Steel-Man Series: Universal Healthcare (Part 3)
[Writer’s Note: This was originally posted on my website on 3/31/2020 and is the third and final part of a 3-part piece. There is no podcast covering this article yet, but I do plan on recording one eventually.]
In Part 1 of the steel-man series on universal healthcare, I went over several different definitions for terms used in arguments for Part 2 and Part 3. In this part, I will go over arguments that cover why costs associated with healthcare are so much higher in the U.S., how the U.S. is advanced enough to implement universal healthcare fairly easily, and how healthcare is a human right. The data and sources used in the argument and critique come from the least bias sources I could find. If the sources had a bias, they would be more Left leaning. All arguments and critiques were made to validate or dispute the statement given at the top of each section. Overlapping arguments will be considered at the conclusion of the article.
Many of these arguments have been made by advocates of universal healthcare for years, but the arguments often have a strong progressive bias that lead to bad-faith claims that assume the motives of the opposition. The same goes for conservative critiques. Those bad-faith arguments will be left out of this commentary to establish a more airtight argument that can only be disputed, not by citing another source for an alternative data set, but by citing other sets of data that can further explain the original data set results. No arguments that can be completely dismissed or assume bad intentions will be used in this series. All sources used will be hyperlinked or cited at the end of the article.
I did my best to partition the main steel-man arguments, pro-universal healthcare arguments (which expands on the main steel-man argument), and conservative critiques in an easy way to follow. I hope this helps avoid confusion. Let the steel-manning begin.
Argument 4: The cost of healthcare is much lower in countries with universal healthcare
Pro-universal healthcare steel-man argument:
Although government programs do not tend to care about cost, costs are lower in many countries whose governments pay the bill. There are many different reasons as to why that is the case. Countries who can centralize their negotiation position to collectively bargain for certain drugs and equipment, whether those come from inside or outside the country, is a great way to make a favorable deal on cost. Anyone who works in any sort of product sourcing department in a free market understands that requesting a higher volume of product typically gets you a lower price. For example, if I go to a store and buy a single plastic cup, I might pay $1.00 for that cup. Or I can go down the aisle and look for a sleeve of plastics cups that are selling at $10.00 for 15 cups, shrinking the going rate for each cup from $1.00 to $0.67 per cup. Now take that to a large scale and have a whole country buy 100 million cups. I think you get my point. The larger the volume, the better the price. Other factors such as number of doctors per capita (quicker availability), volume of prescriptions given (less cost on drugs), and the amount of administrative paperwork contribute to lower costs in countries with universal healthcare. Single-payer systems reduce the amount of administrative paperwork needed during a clinic or hospital visit. One of the downsides of multiple healthcare coverage options is there are more questions that need to be answered per patient to ensure they are billing the correct coverage provider, assuming that coverage provider can cover whatever that visit requires. Single-payer makes it simple to have one billing template because there is only one billing option.
When adding all this up, we see the U.S. spends much more on healthcare than comparable countries. According to the OECD, the U.S. spends 16.9% of their GDP on healthcare compared to an average of 11.1% from comparable countries in 2018 [1]. In the same year, the OECD recorded a spending total of $10,586 per capita compared to $5,795 per capita spending in comparable countries on health care in purchasing power parity (PPP) U.S. dollars [2]. These spending disparities, combined with poorer health outcomes as explained in Part 2 of this series on healthcare, paint a very grim picture of the current state of healthcare in the U.S. Adopting a universal healthcare model might change those outcomes for the better.
Pro-free market healthcare critique response:
As the data show, healthcare is more expensive in the U.S. than most countries and there is no reason to fight against that element in this narrative. Most advocates for universal healthcare who use this narrative do a great job citing statistics and data sets, something the more conservative personality excels at, but statistics do not tell the whole story.
As explained in Part 2 in the section talking about better health outcomes, a culture of health must be considered as one of the main drivers for not only health outcomes, but also healthcare costs. Please see my thorough explanation of a culture of health in Part 2 in the “People in countries with universal healthcare have better health outcomes” section for more details. I will not repeat that argument here, but it should be considered.
