The Case for Universal Health CareINTRODUCTION
Over the last few decades, the United States has witnessed skyrocketing health carecosts. Health insurance premiums have been rising on average by double-digit
percentage points over the past five years, a rate of increase that is 2-3 times the rateof inflation.1 Because of these out-of-control health care costs, there has been a steep
rise in the number of uninsured Americans. Currently, more than 45 million Americans
lack any form of health insurance, and millions more are “underinsured” – they haveinsurance but lack adequate financial protection from health care costs.
While this problem was formerly a problem confined to low-income Americans, more
and more middle-class citizens are becoming directly affected by the problem.
In the face of rising health care costs, fewer employers are able to provide theirworkers with health insurance; the percentage of employers offering health insurance
dropped from 69% in 2000 to 60% in 2005. Even if employers are able to provide
health insurance benefits, the trend is towards providing high-deductible insurance thatcovers an ever-shrinking percentage of health care costs.1 The net result is that more
and more employed middle-class Americans find themselves with low-quality or noaccess to health care.
The erosion of employer-based coverage has been partially offset by increasedenrollment in Medicaid, which is designed to provide a safety-net for the lowest income
Americans.2 However, Medicaid has recently been the subject of relentless funding
cuts by cash-strapped states and Congressional representatives who are ideologically
opposed to welfare programs. As the program continues to be slashed, it is certainthat Medicaid will not be able to offset the losses in employer-based insurance,
resulting in more and more uninsured individuals.
Health insecurity is at an all-time high. In a time when thousands of people lose theirhealth insurance every day, when health care is becoming elusive to even well-to-do
Americans, and when any person is just one pink slip away from becoming uninsured,
it becomes clear that health care for all is not just important to achieve, but imperative.
THE MORAL CASE FOR UNIVERSAL HEALTH CARE
At its root, the lack of health care for all in America is fundamentally a moral issue.
The United States is the only industrialized nation that does not have some form of
universal health care (defined as a basic guarantee of health care to all of its citizens).
While other countries have declared health care to be a basic right, the United Statestreats health care as a privilege, only available to those who can afford it. In thissense, health care in America is treated as an economic good like a TV or VCR, not asa social or public good.
The Uninsured
The most visible victims of America’s decision to treat health care as a privilege are the
45 million Americans who lack insurance. In contrast to prevailing stereotypes, 80% of
the uninsured are hardworking Americans who are employed or come from working
families. However, they are unable to obtain insurance through their work either
because their employer does not offer it, their employer does offer it but the employer
share of the premium is too expensive, or they are not eligible for health insurance(e.g. they are part-time or have not worked long enough at the job).3
The problems of accessing health care for the uninsured have been detailed
extensively.4,5• The uninsured are less likely to be able to fill prescriptions and more
likely to pay much more of their money out-of-pocket for prescriptions.
In a recent survey, one third of uninsured Americans reported that they wereunable to fill a prescription drug in the last year because of the cost.
• The uninsured are 3-4 times more likely than those with insurance toreport problems getting needed medical care, even for serious conditions.
In one study, more than half of the uninsured postponed needed medical care due
to financial concerns, while over one third went without a physician-recommended
medical test or treatment due to financial concerns.
• The uninsured are less likely to have a regular source of health care. 40%of the uninsured do not have a regular place to go when they are sick or need
medical advice, compared to less than 10% of the insured. As a result, 20% of theuninsured say their usual source of care is the emergency room, compared to just
3% of the insured.
• The uninsured are less likely to get needed preventive care. When
compared to the insured, uninsured, non-elderly adults are 50% less likely toreceive preventive care such as pap smears, mammograms, blood pressure checks,
sigmoidoscopies, cholesterol screening, and prostate exams.
• The uninsured are more likely to be forced to delay medical services,
affecting the timeline of diagnosis and thus the prognosis of the disease
process. In one study, the time to diagnosis of late-stage cancer was compared
between uninsured and privately insured patients. The uninsured patients were1.7, 2.6, 1.4, and 1.5 times more likely to be diagnosed late for colorectal cancer,
melanoma, breast cancer, and prostate cancer, respectively.
• The uninsured are more likely to receive poor care for chronic diseases.
Among non-elderly adult diabetics, a lack of insurance is associated with lessglucose monitoring and fewer foot and eye exams, leading to an increased risk of
hospitalization and disability. Uninsured individuals with end-stage renal disease
are more likely to have progressed to a more advanced stage before beginning
dialysis.

