Who socialised US healthcare: Why Trump can’t get rid of Obamacare.

The Americans have a huge aversion to socialised health care.  While all other major Western economies have developed some model of state or socialised healthcare the USA alone leaves it’s health in the hands of the market.  Brits like me who grew up with the NHS are baffled and appalled at the way the US manages its nations health.  

The limited reforms introduced by Barrack Obama as President took the US a tentative step down the road towards universal healthcare, amid much controversy.  His successor Donald Trump has pledged to get rid of Obamacare, but faces an irreconcilable problem – compulsory insurance is really unpopular, but stopping insurers from refusing people with pre-existing conditions is really popular.  The problem is that you can’t have one without the other, otherwise no-one would take out health insurance until they get sick, and the insurers would go bankrupt.

I have a fundamental problem with this narrative.   It wasn’t Obama who socialised US healthcare.   

He inherited a socialised healthcare system from Dubya, and tried to make sense of it through some limited reforms, which provided a decent baseline for future reforms.

To explain that lets start by defining what a socialised healthcare system is. All of the major Western healthcare systems have the same mix of funding:

  1. Out of pocket/fee for service/co-payments
  2. Private health insurance
  3. National and Local Government

The only difference is the balance between those different elements. The US has very high levels of out of pocket and private health insurance, the UK has high levels of National Government expenditure.

A socialised healthcare system is one in which the Government, local and national controls the majority of healthcare expenditure.

The US passed this point 13 years ago, not under Obama, but under Dubya, due to increased entitlements and the rising costs of military and veterans healthcare, the legacy of wars in Iraq and Afghanistan.

As you can see from the graph, there was a big increase in federal expenditure in the 1960s with the initial introduction of Medicaid and Medicare, plus an increase in defence and veterans healthcare costs due to the Vietnam war

I cross checked my data with the Centre for Medicare and Medicaid Services. What I had never appreciated before was the extent of State and Local Government involvement in healthcare funding. In fact State and Local Governments spend a higher percentage of its expenditure than the Federal Government

When we add in State and Local level expenditure the graph changes massively:

Taking total public funding into account the US has been operating a socialised healthcare system since Lyndon Baines Johnson.   It just runs a socialised system in an incredibly expensive and inefficient manner due to the obsession with market approaches to healthcare.  In particular it spends crazy amounts on administration costs, insurance overheads, and is dreadful at controlling the costs of drugs.   The average American spends more on pharmaceuticals than the average Brit does on healthcare, and yet Brits have lower morbidity and a better life expectancy.  

This shows exactly why Trump’s efforts to repeal Obamacare are such a disaster.   The Republican Party want to replace Obamacare with a non-socialised healthcare program.   The problem is that in order to achieve that they have to turn the clock back to a pre-Civil Rights era version of America.   

There is a reactionary right wing movement in American politics that has long wanted to exactly that – turn the clock back to pre-Civil Rights America, stripping away employment and environmental protections along with equal rights legislation.   The Koch Brothers have poured billions into this campaign, with the goal of electing a reactionary President, only to find their careful planning hijacked by an orange faced chancer. 

There are even large parts of the Republican voter base that would cheer on this kind of initiative, but that doesn’t mean that it is a practical prospect, particularly because the people who are most dependent on socialised medicine are the blue collar voters who swung behind Trump in 2016. 

This is why America is on a long slow march towards a fully socialised healthcare system.   The last Republican President to leave office with a lower percentage of healthcare spend controlled by the state was Reagan.   Bush senior and Junior both increased socialisation by more than Obama and Clinton. 

The Republican Party’s “southern strategy” from Nixon onwards has made it the party of poorer, less well educated white voters, particularly in rural areas. They might be prepared to vote for tax cuts for millionaires, and big corporations but not if that means that their own entitlements get shredded at the same time.

That’s why becomes the harder for Republican’s to roll back socialisation. They want to be the Party of small state reactionary politics, but they are dependent on voters in states that are the most dependent on Federal spending.

With the death of David Koch, who spent billions on a reactionary plan for America and achieved little beyond making US politics even more unpleasant, there is an opportunity to try and have an honest debate about what kind of socialised healthcare the US wants and can afford.

https://www.cms.gov/Research-Statistics-Data-and-Systems/Research-Statistics-Data-and-Systems.html

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/highlights.pdf

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.27.5.w349

https://data.oecd.org/healthres/health-spending.htm

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