Another consideration is the bureaucracy of the administrative state driving up costs and extending the time it takes for new drugs to enter the market. As explained in the pro-universal healthcare argument, systems like single-payer do decrease administrative paperwork, in theory, but it comes at the expense of not having multiple coverage options to choose from. I am not sure that is a trade-off most Americans are willing to take. But this cost increase does not come from paperwork as much as it comes from large federal agencies like the Food and Drug Administration (FDA). The FDA is an administrative agency responsible for protecting the public from unsafe and untested food and drugs. That protection comes at a cost. Now, I am not saying we should not appreciate an agency who is made up of people who really want the best and most safe environment for all Americans by forcing food and drug manufacturers to prove their products are safe for human consumption, but, as I would say about most administrative agencies, what would happen tomorrow if that agency disappeared today? Would we go from eating healthy food to eating dirt and chairs (South Park reference)? Not likely, but the FDA is not an agency we should just disband because they do serve a good purpose. The problem we have here is administrative bloat. The answer is to shrink the agency and reduce its scope and reach.
Sherzod Abdukadirov, a health researcher and fellow in the Regulatory Studies Program at the Mercatus Center at George Mason University, wrote an article in U.S. News explaining the extra cost contributed by administrative regulation. In his article, he explains how “drug development costs have skyrocketed over the last quarter century” using estimates from the Researchers Center for the Study of Drug Development. This study shows the investment needed by a pharmaceutical company has been growing much faster than the general inflation rate. In 1991, a pharmaceutical company had to earn $412 million to make a new drug a worthwhile investment. That estimate grew to $1.047 billion in 2003, and to $2.558 billion in 2016. This is caused by the increasing cost of clinical trials while also decreasing the chances of the FDA approving a new drug. Abdukadirov goes on to say, “the probability that a potential drug entering clinical trial stage will be eventually approved by the FDA decreased from 23 percent to 11.83 percent. This means that the FDA is asking drug makers to produce more and more data, yet it is increasingly less likely to approve new drugs.” When you combine the high drug development costs with a relatively high drug usage rate, you will find spending will be much higher.
At this point you might think to yourself, “well do other comparable countries have their own food and drug safety administrative agencies?” Yes, they do, but where are these drugs coming from? The U.S. develops a disproportionate number of drugs and medical equipment, something I will expand on later in this article. But given the U.S. innovates most of these medicines, it makes sense costs are higher because of research and development (R&D). The cost of a pill when you buy it at the store is not only to cover the materials and labor it costs to make the pill, but also the R&D time. In fact, a majority of the cost of a pill is to cover the R&D costs. Regulations and high standards increase the R&D costs. Pharmaceutical companies can charge a higher premium for drugs it sells in the country it is in, especially in the U.S. where patent law allows them to benefit more from their own labor. When a drug company wants to sell to another country, they must meet that country’s standards and be competitive with their price demands, especially when that country can collectively bargain on drug prices. This is part of the reason those drug prices are less expensive in other countries. The other part to this story is, if the drug company cannot meet the price demands of another country, that other country can make “generics” of that new drug with relatively little R&D time. Generic drugs are alternatives to the brand-name drugs made as cheaper substitutes when the brand-name drug patent runs out. But other countries are not held to U.S. Patent laws in many instances. This allows them to reverse engineering brand-name drugs at a cheaper cost which lowers the price. This might be solved by enforcing patent law more strictly around the world and decreasing the amount of time a patent can expire. Decreasing the active patent period will allow other U.S. based drug companies to make generics and lower cost, but we must be careful with how we change patent law because we do not want to significantly decrease the incentive for pharmaceutical companies to innovate.
These factors are often left out of the debate over healthcare costs. Americans do pay a high premium for the services and medical goods they pay for, but that cost is subsidizing healthcare around the world. I am not saying we should not change anything because that is not fair to Americans, but we must consider the national and global trade-offs we will agree to if we adopt universal healthcare.
