This June, Gov. Ralph Northam signed a state budget bill that gives 400,000 low-income Virginians access to government health insurance. This is happening not just in Virginia. US states continue to expand Medicaid, including”red states” like Utah, Nebraska, and Idaho.
The recent expansions of Medicaid, however, are just the latest step in a quickly expanding government-funded healthcare apparatus that has been growing for decades. Government-sector healthcare makes up half of all healthcare spending in the United States.
Using data from the OECD’s 2015 Health Statistics report, government spending in the United States accounted for 48% of overall health spending, compared with an OECD average of 73%.
U.S. government-sector spending (mostly Medicaid, Medicare, VA, etc.) matches most other OECD countries and is on a par with Germany, Switzerland, Belgium, Austrian, New Zealand, and others.
According to the World Health Organization, per capita, government spending on healthcare is the fourth highest in the world.
So, any argument that considers ours a “free market” in health care is not accurate.
The U.S. healthcare market is expansive, expensive, and dominates the industry. With so many Baby Boomers going on Medicare in the near future, and with the continued expansion of Medicaid, it won’t be many more years before a much larger majority of healthcare spending is done by governments.
This is not new, but part of an established trend.
The US is currently approaching levels of public spending that will rival those of some nations that offer what we like to consider socialized healthcare.
The problem is that as the federal government becomes the largest single payer for healthcare purchases in the US, there is no longer any functioning market pricing system in healthcare. The industry is now dominated by government contracts, government spending, and government regulations on healthcare services.
Prices respond by going up because healthcare is heavily subsidized by various government interventions. Subsidized goods and services experience growing demand as the cost — as perceived by consumers — goes down. In most other government-controlled healthcare systems, costs are controlled by denying care or making folks wait in long queues.
America now has an enormous “public” healthcare system–socialized medicine is here, so market-based healthcare instead needs to carve out a niche in a government dominated sector. The discussion is now one of “de-regulation,” “flexibility,” for a truly free fee-for-service economy to develop.