There is a bipartisan consensus that the US healthcare system is broken. Three million Americans owe over $10,000, and 16 million owe $1,000 or more. The average hospital stay can set you back nearly $14,000. The average per-person spending is $12,914 – more than double the average of Germany and triple the average of Japan. But all attempts to fix the broken healthcare system so far have failed.
All the Wrong Answers
Progressives like Sen. Bernie Sanders (I-VT) have tried pushing single-payer healthcare under the name Medicare for All. Moderate Democrats had their own idea, called Medicare for America. Obama did launch The Affordable Care Act – often called Obamacare – an expensive program that still doesn’t cover everyone.
Republicans pushed for a healthcare reform of their own, the American Health Care Act of 2017. It would have cost a million jobs by 2026 and increased the uninsured by 26 million. Despite this disastrous legislation, it shows that there’s some clamoring on both sides for a solution to the healthcare boondoggle. There is need for a bipartisan solution, one that would promote the left’s ideas for protecting poor families from falling into debt and the right’s ideas for fiscal discipline and small government. Such a solution is possible; it’s an idea endorsed by Milton Friedman called Universal Catastrophic Coverage.
A Bipartisan Fix for Healthcare
Universal Catastrophic Coverage (or UCC) is a healthcare scheme that provides a floor so no one has medical costs that would put them in debt. Those under the floor receive full health coverage, while anyone else pays deductible plus coinsurance. Healthcare expenses can’t exceed the deductible, or the UCC will pay. The deductible varies depending on whose proposal is considered, but the model supported by Ed Dolan, senior fellow at the Niskanen Center, defines it as “10% of a family’s income after subtracting the threshold.” If a family earns $50,000 and the threshold is $25,000, their deductible is $2,500.
Cost-wise, the system is fairly cheap. According to an analysis by Brentwood Associates Co-founder Kip Hagopian and USC Price School of Public Policy Dean Dana Goldman, a UCC system would cost half what Obamacare would cost over ten years. That’s $850 billion (or $85 billion a year) to Obamacare’s $1.7 trillion (or $170 billion a year).
(Photo by Alex Wong/Getty Images)
But it saves trillions elsewhere, as well. Since the system would stop anyone from going into medical debt, it would allow us to phase out Medicare and Medicaid. Medicare costs nearly $700 billion a year. Medicaid costs both the states and federal government almost $750 billion (when including administration accounting adjustments, and the territories). These systems don’t need to exist if there’s a system in place to prevent the poor and elderly from falling into medical debt. By the way, the Department of Health and Human Services under a UCC scheme would be reduced by 90% - further cutting costs to the taxpayer.
On top of that, the system would allow us to end the tax exemption for employer-sponsored health insurance. This exemption accounts for $273 billion in lost tax revenue each year and “likely increased health care costs by encouraging the purchase of more comprehensive health insurance policies with lower cost sharing or with less tightly managed care,” according to the Tax Policy Center. On average, insurance costs employers $6,227 for single coverage and $15,754 for families. Without the exemption, this could be converted into higher wages. Abolishing these two programs and the corporate tax exemption would save taxpayers over $1.7 trillion.
A Path to Deregulation
UCC would also provide an avenue to deregulate the healthcare sector and the insurance industry. Regulations cost nearly $1,200 per patient admitted. Collectively, the health sector spends almost $40 billion on regulation-related activity. Deregulation could drive costs down and allow more competition in the industry, leading to more innovation. As the policy would cover any disastrous medical debt, there would be no reason to keep the insurance industry so tightly regulated.
Conservatives are not known for supporting universal health care, but UCC is different. It is government-run, yes, but it is small government-run. It is far more affordable at only $85 billion a year than what we’re doing now, and it allows us to get rid of two of the biggest government programs in our nation’s history, Medicare and Medicaid. It would allow us to end employer-sponsored health insurance that traps people into particular jobs because they don’t want to lose their coverage. It would allow mass deregulation of both the insurance industry and the healthcare sector and eliminate the bureaucracy poisoning our government. American healthcare has a disease, a disease of statism, and UCC could be the cure.
~ Dakota Hensley is from Southeast Kentucky. He likes French comics, experimental music, and writing about politics.
