Universal Health Care in the United States: Debate and Reform

Introduction and Statement of the Problem

The debate over the respective roles and rights of the states and the federal government has always been a characteristic of American politics, and the controversy has become particularly pronounced as the drive toward universal health care has nearly reached the level of being the law of the land. While it is reasonable to suggest that most compassionate Americans feel that no one should be denied basic life-saving health care services based on their inability to pay for them, there remains a dearth of viable approaches from policymakers that can fund these services. Moreover, the problems associated with providing the expanded coverage offered by universal health care plans are much more complicated than that, and current trends suggest that although the Health Care Reform Act passed congressional muster, it faces a groundswell of opposition based on its constitutionality.

Yet another problem facing proponents of a universal health care plan for the United States is the issue of whether there is a mandate for the provision of universal health care at the federal or state level — or a mandate at all. Indeed, some observers suggest that health care is an individual responsibility and that to the extent government contributes to the process is the extent to which it is being benevolent rather than fulfilling a responsibility. There are longstanding precedents regarding the participation of local, state, and federal governments in contributing to health care services for Americans. For example, Champlin and Knoedler (2008) emphasize that, "Nearly a century ago, the American Association for Labor Legislation (AALL) began a campaign for universal health insurance based on the notion that health care is the joint responsibility of employers, workers, and the state" (p. 913). In reality, many aspects of the existing American health care system reflect this type of shared responsibility, with the costs of health insurance currently being underwritten by all three sectors of the U.S. economy: (a) households; (b) employers; and (c) government — although the underwriting is shared, the actual responsibility for subsidization is not shared equitably. According to Champlin and Knoedler, "The steady retreat of private firms and government from assuming a substantial share of the burden of health care costs is based on an underlying presumption that health care is entirely an individual's responsibility, while the contributions of government and the private sector are basically optional — a matter of benevolence rather than responsibility" (p. 913).

Because the provision of health care is not addressed in the U.S. Constitution, the determination of responsibility remains a matter of state- and federal-level interpretation and funding on a strictly voluntary basis, shaped by the prevailing political views of the era. Past trends suggest that governments at all levels will remain active in some fashion in underwriting the health care needs of their citizens, but the current debate over the Health Care Reform Act must address this fundamental issue of responsibility. In this regard, Champlin and Knoedler conclude that, "The likely outcome of the current complicated debates over health care reform will depend on this issue of responsibility. Who should pay for health care? Is it a collective responsibility or an individual one?" (p. 914). A growing number of critics suggest that the entire package is unconstitutional in the way it requires citizens to purchase health insurance coverage or face financial penalties. In other words, some Americans who are already unable to afford health care insurance would be placed at a further disadvantage by being forced to pay a penalty for being too poor in the first place. In this environment, identifying the important differences in universal health care approaches — to determine what works and what does not, and why — has assumed new relevance and represents a timely and valuable contribution to this ongoing debate.

Because the stakes involved are high and the rhetoric surrounding the debate has been emotionally charged in recent years, it is important to sort out the facts from the hyperbole. Therefore, the purpose of this study was to provide a review of the relevant peer-reviewed, scholarly, and governmental literature concerning universal health care, to identify best practices where they exist, and to determine the common factors involved in successful approaches.

The stakes involved in the provision of universal health care are high across the board. In terms of human impact, the costs of failing to provide adequate health care coverage for the uninsured are incalculable, but from a strictly pragmatic perspective, the economic consequences are well established. For example, in 2007, the United States spent approximately $2.2 trillion on health care, or about $7,421 per person (Health care, 2010). This level of spending is almost double what other developed nations around the world currently spend on their health care needs, and Americans spend more on health care than they do on housing or food. In fact, if current projections are accurate, the Congressional Budget Office indicates that by 2025, fully 25% of the national economy will be allocated to the health care system. This increased demand on the national budget will have to be offset by cuts in other social programs and investments in infrastructure that are desperately needed across the country (Health care, 2010). As a White House press release concerning the Health Care Reform Act emphasized, "Rising health care costs also affect our economic competitiveness in the global economy, as American companies compete against companies in other countries that have dramatically lower health care costs" (Health care, 2010, para. 2).