As a result of these difficulties accessing health care, the non-partisan Institute ofMedicine estimates that the uninsured have an excess annual mortality rate of 25%.
This increased mortality translates into 18,000 excess deaths for people between age
25-64 per year, which is of comparable magnitude to the number of people in this age
group who die each year from diabetes, stroke, HIV, and homicide.4
The suffering caused by uninsurance goes far beyond the purely physical sufferingexperienced by uninsured individuals. Emotionally, uninsurance contributes to anxiety,familial stress, depression, and fear. Financially, medical costs are a major cause of
personal bankruptcy. Even without bankruptcy, the financial strain on families can besignificant and potentially ruinous.6
In the end, while all of these facts and figures are sobering, they cannot capture thetrue human dimension of the suffering caused by uninsurance. To truly understandthis dimension, one has merely to turn to the numerous horror stories in the media
that portray the victims of America’s decision not to guarantee health care to all – thepatients who are forced to decide between pills and food, the patients diagnosed withinoperable late-stage cancer after not receiving preventive care, and so on. The
stories of these patients may seem like isolated anecdotes for some, but for the vast
majority of Americans, these stories hit disturbingly close to home. The victims arefriends, neighbors, and increasingly, family members.
The Insured
The consequences of America’s decision to treat health care as a privilege extend far
past the uninsured. With employers dropping health insurance at a record pace, more
and more middle class Americans are at risk of uninsurance. Those who work forcompanies that continue to offer health insurance find themselves paying a higher
share of health care costs than they did previously.1 Finally, employees are finding
their wage increases to be smaller and smaller as the cost of providing healthinsurance skyrockets for employers.
The most direct way in which the insured are affected by the lack of universal healthcare is illustrated by a 2005 study that surveyed people who filed for personalbankruptcy. In this study, 46.2% of those surveyed cited a medical cause for theirbankruptcy. Of note, only 32.6% of those citing a medical cause of bankruptcy wereuninsured at the time of filing, meaning that almost 7 out of 10 people in the survey
were insured when they filed.7 In other words, high medical bills and lost income due
to illness can lead to bankruptcy even for the insured. A society that believes thatpeople should pay a lot of money for the privilege of having health care is a society inwhich only the extraordinarily rich are truly immune to the threat of medical
bankruptcy.
THE ECONOMIC CASE FOR UNIVERSAL HEALTH CARE

The central question surrounding the economic case for universal health care iswhether achieving health care for all is financially feasible. The answer to this question
comes in three parts:• How much would it cost to achieve universal healthcare?
• What are the costs of not achieving universal health care?
• Do the costs of achieving universal health care outweigh the benefits?
How much would it cost to achieve universal health care?
There a number of costs involved with achieving universal health care.8,9• The additional health care that would be used by the uninsured if they
had insurance: The Institute of Medicine estimated that this would amount to$34-$69 billion per year, depending on whether the benefits package offered to theuninsured offered public insurance-level benefits (e.g. Medicaid or S-CHIP) or
private insurance-level benefits. Note that this number assumes “no structuralchanges in the systems of health care financing or delivery, average scope of
benefits, or provider payment”.8• The cost of covering the out-of-pocket costs the uninsured currently pay:
The uninsured pay 35% of health care costs out-of-pocket, compared to 20% for
the insured (8). It is estimated that of the $100 billion in care the uninsured use
per year, 26% was paid out-of-pocket by the uninsured, or $26 billion. As Uwe
Reinhardt wrote, “If the purpose of public policy in this area were to protect
American families from financial distress, then presumably some of this out-ofpocket spending by the uninsured would be shifted from the uninsured to thegovernment’s budget”.9 The cost of covering these out-of-pocket costs would
depend on the generosity of the benefits offered to the uninsured.
• The cost of covering uncompensated care costs provided by hospitals,
physicians, and other providers to the uninsured: Currently, $34.5 billion ayear is spent on uncompensated care costs, which includes free care, discountedcare, and “bad debt” that is written off by the provider if the uninsured person
cannot pay.8 A system that covered the uninsured would likely cover some or all ofthese uncompensated costs; the exact amount would depend on the specificsolution in question.
• Finally, depending on the solution chosen, those who are currently privately insured
may also use more health care (e.g. if health care were made available for all withno or minimal cost-sharing, there might be increased usage of health care acrossthe board). Furthermore, there is the possibility that covering the uninsured
through a public insurance program may tempt employers to drop coverage andpush their employees onto the public insurance program (“crowd-out”); the exact
magnitude of this additional cost would depend on the solution chosen.9
In summary, the cost of universal health care would be at least $34-$69 billion, plus
whatever costs are associated with covering out-of-pocket expenses anduncompensated care for the uninsured. Specific solutions may entail additional
expenses as well, depending on their design parameters.

