Health care and the U.S. economy
The US Economy is being choked by our healthcare system. It costs us $4.3 trillion, or about $13,000 per person, each year.
This breathtaking expenditure represents over 18% of the US gross domestic product (GDP).
The sky-high cost of health care has on-going implications for both our national debt and individual household debt.
The national debt
The cost of healthcare, Medicare, social security, national defense and more all contribute to the national debt.
If health expenditures continue to increase, it will eventually necessitate either tax increases or reduced spending on other important government functions like public safety, education, infrastructure, and research and development.
One promising solution is single-payer health care. Proposed for decades, it is finally gaining serious attention.
In a 2022 report, the Congressional Budget Office (CBO), analyzed the “economic and distributional implications of five illustrative single-payer health care systems.”
6 ways that single payer would strengthen our economy
The CBO analysis concluded that a single payer system would affect the U.S. economy in 6 ways:
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- The burden of providing employer-sponsored health insurance would be eliminated for business owners, and the savings would be passed to employees in the form of higher wages.
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- The cost of health care, health insurance premiums and out of pocket costs would also be reduced for households.
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- Insurance-related administrative costs for employers, hospitals and providers would go down, producing savings that would have economy-wide benefits.
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- This would stimulate productivity and greater efficiency in heath care, but it might entail lower payment rates for certain providers (specialists).
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- People’s health status and productivity would improve because when financial barriers to care are eliminated, they would have greater access to health care.
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- Providing longterm supports and services would mean that caregivers who are currently uncompensated would be paid for their work.
The economic impact of individual medical debt
In 2022 around 100 million Americans were carrying medical and/or dental debt, according to a study by Kaiser Family Foundation.
Collectively, U.S. adults owe at least $195 billion in medical/dental debt, the study showed.
The impact of this huge debt is severe, as Americans must make difficult sacrifices to service or pay back the debt.
Giving up on higher education, home ownership and/or necessary health care for fear of falling deeper into debt can have lifelong – even lethal – consequences.
These consequences are more common and often especially severe among people with lower incomes, people of color and women who, the study showed, experience a higher rate of collection agency abuse on top of everything else.
The single-payer boost for families
According to the CBO, if we replaced our current super-expensive healthcare system with an efficient, single-payer system, our quality of life would improve.
Individual Americans could work fewer hours because
“the reduction in health insurance premiums and [out of pocket] OOP expenses would generate a positive wealth effect that allowed households to spend their time on activities other than paid work and maintain the same standard of living.”
Having a higher disposable income would allow Americans to save for retirement, invest in home ownership, and have the resources to provide education and other opportunities for their children.
Single-payer and the GDP
The impact of single payer health care on the nation’s GDP was predicted to be similarly positive, with:
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- an increase in economy-wide productivity,
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- an increase in the size of the labor force,
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- an increase in the average worker’s labor productivity,
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- and a rise in the capital stock.
Moreover, the resulting gains in non-health consumption would be largest for younger, lower-income households.
In other words, the distribution of gains from adopting single payer would help promote equity in our country.
Saving lives while saving money
These economic benefits are important, no doubt, but we must not overlook the human cost of our fragmented, inefficient healthcare system.
According to a June 2022 Yale University study, during the pandemic the U.S. could have saved 335,000 lives and $450 billion if we had universal health care.
Helpful links
National Health Expenditure [NHE] Fact Sheet, Centers for Medicare & Medicaid Services
Healthcare Spending in the United States Remains High, Peter G. Peterson Foundation
National Debt: Definition, Impact and Key Drivers, Investopedia
A dozen facts about the economics of the US health-care system, Brookings
Economic Effects of Five Illustrative Single-Payer Health Care Systems, Congressional Budget Office
Health Care Debt In The U.S.: The Broad Consequences Of Medical And Dental Bills, Kaiser Family Foundation
Study: More Than 335,000 Lives Could Have Been Saved During Pandemic if U.S. Had Universal Health Care, Yale School of Public Health
For a fresh perspective with a California focus, check out our podcast Code WACK! featuring Ian Lewis, political & research director at the National Union of Healthcare Workers:
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