The scope of the study extended to a review of historic state- and federal-level initiatives designed to provide increased access to health care for the uninsured in general, and the provision of universal health care in particular, in the United States.

Given the enormous amount of money currently being spent on health care in the United States, together with projections of even more money being required in the future, it makes good sense to identify what works best and to do more of it. Unfortunately, there are few success stories to draw upon in the analysis of how best to provide universal health care, but it is vitally important to determine what approaches have proven more effective than others in the past in order to avoid false starts and missteps while maximizing the return on any additional investments.

This study used a five-chapter format. Chapter one introduced the topics under consideration and provided a statement of the problem as well as the purpose, importance, scope, and rationale of the study. Chapter two delivered a review of the relevant peer-reviewed, scholarly, popular, and governmental literature concerning universal health care and what approaches have been shown to be effective. Chapter three described the study's methodology, followed by a data analysis chapter comparing state-level approaches to universal health care with the current efforts to provide UHC at the national level. A summary of the research, relevant conclusions, and recommendations are provided in the concluding chapter.

Background and Overview of National Health Insurance

A strictly literal definition of universal health care would mean that everyone — including undocumented immigrants, all children regardless of their financial or legal status, and those with preexisting conditions — would be equally entitled to health care services. This may appear idealistic, but it is closer to reality than many observers might believe. A popular misperception currently exists about just how much health care is already being provided to those who cannot afford to pay for it. The costs associated with providing current levels of care through a convoluted system of providers and funding make such care very costly and therefore scarcer for a growing number of American consumers. A recent essay by Berkowitz (2006) asks, "Why is there no national health insurance in the United States? The answer is that there is national health insurance in the United States and quite a lot of it. The problem lies in the fact that this country has too much health insurance — making our health care system very costly — and too little — limiting access to health care to well over forty million people" (p. 1218).

Furthermore, current approaches to providing health care coverage to employees are heavily burdened by the obligation some employers have to provide health care coverage for their retirees. According to Champlin and Knoedler (2008), companies have moved away from defined-benefit pensions in favor of defined-contribution plans, partly to avoid offering health benefits as part of retirement packages. Citing General Motors (which provides health care coverage to 750,000 current and former employees) and Ford (which must cover about 560,000), these authors conclude that, "While some employers continue to pay most or all of the cost for individual coverage, the current trend is for employees to pay a higher percentage of the monthly premium. Only seventeen percent of employers still pay the full cost of health care coverage for individuals and only six percent pay the full cost of family coverage" (p. 914). This trend has placed even employer-provided health insurance beyond the means of many Americans.

The effort to provide health care to all Americans is not a new initiative but rather a continuation of a century-long attempt to balance the care that consumers need with the costs involved. Berkowitz notes that, "Although the nation has made periodic surges toward national health insurance, the result has never amounted to universal access. In fact, we have moved further away from this ideal in the last third of the last century" (2006, p. 1218).

Although the Health Care Reform Act passed congressional muster, it faces constitutional challenges from a growing number of institutional critics and taxpayers. Amid the media attention, critics cite a number of constraints and weaknesses in the proposed law. According to Bowman (2010), "Supporters have praised President Obama's health care reform bill as a historic landmark in our nation's history — and so it is, but not for the reasons that many of them claim. The concept itself is not the problem. In fact, it is even commendable" (para. 2). Bowman adds that, "Providing affordable health care to an entire nation is a noble goal, and that is basically what the bill is trying to achieve. But before we jump onto the bandwagon of reform, perhaps we should take a closer look at how the bill will affect the nation" (para. 2).

