Universal healthcare in the U.S.?

A question from Yahoo! Answers:

You guys think the US should have universal health care systeM?
if so why?

There are powerful arguments both for and against.

First, efficiency. It is a proven fact that universal health care system is more, not less, efficient than that based on private health insurance. The U.S. spends a greater percentage of its GDP on health care than any other advanced nation, but has relatively little to show for it in terms of life expectancy or mortality rates. While this can partially be blamed on features of American lifestyle such as scant walking and fat-rich diet, the differences do not disappear even if those are controlled for. The reason is very simple: one big non-profit bureaucracy tends to cost less than 20 smaller for-profit ones, each with its own rules, networks, billing systems, etc. People who criticize Medicare and Medicaid for being expensive and bureaucratic simply ignore the fact that private insurance companies are even more expensive and more bureaucratic. There is a reason for that, too: unlike Medicare and Medicaid, private insurers have a direct financial incentive to refuse treatment.

Second, incentives. Private health insurance discourages entrepreneurship; a person leaving a large company to start their own business automatically loses valuable health coverage and can be insured only at a much higher individual rate. It also encourages employers to hire two half-timers instead of one full-time worker, just to get out of having to provide health benefits. The result is a net loss to society; two workers have to commute to two jobs each, instead of working one job full-time.

Then there is the question of innovation. Under the current system, medical breakthroughs that cost a fortune can be practiced without any governmental pressure on prices; this helps to perfect the delivery and in many cases leads to mass-market adoption (and related price drops) in the future (laser sight correction is an excellent example). It is not clear if the government would exercise this kind of restraint if it were to pay for it, with consequences typical for all price ceilings.

Finally, there is the big money question. Universal health insurance has to be funded somehow or other. The likely cost of universal health insurance in the U.S. is about $1 trillion a year. About 40% of it is already being covered by Medicare and Medicaid, so the government needs to come up with additional $600 billion or so. About the only program that can be squeezed to provide anything close to that amount is defense. This, by the way, is why the U.S. stands apart from other industrialized nations in both defense spending and non-existence of universal health insurance; other countries chose health care over military buildup, the U.S. made the opposite choice. It is, therefore, no surprise that the highest life expectancy in the world is seen in Japan, which has a constitutional limit (1% of GDP) on defense spending…

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