socialising all healthcare was not part of the official debate on Obama’s Affordable Care Act of 2010 (Obamacare), his signature domestic legislation that reformed private health insurance markets, extended coverage to the previously uninsured without universalising it, and left the system more deeply entrenched.
The leading legislative reaction to Obamacare is not expansion but destruction. The Republican Party, with control of the executive branch and both branches of the federal legislature, is developing a massive tax cut for the wealthy, paid for by revoking healthcare coverage and heavily cutting Medicaid, the federal programme for the poor. According to the Congressional Budget Office, a federal body that runs cost-benefit analysis on proposed legislation, the version of the American Health Care Act 2017 (AHCA) passed by the House but not, at the time of writing, by the Senate would immediately strip 14 million Americans of their health insurance, and by 2026, 26 million would be without coverage.
The sudden prospect of millions losing medical coverage has energised Democrats (and some Republicans) who have packed local town hall meetings with their elected members of Congress, and have been raucous, even confrontational, about healthcare. (This focus contrasts with the Democratic Party elites’ fixation on the Trump circle’s alleged collusion with the Russian government, an issue more important to centrist pundits than constituents’ wallets and health.)
This popular response to Obamacare’s potential destruction has gone far beyond defence of the status quo and become radical by American standards, with demands for government-run universal healthcare, often called single payer but increasingly known as Medicare For All. ‘Single payer has become the most important policy issue because people have a dramatic fear of losing their healthcare now — and we have a solution,’ says RoseAnn DeMoro, executive director of National Nurses United and the California Nurses Association, powerful unions leading the charge for universal healthcare. A bill to establish single payer — the Expanded and Improved Medicare for All Act, HR 676 — is floating around the House of Representatives though it is far from summoning a majority.
At state level, enthusiasm for universal healthcare, long on the progressive back burner, is suddenly boiling over. New York state assemblyman Dick Gottfried has proposed a bill for years; the measure suddenly has a majority in the state’s lower legislative chamber. It will probably take several attempts to get this or similar bills signed into law: In 2014 a watered-down universal healthcare bill stalled out in Vermont; a Colorado ballot initiative for single payer tanked last November, and the governor of Nevada has just vetoed a massive expansion of Medicaid.
Yet these setbacks have only stimulated the appetite for change and legislation is moving in the state governments of Washington, Oregon and (probably soon) Illinois. New chapters of Physicians for a National Health Programme are springing up; and that group’s detailed proposals are being published in prestigious medical journals, while more physicians, fed up with fighting insurance companies to get reimbursed, are turning to single payer.
Although universalising healthcare is a matter of fairness and social justice, it is also, counter-intuitively, the only proven way to control healthcare costs. Savvy plutocrats, such as Berkshire Hathaway investment gurus Warren Buffett and Charlie Munger, have come to support state-run universal care, given that soaring healthcare costs drag down the competitiveness of American firms.
The chief savings are in reducing the administrative costs of private insurers, which add no medical value. A June 2016 study in the American Journal of Public Health by Adam Gaffney, Steffie Woolhandler, Marcia Angell and David U Himmelstein, all members of Physicians for a National Health Program, estimates that $500bn a year would be saved by this market restructuring.
Independently, the US government could follow multi-payer systems like Germany and flex its buying power to negotiate down prices of healthcare procedures, prescription drugs and medical technology, given that with Medicare and Medicaid it is overwhelmingly the largest purchaser. Intellectual property law, properly revised, could also push down prices by limiting patents on medicines (often partly developed with publicly funded research) and allowing low-cost generic equivalents to enter the market more quickly. Big Pharma’s profit margins are enormous, roughly twice the Fortune 500 average, evidence of cartel privileges at the expense of patients.
Development of new drugs should ultimately pass out of the private sector with its inefficiencies and profit-seeking conflicts of interest. As economist Dean Baker has proposed, a state-managed research institute could easily develop new drugs and sell them at cost with enormous savings: Contrary to capitalist folklore, many of the 20th century’s important breakthroughs, from penicillin to the polio vaccine, were developed by state and non-profit academic researchers.
The barriers to socialising medicine in the US are more political than economic, and are considerable. Many Republican elected officials have spoken out against the idea of health insurance as collectivist and morally wrong. Republican Scott Perry of Pennsylvania has declared that he shouldn’t be asked to pay towards maternity care since his family does not plan on any more children, while Republican Mo Brooks of Alabama has said he would make the AHCA require the sick to pay more than the healthy ‘who lead good lives’.
Despite such market Calvinism, it’s not clear how deep or enduring is this opposition to socialised medicine among Republican voters. In the early 1960s, Republicans and most of the medical profession militantly opposed Medicare (the American Medical Association hired Ronald Reagan to denounce the programme as communism in radio advertisements), before the programme was signed into law in 1965. Now Medicare is popular across the political spectrum and politically impregnable. And with both parties realigning their social bases, all bets are off. As DeMoro notes, ‘We’re a little perplexed by Donald Trump because he’s spoken favourably about Australia’s single payer system but now he’s got this draconian plan that takes a lot of people’s healthcare away.’
The first step will be convincing enough Democrats: no easy task. While Bernie Sanders campaigned on single-payer healthcare, his victorious rival Hillary Clinton condemned it as ‘utopian’, an odd choice of words for a system that works smoothly in many nations. The close ties between donors and lobbyists from the biomedical industry and the Democratic Party can be seen in the family of Senator Joe Manchin of West Virginia and his daughter Heather Bresch, CEO of Mylan, a firm which has jacked up the price of its EpiPen (an emergency device for allergic reactions) from $100 to $600 since 2009. Manchin defended his daughter’s decision.
But even if Washington Democrats remain opposed to universal care, activity at the state level is going ahead. For now, the big battleground for universal healthcare is California, where the upper legislative chamber on 1 June passed a non-committal Senate bill (562) calling for a single-payer state system without a specific plan to fund it. This is the result of much activist prodding: At the state’s most recent Democratic Party convention, members of National Nurses United chanted outside the event. Although the bill was just killed off by the Democratic state assembly speaker Anthony Rendon, it had support from both lieutenant governor Gavin Newsom, likely the state’s next governor, state attorney general Xavier Becerra and many other elected officials.
Is California’s single-payer plan financially feasible in the near term? The programme’s cost is estimated at $400bn, only half of which could be covered by the state’s general fund without raising the additional revenue necessary until money-saving reforms can be passed at state and federal level. Advocates are optimistic. ‘California is the sixth-largest economy in the world and passing single payer there will have a large ripple effect,’ says DeMoro. ‘We’re hoping California will lead the US in joining the rest of the industrialised world in providing healthcare for its people.’
California’s path to single payer will not be smooth. Even if such a measure eventually does get signed into law and state funds are found, Obama’s Affordable Care Act requires the federal government to grant a waiver for any state to set up its own publicly funded system. Conservative commitments to federalism aside, it is far from certain that the ultraconservative director of the federal Department of Health and Human Services, former Georgia Republican congressman Tom Price, would give California a waiver.
No one expects socialised medicine to happen all at once and without political resistance at every level of government. But even if it takes several election cycles, what was recently a dream is suddenly a defining issue in US domestic politics, and may soon be legislated into reality.