What are the costs of not achieving universal health care?
In a landmark six-part series on the uninsured, the Institute of Medicine compiled an
extensive report on the “hidden” costs of uninsurance.8• Fewer years of participation in the workforce: The annual cost of diminishedhealth and shorter life spans of Americans without insurance is $65-$130 billion.
People who do not live as long do not work and contribute to the economy as long.
• Developmental losses for children: children who are uninsured are more likely
to suffer delays in development because of poor health, thus affecting their future
earning capacity.
• Cost to public programs: Medicare, Social Security Disability Insurance (SSDI),
and the criminal justice system have higher costs than they would if there were
universal coverage. For Medicare, the reason is that people who are uninsured
have poorer health, and this poorer health translates into higher expenses once
they become enrolled in Medicare. A similar effect exists for SSDI and the criminal
justice system, although to a smaller degree because most people do not end up
using these programs whereas the vast majority ultimately enroll in Medicare at age
65.
The Institute of Medicine also studied the cost of high rates of uninsurance tocommunities.10• Lower health care delivery capacity: Communities with high levels ofuninsurance tend to have a lower health care delivery capacity, as providers
burdened by the costs of uncompensated care reduce staff, relocate, or close.
• Impaired access to emergency departments: Access to ER’s is impaired forboth uninsured and insured individuals in communities with high rates ofuninsurance. The reason is twofold: emergency departments burdened byuncompensated care costs close down or reduce capacity, and uninsured individuals
who have nowhere else to turn to for primary care overcrowd ER’s.
• Weakened local economy: A high rate of uninsurance and the corresponding
burden of uncompensated care costs weakens a community’s health infrastructure(e.g. closing or downsizing of local hospitals). Since health care is an importantpart of a community’s economic base, communities suffer economically.
• Adverse effects on public health: Communities with high rates of uninsurance
have less effective control of communicable disease (e.g. less vaccinations, lesssurveillance of TB) and an overall greater disease burden in general. Furthermore,
public health agencies may have budgetary problems if the local government has tosiphon dollars away to pay for safety net services for the uninsured.
In addition to the costs delineated by the Institute of Medicine, there are several otherareas of economic inefficiency because of the lack of universal health care in America:• Unnecessary use of the ER: the ER is an expensive place to receive care. An
average visit to an emergency room costs $383,11 whereas the average physician’s
office visit costs $60.12 It is estimated that 10.7% of ER visits in 2000 were fornon-emergencies, costing the system billions of dollars.13

••Lack of preventive care and adequate care of chronic diseases: Because theuninsured do not get the preventive and chronic disease care they need, they are
more likely to develop complications and advanced stage disease, both of which areexpensive to treat. The magnitude of this cost is difficult to estimate, but it issignificant.
“Job lock”: Job lock refers to the idea that people stay with their jobs when theywould rather work elsewhere because their current job offers health insurance. For
example, many individuals opt to stay with their job instead of starting their own
business because they are unsure of whether they can get health insurance on theindividual market, which has higher premiums and often denies people with preexisting conditions. Although the number of people who would be self-employed if
there were universal health care is controversial, one study from 2001 put the
number at 3.8 million Americans.14 This loss of entrepreneurship is a real economic
cost in a society that is relying on start-ups to offset the loss of jobs that are
moving offshore.

