Calls for Change: Universal Health Coverage and the Problem of Collective Action in the United States

Source: October 2013 United Workers Healthcare Justice March; Flickr.com

Why has the United States been unable to switch to a universal health coverage system, when all other developed countries of the world have? This article argues that the problem of collective action may take part of the blame. In the event that certain individuals perceive themselves as giving up more than they get to achieve a world with universal health coverage, then for those individuals, their rational stance would be in opposition to this policy. If these types of individuals form the majority of the voting population, it is likely that politicians will not find universal coverage a particularly relishing idea to endorse. This may be the reason we see few countries switching to universal health coverage without an exogenous shift that changes the cost-benefit calculations of its voters. 

Every election year, the voting US public has had to grapple with the idea of a universal health system. From Bernie Sanders to Elizabeth Warren, leaders on the left-er side of the American left have long been campaigning for a system that guarantees healthcare to every American citizen. Yet no recent president, not even Barack Obama– who passed the historic Affordable Care Act, expanding the reach of Medicaid – has openly supported universal health coverage. This is surprising, considering the fact that nearly all developed countries have some form of free or universal care. In the chart below, the US, a country without free or universal care, is grouped together with states that are more often than not, in the developing stage, economically weaker, or in conflict zones. 

But perhaps the difficulty in changing the system is not altogether unexpected, and may be a rational symptom of the incentives in place in a democracy. As a democracy is dependent on the will of the people, it is not unlikely that collective action problems may play a role in creating obstacles to realistic change.

For a US president to win an election, she or he would need to secure at least half the electoral college vote – at least 270 electors, not a majority of the popular vote. But let us assume for a moment that it means 50 percent of the voters. This means that at least 50 percent of the voters must support her or his stance on certain issues. 

Does half of the US voter population support universal free healthcare? Let us examine this question. On the one hand, a single-payer system of universal healthcare would make everyone better off financially. Nobody would have to overpay in insurance premiums and nobody would be denied care. But the data shows that America is divided, quite literally. As per a long-running Kaiser poll, attitudes to universal health coverage have remained fairly consistent in the U.S., with 40 percent of respondents in favor of a single payer universal healthcare program around 1998 and 56 percent supporting Medicare-for-all in 2020.

However, when the same surveyed population is sent messages about potential costs of the program to themselves – delays in getting care and higher taxes – the percentage that still favors this plan falls to less than 30 . Now, the reality of these effects is not a given and would depend upon the type of system adopted. In fact, Fox and Poirer’s work shows that single-payer systems have wait times for care similar to those in the US, and the increase in taxes to adopt these systems may be lower than the insurance premiums given up. Yet, most politicians, including many Democrats, are quick to cite a hypothetical price tag and system delays as barriers to a system like Medicare for All. This may be because it is hard to imagine a system that meets increased demand with unchanged supply as realistic. How do you get more without giving up something?

And so we have a clear-cut collective action problem. The problem arises because universal healthcare will make everyone better off in the long term, but those benefits are unequal in the short term. Let’s break this down. At the moment, 8% of Americans are uninsured. For this group of individuals, universal healthcare is going to be a huge benefit, as it will reduce their medical costs by a great deal. For the remaining 90 percent, it’s a mixed bag. 

Depending on how each individual gets his or her insurance (employer provided, self-provided, etc.), there are varying levels of perceived immediate benefits. A 2020 Gallup Poll showed that while around 60 percent of Americans are worried about the affordability of healthcare in general, only 43 percent worry about paying for their own normal healthcare costs. For the remaining 57 percent, which forms the majority, there may be little immediate and tangible benefit to universal health coverage as this population was not concerned about costs to begin with. In fact, a 2019 Kaiser survey reports that around 7 in 10 people who have employer-funded insurance are happy or content with their insurance. This belief undeniably stems from a place of privilege, but it is not useful to pretend that privilege does not exist and does not play some role in rational choice.

In addition, there is the perception (and perhaps reality) of increased taxes. For the population that is unconcerned about their own normal healthcare costs – for instance, because their employer pays for insurance – they would feel the pinch of (potentially) increased taxes first, and then benefit of a safety net only in a later hypothetical situation where they would lose employment or be diagnosed with a debilitating condition. This is not an impossible situation to keep in mind, but it is harder to imagine than the real and immediate fear of a reduced paycheck. Due to this complex cost-benefit calculation, it will be difficult to present a majority that perceives itself as benefitting from a universal healthcare system in the immediate term. 