Argument 5: We have the technology and the systems setup that will make universal healthcare easy to administer to everyone efficiently
Pro-universal healthcare steel-man argument:
Chances are if you really want to improve your health, there is an app for that. And this goes much further than just fitness and calorie counting apps. More and more health providers offer a “Virtual Doctor” or “Virtual Visit” that allows people to stay at home while consulting their doctor. This is very useful in preventing the spread of sicknesses by allowing sick people to stay home and can lower cost by allowing automated programs to do most of the administrative work and answer easy questions. Other technologies like thermometers and heart rate sensors can be linked directly to the application to cover many of the tasks performed by the nurse before the patient is checked out by the doctor. The doctor can then consult the patient in real time on the app. Combine this with online prescriptions and the only thing a sick person has to do is pick up the medication from the pharmacy, at least until Uber creates “Uber Pharmacy” delivery services (not a real Uber service… yet). Combining all these technologies and advancements, the cost of coverage will decrease, but will not disappear.
This allows universal healthcare to come in and fill in the gaps to cover surgery, critical care, and other treatments that cannot be done on your phone. These treatments can be the most expensive, and therefore, the most vital to cover. Technological innovation is great but will only go so far in helping the everyday American in covering costs of healthcare when they need it most. Creating a government healthcare app to allow all Americans to have access to a Virtual Doctor for free might be the first step towards universal coverage by covering the largest volume of healthcare services, but universal healthcare to cover everything else will ensure everyone has access to healthcare with little to no cost barriers that will stop them from living healthy lives. Use the tools we have now to create a healthier future for everyone.
Pro-free market healthcare critique response:
These new tools are great, there is no doubt. Using the infrastructure we have today and combine it with a government service to create a better and more equitable society is a common argument made by advocates of any kind of fixed market (I do not want to refer to a universal healthcare system as “socialist” because there can be good arguments as to why it would not be considered socialist and I do not want to create a straw-man out of that argument). The problem here is the attempt to take something created in a free market, place it in a fixed market, and expect the trend of innovation to not slow down or completely level off. The reason we have these apps and technological advancements is because there is an incentive to create them. This is the reason why, for example, sports apparel companies like Nike and Under Armour each created their own health and fitness apps that make up the top-rated apps in that category you can find. Both of these companies were not created as software companies, but enterprises who wanted to create the best fitness experience possible to help sell their clothes. There is no reason why free market healthcare providers would not act the same.
Many people who advocate for universal healthcare do not find this to be a compelling argument. They do not believe we should be trading life for free market innovation. I believe they consider this trade-off as a valid argument because “innovation” is sometimes a word used by advocates for and against capitalism as a synonym for “increased profits.” Although innovation is often driven by the prospect of increased profits, profiting off market advancement is not inherently a bad thing. In fact, it is a good thing most of the time, and innovation often leads to greater access to those technologies by people who could not afford it before. An example I like to use to better understand innovation is the invention of the automobile. The first true automobile was invented in 1885. That invention led to mass production of automobiles in the early 20th century. This is a good story about how free markets operate but let us assume between 1885 and 1900 that we decided to fix that market. Imagine if in 1890 the U.S. government declared transportation a human right by promising to give everyone a horse as an attempt to equalize the ability to efficiently travel for the rich and poor alike. It would seem silly now, but back then, if they were to adopt the social mindset of today, this would probably by at the top of Bernie Sanders’ wish list. Assuming the government had the supply of horses to provide one for every person and it came at no cost, this would be very beneficial for most families at that time. It would be a great short-term benefit at the expense of long-term innovation. The market incentive to produce automobiles would have been greatly reduced, if not eliminated altogether. It might lead to a future where in 2020 we are still using a horse and buggy system. This is an example of how government intervention in a market can kill innovation. The problem with getting this point across to people is real life examples are almost impossible to come by considering we cannot see two different outcomes manifest in reality side by side.
