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Health Care Costs

PERSPECTIVE

Are Americans Closer Than We Think To National Health Insurance?

In fact, they argue that the government’s share of the health care bill is much larger than previously assumed. If, as the authors calculate, one includes both forgone tax revenues for employer-sponsored health insurance and the private insurance that government subsidizes for public employees, 60 percent of U.S. health spending is tax-financed. Tax-financed health spending in the United States now exceeds total spending on medical care in all countries except Switzerland. The implication, Woolhandler and Himmelstein conclude, is that the United States is closer to national health insurance than we think, because of both the scope of government-funded health insurance and the need for smaller tax increases than previously expected to fund national health insurance.

If only this were true.

Certainly, many observers who accept the U.S. health care system as a private system will be surprised by the extent of the government’s role in funding medical care. They shouldn’t be. Even if one uses the conventional estimates of federal spending, public expenditures account for almost half of the nation’s health care spending, a number that is sure to rise as Medicare enrollment doubles over the next two decades.

Acknowledging that the government’s share of health spending is a majority of all expenditures, or larger than we thought, does not move the United States any closer to national health insurance, however. Here the authors fail to make a crucial distinction between the economic and political significance of income taxation, payroll taxes, and tax expenditures. The politics of raising taxes for a single-payer national health insurance plan of the sort Woolhandler and Himmelstein support is entirely different from tax expenditures. Raising income or payroll taxes to fund national health insurance imposes a visible cost on Americans, a cost that so far taxpayers have shown little willingness to fund. In contrast, tax expenditures for employer coverage are largely invisible, and the public is more likely to regard them as benefits than as costs. The tax exclusion of employer-sponsored health benefits is, as health economists have long noted, highly regressive. But could anyone explain that in language understandable to our citizenry, and if they did understand the regressive nature of the policy, would they care?

In fact, an alternative reading of the tax expenditure precedent in employer-sponsored insurance would provide evidence of public amenability to tax credits for funding national health insurance (an idea that Woolhandler and Himmelstein would rightly regard as ill-advised). The United States has the most expensive and least efficient health care system in the world, and the government is funding more of that system than most people know. But if they did know, single-payer insurance would not likely be around the corner.

Obstacles in the way. Accepting Himmelstein and Woolhandler’s data (and I think they make a good case), the public share of U.S. health spending is 60 percent, not so distant from Canada’s 70 percent. Suddenly, Canadian-style national health insurance appears in sight. Unfortunately, that vision is a mirage. Adopting single-payer insurance in the United States does not simply require an incremental increase in public expenditures on medical care. Rather, it requires overcoming a number of obstacles: the political power of health insurers and medical providers vested in maintaining a profitable status quo; the numerous hurdles that fragmented U.S. political institutions throw in the way of any comprehensive reform; the reticence of the public to create a public monopoly in health insurance; cultural ambivalence about the scope of government power; and indifference and anxiousness from the 85 percent of Americans who do have insurance and worry that a national plan would erode their care. Recounting the numbers on public health spending in the United States, I am afraid, does nothing to ameliorate any of these obstacles.

All is not lost. This does not mean, from health reformers’ perspectives, that all is lost. Political currents change, and the combination of rising costs and growing ranks of the uninsured may eventually bring the United States to adopt universal coverage, although my guess is that things must get much worse for the well-insured before they improve for the uninsured. There are, I believe, alternatives to single-payer insurance that guarantee universal coverage and are more politically feasible, alternatives that many health reformers have overlooked in a single-minded focus on the Canadian experience. And perhaps one day the public will express a clear willingness to pay more taxes to assure that all Americans have health insurance.

Just don’t count on it.

Editor's Notes

 
Jonathan Oberlander is assistant professor of social medicine at the University of North Carolina–Chapel Hill Medical School.

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