Is Universal Health Care Socialism?


The November midterms elections are approaching, and one of the major topics is health care. Democrats are campaigning on retaining Obamacare, in many cases advocating that we move towards universal health care.

That would be pure socialism, retort Republicans, who would rather repeal the Affordable Care Act as they attempted in 2017, even if this leads to 20 million Americans losing coverage.

Is Universal Health Care Socialism?

Only if we believe that every other developed market-based economy in the world is socialist since the U.S. is the only one without universal coverage. We spend almost $10,000 per year per capita on health care, about twice as much as most developed countries. However, in terms of major health outcomes, such as infant mortality or life expectancy, we are laggards. In a recent OECD survey, we ranked 27th out of 35 countries in life expectancy. Japan spends about $4,000 per year per capita in health care, yet the average Japanese has a life expectancy of 84 years, versus 79 for the average American. Why?

Every developed country other than the U.S. has had universal care for decades. While Prussia’s “Iron Chancellor” Otto Von Bismarck implemented the first universal care system…in 1883, our health care history is a patchwork of partial reforms, an inefficient collage of private and public institutions. We first tied health insurance to employment in 1946, because business and conservative opposition would not allow universal coverage; then added Medicare in 1965 so that our seniors would have coverage after they retired; then Medicaid, a different one for each one of our fifty states; then the “Affordable Care Act” or Obamacare, which gave insurance to over twenty million people but did not reduce costs. Rather, the ACA’s health exchanges, ironically a conservative Heritage Foundation concept first implemented in Massachusetts by then Republican governor Mitt Romney, added new complexity to the system. With Donald Trump and Republicans in charge, their potential “repeal and replace” efforts to kill the ACA degenerated in a partisan cacophony in the summer of 2017 – the sadly departed and much regretted John McCain’s courageous and principled vote ensuring that Obamacare remained the law of the land.

Interestingly, our national health care debate also appears to be artificially constrained, most of the political discourse focusing on just two streams of ideas: either incremental tweaks to the current system or a national, universal single-payer system like those found in Australia, Canada, and the United Kingdom. These systems do provide universal care at a very reasonable cost, but suffer from a certain degree of “rationing” of care, principally for older people, and do not use private sector capabilities effectively. On the other hand, countries like Japan and those in Continental Europe have very successful health care systems that combine universal coverage administrated or mandated by the state with a thriving private sector. The respective roles of the government and private sector are clearly delineated: the government focuses on ensuring that even the economically disadvantaged get health care; the private sector – typically not very good at serving the poor effectively – can then focus on innovations and leading-edge treatments. Supplemental private plans are on offer for most workers and retirees, paid by employers or the insured.

In the U.S., no such clarity of roles exists. In the land of free markets, our government spends over 60 cents of every health care dollar – think Medicare, fifty different Medicaid plans, the VA, and tax deductions for employer-provided insurance. That is much more than in the non-single payer countries mentioned above. Our government and the private sector cannot untangle themselves. Costs mushroom and complexity is everywhere:

  • in our fee-for-service payment system;
  • a medical training bias towards specialties as opposed to general practice;
  • uninsured patients getting expensive care from emergency departments because they don’t have access to primary care;
  • a focus on expensive cures as opposed to prevention;
  • cumbersome administrative and IT processes;
  • technology innovations that more often than not add costs;
  • patient accounting systems and electronic medical records costing tens of billions of dollars in aggregate, but still unable to “talk to each other” across our nation’s medical centers;
  • a myriad of testing procedures; and
  • a very complex drug and medical devices supply chain that is everything but low cost.

As a result, our health care system suffers from a zero-sum game syndrome: either millions gain access to health insurance, at the expense of increased costs – typically when Democrats are in power; or millions may lose coverage in efforts to lower taxes – when Republicans rule the show. We have a myriad of different insurance plans and hospitals; government entities and private companies both run health care operations; the one common thread is that health care complexity, like entropy, keeps increasing. This is because adding complexity to an already complex system is simple and politically expedient: incremental change is easy, whereas comprehensive reform is much more challenging.

Here is an idea: Let’s create a new health system that would be a lot simpler; separate clearly the roles of government and private enterprise, so that both could perform better; and cover everyone while reducing costs. This “Basic Medicare for All” plan (not single payer) could help restructure the way federal and state entities interface with the private sector. Medicare would stay as is for those who are 65 or older; between the ages of 65 and 55, there would be a still comprehensive plan, but less generous and expensive than today’s Medicare; between 55 and 40, Americans would enjoy a more basic plan, costly significantly less and reflecting their better-expected health within that tranche of age; and between 40 and 26, there would be a very basic plan, at very low cost, essentially covering serious and unforeseen illnesses so that no young American would face the threat of bankruptcy due to an unexpected health situation.

Costs would go down with the lower coverage needed for younger people, and the simplicity of this system. Private businesses would focus on offering “supplemental” or “advantage” plans to everyone in the country, leveraging their vast experience with such plans today, and their ability to work with employers. The government would focus on providing a health safety net, and the private sector would do the rest.

Both would focus on their strengths and become more efficient. Everyone covered, costs going down, what’s not to like in this?

Author of “Untangling the USA: the Cost of Complexity, and What Can Be Done About It,” Etienne Deffarges has counseled, created, and invested in countless organizations during his professional life as a management consultant, business executive, and entrepreneur

7 replies »

  1. Unfortunately, the Black Swan event arrived in 2020 but nothing changed.

  2. What happen to the health care professional and the infrastructure of the healthcare providers…personnel, doctors,nurses, aides, etc..including and not limiting EMP and first responders?How does that drastically changed?and the insurance company

  3. Almost anything is possible. All you must do is convince the entirety of the health care establishment to cut their costs by 30 or 40%.

