Medicare for All Is Not Socialized Health Care; It is Socialized Health Insurance, and that Is a Good Thing
Last week, the Trump administration filed a brief with the Supreme Court urging it to overturn the Affordable Care Act once and for all. Nobody was really surprised by the action — Trump has been trying to get rid of “Obamacare” for years. But people were surprised that he would do this during a national pandemic. Depriving millions of Americans of their health care — for all the personal satisfaction it would give the President — is not a normal election-year response to a health crisis. The optics are terrible.
But Trump had little choice. He is about to be judged by the American people on his accomplishments over the past four years, and, well, he doesn’t really have any. The signature issues that swept him into power in 2016 were building a border wall and getting rid of Obamacare. The border wall was a bust. By the end of 2019, Trump had managed to construct 93 miles of the great wall — 90 of which replaced existing structures, for a grand total of three miles of new border wall in 3 years.
For a while it looked like Trump would still have a good economy to run on, but the biggest recession since World War II has taken the shine off of that argument. And a series of disappointing rulings by conservative Supreme Court justices has cast serious doubt on Trump’s ability to move the judiciary in the directions that social conservatives demand that it be moved.
So this leaves Obamacare, which he failed to address legislatively and now hopes to destroy through the mechanisms of a court that has already refused to overturn it.
It is very unlikely that anyone in the administration thinks that the Court will actually overturn the Affordable Care Act. Rather, Trump and his handlers desperately want to make an issue of the Democrats plans to replace the ACA with “Medicare for All,” or a single-payer health-insurance system comparable to those in Canada, Sweden, Australia, and other developed countries. Trump desperately wants to use the “s” word (socialism) as a battering ram against his likely Democratic rival, Joe Biden.
The strategy is unlikely to work, since the pragmatic necessities of available health care are, for the foreseeable future, going to supersede theoretical debates about capitalism and socialism. But we will soon be having this debate again, and when we do, it is important that we get the terms right.
The term “socialized medicine,” for example, is completely inappropriate. No serious contender for the Democratic nomination ever came anywhere close to advocating socialized medicine, or a series of government-run hospitals and health-care networks. We actually have socialized medicine in the United States. It’s called the Veterans Health Administration, and it operates more than 1200 medical facilities across the country.
But nobody is seriously proposing “veterans benefits for all.” What has been proposed several times, and in different configurations, is socialized health insurance — or a system where the government operates either a single-payer insurance plan or a public option for traditional insurance.
Socialized insurance is, in fact, a very good idea. And I don’t want to hear anything about the free market here, as there is nothing like a free market system for health care anywhere in the United States. Health insurance is a huge market distorter — one that drives the cost of health-care goods and services well beyond what most uninsured people can afford. And employer-subsidized health insurance is a huge market distorter that does the same thing for the price of health insurance.
So the question is not, “should we have socialism or a free market system?” It is, “should we have a socialized system or an incredibly and unfairly distorted market system?” To a large degree, governments exist to pool resources and socialize the sorts of things that don’t work well in pure market economies. This is why most children go to public schools, and very few people build their own roads. So what we really have to decide is whether health insurance is a public good, like a street, or a private good, like a taco.
It is both, of course, just like education is both. Everybody does better when we have an educated populace. But everyone also does better when we have a healthy population. When people have access to regular health care, the economy is more productive, the streets are safer, and the communicable diseases are fewer. Bad health, like ignorance, has both a social cost and a tangible economic cost. And costs, like benefits, can be socialized. Socialized education and health care are better for society than socialized sickness and stupidity.
But here is the most important reason that we should have national, single-payer health insurance: health care is not the sort of thing that should be distributed through insurance at all. The insurance industry adds a tremendous cost to our health care and provides very little value in return — because it does not do the sorts of things that insurance is supposed to do.
Let me elaborate. Insurance is designed to distribute risk, not to ration consumer goods. It works well when the risk is relatively small. This is why life insurance, house insurance, and even automobile insurance are good ideas. Everybody doesn’t die every year, nor do most people’s houses burn to the ground, so it makes sense to use insurance to pool the risk of such things happening to us.
But most people go to the doctor or fill a prescription every year. Basic health care is a consumer good, like food or clothing, and paying for health care through health insurance makes no more sense than paying for food through “hunger insurance” or paying for clothing through “nudity insurance.” Imagine what would happen if 75% of Americans had “hunger insurance” through their jobs. The invisible hand of the market would push food prices up to the price of the co-pay. A can of ravioli may cost ten dollars, but people with hunger insurance would still only pay a dollar. But the people without hunger insurance would have to pay ten times more than everybody else. This is roughly what health insurance does to the cost of our health care.
Because we have paid for health care this way since the 1930s or so, we have essentially removed health services from the free market. People who have insurance do not make decisions about their health care based on the cost of various goods and services. We can’t because insurance hides all of these costs. We cannot make rational decisions based on costs that we not only do not incur, but do not even understand.
We make decisions, therefore, based on the cost of the deductibles and co-pays that we actually incur, which drives the real cost of those goods and services far above their actual value to anybody. And it makes it virtually impossible for somebody without insurance to buy any health care at all. It is supremely unfair, I think, to try to invoke free-market principles to avoid helping people who cannot afford goods and services that have not been subject to free-market pricing for nearly a hundred years.
This is the problem that a single-payer health-care insurance system could solve. The effective result of such a program would be to eliminate the expense of health insurance on the health-care market and bring down the total cost of health care. This would be the primary advantage of “medicare for all,” but it would have at least two others as well: 1) It would make our labor market more mobile, and therefore more responsive to global trends, since, if people didn’t have to stay in a job for insurance benefits, they would be better able to change careers; and 2) If employers did not have to subsidize health insurance, they could pay more in salaries.
None of these advantages — eliminating market distortions, increasing the productivity of workers, eliminating expensive requirements of employers — is a particularly liberal idea. They are the sorts of things that conservatives have been advocating for years. Which is why we need to eliminate the aggressive culture-war nonsense about “socialized medicine” and actually fix our broken health-insurance system in a way that will stay fixed.