Healthcare: a uniquely American tyranny

Economic liberals and libertarians should love universal healthare. This is why they don’t

One of the most shocking aspects of anyone who has spent any amount of time living in the US is its lack of public healthcare provision. It is the only industrialized economy not to offer either a universal healthcare service like Britain’s NHS, or a universal healthcare insurance scheme like that which is provided in countries like Germany and France. Even most of the richer developing countries offer services that the vastly wealthier US lacks: in my country, Mexico, you have access to the main public healthcare system with most formal jobs and even those in informal jobs have some limited coverage from a separate public scheme. Worse still is that the cost of private insurance in the US is horrifically expensive: the average monthly premium is estimated at over $300 a month for individuals and over $800 for families. Then there’s the copayments and the fact that insurers may decide not to cover you at all for a myriad of reasons.

However, there is another aspect of the US’s dysfunctional and inhumane healthcare system that is arguably the most troubling. That it exists solely for the purpose of private profit is problematic in itself but its nature as an instrument for labor’s subservience to capital is much worse. This is because for the grand majority of Americans, healthcare is obtained through their employers and is widely seen as an important “perk” of a good job. Although the Affordable Care Act (Obamacare) of 2010 made it much easier for  to obtain insurance while not employed, the fact that employers can generally negotiate a better deal with insurers as an institution than you as an individual means that job-based insurance schemes generally have better coverage and are cheaper than anything that you as an individual could obtain on your own. Consequently, the cost of losing a job is two-fold: not only your obvious loss of income but also the increased risk of suffering some health-related emergency or losing coverage for any condition that you or a loved one under your plan already had.

No such thing as a free labor market

The power that this affords employers is tremendous. Economic liberals and libertarians frequently argue that the labor market is precisely that, a “market” with frictionless entry and exit and consequently, near perfect competition.  Don’t like your job? Get a new one. Company treats its employees badly or pays them poorly? They’ll leave and nobody will want to work for them anymore. In fact, nothing could be further from the truth. There is increasing evidence from economic studies that the labor market has the characteristics of a monopsony, that is, a market where there is only one buyer. And that is precisely because there are huge costs to the employee from switching jobs. That’s bad enough in most countries where healthcare is provided by the state regardless of employment condition, but in the US this is made much worse since the risk of illness or death to you or your dependents must be counted as well.

This state of affairs, however, is not entirely beneficial for employers. Because a healthcare plan is such an important component of the attractiveness of a full-time job offer, even though no US employer is forced to offer a healthcare plan, most do. And this, of course, adds an extra cost to its overheads and to its profits, even after considering how much of these costs they have quietly shifted to employees in recent years. Surely then, US employers would be vociferous proponents of plans like Medicare for All or some form of universal healthcare. After all, the cost of the average employee healthcare plan runs at around $20,000 per year, of which employees contribute less than a third of. The rest comes out of the company’s pockets. Why should companies pay so much?

A strange objection

And yet, the US’s corporate elite, along with the media that caters to it, is overwhelmingly opposed to Medicare for All. What explains this apparent contradiction? Simple: employers may be saddled with huge healthcare costs but in return, they have subservient employees that will be reluctant to quit their jobs even in the face of poor pay and poor working conditions. There is a further benefit in firms that are unionized: unions will spend much of their negotiating capital in lobbying for a better healthcare plan, and thus won’t have enough leverage for negotiating other issues involving employee well-being, such as a pay or representation. For a nation that waxes lyrical about free enterprise and the entrepreneur as a job creator and hero, why saddle businesses (especially small businesses) with such astronomical costs that should be the responsibility of the state? Even libertarians should be championing Medicare for All yet most get a mini heart attack when the words are even mentioned, lest it conjure the specter of “socialized medicine” or similar nonsense.

Make no mistake. The fight for a more humane healthcare system in the US is not just to avoid the thousands (and cumulatively probably millions) of needless deaths that have been caused by lack of coverage. It is not just to avoid the number one cause of bankruptcy in the country. It is not just to avoid the anxiety and stress that millions of American families suffer from due to fears of a medical emergency plunging them into financial despair (40% of American would struggle to afford $400 for a medical emergency according to the Federal Reserve). It is to strengthen the hands of workers so that they can be freer to choose their jobs, to demand better work conditions, and to live less under the control of their employers in an aspect of life that extends beyond the workplace. Some would dare call this freedom. Economic liberals and libertarians, who pride themselves at being passionate advocates of freedom and democracy, should wake up to their hypocrisy of not extending this to economic life as well.

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