This article is written by a friend, Econoobics, who has been inspired by Economics just as much as I have. I own none of the content. I have gotten his approval, and I am sharing for educational purpose only. In this article, he will lead you into the world of universal healthcare, using American HealthCare System as a case study. Enjoy!
One trivial question: “What do countries like England, France, Switzerland, Sweden, Germany, Australia and Canada have in common?” If it wasn’t because of Australia and Canada, “those countries are in Europe” would be a correct answer. Well, I can assure you that this article is not about geography. What those countries have in common is Universal Health Care. So what is Universal Health Care (UHC)? According to World Health Organization (WHO), universal healthcare or sometimes called universal heath coverage is “defined as ensuring that all people can use the promotive, preventive, curative, rehabilitative and palliative health services they need, of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship.” One of the goal of UHC is to promote “equity”, which is to ensure that quality health service is not only affordable for the rich but also for the poor. Another goal is financial protection against costly disease which could lead to personal bankruptcy for some individuals. Of course, a serious disease can put one person in jeopardy, both economically and physically. One reason is that the overwhelming financial cost incurred through treatment could be unbearable and another reason is that some seriously sick persons would not be able to go to work, which means their livelihoods (source of income) are pretty much in dismal.
American HealthCare System
So another trivial question: “What distinguishes the United States from the rest of the above countries?” Give yourself a round of applause if you confidently answer “No universal health care”. Surprisingly, the mere idea that the richest country in the history of planet Earth has no universal heath coverage for her people would leave a whole lot of people scratching their heads (including me of course). Healthcare in America is very expensive and that’s why many American buy health insurance policy from private insurance companies. The problem is not everyone can afford to buy health insurance in America. Another way American can get health insurance is through their employers. Besides, there are other social insurance programs known as Medicare and Medicaid, but I would not go into detail in this article.
The Complication of UHC: Tax Hike and Moral Hazard
The goals of UHC are desirable and commendable - a quality health service to everyone serving as a buffer against financial hardship resulted from costly disease. But why would the richest country in the whole wide world refuse to adopt such health care system despite all of the benefits for the people? Does it manifest the perception that America leaves the people in a situation in which they only care for themselves? Come to think of it, America has its reasons for why universal health coverage is not rolled out. In all seriousness, no one enjoys seeing a poverty-stricken person unable to get treatment for his sick children or a person who has to liquidate all of his valuable assets and runs into huge debts just because he needs the money to pay the doctor to cure his wife’s chronic disease. You see, no one and no society dreams about this kind of scenario, because what we all have in common is “humanity”. We do feel compassion about the suffering of others. So UHC makes perfect sense in our society, but the painful truth is UHC does not come without a cost. In other words, it’s not free. Ultimately, someone out there must pay the price of providing treatment to everyone if a country wants to make UHC a reality, because after all universal health care system costs a great deal of money. To finance the cost UHC for the people, the feasible way for the government to do could be raising tax or running a large-scale government’s social insurance program. Well, raising tax could be a headache because it hurts everybody in the economy and jobs could also be eliminated as a results of tax hike. In addition to the problems associated with tax increase, a huge government insurance program run by the government might not be efficient and could cause a lot waste and inflexibility. We have seen in many occasions that private companies could operate more efficiently and utilize less resource compared to the government.
And then there is another complication. Let me ask you what you would do if electricity and water in your house are free or cheap to say the least. Yes, you would overuse your water and electricity like leaving the TV turned on all night or using the air conditioner or heater carelessly. By the same token, the overutilization of free health service when healthcare is free for everyone could also be a daunting problem. The overutilization of health service in an inefficient way as such is known by economists as moral hazard. As a result of people overutilizing the service, long wait time to meet with a doctor or to get treatment is the unintended consequence that comes along. A 2010 Commonwealth survey indicated that 43% of Canadian had to wait 4 or more weeks to see a specialists (http://www.healthcouncilcanada.ca/rpt_det.php?id=122). I have to clarify that one data could not represent the whole picture of a universal health care system because in contrast to Canada, only 9% had to wait 4 or more week to see a specialist in Germany and Switzerland. I choose this data in Canada to show the possibility that universal health coverage system could degrade the quality of health service rather than improving it.
I have to admit that this article is far from perfect, since there are tons of stuffs that I should cover such as America’s social insurance program administered by the government called Medicare, state-run Medicaid and other statistics to demonstrate the problems associated with universal health coverage. But to do so, you know that long-hour extensive research is required. Having said that, I hope this article will serve as an introduction to the healthcare system in America and help us understand the pros and cons of a universal health coverage. I sincerely hope I can add additional details in the near future.
In the coming article, we will go through one of the most important legislation in America known as Patient Protection and Affordable Care Act (PPACA) or commonly known as Affordable Care Act (ACA) or even more commonly known asObamacare. In the meantime, you can vist WHO’s websitehttp://www.who.int/health_financing/universal_coverage_definition/en/ for the definition of UHC. Until then, I have to get back to my study and have a great weekend.