This closer examination reveals that during a period of economic downturn, the United States government sought to establish additional mandates on the states and individual citizens that would raise taxes and require the several states to increase funding for health care services (Bowman, 2010). Some estimates of the additional costs of the Health Care Reform Act exceed $500 billion over the next decade, with a significant portion derived from levies on Medicare and taxpayers (Bowman, 2010). Bowman notes that, "The bill, when fully implemented, will require all individuals to purchase health care or risk being fined by the government. Several states have vowed to actually sue the federal government over this point, claiming that it infringes on the constitutional rights of citizens" (2010, para. 2). In response, the White House press release on the Health Care Reform Act emphasized that the legislation would:

1. Make insurance more affordable by providing the largest middle-class tax cut for health care in history, reducing premium costs for tens of millions of families and small business owners who are priced out of coverage today, helping over 31 million Americans afford health care who do not get it today.

2. Set up a new competitive health insurance market giving tens of millions of Americans the same insurance choices that members of Congress have.

3. Bring greater accountability to health care by establishing commonsense rules to keep premiums down and prevent insurance industry abuses and denial of care.

4. End discrimination against Americans with pre-existing conditions.

5. Put the budget and economy on a more stable path by reducing the deficit by $100 billion over the next ten years — and about $1 trillion over the second decade — by cutting government overspending and reining in waste, fraud, and abuse (Health care, 2010, para. 3–4).

Nevertheless, some critics cite the lack of a so-called public option in the Health Care Reform Act — meaning that consumer choices are limited to private insurance carriers — which they regard as an essential element if the legislation is to survive constitutional review (Bowman, 2010). Instead of a public option, the current approach mandates a government option only. According to Bowman, the government option is "a rationed plan with benefits and treatments chosen by a government committee. The problem with that option is, you have no say in the benefits that are given (or withheld), and there is no appeals process if you disagree. In addition to this, according to the bill itself, no company can sue the government for price-fixing, and no 'judicial review' is permitted against the government" (2010, para. 3).

The move to provide universal health care in America has been underway for more than a century, and the proposals for these initiatives have largely mirrored the political needs of the policymakers involved. Berkowitz notes that, "In the progressive era, labor economists and others with an interest in the terms of the wage bargain tended to dominate the discussion. The result was proposals from groups such as the American Association for Labor Legislation to have the state subsidize health insurance for the working classes" (2006, p. 1218). While such funding approaches are considered standard today, they were regarded as radical at the time. Berkowitz adds that, "This class-specific formulation of the problem rankled many Americans, including conservative businessmen and upwardly mobile members of labor unions. The progressives imported many of their ideas from abroad. At the time, the European welfare state was far from universal in its scope of coverage. Instead it used the state to confer benefits on particular occupational groups" (2006, p. 1218).

Another proposal for increasing universal access to health care emerged during the 1920s, arguing that if there were an abundance of health care facilities, the issue of access would no longer be a problem. While the Great Depression ended this ambitious approach, it highlighted some of the same types of problems that still plague policymaking today — in particular, the failure to address who was entitled to what. Berkowitz notes that this early initiative failed because of "vagaries concerning who [would be treated], as reflected in the very nature of a country that raised racial and regional barriers to providing services of any sort" (2006, p. 1218).

While the racial barriers have largely been resolved through legislative means, the underlying entitlement issues remain salient today. Current approaches to providing extended health care coverage are rooted in part in the late 1960s, when Lyndon Johnson's Great Society initiative combined elements of the progressive era and the 1920s approach to create Medicare and Medicaid. According to Berkowitz, "It was health care for those left behind in the tremendous expansion of private health insurance in the postwar era" (2006, p. 1219). Even during the height of funding for social programs such as health care, these trends only served to make matters worse for health care consumers who could not afford employer- or government-provided insurance, by making health care more expensive for everyone. Berkowitz writes that "social insurance, which insured workers but not others in the general population, mitigated against the very notion of universal health care. The structure of permissive programs like Medicare helped to raise medical care costs and create a crisis in health care finance" (2006, p. 1219).