Thus, well-off democracies inherently suffer from collective action problems that may come in the way of system overhaul. To illustrate this, let’s take a look at the last few countries to shift to a system of universal coverage. In the last 30 years, only five countries have made the shift to a universal system. Of these five, two are hybrid regimes – Hong Kong and Singapore – which would suffer from fewer collective action problems. Of the remaining, two are relatively new democracies – Iceland and Israel, both of which were created as modern democracies in the 1940s, and so implemented this policy within fifty years of their formation. Rather than a switch, in Iceland, the policy was part of an ongoing experimentation with a social welfare system, where previously partially-public funded insurance funds were mandated for all people below a certain income. In Israel, the switch came out of the recommendations of a 1988 National Committee of Inquiry into the state of public health headed by a Supreme Court Justice, rather than a politician’s platform or campaign promises . A fifth, Switzerland, a long and stable democracy, entered into a policy mandating insurance coverage, not providing it. This was less of a revolutionary policy than implementing a single payer or two-tiered system, as was done in the other four countries. 

As the graph below (created using data from the New York State Department of Health and Praveen Ghanta) shows, most shifts to universal health care systems took place in the latter part of the last century, an era marked by nation-building. Policymaking was more fluid as new democracies were coming into being following the second World War. Since the 1990s, no country has made the revolutionary shift to a system of universal healthcare. This scenario seems likely under a situation where collective action in established democracies acts as a hurdle to revolutionary change. 

A counter-example to the argument that democratic collective action is behind the reluctance of the US to implement universal coverage is the implementation of the New Deal, a revolutionary social security policy which rescued the US from the Great Depression of the 1930s. In that situation, a majority of Americans may have backed the social safety net, resulting in the necessary political appetite to put it into policy. Why? The depression acted as an exogenous shock that actually changed the immediate cost/benefit situation for Americans. Unemployment peaked at 25 percent. It isn’t hard to imagine that another 25 percent of the population was facing immense shortages in basic services. There wasn’t much to lose and there was a lot to gain. It is possible that the Great Depression was enough of a shock to build that majority coalition that resulted in the majority benefitting from the safety net in the short term. 

It is hard to find examples of structural “revolutions” in democracies that come about without an external shock. It took India’s worst fiscal crisis of 1991 to shift it from a closed economy to an open one. The magnitude of the budget deficit meant that India had only enough foreign exchange to keep imports going for barely three weeks, including essential goods like oil and food. The only recourse seemed to be an IMF loan conditional on economic reforms and liberalization of the economy. The reforms were “in sharp contrast to the several earlier episodes of hesitant liberalization” just as a Medicare-for-All policy would be a sharp turn from hesitant expansion of healthcare access that has been ongoing in the US. The reforms would have been widely unpopular, even among those who implemented it – as a New York Times article from the period put it, “In remarks that would have been unthinkable by a Cabinet official in recent years, [the Finance Minister] demanded ‘no ideological hang-ups.’” Yet it was taken. Despite opposition from parts of the left, the right, and the Communist Party, liberalization was never rolled back and in fact, as the Indian economy stabilized through globalization, popular policy continued to push it further in the direction of openness.

The same argument may apply to the Canadian healthcare system, which has its roots in the Great Depression. The beginnings of provincial healthcare systems came through public demands in the 1930s. In 1947, the first Canadian province, Saskatchewan, implemented nearly universal healthcare, which became fully universal following federal legislation in 1958. From then on, incremental steps brought the nation to its current situation with national coverage. This did not come about as a revolution in a vacuum, but as the result of an exogenous shock, the Great Depression. 

An optimistic point of view may see the current Coronavirus crisis as such a shock to the US system. Writers from the World Bank, New England Journal of Medicine, and the Washington Post all argue that the huge economic cost of the pandemic, taking into account the millions laid off, coupled with the increased likelihood of needing to access healthcare reinforces the need for universal coverage , though it is unclear if popular opinion follows this reasoning. 54 percent of respondents in the Gallup Survey felt that they would worry about paying for healthcare in the event of a serious illness, and the pandemic has increased the likelihood of serious illness. At this point, more than eight in every 1,000 Americans has or has had Coronavirus. Everyone has a higher likelihood of falling sick. Remdesivir, the only emergency drug approved to treat this disease, comes at a price tag of over $3,000 for a week’s course – and that is for those with private insurance. However, it remains to be seen if these odds are enough to boost support for a universal health coverage policy, thereby beginning the breaking the barriers to collective action. On the other hand, the US has seen certain exogenous shocks in the fields of gun violence, which have mobilized the nation, but not collected the requisite majority coalition for concrete policy change. It remains to be seen whether the coronavirus will prove to be great enough in magnitude to force an exogenous shock to the system. 

Until then, populist presidents will continue to make only incremental steps towards universal healthcare. It may, on the other hand, take a leader with strong pro-universal coverage convictions  – the epitome of Max Weber’s “charismatic leader”– who has enough hold over the public to sway popular opinion in favor of reforms and garner the support of the collective masses.