America's health-care system runs the gamut from capitalism to socialism, stopping at all points between. At the free-market extreme are 10 million people who buy private insurance without any government help and 48 million people with no insurance at all. At the collectivized end are 5 million military veterans who see government doctors in government hospitals, 32 million retirees covered directly by the federal government under Medicare, and 37 million insured by Medicaid. In the middle are the majority, 153 million workers and their families, who get government-subsidized private insurance through their employers
A growing consensus recognizes this patchwork as economically disadvantageous and morally intolerable. Viewed as a whole, the American system is inefficient, expensive, and possibly unsustainable, consuming 16 percent of GDP and growing at a rate of 6.4 percent a year. European countries manage to provide universal, high-quality care for half as much per capita. Employer-based coverage is a drag on the economy, tethering workers to jobs they would otherwise leave and harming the competitiveness of American manufacturing by adding to the cost of goods. Health-care spending is a budget-wrecker at every level of government. And for all we spend, 16 percent of the population, including 8 million children, must make do at the system's charitable margins.
But if the status quo is untenable, the Euro alternative remains an impossible sell. Americans place a high premium on personal liberty and individual choice in all matters. A single-payer system, in which government insures everyone directly, diminishes consumer freedom for the sake of greater equity and efficiency. Many resist making that trade-off, even where it would serve their interests. As recently as 2000, Oregon, which is either the most—or the second-most, after Vermont—progressive-minded state in the country, defeated a single-payer initiative by a margin of 4-to-1.
The action at the moment is all in the big space between the status quo and single-payer. President Bush started the conversation in his January State of the Union address, in which he proposed capping the tax deductibility of employer-provided plans and creating a new tax deduction for individuals. By turning the health-care tax deduction into a kind of voucher, Bush would discipline spending and allow more individuals to afford insurance. His proposal didn't deserve the scorn heaped on it by leading Democrats. A paper from the liberal Tax Policy Center calls the president's proposal "in some respects … innovative and a step in the right direction." But Bush is thinking too small. His plan risks undermining the current employer-based system without replacing it, and fails to grapple in a serious way with the problem of the uninsured.
John Edwards recently became the only presidential candidate to get specific on the subject, when he laid out a plan bolder than Bush's that would build on the employer-based system. Edwards would require companies that don't insure their workers to pay into a fund for the uninsured. Following the trend in Massachusetts and California, he would add an individual mandate, a requirement that anyone not covered at work buy insurance in a regulated market. The chief advantages of the Edwards plan are that it achieves universal coverage without disrupting the way most Americans now receive health care, and that it's straightforward about raising taxes to pay for extending coverage to the uninsured. Its chief disadvantages are that it would do little to control costs and that it fails to break the anachronistic connection between employers and insurance.