Universal Health Care: No Sick Joke
Small businesses—and large—have trouble attracting the best job candidates because of the high price of health care. Entrepreneurship demands nationalized medical insurance. Pro or con?
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Pro: Cure for the Uninsured
Since 2000, employer-sponsored health insurance premiums have risen by an average of 73%. For small firms, they’ve more than doubled. This rapid run-up in costs, plus pressures from an increasingly globalized economy, is causing firms of all sizes to pull back from offering health benefits. In 2000, 67% of nonelderly Americans had employer-sponsored health insurance. Just 63% do today.
Large companies increasingly hire workers on a contingency basis through contract houses, temp agencies, or contracts with self-employed people. This allows companies to reduce the number of workers with benefits. Small firms have always faced higher premiums per person than large firms and so have been far less likely to offer health coverage. Since many are new, they feel especially reluctant to provide a fringe benefit that’s more than doubled in cost in just the last six years.
Moreover, many startups exist as virtual companies: They’re groups of self-employed associates, rather than employees. This means they must find health insurance on their own, which costs even more than employer-group coverage.
For 20 years, the services sector, where small firms are the norm, has generated employment growth in the U.S. This, plus employer resistance to rising premiums, has transformed who’s uninsured. Today, almost 60% of the U.S.’s 46 million uninsured are 19 to 45 years old. Significantly, a quarter of all 25- to 34-year-olds and one-fifth of all 35- to 44-year-olds are uninsured. Both those figures have doubled in the last 25 years.
We need to recognize this sea change and create a universal coverage plan. The real question is: How will we finance it? A starting point is to recognize that universal coverage involves a social compact—and individuals should be required to enroll.
Second, individuals and companies should contribute; firms reap large benefits from having a healthy workforce. The federal government would raise funds to subsidize lower-income households and cover most of the expenses of people with extremely high medical costs. Universal coverage can easily include private health plans. But unless we reconfigure the financing, private health insurance will soon exist only for a fortunate, small minority.
Con: No Right to “Free” Health Care
The cause of the U.S. health-care mess is governmental interference. The solution, therefore, is not more governmental control, whether via nationalized medical insurance or a government takeover of medicine.
Health insurance costs so much today because the government, on the premise that there exists a “right” to health care at someone else’s expense, has promised Americans a free lunch. When a person can consume medical services without needing to consider how to pay for them—Medicare, Medicaid, or the individual’s employer will foot the bill—demand skyrockets. The $2,000 elective liver test he or she would have forgone in favor of a better place to live suddenly becomes a necessity when its cost seems to add up to $0.
As the expense of providing “free” health care erupts accordingly, the government tries to control costs by clamping down on the providers of health care. A massive net of regulations descends on doctors, nurses, insurers, and drug companies. As more of their endeavors are rendered unprofitable, drug companies produce fewer drugs, and insurers limit their policies or exit the industry.
Doctors and nurses, now buried in paperwork and faced with the endless, unjust task of appeasing government regulators, find their love for their work dissipating. They cut their hours or leave the profession. Many young people decide never to enter those fields in the first place.
What happens when demand skyrockets and supply is restricted? The price of medicine explodes. What was once to serve as a free lunch for everyone becomes lunch for no one.
The solution? Remove all controls. Recognize each citizen’s right and responsibility to pay for his or her own health care, and return to insurers the entrepreneurial freedom to come up with innovative products.
True freedom would bring health care into the reach of the average U.S. citizen again—just as it has done for other goods and services, such as computers, cell phones, and food.Opinions and conclusions expressed in the BusinessWeek Debate Room do not necessarily reflect the views of BusinessWeek, BusinessWeek.com, or The McGraw-Hill Companies.