A health care crisis is coming. It may be here as soon as this winter. Analysts estimate that employers will be facing average health insurance premium increases next year of 9 percent, the largest in 15 years. Unions are reporting employers are coming to the bargaining table now saying they are facing much greater increases—over 20 percent. And patients in the individual market will see a median increase of 18 percent, even before the expiration of Affordable Care Act exchange subsidies that would spike out-of-pocket costs for those affected by over 75 percent.
This crisis seems clearly to have been triggered by President Trump’s reconciliation legislation, even though most of its health care provisions won’t go into effect until 2027.
Democrats are considering whether they will demand patches and fixes to prevent an insurance premium spike as part of negotiations over government funding. But they also need to reckon with some very inconvenient truths.
First, Trump is likely not to repeal the Affordable Care Act, but to break it. His aim since the failure of repeal in 2017 has been to defund critical pillars to make the entire complex edifice, designed to expand coverage while making both hospitals and insurance companies happy, collapse.
Second, it may not be possible to put Humpty Dumpty back together again. It seems unlikely that Medicaid funding in particular can be restored before significant structural damage is done to the existing system: to rural hospitals, to employer health coverage, and to a variety of other structural features of the current system.
Third, trying to put Humpty Dumpty back together again is political suicide. The current system is deeply unpopular. Witness the level of popular support for Luigi Mangione, killer of the CEO of UnitedHealthcare, the company that more than any other one embodies the current system. According to Emerson College polling, 41 percent of those under 30 found the murder acceptable, and a University of Chicago poll found that more than two-thirds of all adults polled thought that health insurance company practices were in part responsible.
Fourth, the current system is an economic ball and chain around the ankles of U.S. society. It costs four times what the most cost-effective health systems in the developed world cost, burdening individuals and businesses.
Fifth, the U.S. health care system is a case in point of the grotesque inequality infecting American society. Overall outcomes in U.S. health care lag well behind the entire developed world, but outcomes for the wealthiest are fantastic. Case in point: According to the most recent study at this level of granularity, life expectancy in the Anacostia section of Washington, D.C., is 66.7; five miles away, in Georgetown, it’s 94.3.
Anyone thinking seriously about America’s future needs to understand the meaning of the graph below. It shows the developed world’s health care spending and life expectancy by country. Most countries have similar levels of spending and similar outcomes—spending around between 8 and 12 percent of GDP, with average life expectancy around 82. The U.S. is the outlier, with health care spending at 17.2 percent of GDP, and life expectancy at 78.
But it gets worse than that. The United Kingdom, a relatively large country that we have a “special relationship” with, has the most centralized of the developed world’s major health systems. The National Health Service directly employs health professionals to deliver medical treatment, rather than running a public insurance program with private doctors and hospitals.
The U.K. has an average life expectancy of 81, which is significantly higher than ours. Meanwhile, Britain spends about 9 percent of its GDP on the NHS, which is the only health care provider for 90 percent of the population, and about 2 percent of GDP on private health care for the most affluent 10 percent. In other words, it has a public system that is incredibly cost-efficient and a private system that is grossly expensive.
In total, the U.K. spends a bit more than half of what the U.S. spends on health care as a percentage of GDP. But the U.K.’s per capita GDP is about half that of the U.S. There is an issue here of apple-to-apple comparisons, as staff costs are tied to GDP, but there is something of a global market in skilled health care labor. So it’s fair to say that the right comparison is that U.S. health care costs per person are around three times U.K. health care costs per person.
That figure is overall costs borne by the system. For individuals, health care with the NHS is free. There are no premiums, no co-pays, and no deductibles. Patients pay about $13 for prescriptions unless they are in the hospital, in which case drugs are free. The system is paid for out of general government revenue. It is true that there are substantial wait times for nonurgent care, and that the system has been underfunded after years of Conservative government austerity. But the bottom line is it produces a substantially better outcome on the most important metric—how long do people live—than the U.S. produces.
So much of what is structurally economically unstable about our country comes from spending 17.2 percent of GDP on health care. For starters, Medicare’s finances are uncertain in the coming decades. Secondly, we run massive federal deficits, much of which is used to pay for health care. Third, we have underfunded critical public investments for decades, like infrastructure and workforce training, as health care crowds out those expenses. Fourth, we are having destructive, divisive, and dangerous political battles over climate change that in substantial part come from trying to deal with climate change on the cheap, again due to so much money being diverted to health care.
How much money is 11 percent of GDP—a rough guess at the difference between U.S. and U.K. health care expenditures? Well, in dollars it’s roughly $3.3 trillion. Putting it into ten-year budget terms, it’s more than $33 trillion, because of course the base number will rise with medical inflation. That’s a number higher than GDP growth, and about the size of the federal debt—not the deficit, the total debt. It’s a number far greater than the price to decarbonize the U.S. economy in line with our prior Paris Agreement commitment; in fact, it approaches the number needed to decarbonize the whole world. It’s a number that could pay for free postgraduate education for every American, and have trillions left over. Or it’s a number that could simply raise take-home pay for average Americans dramatically and be reallocated to other good things in life that people want.
Trump is blowing a huge hole in our health care system. That system, with President Obama’s reforms, was better than what came before. It covered more people; it gave the public more rights. But it remained an ineffective, exploitative, and incredibly costly system. We cannot go back to it. Not from a political perspective, not from an economic perspective, and not from a public-health perspective.
And while the NHS may not be the model Americans want, we need to understand it is there. It is possible to live longer than we do as a nation and pay between 50 and 75 percent less to do so. And pretty much every other developed country is doing just that, including all the larger English-speaking open societies Americans feel closest to: the U.K., Australia, and Canada.
What stands in our way? We all know it’s the political power of insurance companies, pharmaceutical companies, and hospitals. But it might be more accurate to say it’s the model of our politics, where both political parties compete for their money while the public rages impotently.
And it sure looks today like that model of our politics has reached the end of the road, just as much as our model of health care has.