Introduction
Woolhandler and Himmelstein provide a much-needed corrective to the view that the U.S. health care system is private. They remind us that Americans, for all of their ostensible anti-government bias, individualism, and love for the market, have after all a mixed health care system in which the government plays a prominent role. That role is not limited to providing public insurance to Americans who are left out of the private market, through Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP), or to delivering medical care to military personnel and veterans. As these authors document, the federal government also subsidizes private insurance through costly tax expenditures, by excluding employer-sponsored health insurance benefits from taxable income.
In fact, they argue that the government's share of the health care bill is much large than previously assumed. If, as the authors calculate, one includes both forgone tax revenues for employer-sponsored health insurance and the private insurance that government subsidizes for public employees, 60 percent of U.S. health spending is tax-financed. Tax-financed health spending in the United States now exceeds total spending on medical care in all countries except Switzerland. The implication, Woolhandle and Himmelstein conclude, is that the United States is close to national health insurance than we think, because of both the scope of government-funded health insurance and the need for smaller tax increases than previously expected to fund national health insurance.
If only this were true.
Certainly, many observers who accept the U.S. health care system as a private system will be surprised by the extent of the government's role in funding medical care. They shouldn't be. Even if one uses the conventional estimates of federal spending, public expenditures account for almost half of the nation's health care spending, a number that is sure to rise as Medicare enrollment doubles over the next two decades.
Acknowledging that the government's share of health spending is a majority of all expenditures, or larger than we thought, does not move the United States any close to national health insurance, however. Here the authors fail to make a crucial distinction between the economic and political significance of income taxation, payroll taxes, and tax expenditures. The politics of raising taxes for a single-payer national health insurance plan of the sort Woolhandle and Himmelstein support is entirely different from tax expenditures. Raising income or payroll taxes to fund national health insurance imposes a visible cost on Americans, a cost that so far taxpayers have shown little willingness to fund. In contrast, tax expenditures for employer coverage are largely invisible, and the public is more likely to regard them as benefits than as costs. The tax exclusion of employer-sponsored health benefits is, as health economists have long noted, highly regressive. But could anyone explain that in language understandable to our citizenry, and if they did understand the regressive nature of the policy, would they care?
In fact, an alternative reading of the tax expenditure precedent in employer-sponsored insurance would provide evidence of public amenability to tax credits for funding national health insurance (an idea that Woolhandle and Himmelstein would rightly regard as ill-advised). The United States has the most expensive and least efficient health care system in the world, and the government is funding more of that system than most people know. But if they did know, single-payer insurance would not likely be around the corner.
Health Affairs. 2002;21(4) © 2002 Project HOPE
Cite this: Are Americans Closer Than We Think to National Health Insurance? - Medscape - Jul 01, 2002.
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