Socialized Healthcare: Lessons from the UK

Socialized Healthcare: Lessons from the UK

By Rowenna Davis

A few months ago a best friend of mine turned up on my doorstep with a bundle of suitcases. She and her husband had been forced to leave their New York home after he was diagnosed with degenerative arthritis. The drugs he needed to keep him out of a wheelchair cost $1,500/month, and they couldn't afford it. Luckily, he had a British passport. He is now receiving free treatment on our National Health Service.

America didn't just lose moral credibility when this couple left. My friend and her husband are young, talented and highly driven -- and their productivity is Britain's now. Brits often preach the moral case for their system of healthcare to Americans, but the economic arguments have all too often been left to collect dust on the shelf.

Obama has started to change all that. By framing the healthcare debate in terms of efficiency and productivity, he is cleverly sidestepping the age-old critics of "socialized medicine." His new report published last week revealed that healthcare expenditure in the US is already 18% of GDP and, on current trends, will reach nearly one third of total output by 2040. Bringing down costs through public intervention, the White House argues, would add an extra $2,600 to the income of an average family of four by 2020, and nearly $10,000 by 2040.

Obama is convincing Americans what Brits have known for a long time: public health systems make economic sense. Our system is simply more efficient. Because tax-based funding relies on the whole tax base, it reduces distortions in the economy. Putting the burden on employers alone turns healthcare into a tax on jobs, and reduces labour market flexibility.

The private insurance market of the US on the other hand, is an economist's nightmare. Health gurus like Ezra Klein have argued eloquently that health insurance is supposed to cover the sick but instead competes to insure the healthy. It wastes millions seeking out low-risk individuals, and even more trying to get out of paying clients the just entitlements they need to fix their health when something goes wrong. It fails to utilise the benefits that come with economies of scale, and it leaves the government to pick up the bill for those it leaves behind. In 2000 alone, Bill Clinton was forced to go to Congress for $110 billion so that 5 million uninsured Americans could get some kind of cover.

America needs to start counting the "opportunity cost" of failing to keep its workforce fit to work. In the UK, our health secretaries are well aware that we lose almost a quarter of a million years to disease every year. Fifteen per cent of jobless people cite back pain alone as a reason for not working, accounting for 119 million days of certified incapacity in the UK. The comparatively higher losses in the States seem profoundly un-American; I thought the States was about utilizing talent, not throwing it away.

It remains to be seen whether sound economic arguments like these can win out over vested political and economic interests in the States. Even as my American friend starts her new job in the UK, the AMA is blocking moves that could keep her husband out of a wheelchair. It strikes me that the US should do the American thing by copying Britain's system. Maybe then my friend and her husband could fulfil their dream of returning home, and contribute once more to the American economy.

Rowenna Davis is a British journalist and contributor to LabourList.

Here's the figures again guys:

US budget for Medicare, covers 46 million people. Doesn't pay for everything, drug coverage expensive. doesn't cover dental... supplemental insurance often required. Cost to US government in 2007: $457,669,000 (source: http://www.hhs.gov/budget/07budget/centersformed.html )

UK budget for the National Health Service. Covers 60 million people. Pays for pretty much everything, includes drug coverage with minimal copays to those of working age, covers some dental. Cost to UK government in 2007: about £110 billion - about $190 billion.

Source data -
for England: http://www.hm-treasury.gov.uk/d/bud07_chapterc_288.pdf
for Scotland: http://www.scotland.gov.uk/News/Releases/2007/01/31162801
for Wales: http://www.abpi.org.uk/wales/wales_nhs.asp (non government source)
for Northern Ireland: http://www.dhsspsni.gov.uk/business_plan_0708.pdf

Seems like the UK can cover more people for less than half the US Medicare budget and do more with it. Now the NHS employs lots of people: only the Chinese Army, Wal-Mart and the Indian Railways employ more people. It's more affordable to train to be a doctor too - yes there are student loans but repayment these days is entirely linked to your means so it's more like a tax on your eventual earnings. Yes, the doctors earn less but most understand that they're not getting into medicine to get rich quick but to help others.

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