Was Michael Moore Right About The Us Health Care System?

In a 123 minute documentary, titled SICKO, which was released in 2007, Michael Moore highlighted the problems and failures of US healthcare system, in a way that not only attracted enormous public attention, but perhaps, also facilitated some major reforms, including the introduction of Obamacare in 2010. As the Trump Administration grapples with undoing some of those reforms, maybe it is time to look back...
Was Michael Moore Right about the US Health Care System?
Source - Wikimedia Commons (https://commons.wikimedia.org/wiki/File%3AUS_Health_Care_Cost_as_Percent_of_GDP.svg)

I have always felt that Moore was right, and I want to tell you why. But before I do that, it is worth understanding why it is relevant to talk about him now.

Moore’s Documentary in 2007 created Ripples

Moore made a two hour documentary that was released on 22 June, 2017, and attracted a lot of attention. Titled “Sicko”, it highlighted the shortcomings of the healthcare system in the United States at that point of time, and also compared healthcare system in the United States with some other countries like United Kingdom, France and Cuba, which provide a universal healthcare to

their citizens. Through interview with real persons in these different countries, it showed how the healthcare system in these countries is serving their people better than the way it does in the United Stated, and that this happens in spite of the fact that per capital healthcare costs are by far, the highest in the United Stated.

Moore’s documentary was not only a commercial success, exceeding the expectations of its producers and financiers, but also wide acclaimed from people and experts alike. The importance and significance of the documentary in initiating a public debate and affecting public opinion can be best perceived from the very structured and well planned attempts by the healthcare industry, including the health insurance companies, hospitals and pharmaceuticals that tried their best to discredit Moore’s depiction of the issues as erroneous and also questioned his judgment, with limited success. Moore did not bring any new discoveries out in Sicko. But, the depiction of problems in a manner by which people were able to connect to them was an important achievement of his documentary. While it difficult to quantify the extent to which it may have contributed in subsequent reforms, it certainly helped in tilting public opinion in favour of reforms.

In 2010, the introduction of Obamacare aimed at removing some of the limitations that were highlighted in Sicko. Of course, it did not go to the extent of replacing insurance based healthcare with public funded universal healthcare. However, it did expand the scope of health support, and also imposed additional taxes on the richest of Americans. Part of this is what president Trump wishes to undo by the proposed ‘American healthcare Act of 2017’.

If Moore was right, probably so was President Obama in introducing Obamacare. In that case, repeal of Obamacare may not be the best option, especially for the poorest of Americans.

Facts about State of Health Care in United States

And before I make an argument, let me state some of the facts. United States spends more on health care, both as a proportion of GDP, as well on per capita basis, than any other country in the world, as per the 'Core Health Indicators' of WHO. In 2015, healthcare spending in United States amounted to $3.2 trillion or 17.8% of its GDP. The per capital expenditure was just a shade short of $10,000, which is likely to grow further in coming years.

United States is the only developed country in the world without a universal health care system. WHO, in 2000, ranked US health care system as 37th in overall performance, and 72nd in overall level of health. CIA fact book once ranked United States as 41st in terms of low infant mortality rate. In 2010, just before the introduction of Obamacare, about 53 million or 18.2% of Americans under 65 years were without any health insurance. Researches indicate that rising cost of health care insurance is one of the leading causes of individual bankruptcies, and a major cost of US corporations and employers.

After Obamacare, the number of uninsured has come down to around 27 million or 10% of under 65 population. However, it is still far from the universal healthcare provision available in other countries.

Economy is not the only challenge faced by the United States. An equally important challenge has been staring it in the form of Health Care System. In spite of spending more than double in terms of per capita expenses on health care, United States has a large population without these benefits, while the high costs are constraining the economy.

Reasons for Poor Healthcare System in United States

From these facts, if any indisputable conclusion can be drawn, it is that

the state of health care in US is neither in tune with its economic health, nor satisfactory in terms of money and resources devoted to it. There are three main reasons for it.

First, the free markets that are the pillars of strength for US economy, are also the reason of problems pertaining to health care. In case of health care, free markets are always likely to fail because of their inherent characteristic. Unlike other goods and services, health care is supplier (physician) driven, full of information asymmetry and reflective of supply more than the demand.

Second, health care is a merit good, and hence cannot be totally left to the market alone. It is inhumane to allow a destitute to die uncared, just because he has nothing to pay. Markets cannot take care of that. The large number of uninsured people in United States is a living testimony to this limitation.

Third, the individual centric capitalist society of United States places too much emphasis on marketing and business of health care, that leaves the medical profession, primarily a profession of service totally devoid of any human service concept and nobility that has traditionally been its hallmark. As a result, the unethical practices, including collusions between the physician and pharmaceuticals have continued to rise. Their organized attempts to discredit Moore only further highlighted this limitation.

Lastly, the US healthcare also suffers from the unintended consequences of its legal system, especially the profit oriented litigation initiated by ‘ambulance chasers’ who file cases against medical service providers with the objective of seeking rent. On one hand, it creates incentives for physicians to opt for all possible investigations to avoid negligence charges later. On the other, it adds the legal costs of obtaining medical indemnity to their charges. This substantially inflates the overhead costs of healthcare.

Because of these reasons, US health care has not been as effective as its markets, and that is a situation that may not change unless some drastic steps are adhered to.

A Balanced Perspective Required

Moore had focused only upon some of these facts, though in a more dramatized manner. His comparison between United States and Cuba may not be fully rational, because the standards of care in Cuba may not be acceptable at all in United States. However, the issues he raised were very real, and generally correct. It is a fact that US health care system had become inefficient, while violating norms of equity.

Many of the limitations that were highlighted by Moore continue to exist even today, although the Obamacare has helped a lot by reducing the number of uninsured. Somebody seeking even more reforms in the direction of Obamacare, or even a debate for changing over to another model that provides greater coverage of public healthcare would be reasonably justified in doing so. Thus, a decade after Sicko was released, the is even greater justification in looking at the things that he highlighted.

While Moore is correct, I do not think United States needs to just borrow the universal health care system of other countries. That is also unlikely to solve all the problems faced by the people, because a universal government establishment also suffers from several distortion of incentives, and may not be as responsive as the existing Health Care system that exists today in the United States.

Probably the need of the hour is to analyze the role of saving for medical care, and combining a system of savings based medical insurance with properly targeted health care subsidy. There is also a role of an expert regulatory body which may put brakes on the usual business greed of all stakeholders, and prevent some of the supplier driven rise of demand.

Easier said than done, but not impossible. Maybe it is time for another documentary!

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