Arguments mount for a national healthcare system

Some reformers say a government-run system has become an 'economic necessity.'

By David R. Francis | columnist

from the March 3, 2008 edition

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As advocates of healthcare reform see it, change in the United States healthcare system has become an economic necessity – not just socially desirable or politically popular.

"It has to happen," says Regina Herzlinger, an expert at the Harvard Business School in Cambridge, Mass. That's because the business community pays for 55 percent of the nation's total health costs, the government just 45 percent. And many businesses want to get rid of their health costs.

"Bringing costs under control is the only way to … allow our companies to effectively compete around the world," states Sen. John McCain, the leading Republican presidential candidate, on his website.

Those costs have exploded. Healthcare expenditures in the US rose 6.7 percent in 2006 to $2.1 trillion, or 16.1 percent of the nation's total output of goods and services, government economists reported last month. (Last week, the government predicted the nation's healthcare expenditures will reach $4 trillion by 2017.) Most other rich industrial nations, with universal care, spend only 11 to 12 percent of their gross domestic product on healthcare. Canada spends even less, a bit more than 9 percent of GDP, on a single-payer government insurance system for all its people.

US health costs have doubled in the past decade. Yet nearly 48 million Americans have no health insurance. By some health measures, the expensive US health system produces poorer "outcomes" in health than do the cheaper systems in other nations.

In the current campaign season, Senator McCain calls for dozens of reforms to bring down costs and make expenditures more effective in health results. And he states, "we can and must provide access to healthcare for all our citizens." His proposals, though, don't fully embrace the uninsured.

Shannon Brownlee, a senior fellow at the centrist New America Foundation, charges that McCain is "so wedded to the free market that he fails to recognize that there has been market failure" in the healthcare industry.

Democratic presidential candidates Sens. Hillary Rodham Clinton and Barack Obama are more ambitious in their proposed reforms than McCain. They both promise, if elected, to provide guaranteed, affordable care for all Americans.

Both of their proposals have taken key elements from a plan of Jacob Hacker, a political scientist at Yale University in New Haven, Conn. Professor Hacker's template, outlined in an Economic Policy Institute briefing paper, notes: "America's $2.2 trillion-a-year medical complex is enormously wasteful, ill-targeted, inefficient, and unfair. The best medical care is extremely good, but the Rube Goldberg system through which that care is financed is extremely bad – and falling apart." He calls the runaway costs a "grave threat" to the security of family finances and to corporate America's bottom line.

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