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Filed under: Health Care , Woman Up America really is the best. OK, so I’m exaggerating to make a point. But I do believe that America is the best in some ways. And this analysis is my guiding light as I wend my way through the whole health care debate. I understand that America is the only industrialized country in the world that does not provide some version of universal health care coverage for its residents; this fact is quite shameful. My colleague, Delia Lloyd, an American who three years ago moved to the United Kingdom with her family, wrote that “there is a lot to be said for socialized medicine” and that she “thanks her lucky stars” she lives in the U.K., where she has “free, excellent, life-long care” for herself and her family, regardless of her personal circumstances. One implication is that I, who live in America, which does not offer socialized medicine, must have expensive, and only temporary, care for myself and my family. First, let’s get a factual matter out of the way. Just because the government provides a service does not mean that the service is free; it just means that the government has funded the services through taxes. That’s the case in Britain. By contrast, Americans don’t view their health care as free because they generally pay for it through the private insurance system. According to the Kaiser Family Foundation , the typical American family insurance policy cost $13,375 last year. As far as I know, the U.K. does not tell its taxpayers what share of their taxes goes toward providing health care. In any case, neither system is free. So, sorry, Delia, your health care is not free — you’re paying for your socialized medicine through taxes. And, as you probably know, your taxes are probably higher in the U.K. than they would be in the United States. To illustrate, compare the U.K. tax structure with the one in the U.S. For example, a family making $60,000 in the U.K. faces a 20 percent rate, while the American family faces a 15 percent tax rate. (There are other differences in the systems concerning personal allowances, etc., but those are not relevant for this discussion.) British tax authorities report that those making more than 1 million pounds, or about $1.6 million, pay an average tax rate of 35.7 percent. By comparison, the IRS reports that Americans making more than $1 million pay just a 15.9 percent average tax rate. (The figures are from 2008 for the U.K. and 2006 for the United States.) Those at the lowest end of the earnings spectrum in the U.S. are, surprisingly, slightly better off than their poor U.K. counterparts. Due largely to the refundable earned income credit, Americans with income up to $50,000 have a negative tax liability, while even the lowest-income group in the U.K. must pony up something to Her Majesty’s revenue service. Do these different approaches to paying for health care — one through the tax system and one through the private system — affect the provision of health services? The answer depends crucially on whether the American has health insurance. Americans with the means to purchase insurance or who have it largely subsidized by their employers are in a much better position than those who don’t. On this score, the U.K. ranks much higher than the United States. Although after-tax earnings are lower in the U.K. than here, the typical British resident likely has a peace of mind over unanticipated health care expenses that many Americans lack. Knowing that the discovery of an expensive health issue — who knows when cancer might strike? — is not going to drive you to bankruptcy is a great benefit. The health care system in the United States is not so comforting. Even though Americans pay lower taxes than their British counterparts, the typical family often struggles to meet its health care bills. As the Kaiser Family Foundation study revealed, workers are picking up a growing share of their insurance-premium costs, with the average employee now paying more than one-fourth of it. Moreover, economists also recognize that employers shift some of the costs of these benefits to their employees by reducing their wages. Thus, American workers bear a significant portion of the cost of their insurance. Could America adopt a system like the one in Britain? Of course. If America applied the U.K. tax structure to American income, the federal government could raise more than enough revenue to provide “free” health care for all. We could likely achieve this goal even if the tax structure were applied only to those making more than $250,000 or so. But, do Americans want to pay for this type of health insurance system? The response to the health care reform bills that the Senate and House have passed indicates that many do not want socialized health care. But is this decision based on a proper understanding of what socialized health care is? I don’t think so, as shown by the report that Americans are big fans of Medicare yet want the U.S. government to “keep its hands off” of their Medicare. Obviously, some people are pretty confused. If any health program in the United States is socialized, the Medicare safety net is it. If Americans understood what that safety net, i.e., socialized health care, provides, perhaps they would they want it. Or would they? Although my views may not generalize, I have experience with both a socialized and a non-socialized health care system, as I have given birth and had knee surgery in both the United States and in Belgium. Based on those experiences, can I tell you which system offers the best care? No, I can’t. In Belgium, because I worked for a public university, I was in the Belgian health care system and my fees were covered by socialized medicine paid for through taxes withheld from my pay. By contrast, in America, I had private insurance and my fees were covered by the insurance company, partially through premiums that I paid through my employer and partially through my co-payments and deductible. In both cases, I received excellent care and would not rank one system as superior to the other. (Although the Belgian hospital clearly provided better food than its American equivalent — but who goes to the hospital for a four-star meal?) In general, the main difference is that, if I had not had insurance in America, I would have had to pay the medical fees on my own. Had there been any complications with childbirth or surgery, those fees could have amounted to thousands of additional dollars. By contrast, if I had had complications in the U.K., I would have been treated “for free.” This analysis shows that some countries, such as Belgium and the U.K., require their residents to purchase health insurance through the tax system. Other countries, such as the United States, allow their residents to purchase health insurance through their employer (or through the market), but do not require residents to have insurance. As a result, when people here without insurance require care, they must be ready to pay for the services on their own, go without the services, or call upon the state to pay for them. (Unfortunately, states are increasingly denying coverage for those unable to pay, and that is a failure of the American system that should be remedied. That analysis is for another story.) Many of those without resources wind up in emergency rooms, where care cannot be denied, and the costs are ultimately passed on in the form of higher fees for all. America — whose slogan is the land of the free and the home of the brave — has decided that Americans should be free to choose and brave enough to face the consequences of that choice. That’s what many people love about America and why they are reluctant to surrender even an inch of that freedom, even on an issue as important as providing decent health care for all.
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