Further reading: the US elections, healthcare and Obamacare

Healthcare – specifically, the future of the current president’s ‘Obamacare’ plan – is a major issue in the US election. As Barack Obama joked last week about Mitt Romney (reported by the Independent):

He is hoping you come down with a severe case of Romnesia just before you cast your ballot… [with symptoms including] headaches, the eyes getting blurry, but don’t worry – Obamacare covers pre-existing conditions!

For the rest of the developed world, the amazing thing is that healthcare is an issue at all in the US elections – rather than the second most important issue, up from third in 2008, according to the New England Journal of Medicine. The following tweets from the (British) health secretary are indicative:

Conservatives like to compare Britain to other English-speaking nations, especially the US, while Labour and LibDem politicians are more likely to pivot towards Europe. But here, tweeting Tory health secretary Jeremy Hunt uses Europe for his comparisons. It’s not because Hunt is a secret Europhile left-winger, but because among rich countries’ healthcare systems, the USA is the last country to emulate: while it provides world-class care for some, overall it delivers mediocre results at very high cost.

I produced the map below in August, a (crude) attempt to compare different countries’ effectiveness based on the ‘cost’ of each year of average life above the age of 45. Dark green is worst:

Map removed as Google Fusion Tables no longer works.

This election is set to decide whether the most substantial attempt to address the failings of US healthcare provision since the 1965 creation of Medicare (for the over-65s) and Medicaid (for the poor) goes ahead. In 2010, Obama passed the Affordable Care Act (ACA), often called Obamacare (including, evidently, by the president), which would extend health insurance to nearly everyone, for many by insisting on its purchase. King’s Fund senior research fellow Rachael Addicott sums up its future as follows:

The period following the 4 November presidential election is likely to mean business as usual if Obama retains the presidency, with a mandate to drive through implementation of the ACA. However, if the US elects a Republican president, it will mean a complete reversal of the progress that has been made since the ACA was signed into law, with no indication of what would replace it.

Writing in the current issue of the New Yorker which heartily endorsed Obama, economics staff writer James Surowiecki criticises Mitt Romney’s plans to increase competition and market involvement in healthcare (whereas Obamacare will temper this): “the free market, though it may be the best way of allocating new TVs and cars, falters when it comes to paying for bypass surgery or chemotherapy”. Citing half-century old work by economist Kenneth Arrow, he continues:

Because people don’t have the expertise to evaluate doctors, hospitals, or treatments, it’s hard for them to comparison-shop. Because they can’t pay for major care out of pocket, they must rely on insurance, thereby often losing the final say in what to buy or how much to spend. More fundamentally, markets work only when consumers have the power to say no if the price isn’t right. Yet it’s very hard for people to say no in the case of things like end-of-life care or brain surgery.

Dr Zach Cooper, an American academic at the London School of Economics – who is more than ready to challenge conventional thinking on the NHS – has produced his own analysis of the two candidates’ positions on healthcare. He notes the high cost of mediocre results and the fact that 16% of Americans lack health insurance, although he adds that there is good access to the latest treatments. And he adds another dimension:

At nearly a fifth of the US economy and as the largest driver of long-term US debt, what happens to healthcare will determine what happens to the economy in the long run. The ability of the next president to rein in healthcare spending and improve the productivity of the US healthcare system is going to determine the country’s fiscal future.

ACA/Obamacare is a way to do that reining in. But could the lack of universal healthcare also be bad for businesses directly, as well as people and government? With even China offering (basic, primary only) health cover to 95% of its people, up from 15% in 2000, the US is unusual in leaving individuals and the businesses that employ them to shoulder the burden. Healthcare is the most critical issue for small businesses, according a survey quoted by the Economist (see box-out).

In Britain, if you’re thinking about leaving one employer for another – perhaps a smaller, more exciting one, the sort of business that can reinvigorate the economy – or striking out on your own, then healthcare isn’t an issue as you’re covered by the NHS. But in the current US system, while those working for large employers generally have sufficient cover, it is linked to their employment – so becomes an argument against leaving.

It could be argued that universal socialist healthcare actually promotes entrepreneurial behaviour.

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