The departure of Donald Trump and inauguration of Joe Biden as the 46th US President in the midst of a pandemic that has killed over 400,000 Americans is likely to be swiftly followed by a fresh debate over reforming the disastrous, costly and inequitable US health care system.

One of the main arguments for the need for fundamental change is that lack of or inadequate insurance amongst the poorest and most socially deprived Americans leads to extremely high numbers failing to seek or access health care checks or treatment compared with other high income countries. 

Indeed in 2010 the Commonwealth Fund comparison of 11 OECD countries showed that in the US even 20% of Americans of above average income (and 29% of those below average) experienced financially-driven unmet need “Either did not visit doctor with medical problem, did not get recommended care, or did not fill/skipped prescription.”

Not a lot changed over the 20 years to 2017: a 2020 study showed that while Obamacare and other changes had brought a decrease in the numbers uninsured, there had been a larger increase in the proportion unable to see a physician owing to cost, and the proportion of persons with chronic medical conditions who were unable to see a physician because of cost also increased for most conditions, while the proportion of chronically ill adults receiving check-ups did not change.

The Covid-19 pandemic arrived in a US health care financing system that was already under strain, with increasing numbers of people uninsured and more finding health care unaffordable. The financial impact of the virus on the US economy is likely to further constrain Biden from implementing his already limited promises to expand coverage.

One of the major objections raised to a “single payer” system that would extend coverage to the whole US population has been the argument that it would trigger a tsunami of pent-up demand from people who would previously have been excluded by cost — forcing up health spending. But now an important new study by veteran campaigners from Physicians for a National Health Program has looked at the evidence of what actually happened after previous expansions of health coverage – from New Zealand in 1938 and the UK in 1948 through to the Obamacare reforms of 2010 in the USA.

It begins by making two important points: firstly that while adding new health services would inevitably add new costs, a change in the way of funding the existing health care system would not – since it is already being paid for: 

“Ultimately, every dollar of these expenditures comes from households in the form of deductions from workerspaychecks (for their share of premiums and lost wages due to employershealth benefit costs), taxes that pay for government programs such as Medicare, and out-of-pocket health spending. Reforms that substitute government expenditures for current private outlays may raise political hurdles but would not impose new costs on households.”

Indeed by streamlining the system, eliminating waste and a huge level of billing and invoicing, and stripping out the colossal profits pocketed by insurance companies and major hospital chains (and the telephone number salaries of their CEOs) a single payer system could generate very significant savings.

The second important point however is that even the extension of health coverage to millions of Americans currently excluded by cost would not create an exponential expansion of health care provision because of the “finite supply of medical professionals and hospital resources.”

The study looks at a series of previous estimates of the “induced costs” of additional demand for health services if out of pocket costs were reduced or eliminated. 

The assumption made in previous studies is that people would use more health care if the price they had to pay was lower (the “moral hazard” argument) – whereas demand for health care in systems with universal coverage is in practice limited by need rather than price (who wants extra “free” radiotherapy or an extra “free” amputation?).

The false assumption led to extremely high predictions of increased health spending, with a 1993 Congressional Budget Office estimate of a 33% increase in spending on physicians and 21% on hospitals. In 2016 the Urban Institute estimated a 16.9% increase in national health expenditure, and in 2019 another report from the same body warned the cost could be an extra 20.6% despite  a large average decrease in prices.

By contrast the analysis of the actual increases in utilisation of services after widely expanded coverage in 10 countries (New Zealand, Great Britain, Sweden, Canada, USA (Medicare and Obamacare, Australia, Portugal, Greece, Spain) showed substantially smaller increases than US studies assumed. Indeed allowing for previous upward trends in health spending almost all of them came out lower than might have been predicted. 

In Britain when the NHS was established in 1948 about 60% of the population was uninsured: yet the actual increase in utilisation of physicians was around 11% and utilisation of hospital care fell compared to preceding trends (including the end of WW2). Larger increases in health care use among groups which had been most excluded (older people and women) were partially offset by small reductions among those on high incomes. As we know any expansion in the total provision of care was constrained in the early NHS by the scale condition and age of the hospital system and limited numbers of professionals.

The authors convincingly make the case that the US would not face exponential growth in utilisation of health care if out of pocket costs were removed – but there is a lingering concern that the campaigners have conceded too much to those seeking to constrain utilisation and cost growth, and under-estimated the scale of under-treatment that could come to the surface if America’s poorest (not least in terms of mental health) are at last included in collective provision of health care – and the need for investment and expansion to fill gaps in care in those parts of the US that the private sector has deemed unprofitable .


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