The recent Republican debacle on healthcare could prove to be an opportunity. It highlighted, yet again, the complexity of America’s system, which continues to be by far the most expensive and inefficient in the advanced world. But Donald Trump could actually use the legislative collapse to fix healthcare if he went back to basics and to his core convictions on the topic, which are surprisingly intelligent and consistent.
There is an understandable impulse on the right to assume that healthcare would work more efficiently if it were a free market — or a freer market. This is true for most goods and services. But in 1963, the economist Kenneth Arrow, who later won a Nobel Prize, offered an explanation as to why markets would not work well in this area. He argued that there was a huge mismatch of power and information between the buyer and the seller. If a salesman tells you to buy a particular television, you can easily choose another or just walk away. If a doctor insists that you need a medicine or a procedure, you are far less likely to reject the advice. And, Arrow pointed out, people think they don’t need healthcare until they get sick, and then they need lots of it.
Every advanced economy in the world has implicitly acknowledged his argument because they have all adopted some version of a state-directed system for healthcare. Consider the 16 countries that rank higher than the United States on the conservative Heritage Foundation’s Index of Economic Freedom. All except Singapore (which has a unique state-driven approach) have universal healthcare systems that can be described as single-payer (Medicare for all), government-run healthcare (the British model) or Obamacare-plus (private insurance with a real mandate that everyone opt in). Hong Kong, often considered the most unregulated free market in the world, has a British-style government-run system. Switzerland, one of the most business-friendly countries, had a private insurance system just like the United States’ but found that, to make it work, it had to introduce a mandate.
While producing a CNN documentary on healthcare systems around the globe, I was particularly struck by the experience of Taiwan, another free-market haven. In 1995, 40 percent of its population was uninsured and the country had very poor health outcomes. The government decided to canvass the world for the best ideas before instituting a new framework. It chose Medicare for all, a single government payer, with multiple private providers. The results are astonishing. Taiwan has achieved some of the best outcomes in the world while paying only 7 percent of its GDP on healthcare (compared with 18 percent in the U.S.). I asked William Hsiao, an economist who helped devise the country’s model, what lessons they took, if any, from the United States. “You can learn what not to do from the United States rather than learn what to do,” he replied.
Americans often assume that despite its costs, American healthcare provides better services than others. We often hear about the waiting time for care in other countries. But according to the Commonwealth Fund, among industrialized countries, the U.S. is in the middle of the pack for wait times, behind even the U.K. Moreover, one of the world’s leading experts, Uwe Reinhardt of Princeton, has found that Americans use less care than the average for developed countries when it comes to things like seeing a doctor or spending time in the hospital. The problem with the free market is there is little profit in prevention and lots in crisis care.
Trump has now taken up the call to repeal Obamacare. But until recently, healthcare was actually one of the rare issues on which he had spoken out, before his campaign, with remarkable consistency. In his 2000 book, The America We Deserve, he wrote: “I’m a conservative on most issues but a liberal on this one. We should not hear so many stories of families ruined by healthcare expenses. ... We must have universal healthcare. ... The Canadian plan ... helps Canadians live longer and healthier than Americans. There are fewer medical lawsuits, less loss of labor to sickness, and lower costs to companies paying for the medical care of their employees. ... We need, as a nation, to re-examine the single-payer plan, as many individual states are doing.”
Trump was right on this issue for much of his life. He has now caved to special interests and an ideology unmoored by facts. He could simply return to his convictions, reach out to Democrats and help America solve its healthcare crisis.
Fareed Zakaria’s email address is comments@fareedzakaria.com.
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