But here are some real numbers that get this point across as given by the Scimago Journal database. The U.S. accounts for 21.5% of all published documents, 20.7% of all citable documents, 21% of all citations, and 34.2% of all self-citations in documents and journals on medicine in 2018. Considering the U.S. accounts for 4.3% of the world population and 15.2% of the world GDP in 2018, the U.S. is disproportionately contributing to medical advancement around the world (I am leaving out pharmaceutical innovation for now in which the U.S. attributes around 40% because I want to broaden this conversation to more than just drugs). In overall innovative advancement, the U.S. is ranked 3rd behind Switzerland and Sweden, both of whom have heavy social safety nets but have a freer free market economy than the U.S. My conclusion here is free market economies, especially in vital industries like medical supplies, have a larger contribution to worldwide advancement. If you take away free market incentives to innovate, innovation stops.
As explained in the previous argument, the U.S. pays a higher premium for worse outcomes. The U.S. also pays for much of the development of new drugs and medical innovation to cover the costs of R&D and rigorous FDA testing regulations. Other countries, especially countries who go around patents to create their own generic drugs, do not fund R&D at the same proportions the U.S. consumers do. If you account for the U.S. based companies or companies with a large share of their profit coming from U.S. consumers, most of the pharmaceutical industry relies on the U.S. to fund the world’s medical innovation (about 64% to 78% of total pharmaceutical profits are from American consumers according to the Brookings Institute). There are ways to fix this disproportionality U.S. consumers feel when they subsidize the world’s medical innovation, such as trade agreements that push more cost to other developed countries, but to heavily regulate U.S. drug costs and decrease the incentive to innovate would not only hurt the U.S. but would hurt the world. This is similar to how many countries, especially countries in the United Nations, do not have a large military force and do not spend much of their GDP on their own military. This is because they have U.S. military might to defend them when they need it. Other countries are not going to spend on medical innovation because they have the U.S. spending on the innovation instead. This allows them to have universal healthcare without a large concern for the decrease in innovation trade-off. This also includes software advancements, like the healthcare apps referred to at the beginning of this argument, to become less profitable to create and improve. Advocates around the world who want the U.S. to become just like them are advocating for their own health advancement plateau which will result in the drugs and medical devices of today to become the horse and buggy system of the future of healthcare and there will not be other options.
Argument 6: Healthcare is a human right, period
Pro-universal healthcare steel-man argument:
Healthcare is a human right, possibly the most important right because without it, you do not have any other rights. You should not be denied healthcare no matter your race, gender, sexual orientation, or religious beliefs. Refusing to help others in need in the richest country in the history of the world is morally wrong. There is really no excuse.
To some, this idea is considered “un-American” because of its individual overreach and effective takeover of private industry, but the origins of the push to make healthcare a human right comes from none other than former President of the United States, Franklin Delano Roosevelt. Before his death, FDR drafted what was called the “Second Bill of Rights” that was never passed, but his wife, Eleanor Roosevelt, took those ideas to the United Nations which gave birth to the Universal Declaration of Human Rights (UDHR) in 1948. Included in the UDHR is Article 25 which first clause reads as, “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.” Every industrialized country other than the U.S. has adopted some form of universal healthcare since the UDHR was proclaimed. It might be time to recognize healthcare for what it is, a human right.
Pro-free market healthcare critique response:
Is healthcare a human right? Maybe, depending on how you define the term. If you consider “healthcare” as the right to care for one’s health, then yes, healthcare is most definitely a human right. No one can stop you from eating healthy, exercising, and living a healthy lifestyle, but this is not what advocates for universal healthcare are referring to. Healthcare as a human right provided and protected by the government is what those advocates want. This is an admirable position, but is not one we should accept in the U.S. There are simple arguments to refute this like claiming this would be considered “indentured servitude” which refers to demands of healthcare from healthcare professions by threat of legal action akin to slavery, but placing that argument in the context of healthcare professionals acting as public servants, much like the police, is not very strong. If a police officer refuses to help someone who is in legitimate need of law enforcement, that officer can be held legally liable for his or her inaction. The same would go for healthcare professionals in this context. Even though it is easy to argue we would not want to live in a world where healthcare professionals are viewed politically and socially similar to police officers, because advocates of universal healthcare (typically a Left-leaning position in America) do not always view the police as their favorite public department, I will leave out this argument and unpack it further in a future article.
