Understanding Why the American Healthcare System is the Worst in the Developed World

 Post-WII England

Post-WWII United States

“The business of America is business.” 

President Calvin Cooledge

FDR’s New Deal was a recovery action following the laissez-faire market-driven economic policies, under Calvin Cooledge and Herbert Hoover, that resulted from a completely unregulated financial and business environment culminating in the Great Depression. FDR’s permanent social reforms (like Social Security and Medicare for elderly Americans) and regulatory supervision of corporate America (like the Securities and Exchange Commission and the National Labor Relations Board) were born of his “big fix” of a derailed America.

Inadvertently, FDR’s infrastructural efforts to create massive power-generating dams (which were make-work programs to provide jobs for displaced and unemployed victims of The Great Depression), created a huge electrical power over-capacity, well in excess of what the country required. It was the electrical surplus that was principally responsible for the allied victory in WWII. America was able to build the ships, planes, artillery, tanks and munitions to supply all our allies with the tools without which victory would have belonged to Germany and Japan. But our inferior medical healthcare was dramatically impacted by the aftermath of WWII. Here’s why.

Aside from Pearl Harbor and distant US territories, the United States escaped WWII largely intact. As bombed out England (Canada’s resources were deployed to benefit England), continental Europe, Soviet Russia and Japan had been decimated by the war – entire cities leveled, factories and power plants destroyed, roads and bridges blown apart and housing crumbled in ashes. The United States became the only surviving mega-economic power able to focus entirely on economic growth. The GI Bill provided educational and home ownership incentives that propelled our economy even further. America was incentivized by Eisenhower-era commitments to productivity-enhancing infrastructure. From the National Interstate and Defense Highways Act of 1956 to the post-Sputnik commitment to education and research, we only grew stronger.

There were some corollaries to this success. Generally, professionals at every level were earning top dollar, considerably more than their counterparts anywhere else on earth. Institutions like hospitals benefitted from those concomitant technical and medical advances, very expensive but equally very effective. Medical doctors were both respected and extremely well-paid. Europe, by way of example, had decent doctors, but their pay levels reflected a post-war recovery economy. So for, Europe, the cost of universal healthcare had an entry-level cost seriously less than what a comparable program would have cost in the United States. Today, our wavering healthcare per capita costs are roughly double those in the rest of the developed world.

Still, the institution of post-WII universal healthcare had a shaky start. Canada’s example is illustrative; the introduction of national health insurance began at a provincial level, as conservatives railed using the standard “creeping socialism” mantra to stop the movement. “Saskatchewan took the lead in 1947 when its socialist government, the CCF, introduced hospital insurance. The federal CCF and Progressive Conservative parties were interested, so for political reasons the Liberal government of Louis St.-Laurent took action. In April, 1957, the House of Commons unanimously passed the Hospital and Diagnostic Services Act, which covered a range of hospital services. The scheme was designed to fail, because it required the support of five provinces with half Canada’s population and Ontario and Quebec were opposed. A year later, the newly-elected Progressive Conservative government of John Diefenbaker dropped that condition, five small provinces joined the scheme, and Canada had universal hospital insurance. Saskatchewan then used the money freed up by Ottawa’s contributions to hospital insurance to launch the next program in its plan for the welfare state; Medicare…

“Work on various plans proceeded at both the federal and provincial levels, and at a conference on June 19, 1965, Liberal Prime Minister Lester B. Pearson told a surprised group of premiers that Canada was to have a federally-drafted, shared-cost Medicare program. Eighty percent of provincial services would be covered and Ottawa would pay half the cost.” Ed Whitcomb in a Canadian Public Policy piece - Health Care and Federal-Provincial Relations: Cash and Confrontation. The reaction pushed liberals out of power and conservatives back in, but national healthcare stuck. Despite differences within various provinces – dealing with the wait-time to get specialist appointments and the time spent managing through the system – today most Canadians would rather give up their sacred national sport, ice hockey, that forego their healthcare system.

In the 1990s, union-mandated healthcare insurance (the closest we were to national healthcare) was so expensive that US carmakers moved many of their plants to Ontario, Canada, where workers were paid roughly the same as US workers, but the $1500-$2000 allocable healthcare benefit costs per vehicle that US companies had to pay became zero under Canada’s system. Healthcare moved from being a “liberal” cause to being supported by virtually all Canadian parties regardless of political persuasion.

As medical technology and pharmacological research address more healthcare needs, the overall costs in the United States continue to skyrocket, even for those covered by insurance. Premiums, deductibles, caps and co-pays are responsible for their share of the massive healthcare debt that plagues millions and millions of Americans. Europeans, for example, have locked their programs and have the same access to medicines and technology as we do, but protecting healthcare profits ensures that the US will only face more medical bankruptcies and higher costs.

Writing for the September 20th NBC News, Gretchen Morgenson, explains: “Americans owe some $220 billion in medical debt, according to KFF, a nonprofit health policy research, polling and news organization. The top three states for medical debt are South Dakota, where 18% of the population is affected, followed by Mississippi at 15% and … North Carolina at 13%...” See also my recent We Have the Best Healthcare in the World, if You are Rich blog. North Carolina is on a path to eliminate lingering medical debt. It is unsustainable.

The trend lines are beyond clear: as we cut taxes for the richest Americans, the rest of us face a future of accelerating healthcare costs, receding coverage with expensive add-ons even for those with insurance, projected to be well over expected increases in compensation and the overall cost of living. The choice remains: protect the profits in the healthcare sector or provide solid medical coverage for the rest of us. As I have said before, that is a mutually exclusive choice.

I’m Peter Dekom, and no matter how much MAGA and the wealthy repeat that false slogan – universal healthcare is “creeping socialism” – the rich will get richer, and most of the rest of will pay for that… and get sicker (as our average life expectancy continues on a downward vector).