The above are the costs of not achieving universal health care in America by any
solution. There is a specific subset of costs that would remain if the solution chosen toachieve universal health care builds on the current system of employer-based
insurance (e.g. if the solution is not a comprehensive reform that moves to acentralized insurance scheme, like single payer or social insurance).
• Strain on businesses: The employer-based insurance system in America
constitutes a tremendous drain on businesses, as skyrocketing health insurance
premiums dig further into profit margins and undermine the ability of businesses toinvest in expansion. Health insurance premiums in 2005 grew approximately 2-3
times the rate of overall inflation (3.5%) and wage increases (2.7%).1• Loss of global competitiveness: Health insurance costs are built into the pricesof American products. Because businesses in other industrialized countries are notresponsible for shouldering most of the costs of employee health insurance,
American companies are at a competitive disadvantage globally. General Motors
reports that every car it makes is $1,500 more expensive because of health carecosts, far more than what Japanese and German automakers have to pay.15
Do the costs of achieving universal health care outweigh the benefits?
In 2005, the Emory economist Dr. Kenneth Thorpe published an important report for
the National Coalition for Health Care, a strictly non-partisan, broad-based coalition ofbusinesses, providers, unions, and other groups interested in improving the health caresystem. In this report, Dr. Thorpe calculated the costs to the government of instituting
health care for all under four different scenarios:• Institute an employer mandate plus individual mandate (requiring employers toprovide a certain level of health benefits, and requiring individuals who do not
get employer-based insurance to obtain health insurance through somemechanism)• Expand public programs such as Medicaid;••Create a new program for the uninsured modeled after the Federal Employee
Health Benefits Plan (FEHBP), the insurance plan for federal employees;
Create a universal, public financed plan.

This study did not just focus on expanding access; it also assumed significant systemicchanges including administrative simplification, computerized physician order entry, an
automated patient safety/error reporting system, reduction in inappropriate clinicalpractice variation, and controls of provider payments and premiums to reach target
goals in expenditure growth. According to Thorpe’s analysis, each of these four
options would save money over 10 years. The first two options would save $320.5
billion over 10 years, the third option would save $369.8 billion over 10 years, and thefourth option would save $1.1 trillion over 10 years.16
The important point to take away from Thorpe’s study is that universal health care,coupled with cost controls, can save money while expanding health care access toeveryone. If universal health care simply expanded access, the net expenditure would
be large. The only way to pay for this expanded access is to institute cost controls
such as administrative simplification.
Note that it is much easier in some universal health care solutions to institute cost
controls than others. For instance, a single payer system allows for a more dramatic
reduction of administrative costs than do the other three solutions, all of which build on
the current system.
Conclusion
There are real economic costs associated with uninsurance, as detailed above.
Although many of these costs are not quantifiable given present data, the idea that
universal health care would entail a massive outlay of money with no return does nottake into account the hidden economic gains associated with having a healthier andlonger living workforce.
Even if one were to assume that universal health care would entail a large outlay ofmoney with no economic return, the amount of money it costs to cover all is literally adrop in the bucket of the U.S. economy. In the end, universal health care is a matterof budgetary priorities, and therefore of moral priorities. As the world-famous
Princeton health economist Uwe Reinhardt put it, “The issue of universal coverage is
not a matter of economics. Little more than 1% of GDP assigned to health could coverall. It is a matter of soul.”
THE CULTURAL CASE FOR UNIVERSAL HEALTHCARE“Economic goods that can be valued in monetary terms are not the only kinds of goodthat we value having. Providing certain important goods like health care to allmembers of society has its own value.”8

