Saturday 5 August 2017

The American Health Service

Just imagine a service, which I'll call the American Health Service (AHS), which is similar to our own National Health Service (NHS). One of the objections to such a service, would be the cost. So what would be the taxation increase required, to fund the AHS?

The Medicare budget in 2017 is $709 billion
The Medicaid budget in 2017 is $553 billion
The Veterans (VHA) budget is $68 billion

So that's a total of $1330 billion, which works out at $4100 per head.

The NHS budget is £124 billion, which is $161 billion, and works out at $2500 per head.

Taxation increase? It seems not!

There's a couple of reasons for this. In the UK, if you want to sell medicines in volume, there's only one buyer. And just as a monopoly (only one seller) pushes prices up, a monopsony (only one buyer) pushes prices down. That's why drug prices in the US are so much higher than elsewhere. Look at the spam you're getting - a lot of it is for non-US drugs sellers, and some of them are probably legitimate. The AHS would be a monopsony - in America, they refer to this as a "single-payer system".

Another reason - insurance companies aren't non-profit. The US insurance companies take a chunk of money out of the healthcare system, via their costs and their profits. The AHS wouldn't have that problem.

Another reason - the cost of administering an insurance-based system also falls on the hospitals, who have to have admin staff to document the claims that each case throws onto the insurance system (and the insurance companies have to hire admin staff to scrutinise these claims). In the AHS, none of that would be needed.

So, if we look at it from the point of view of the taxpayer, the AHS would be a lower burden in taxation ($1600 per head less), plus they wouldn't have to pay for the healthcare insurance that they currently pay.

This calculation doesn't seem to be widely known, and perhaps I'm missing some major point about the US system; if I am, please let me know. But on the face of it, the AHS would lead to a cut in taxation, so should be favoured by low-tax lovers (Republicans), should be favoured by Democrats as a social benefit, by Christians because Jesus recommended helping the poor and sick, and by atheists because it's so obviously the right thing to do.

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