A better defense against healthcare as a human right argument is explaining the differences between positive and negative rights. A positive right includes a good or service provided by the government as an entitlement, and a negative right is a protection against government action and an individual’s ability to violate another individual’s rights. An example of a positive right in the U.S. is the right to an attorney (some can argue this was originally a negative right not allowing the government to bar an individual from an attorney, but it is clearly a positive right as it stands today). An example of a negative right is the right to free speech where the government must let you speak but does not need to provide a speaking platform. Basically, all rights recognized by the U.S. government are negative rights, something that is more unique compared to other countries. Using healthcare as an example as a negative right, healthcare can be obtained but not provided by the government. Using healthcare as an example as a positive right, healthcare can be provided by the government but, using the context of the right to an attorney, it should only be provided if the individual does not have the ability to provide healthcare themselves (Medicare and Medicaid act this way). Understanding how healthcare would become a right in the U.S. context, it would probably act more like the right to bear arms. The government recognizes the citizen’s right to own a firearm, but that does not mean they must issue every citizen a firearm. Like I said before, this understanding is unique to the U.S., but the U.S. is unique in many ways, more good ways than bad.
My final argument against healthcare as a human right is who is providing this right? If we understand this argument as a positive right given by government, we must understand this is an entitlement that can be chipped away, or taken away completely, until it is basically gone or rendered useless. We see this with Second Amendment rights. We all have the right to bear arms, but federal and local regulations make it almost impossible to own a firearm in some places. If healthcare is something to be provided by the government, then the government is in complete control of your healthcare. When government has that control, they get to choose who gets what and determines how much care should be provided. This is an interesting argument to bring up with the Left-leaning crowd who want universal healthcare but are extremely afraid of what President Trump would do with more power. They believe (not straw-manning here) that someone like Bernie Sanders can pass universal healthcare and the power and control that come with that responsibility will never go to another Right-wing authoritarian again (not calling President Trump an authoritarian, but that is what he is considered by many on the Left). We must understand, any power we give up to the government will rarely be given back to the people and will be used by someone you do not like in the future. Be prepared to make that trade-off.
Closing Statements
You can cover everyone under universal health insurance, but if we do not treat healthcare as a commodity, the only thing we will be ensured is declining quality and innovation. It is a heavy burden for the American people to subsidize healthcare around the world, but there are other ways to lower cost like loosening regulation and cost to develop new drugs. If Americans want to improve health outcomes, the first step is to create a healthier culture and lifestyle. We see the free markets improve our lives every day because we can control our future. Giving up that control is not a step towards a brighter future, but a step backwards into a darker world with less freedom.
FDR listed off all the rights he wanted implement in his Second Bill of Rights speech (State of the Union address in 1944) and concluded that list by stating, “All of these rights spell security.” Security is a word we must better understand, especially in the context of rights and freedoms. Security is often a placeholder for “you do not have the ability to provide for yourself and control your own life, so someone else will do that for you.” And as Benjamin Franklin once said, “those who give up essential liberty, to purchase a little temporary safety, deserve neither liberty nor safety.” This is a trade-off we cannot afford.
OECD.stat Database References (Citations):
- Health Expenditure and Financing — Definition: This dataset provides internationally comparable data on current health expenditure (i.e. final consumption expenditure on health care goods and services) by health care functions, providers and financing schemes — Financing Scheme (INPUT): All financing schemes — Function (INPUT): Current expenditure on health (all functions) — Provider (INPUT): All providers — Measure (INPUT): Share of gross domestic product — Country (INPUT): Australia, Canada, France, Germany, Netherlands, New Zealand, Norway, Sweden, Switzerland, United Kingdom, and United States — Year (INPUT): 2018
- Health Expenditure and Financing — Definition: This dataset provides internationally comparable data on current health expenditure (i.e. final consumption expenditure on health care goods and services) by health care functions, providers and financing schemes — Financing Scheme (INPUT): All financing schemes — Function (INPUT): Current expenditure on health (all functions) — Provider (INPUT): All providers — Measure (INPUT): Per capita, current prices, current PPPs — Country (INPUT): Australia, Canada, France, Germany, Netherlands, New Zealand, Norway, Sweden, Switzerland, United Kingdom, and United States — Year (INPUT): 2018
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