American People and Politicians Don’t Want Lower Healthcare Costs
The United States is the only highly-developed country without universal health coverage. Americans say they want lower healthcare costs, but there are two problems. Lowering healthcare costs means doing more with less, addressing the free-rider problem and government mandates, and enacting restrictive social policies. Good luck getting the American public and politicians to support these propositions.
The left and the libertarian right understand that private insurance is a middleman that drives up costs; 17% of the insurance industry’s costs are administrative, much higher than the two-five percent for government-run programs. Eliminating private insurance, however, is politically unpopular, hence why Democrats flip-flopped on it so much during the 2020 primary.
Employer-sponsored private health insurance mostly exists because of World War II wage controls. The coronavirus pandemic also proved why it’s useless: if you lose your job in the middle of a pandemic, you also lose your health insurance. Private health insurance isn’t the only unnecessary expense driving up costs. High labor costs contribute. Doctors’ salaries are absurd, and unionization of other healthcare workers drives up costs. A specialist-grade doctor in the United Kingdom earns somewhere between $123,800 and $137,000 annually, according to the National Health Service website. In the United States, they make well over $300,000 annually, on average.
Nurses and pharmacists may demand more pay and think the government should pay off their student loans (highly regressive), but that would give us the same service for more money. The same is true of implementing rigid nursing staffing ratios. The NHS pays their nurses, on average, between $42,000 and $45,000 annually—and the UK is among the wealthier European countries. That’s less than half the median wage of $94,480 for a registered nurse in the United States. We won’t match the UK anytime soon since virtually nobody would support the Cut Nurse Pay in Half Act. That would result in people quitting their jobs and poorer service nationwide.
Doing more with less also means undercutting big pharma. America could import cheaper prescription drugs from other countries, ban prescription drug advertising on television to decrease demand for expensive, name-brand drugs, and nationalize insulin production, but will it? The man who discovered insulin never patented the cheap-to-make product because he wanted his discovery to benefit humanity, not pharmaceutical companies. There’s no reason why the public sector couldn’t produce insulin or at least contract philanthropic billionaires to produce affordable insulin for all who need it. Other countries offer the vital product for seven to 10 times less than America, so we should take bold action to save money, even if it means pissing off big pharma. Politicians covet big pharma money, which helps explain why these changes aren’t among their top priorities.
America also needs young and healthy people to pay into the system as long as a private health insurance system exists. Individual mandates attempt to do this but serve as a regressive tax—forcing people to pay money for the pleasure of not having health insurance. One of John McCain’s worst political opinions was that some people don’t want health insurance; therefore, he opposed the individual mandate. It’s a matter of affording the high costs of private health insurance—something meant to protect people from financial ruin—not a disinterest in having access to medical care.
As someone who dislikes the individual mandate and supports universal coverage, I think the individual mandate strengthens the case against private health insurance. The other free rider problem is far more controversial: illegal immigrants. Some liberal politicians support providing free healthcare to illegal immigrants, such as Gavin Newsom. Illegal immigrants already take far more from the pot than they contribute financially. With the public sector’s lower reimbursement rates, Americans pay for it twice: via higher health insurance premiums and their tax dollars.
Government mandates also make the system more expensive. When Massachusetts passes a policy that says insurance companies must cover abortion with no cost-sharing, that increases healthcare costs. The same is true of Trump’s proposal to force insurance companies to cover in-vitro fertilization without cost-sharing—one of the worst political ideas I’ve ever heard. Why force insurance to cover divisive elective procedures if you want to cut healthcare costs?
Cutting healthcare costs must also address the bad habits of the American people that drive up costs, like alcohol, tobacco, cannabis, and junk food (obesity). Cigarette smoking alone creates $240 billion in healthcare costs annually, according to the CDC. Proposals to phase out cigarettes for younger generations face staunch opposition, especially from Republicans, while neither party supports seriously restricting alcohol. People also freaked out when Michelle Obama tried to make school lunch healthier—another reminder of how hard it is to fix this problem.
America should take active measures to restrict alcohol, cannabis, and junk food advertising, increase its alcohol excise taxes, get marijuana out of convenience stores, and ban the toxic food dyes that make junk food more visually appealing. Will it happen? Probably not. We’ll remain stuck with high healthcare costs because that’s what the people and politicians want.