Instead of focusing on universal healthcare, should the United States be focused on increasing the savings rate?
CALIFORNIA—If Chris Martin and Guy Berryman could mass-produce more bone-igniting lights, that might be able to fix a lot of people. As COVID-19 continues to terrorize and decimate the limbs and lifeblood of the economies and healthcare systems around the globe, much attention is being paid to the availability of hospital supplies and the loss in productivity stemming from a sudden massive attack to industries and sectors across the board. Social media is awash in exhortations for individuals to donate personal protective equipment (PPE) to hospitals that are in short supply and follow instructions from the Center for Disease Control and Prevention (CDC).
Being careful not to engage in the post-hoc-ergo-propter-hoc fallacy for leap projections, particularly when discussing political and cultural trends, it’s important to recognize how the government response to this virus could not only affect the election, but in a best-case scenario could be the catalyst for systemic cultural change of healthcare finance. Systemic change might be necessary. The current global death toll is over 50,000 people. The United States provided 6,059 of those, and how many of them didn’t get enough care due to monetary reasons is unclear.
2020 is an American presidential election year, and a focal point for the Democratic party (the non-incumbent) is universal healthcare. The recent legislation from the White House providing emergency financial relief for those suffering greatly has caused both rejoicing and concern for what the government will look like when the imminent dangers posed by the novel sickness have abated. State power expands during crises. It does not tend to shrink again afterwards.
Would that be a bad thing? Providing universal healthcare would mean that government takes the authority to do that. A talking point that comes up often in the pro-universal healthcare argument camp is that it is wrong for anyone to need to choose between basic sustenance and an unexpected medical expense. Whether rectifying that wrong through extending or reducing government control is currently up for contention. Less up for contention is why that choice would arise in the first place. While the sudden need to spend a lump sum of several hundred dollars would put a strain on almost anyone, let alone the ill and pained, the fact that so many American people do not have enough savings for such an event warrants another look.
Two countries that have both been dramatically affected by the virus, have nationalized healthcare coverage, and have a healthy savings rate are China and Italy. China has been working on its healthcare reforms with projects such as Healthy China 2020 and Healthy China 2030, but the giant failure of Mao’s “iron rice bowl” (state provision for employment, healthcare, housing, etc., etc.,) has led generations to value thrift. China’s savings rate is reported to hover at 20%, and out-of-pocket spending for healthcare measured as a percentage is 36.1%. Nationally subsidized healthcare leaves citizens with affordable care through underfunded public hospitals. This breeds its own problems, but generally, people can pay for the care they need with the money they have.
Italy, the second epicenter of the disease, also has a high savings rate at 22.6%, which might play into why it is not listed on the “affected by catastrophic health spending” graph presented by the World Health Organization. It is also not on the graph which maps incidences of unmet need due to cost, distance, or waiting time. The out-of-pocket healthcare spending percentage hovers at 23.5%, and anything other than basic mandatory care will accrue some sort of fee. In general, the healthcare system in Italy is esteemed to be affordable and in good functioning order.
The United States has a personal savings rate of 5.7%. The healthcare out-of-pocket percentage is also already very low, at 11%. Now confirmed with the most COVID-19 cases, the attitude of the current government toward managing this healthcare crisis has led more people to view the Democratic proposals of universal healthcare as favorable. However, based on the enormous population size, geographic anomalies, and income disparity within the United States, trying to implement universal healthcare that would satisfy the needs of such a diverse population would be a Sisyphean task. The examples of China and Italy show that nationalized healthcare is still not always completely free or adequate, and that the responsibility to shoulder additional healthcare expense to some extent still falls to the consumer. As such, making universal personal financial prudence possible deserves policy-level attention as well.
If the future president attempts to put in place robust universal health care in the United States without critically thinking about how this kind of government spending might affect other aspects of the production economy, the United States might be in danger of getting what it wants and not what it needs. If that happens, all the light we can see still won’t fix anyone.
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