  4. I felt for some time now that our healthcare system has four key problems one of which is contractual and the other three are cultural. The contractual issue is the confidentiality agreements between insurers and providers which preclude the disclosure of actual contract reimbursement rates. This makes it impossible for doctors and patients to identify the most cost-effective high quality providers in real time. Sky high out of network payment rates imposed by hospitals upon insurers for emergency care is a separate problem that adds significantly to costs and is flat out gouging in my opinion. There needs to be rules that limit how much can be charged for care that must be delivered under emergency conditions and the confidentiality agreements need to be outlawed or abolished.

    The first of our cultural problems is that our society is much more litigious than other first world societies. This creates lots of defensive medicine that get built into physician practice patterns out of necessity as doctors rightly want to minimize their risk of lawsuits, especially failure to diagnose lawsuits.

    The second problem relates to individual expectations especially around end of life care. In other societies, people generally believe that it’s inappropriate to impose unreasonable costs and expectations upon their fellow citizens. In the United States, it’s I want what I want when I want it and I expect someone else to pay for it even if the prognosis is dire and the care is likely to be futile or, at best, only marginally useful.

    The third problem is that there is more of a fraud culture in the U.S. that exploits Medicare and Medicaid. This is probably concentrated in areas like durable medical equipment, home healthcare, nursing home care and physical therapy. More investment in data analytics could probably mitigate this problem. While doctors appreciate that regular Medicare pays quickly, quick payment also makes fraud easier to commit.

    As for Japan, I’ve read that they use imaging equipment that is technically less sophisticated than ours but costs only one-tenth as much. In Japan, it’s considered good enough. In the U.S., there would be a failure to diagnose lawsuit every time a more sophisticated machine found a cancer that the cheaper machine missed. For that reason, it just wouldn’t be acceptable here. Also in Japan, the typical primary care visit lasts all of three to five minutes and patients are willing to wait as long as three hours in the waiting room to see the more popular doctors. I don’t think that would work very well in the U.S. either. Every country and society has different values and expectations. What works in one country won’t necessarily work in another.

  5. Interestingly, there was a recent article in the New York Times about Comcast being able to hold its healthcare spending per covered life roughly flat in nominal dollars for the last five years and it’s now increasing by only 1% per year which is less than the rate of inflation. At the same time, it is spending roughly $5,800 per covered life to cover its employees and their families. With current Medicare spending at roughly $12,000 per person which is supposedly about double what it costs to cover the population younger than 65, Comcast’s per capita seems to be approximately in line with what we would expect. Something doesn’t add up here.

  6. We have worked our way into a box where we cannot fix health care, not now–for two principle reasons: prices are so high that we cannot afford to have universal access. No way. Look at the states that have investigated or tried this.

    And, secondly, the dominant stakeholders have the politicians so petrified that we cannot even try such things as mass (monopsonic) purchasing of Medicare drugs or cleaning up the smell coming from all the kickbacks and kick-forwards in the PBMs or the GPOs.

    Further, no one is learning or changing–look at the continued effort to have interoperability in our EMRs and our continued whipping the dead horse of ACOs. We have “reform” fatigue.

    So…we’re stuck. And it appears that we shall have to wait for some crisis or black swan event to impart to our behinds a swift kick.

  7. I. The goals for healthcare reform should be clear and precise:
    *) Decrease our nation’s health spending as a portion of the national economy (GDP) by 0.5% less than economic growth annually for 10 years (18% to 13% of the GDP) AND
    *) Decrease our nation’s maternal mortality incidence by 70% within 10 years.
    II. A nationally applied new model for the managing health spending will be required based on the Design Principles for Managing a Common Pool Resource (CPR). The CPR for health spending is defined as the appropriate portion of our nation’s economy devoted to healthcare. The Goal above defines it as representing less than 13.0%.
    see http://dx.doi.org/10.1016/j.jebo.2012.12.010
    for a review of these Design Principles
    III. Since WWII, the underlying social and economic CLUSTERS of change within our nation, community by community, have led to poor HEALTH for too many of our citizens. It is not feasible to expect the modern status of our nation’s healthcare to solve these problems. Our nation’s worsening maternal mortality incidence for more than 25 years is the most emblematic of our nation’s HEALTH disaster. The others include worsening sexually transmitted disease, young adult suicide/homicide, obesity, mid-life depression, mass shootings, substance addiction and entrenched poverty (loss of social mobility).
    see https://nationalhealthusa.net/paradigm-shift/rationale/
    for a proposal to manage the social-demographic determinants of each citizen’s health through locally managed social change, community by community. It is largely driven based on an expanded definition of HEALTH.

    A 10 year implementation process could be started 6 months after Congressional approval of a Charter for a new semi-autonomous institution to implement the necessary changes. With a fixed budget representing $1.00 per citizen and paid annually by the Federal Government, this new institution would mimic the character of the Cooperative Extension Service for our nation’s agriculture industry. It was established by Congress in 1914 with the Smith-Lever Act.
    No matter how we structure the political economics of healthcare, the HEALTH of each citizen will require a recognition of the human ecological conditions of each citizens community that contribute or impair their own expression of HEALTH. The current pre-occupation with the economic dimensions underlying healthcare seriously detracts from a reality-based, sun-shine recognition of the underlying factors that endanger the expression of each citizens HEALTH. As written about many years ago by Stephen Covey, A. Roger Merrill and Rebecca R. Merrill, FIRST THINGS FIRST (1994).
    It all begins with each person’s caring relationships as defined by:
    .a social interaction between two persons,
    .occurring with an evolving purpose, synergy and permanence,
    .that both persons understand as representing a beneficent intent
    .to enhance each other’s autonomy by communicating in harmony with
    .warmth, non-critical acceptance, honesty and empathy.