A history of why the US is the only rich country without universal health care

Jul 19, 2017, 05:00 PM

For now, at least, the health-care fight in the US is over. The Senate bill replacing president Barack Obama’s Affordable Care Act has collapsed after two more Republican senators withdrew their support, leaving the ruling party without a majority. Senate majority leader Mitch McConnell is proposing to repeal Obamacare entirely, with a two-year delay so his party can negotiate a new bill, but several Republicans oppose that too.

That leaves the US with Obamacare, whose signal achievement was to cut by 20 million the number of Americans without health insurance; the Republican plan would have entirely reversed those gains. But Obamacare still leaves nearly 30 million people not covered and, as Republicans complain, burdens middle-class Americans with higher insurance premiums and the government with higher subsidies.

So why does the US, the only industrialized nation without universal health coverage, also have not only the highest health-care spending in the world—both in absolute terms and as a share of GDP—but also one of the highest levels of government spending on health care per person? And how did it come to be this way?

The answer is that the lack of universal coverage and high costs are intimately linked—both economically and historically.

Single-payer health-care (in which the government pays for universal coverage, typically through taxes) helps keep costs down for two reasons: It means that the government can regulate and negotiate the price of drugs and medical services, and it eliminates the need for a vast private health-insurance bureaucracy.

Currently, the US spends two to three times as much per capita on health care as most industrialized countries.

Of this burden, an estimated two thirds falls on the government’s shoulders, when one accounts for entitlements (Medicare and Medicaid), the cost of health insurance for government workers, and tax credits that subsidize private insurance plans for other people. “Most Americans have publicly funded health care,” either in full or in part,says David Himmelstein, professor of public health at CUNY and author of the estimate. “The government spends much more than other countries, but it’s an opaque system.” The government’s role is mostly to subsidize the astronomical costs set by the for-profit market.

Many Americans think their system is expensive because it’s very good. They are wrong: The US ranks 28th, below almost all other rich countries, when it comes to the quality of its healthcare assessed by UN parameter

When did the country diverge from other industrialized nations and, rather than offering universal health coverage, built up a system that relied on private insurance?

It wasn’t one moment, says Karen Palmer, professor of health science at Simon Fraser University, but rather, “a series of decisions, turning points, and cascading events.” Though until World War I there had been some attempts by socially liberal governments to follow the examples of Germany and others, they were met with opposition from doctors, insurance companies, businesses, and even some conservative labor organizations, which considered state-sponsored health care paternalistic and unnecessary. Labor unions also worried that it would weaken their own bargaining power, says Palmer, as they were otherwise responsible for getting their members social services.

But the root of the current system, Palmer says, can be found in World War II. In 1943 president Franklin D. Roosevelt imposed an effective freeze on labor wages, and companies started offering health and pension benefits as a way to retain workers instead. This was the beginning of employer-sponsored healthcare, though there was no government mandate to offer it (except in Hawaii). Unions began negotiating the benefits as part of what they could obtain for workers. The rest of the population wasn’t covered, but it meant the unions didn’t put pressure on the government to create a public health system.

Another turning ...