Socialized Healthcare: Lessons from the UK

By Rowenna Davis

A few months ago a best friend of mine turned up on my doorstep with a bundle of suitcases. She and her husband had been forced to leave their New York home after he was diagnosed with degenerative arthritis. The drugs he needed to keep him out of a wheelchair cost $1,500/month, and they couldn't afford it. Luckily, he had a British passport. He is now receiving free treatment on our National Health Service.

America didn't just lose moral credibility when this couple left. My friend and her husband are young, talented and highly driven -- and their productivity is Britain's now. Brits often preach the moral case for their system of healthcare to Americans, but the economic arguments have all too often been left to collect dust on the shelf.

Obama has started to change all that. By framing the healthcare debate in terms of efficiency and productivity, he is cleverly sidestepping the age-old critics of "socialized medicine." His new report published last week revealed that healthcare expenditure in the US is already 18% of GDP and, on current trends, will reach nearly one third of total output by 2040. Bringing down costs through public intervention, the White House argues, would add an extra $2,600 to the income of an average family of four by 2020, and nearly $10,000 by 2040.

Obama is convincing Americans what Brits have known for a long time: public health systems make economic sense. Our system is simply more efficient. Because tax-based funding relies on the whole tax base, it reduces distortions in the economy. Putting the burden on employers alone turns healthcare into a tax on jobs, and reduces labour market flexibility.

The private insurance market of the US on the other hand, is an economist's nightmare. Health gurus like Ezra Klein have argued eloquently that health insurance is supposed to cover the sick but instead competes to insure the healthy. It wastes millions seeking out low-risk individuals, and even more trying to get out of paying clients the just entitlements they need to fix their health when something goes wrong. It fails to utilise the benefits that come with economies of scale, and it leaves the government to pick up the bill for those it leaves behind. In 2000 alone, Bill Clinton was forced to go to Congress for $110 billion so that 5 million uninsured Americans could get some kind of cover.

America needs to start counting the "opportunity cost" of failing to keep its workforce fit to work. In the UK, our health secretaries are well aware that we lose almost a quarter of a million years to disease every year. Fifteen per cent of jobless people cite back pain alone as a reason for not working, accounting for 119 million days of certified incapacity in the UK. The comparatively higher losses in the States seem profoundly un-American; I thought the States was about utilizing talent, not throwing it away.

It remains to be seen whether sound economic arguments like these can win out over vested political and economic interests in the States. Even as my American friend starts her new job in the UK, the AMA is blocking moves that could keep her husband out of a wheelchair. It strikes me that the US should do the American thing by copying Britain's system. Maybe then my friend and her husband could fulfil their dream of returning home, and contribute once more to the American economy.

Rowenna Davis is a British journalist and contributor to LabourList.