The Fallacy of the Obamacare Debate

Author Gary Moreau

You can’t get online in the US these days without being confronted with news about healthcare. I refer to it as news with an abundance of generosity, however, as there really isn’t anything to report. A lot of dust in the air. A lot of angst. And whichever side of the issue you come down on, a whole lot of misleading claims and predictions.

For the nine years that I lived in China I did so with what is not-so-fondly called a single-payer system. People who really hate the idea refer to it as “nationalized” health care, suggestive, as it is, of military troops storming the hospitals and doctor offices. It’s a visual that’s sure to get a rise out of voters in America, although the real irony is that it is American troops that do most of the storming around the world. (Not a judgment. Just an observation.)

During my nine years in China my family had health care emergencies and needs very typical to a family with young children. My daughters had concussions, athletic injuries, and the normal array of fevers and skin irritations. I had surgery within six months of my arrival, ultimately had a stroke, and had the normal barrage of tests, including a colonoscopy. I even spent some time with a Chinese psychiatrist born and raised there. (With some training at Harvard, mind you.)

I speak, in other words, from experience. And I can say, without hesitation, that the medical care I received while in China was very much on a par with the medical care I receive here in the US. There were a few differences, but none that compromised the quality of the care I received.

In my own experience I found Chinese doctors, for example, were generally cautious about prescribing drugs and focused more on lifestyle and personal habits of nutrition and exercise. My Chinese neurologist, on one occasion, told me that the American pharmaceutical company that made the drug she was prescribing for my cholesterol recommended an initial dose of 80 mg. She thought 10 mg was sufficient for most people, however, and suggested we start there. It made sense to me. And 10 mg did the trick, coupled with a couple of tweaks to diet and lifestyle.

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Critics will be quick to point out their perceived “gotcha,” of course. Yes, I went to a private hospital that many Chinese could not afford. They weren’t barred, however. Anyone could seek medical treatment there and many Chinese made that choice.

But therein lies the fallacy of the current health care debate in America. Critics of a one-payer solution, and Obamacare in general, always position their arguments in terms of choice and quality. Neither, however, has much of anything to do with the actual health care you receive. The only question is who is going to pay for it. And how much?

The Chinese do not get a free ride, contrary to popular perception. If they aren’t covered by the one-payer system funded by taxes on wages, they pay out of pocket. And pay they must – up front. Hospitals are under no obligation to treat anyone without the money to pay. And they won’t. At my own company, which operated its factory 24/7, we kept a cash box with enough money in it that the off-shift supervisors could take an injured employee to the hospital and pay for their care. The hospitals don’t give credit, even to US multi-national companies. (All patients ultimately pay for the cost of credit, of course, even in the US.)

There is no free lunch in life. To the extent the government covers the cost of health care the taxpayers ultimately have to pick up the tab. If they don’t pay it directly through taxes (e.g., the Medicare tax in the US), they pay it through the cost of the goods and services they purchase, or the government allows them to kick the burden down the road to future generations. However you disguise the cost, however, the citizens pay it in the end. The capitalists pay it to the same extent the socialists do. It’s just less transparent in the “free market” universe.

That’s why it strikes me as a bit ironic that there is so much venom directed at Obamacare’s boldest feature—mandatory participation.

The whole purpose of insurance is to spread the cost of major unpredictable costs over a large pool to minimize the potential impact on those who suffer such a loss. If your house burned down, for example, you probably couldn’t afford to replace it, unless you’re a one-percenter. You buy fire insurance, as a result, so if you do suffer the loss of your home the insurance company steps in and you don’t have to live in the street. If nobody bought fire insurance until their house actually burned down, however, there would be no need for fire insurance. Having insurance would be the same as not having it.

And, by the way, you don’t really have the right to opt-out of buying fire insurance. If you borrow money to buy the house, which most people are forced to do, the bank will demand it. They may even buy it directly and just charge you a monthly escrow fee. Even renting doesn’t get you out of the obligation. You just pay the cost of the fire insurance in your monthly rent. The bank isn’t the government, but it is empowered to charge you by the government. Either way, you have no choice.

When it comes to insurance, moreover, mandatory participation is already a fact of life here in the US on a few fronts. All but a few states make automotive liability insurance mandatory. You can’t register a car without it. There are no exceptions, short of breaking the law. Even those states that don’t mandate insurance do mandate some form of bond or impose a tax to cover the exposure.

I’m sure it’s true that the wealthy pay more for their car insurance. They probably take out better coverage and tend to drive more expensive cars. The mandatory cost of the right to own an automobile in the US, nonetheless, is still highly regressive in the same way that the sales tax is. In terms of impact, the poor pay more for the right to drive and shop.

The real issue, when it comes to healthcare, is not who pays, but how much it costs. And in the US our medical care costs more than it does anywhere else on the planet, however you measure it. And that is not just so that you can have access to better-educated doctors. My doctors in China, all Chinese, were often trained at the same universities that your local doctor was.

There are differences, however, that do ultimately impact the cost of the healthcare we receive. The biggest difference in the cost of healthcare in the US and elsewhere is the cost of healthcare administration here in the US.

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Private sector competition is supposed to drive down costs. And it probably does, when all else is equal. It isn’t. What differentiates the American healthcare system from all others is the amount of government oversight and regulation that already exists, even in the absence of a single-payer insurance system.

That regulation is not all bad. Life is full of dichotomies. What’s good is almost always not so good when viewed from a different perspective or in different circumstances. The FDA regulatory process for the approval of new drugs, for example, exists to protect consumers. The FDA is charged with the responsibility to insure that new drugs are safe and effective. And that’s a good thing. The downside is that the lengthy approval process is built into the cost of the drug once it is finally approved, drugs aren’t developed for people who need them for a disease that is not common enough to warrant the investment, or, in the case of a new life threatening disease, the afflicted may not survive long enough for the drug to get approved.

The same thing happens when states decide to license the professions. They do it in the name of consumer protection, of course, but the practical effect is to drive down competition and drive up costs. And, of course, the states make a lot of money from licensing. Most states, as a result, license every professional from brain surgeons to barbers. In my own state of Michigan barbers must receive (and pay for) 2,000 hours of training at an “accredited” school, a requirement I am sure the accredited schools pushed for and which ultimately gets passed on in the cost of a haircut.

And, of course, the government regulates the services that those professionals provide. It is very common in China, for example, even in the most prestigious private hospitals, for nurses to perform many of the common tasks reserved exclusively for highly trained doctors in the US. But the nurses don’t empty bedpans. Your family can do that for you. Or you can hire someone at a fraction of what you would ultimately pay a nurse who has to pay for his or her education to do it.

I could talk about the impact the lawyers and their litigious clients have on the cost of US healthcare, of course. Perhaps another day.

It is ironic, though, how much we talk about choice and transparency here in the US. In the end we have far less of both than our politicians and their lobbyists and issue activists like to tell us we have. Most of it is just talk in the end. It’s loud, for sure, but it’s neither transparent nor factual much of the time.

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Gary Moreau’s fictional novel written under the pen name of Avam Hale.