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Universal coverage is bad – Part Four

Today we’re examining the claim that “Universal coverage won’t help solve the health care crisis”. There are two parts to this statement; first, does a ‘crisis’ exist, and second, why would universal coverage fail to address one or more of the underlying causes.

First things first.
There is a small number of pundits who claim there is no such thing as a health care or health insurance crisis. I’m not going to get into the “it depends on what ‘is’ is” debate. Instead, here are the facts. Apologies, I know you’ve seen them a gazillion times.
1. Health care costs are going up significantly faster than overall inflation. The percentage of personal, business, and governmental budgets allocated to health care is growing in parallel. This growth is causing individuals, businesses, and governments to reduce spending on other needs or to drop funding for health care .
2. The cost of providing health care is hindering American business’ ability to compete in a global economy.
3. The number of Americans without insurance is above 40 million. It is also increasing. Without health insurance, people don’t get primary care, are less likely to access preventive medicine or stay on drug regimens, and are more likely to die from conditions ranging from breast cancer to heart disease.
4. While Americans with health insurance are generally as healthy as those in other industrialized countries, those without are most definitely not. In fact, they are so unhealthy that they drag down the national health status to a level equal to Costa Rica’s.
That’s good enough for me, and most of the rest of the world.
Now, onto how universal coverage helps solve the problem.
If everyone is covered by insurance, providers don’t have to shift costs around to make up for uncompensated care. (I know, Medicaid reimbursement is a problem, but we’re focusing on how UC helps solve the problem, Medicaid is a separate issue). That reduces private insurance costs by about a thousand bucks per year per family.
Now that they have coverage, all those people who have been putting off going to the doc for diagnoses or treatment of chronic conditions go. Yes, expect a surge of cost in the first couple years, but that will be far outweighed by reduced costs for acute care in subsequent years.
Let’s not forget that this will help these newly-covered folks live longer, work more, and therefore contribute more to the economy including increasing the tax base – all good things.
And the nation’s health status will increase as well – when you improve the health of the unhealthiest part of the population, the health of the population as a whole improves.
That’s it for this claim.
As always, I welcome disagreement. But please avoid statements like “this is socialized medicine and therefore bad’ without citing facts and data to illuminate your position.

5 thoughts on “Universal coverage is bad – Part Four”

  1. Joe – First, I’m a supporter of universal coverage, but let’s not oversell and overstate the case.
    With respect to uncompensated care, for example, the Kaiser Family Foundation estimates that it results in hospital prices (at contract rates) being about 6% higher than they would be otherwise. There is much more cost shifting to private payers as a result of Medicare and Medicaid not paying the full cost of many procedures and squeezing reimbursement rates to meet fiscal budget targets. Charlie Baker, CEO of Harvard-Pilgrim Healthcare, estimates that private insurers reimburse hospitals and doctors at about 120%-130% of Medicare and 135%-150% of Medicaid.
    Regarding improved health outcomes if everyone has insurance, it is very difficult to isolate the effect of access to healthcare from factors related to diet, culture, lifestyle and socioeconomic status, especially when looking at metrics like life expectancy and infant mortality across countries. Even within the U.S., infant mortality varies significantly among the states with little correlation to the percentage of the population that has insurance or whether or not women had access to prenatal care. The biggest factor associated with higher infant mortality appears to be poverty.
    Finally, while reducing the number of premature deaths that result from lack of access to healthcare is a good thing, it most likely will NOT reduce healthcare costs. If people die prematurely from heart disease, for example, their healthcare costs stop. If we can treat them, with bypass surgery or stents if necessary, and then manage their disease with prescription drugs, periodic stress tests and other monitoring, they will probably live long enough to die of cancer, Alzheimer’s, dementia, etc. The chances are that their lifetime medical costs will be higher, not lower, than if they were uninsured.
    My guess is that covering the uninsured would cost an incremental $125-$150 billion per year or about an additional 1% of GDP on top of the 16% of GDP we are already spending. I think it would be helpful if we sought to free up some money to accommodate this cost by such strategies as Medicare applying more rigorous cost-benefit or cost effectiveness analysis to new drugs and devices before agreeing to cover them, a serious rethinking of our approach to end of life care with more emphasis on palliative care, and, perhaps, making living wills and advance directives a condition of insurance and establishing a registry to assure that the information is accessible to doctors and hospitals on a timely basis when needed.

  2. There are some studies that indicate that SES status determines health status and how appropriately people use health care even if it is made available. We need to look at countries such as England where general health status is not improved even with a universal health care system. Another issue is the lack of medical resources so people have to wait for routine surgery, etc.
    Also, we need to address the illegal immigrant population which in some states has had a significant impact on access to care. When hospitals don’t get paid for services they not only redistribute the costs but cannot hire the providers needed to serve all the population. The average wait for care in a Las Vegas emergency room is now over four hours even if you do have health insurance.

  3. Barry I think all of your suggestions are excellent ones. It seems there’s growing momentum for CMS or a related body to evaluate different medical procedures on a cost-benefit basis so the health care industry can begin making intelligent decisions about which treatments to use.
    And let’s not forget the administrative savings that can come with a universal system. We spend 4 times more per capita than Canada on administrative expenses. Switching to a simplified system that isn’t as heavily underwritten or means-tested or as bloated with “competition” can save us huge money.

  4. Canadians come to the US for healthcare when it matters. The wait, for example, for an MRI to test for cancer is two years, and in that time you’d die from the cancer.
    The simple point made above in the first response is that socialism has failed in every country in which it has been installed, and yet Joe and others imagine that it can work in the US. The assumptions for every single Medicare or Medicaid expansion ever implemented have understated costs by 75% or more. What happens is that when free healthcare is available, usage explodes. In healthcare we have a three-headed customer: the physician decides what you buy and use, your employer or the government pays and you use. When the government pays, everyone chooses to use and all of the decisions become political decisions. We only have to look at our wide open borders to see how political decisions impact the US.

  5. I am so sick and tired of everyone blaming the “wide open borders” for our failing healthcare system (and other problems). This is an easy copout. If you refer to the Kaiser Fact Sheets at, a number of the studies (as well as other sources) site that about half of the uninsured in this country are white, working adults at or below poverty level. I agree with “spike” in that the administrative savings alone would be worth looking into a universal system. Bottom line is none of us know the perfect solution, but we have to start by agreeing that what we have is not working and figure out what’s next.

Comments are closed.

Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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