“Uninsurance in America not only has hidden costs, it represents lost opportunities tomore fully realize important social and political ideals that account for our nation’s
political stability and vitality. Extending the social benefit of health insurance would
help us make our implicit and explicit democratic political commitments of equal
opportunity and mutual concern and respect more meaningful and concrete.”8These two quotes from the Institute of Medicine’s report on the uninsured capture theessence of the cultural argument for universal health care – the idea that universal
health care is not just consistent with American values, but demanded by them.
Clearly, it is extremely challenging to define American values as a whole, and what
follows are generalizations that may not apply to every American.
What does the American Dream mean to people?
In a May 2005, a representative group of 1000 participants was asked to define what
the American Dream means to them. The three responses that scored highest were
“having a close family”, “having the freedom to make decisions about your life”, andbeing able to provide for yourself and your family.” In a follow-up question, theparticipants were asked what they felt was the main threat to the American dream. Byfar, the response that scored highest was “health insurance that is too expensive” –above the expense of college education, the quality of public schools, the loss of
security in retirement, and the threat of a terrorist attack.17
How can the expense of health insurance be a threat to the American dream?
• Having a close family: The stress borne by families with members who haveextremely high health care costs or who are ill because they cannot access healthcare was documented in the Institute of Medicine’s report on the uninsured.6
Dealing with collections agencies, personal bankruptcy, and transient periods ofuninsurance can be part and parcel of the experience of American families wheneven one of their members is uninsured. Children in particular are harmed byfamilial stress and developmental delays from not receiving health care, both ofwhich can lead to behavioral problems and loss of potential.8• Having the freedom to make decisions about your life: The freedom to makedecisions about one’s life includes having the financial resources to pursue one’s
goals. More explicitly, the “job lock” phenomenon, in which millions of Americans
stay with a job they don’t like because it provides health insurance it provides, is aclear barrier to being able to freely make decisions about how your life plays out.
• Being able to provide for yourself and your family: With health carepremiums increasing 2-3 times the rate of inflation and increases in average weekly
earnings, employers are forcing employees to pay a greater share of the healthinsurance premiums.1 In addition, employers are increasingly passing theirincreased health insurance costs to employees by not raising wages. Healthinsurance is a form of compensation even though it is not counted as salary, and if
businesses want to keep total compensation per worker steady, they often holdwages the same when health insurance premiums increase. Finally, private healthinsurance is trending towards high-deductible insurance that provides less

protection against health care costs than before. All of these conspire to increase
the amount the average American is paying both to have health insurance and touse the health care system.
A universal health care system that insulated people from the costs of health carewould help people pursue the American dream, at least as defined in this survey.
American values as they relate to universal health care
• Americans purport to believe in equal opportunity. Yet, in the current situation,
those who do not have health care are at risk for financial ruin and poorer health,both of which disadvantage them in society and thereby do not give them equal
opportunity. Education is guaranteed in America in part to further the ideal ofequal opportunity, but health care is not treated in the same way.
• The Declaration of Independence states there are certain “inalienable rights”,
including life, liberty and the pursuit of happiness. If Americans believe in an
inalienable right to life, how can we tolerate a system that denies people lifesaving
medications and treatments? Similarly, if Americans believe in an inalienable rightto the pursuit of happiness, how can we allow millions of dreams to be smashed by
the financial and physical consequences of uninsurance?
• Finally, a value that is not clearly specific to Americans but that certainly is held by
is economic efficiency -- getting good value for money. The United States spend
almost twice per capita on health care on average than other countries do.18 Yet,
the American health care system suffers from rampant uninsurance, subpar life
expectancy and infant mortality rates, and uneven performance on quality.
Americans do not need more money for health care; they need more health care for
their money.
CONCLUSION
It is tempting to believe that the current design of the health care system is untenable– that the system is on the verge of collapse. Yet, countless of reformers haveproclaimed the impending doom of the health care system throughout the years, only
to see the American health care system morph into an externally different yet stillfundamentally flawed entity. The only way Americans can avoid repeating thisabysmal cycle is to fully engage the central questions underlying this issue. Is it
indeed acceptable to deny people health care based on their ability to pay? Or ishealth care a basic need that should be provided to every American as a matter ofcourse? If the answer is the latter, then we need to overcome the remarkable inertiaof the American health care system and create a society in which health care isavailable to all.
Contact:
Flávio Casoy
AMSA Jack Rutledge Fellow
1902 Association Drive
Reston, VA 20191
jrf@amsa.org(703) 620-6600 x256

Written by Kao-Ping ChuaAMSA Jack Rutledge Fellow 2005-2006
Updated by Flávio Casoy
AMSA Jack Rutledge Fellow 2007-2008

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