Within the current world of policy and administration, efficiency has become an important if not overarching goal. Arguments for privatization and program elimination have been based almost solely on whether or not a program is efficient. The PART program under the administration of George W. Bush rated programs at various levels of efficiency and then based their budget recommendations on these ratings (whether or not these ratings were based more on ideology than actual science will be addressed in another, future post). There seems to be one area, in which, the concern for efficiency has been ignored; healthcare.

It is no secret that healthcare coverage in the United States has been insufficient for at least the past 10 years if not longer. The system is set-up so that Americans can get employer-based coverage through their workplace, in the individual market, or from government if they are elderly, disabled, a veteran, a low or moderate income child, or a low-income parent. Aside from most government provided insurance, all other insurance coverage is provided by private insurance companies motivated more by profit than by providing socially optimal levels of care. In 2007, 45.7 million Americans were uninsured and that does not count the number of individuals who are underinsured (without insurance for pre-existing conditions, prescription drugs, preventive care, birth control, or maternity care; or with extremely high co-pays and deductibles). The problems associated with the American healthcare system are many but the most galling to me is the stark inefficiency.

Universal health coverage would be more efficient and cost-effective for the United States of America for the following reasons:

1. Larger pools of individuals lead to lower co-pays on average for all: The reason that we have health insurance at all is that we have no real way to predict when or if we will get really sick. For most individuals, most of the time healthcare costs are low, but most individuals at one point in their lives will find themselves in need of expensive care. The bigger the pool of individuals with low costs to offset the costs of the few individuals with high costs, the more cost effective our system will be overall.
2. There are high administrative costs associated with the private insurance market: The costs to patients, doctors, and employers associated with dealing with private insurance companies has become excrutiatingly high. We have all been in a position or had family members in a position where they have had to spend hours negotiating with insurance companies to dispute charges and benefits. A single-payer system would likely reduce the costs of negotiation with insurance companies. Additionally, individuals in the current US economy are expected to change jobs at least 10 times in their working life. The cost of changing insurance companies, transferring healthcare records, and changing doctors further adds to administrative costs in the private market.
3. There is no incentive for preventive care in the private market: In an economy where workers change jobs 10 times in their work-life — moving from one insurance company to another, or perhaps from being insured to being uninsured, to being underinsured — there is no incentive to focus on preventive care which reduces cost in the long-run by slightly increasing them in the short-run. Routine physicals, birth-control, regular screenings for diseases, as well as prevention for lifestyle induced disease such as obesity and diabetes are consistently underfunded. Type II diabetes for example is a disease that costs $1 a day to treat if managed on a daily basis, and is almost entirely preventable if early interventions can lead to better eating and exercise habits. If left without treatment, the diabetic faces expensive medical procedures such as amputation.
4. Employer provided insurance makes our employers less competitive in a global marketplace: US employers pay approximately $3,000 per worker annually to cover health insurance. Competitors in similar nations do not need to pay this premium because health coverage is provided by their governments. Many have suggested moving to the individual insurance market for this reason. For the reasons stated above moving to the private insurance market is the least efficient choice of all. Individuals who are self-insured are the most likely to be underinsured with no coverage for pre-existing conditions, and no ability to lower payments for those who need it most. Additionally, the members of society who are most in need of healthcare coverage are often excluded in the private market because they are too high risk.

The prospect of government provided healthcare is often scary to Americans. They worry about the inefficiency “inherent” in bureaucracy, nightmare stories of waiting years for a surgical procedure, and the loss of control of their own decision-making when choosing between healthcare options. The sad fact is that all of these problems and worse are occuring in our current healthcare system. Instead of waiting years for procedures Americans are denied them, rather than controlling their healthcare decisions they are instead determined by what the insurance company will and will not pay or cover. Those without insurance or who are underinsured face the prospect of bankruptcy thanks to one necessary visit to the emergency room or a 24-hour clinic. No, health systems in the UK and Canada are not perfect, but there is no reason why we can’t learn from their mistakes as well as our own to create an even better system. I hope that the fears that killed the Clinton healthcare plan in the 1990’s have been assuaged and America can finally get a healthcare system that is the most efficient as well as the most fair for all Americans.