Because so many Americans were already affected by Medicare and Medicaid, costs associated with those programs took center stage over the larger debate about universal health care. Berkowitz adds that, "As rising costs became the central problem of medical policy, the issue of universal access tended to be shunted aside, with tragic consequences for those on the edges of American society" (2006, p. 1219). According to Agrawal and Veit (2002), "During the 1970s, there was widespread sentiment that universal health care coverage was not economically feasible. Only a few short years after Medicare and Medicaid expanded access to health care coverage, the need to control health care cost inflation was obvious. Expanding the then-current style of medical practice to an ever-increasing number of citizens would cost more than the nation was willing or able to pay" (p. 12).

Some early efforts to address these problems met with mixed results, such as Oregon's plan during the early 1990s, which sought to improve health care access by aggressively expanding the state's Medicaid program. One distinctive aspect of this approach was the use of diverted funds from a rationing system that weighted health care treatments according to a proven efficacy scale and only provided coverage for those with the best track records (Klein, 2007). The program met with some early successes — Oregon's uninsured population dropped by 7% between 1992 and 1996, and the electorate twice voted to raise cigarette taxes to fund the program (Klein, 2007, p. 26).

The economic downturns of the early 21st century, however, doomed Oregon's efforts. The approach was expanded in 2002, but this expansion took place during a severe economic downturn, and there was no money available to fund it. As a result, services were reduced and charges were increased — a compromise that received bipartisan support but led to the program's failure. According to Klein, "Instead of expanding by 50%, the program contracted by 75%, as the increased cost sharing and stringent payment regulations caused thousands of Oregonians to leave or be kicked off the state's rolls" (2007, p. 26). This outcome was not necessarily inevitable, but it highlights the fact that the costs of health care cannot be avoided, only shifted among the major stakeholders involved.

Implications of Universal Health Care Coverage

Universal health care plans inevitably confront the harsh realities involved in coordinating administrative and payment methods between health care providers and private insurance carriers. According to Olson and Wasson (2004), "Health care providers often agree to certain fee schedules with private insurance carriers, under which they accept as full payment less than the amount billed to the patient. The provider then must write off the difference between the amount charged and the amount received" (p. 172). Comparable circumstances arise when health care providers deliver services under the federally sponsored Medicare or Medicaid programs. Providers typically receive far less than what they charge Medicare or Medicaid — generally about one-third of their billed charges — and current law stipulates that the health care provider must write off the remaining balance and is unable to collect additional payments for the remaining amounts charged (Olson & Wasson, 2004).

It is little wonder, then, that private insurance carriers are alarmed at proposed changes that would cost them even more money as a result of federal government mandates in the Health Care Reform Act. Some of the consumer protections touted by the White House that will have a direct impact on private insurance carriers include:

1. No discrimination for pre-existing conditions — insurance companies will be prohibited from refusing coverage based on medical history.

2. No exorbitant out-of-pocket expenses — insurance companies will be required to abide by yearly caps on out-of-pocket expenses.

3. No cost-sharing for preventive care — insurance companies must fully cover regular checkups and preventive tests such as mammograms and diabetic eye and foot exams.

4. No dropping of coverage for the seriously ill — insurance companies will be prohibited from dropping or watering down coverage for those who become seriously ill.

5. No gender discrimination — insurance companies will be prohibited from charging more based on gender.

6. No annual or lifetime caps on coverage — insurance companies will be prevented from placing annual or lifetime caps on coverage.

7. Extended coverage for young adults — children will remain eligible for family coverage through age 26.

8. Guaranteed insurance renewal — insurance companies will be required to renew any policy as long as the policyholder pays their premium in full, and they will not be allowed to refuse renewal because someone became sick (Health insurance consumer protections, 2010).

The move to provide universal health care in America has been taking place for more than a century, and the proposals for these initiatives have largely mirrored the political needs of the policymakers involved. While funding approaches that were once considered radical are now standard, the underlying entitlement and cost challenges have never been fully resolved. Current approaches to providing extended health care coverage are based in large part on efforts stretching back decades, and the unresolved tensions between public and private responsibility continue to shape the debate.

Given the mixed track record of results with universal health care and the varying definitions of what elements are needed to qualify as "universal," a review of how other authorities have weighed in on these issues is provided in the data analysis below.