The Tycoon Report

Universal Health Care

Dylan, I'm a Canadian, but I'm something of a political junkie and I follow US politics very closely. There is now, and has been for at least 2 decades, a "push" for Universal Health Care (UNC). In a phrase - it's not going to happen ... unless Americans are prepared to either see extraordinary (double digit) tax increases or completely destroy the economy and I don't see either of those as likely. There are a myriad of reasons, but here are only some of them ...

First, you must realize the concept of demographics. About 1/3rd of the population of the US (and Canada) are "baby boomers". The "leading edge" of them are now about 60; the "trailing edge" is about 40.

Who makes medical claims? If you give it some thought you'll realize that the "lion's share" of these are made by the very young (infants and young children) and "old people". (I'll let you decide what "old" is, but I think we can agree that 70 is, at a minimum, what we'd call "old". The kinds of medical claims that will be significant and require extensive use of drugs, hospital stays, doctors and nurses, etc. will largely come from this latter cohort.

The "leading edge" of boomers will only be UNC "contributors" for 10 years before they start making claims. One serious heart attack or hip joint replacement surgery or kidney transplant, etc. will eat up all the contributions they ever made by a multiplier. Where will the shortfall come from?

And it will get worse each year for 20 years. Compound that by the fact that living beyond age 80 is not uncommon today and will be much more common in the years ahead. The money isn't there!

Next, what will be covered? For example, a woman gets breast cancer and has a lumpectomy, or worse, a mastectomy. She's "uncomfortable" with the fact that her breasts aren't "even" so she wants a breast implant or similar cosmetic surgery. Will that be covered? Before you say "no" I caution you to remember that in America today you don't say "no" to women. Ever! If women decide they want this covered I assure you it will be. What about breast reduction surgery? Gals with DD cups don't think it's funny - it's uncomfortable and even painful.

What about rhinoplasty, dentures, birth control items from "the Pill" to IUDs and diaphrams to condoms? What about preventative medicine from vaccines to mammography and PSA testing? And I could go on. This stuff is expensive. Where will the line be drawn and who will draw it?

And if you think that's bad, consider this ...

Breast cancer is a big issue these days and justifiably so. But, for the most part, this affects women between the ages of 40 and 60. (Yeah, I know, they can get it at any age. I know a woman who died from it at age 42. But I emphasize "for the most part".) The point is that the incidence of this is now as bad is it's going to get. By demographics alone, the incidence (i.e. raw numbers) will decline in the years ahead as women become older and less likely to get it because the cohort behind the boomers is much smaller.

But a bigger issue than that is prostate cancer. This doesn't really affect men until their mid-60's. This means that boomer men are 4 or 5 years way from prostate cancer becoming a real medical pandemic. And as those boomer men get older the incidence (i.e. raw numbers) will get bigger and bigger. And the morbidity rate and mortality rate is about the same as for breast cancer. Ask any MD and he'll tell you that if you're a man and you don't die of something else, your prostate will get you. Compound that with the fact that we spend precious little in research on it - especially when compared to breast cancer and AIDS. Add to that the (sad) fact that, whereas women are reticent but likely to undergo the discomfort of mammography, men are incredibly reluctant (stupid?) to undergo a digital rectal exam or have the PSA test. And no one is out there telling men to do so.

Prostate cancer, even if caught early, may mean surgery, but it will also mean chemotherapy and radiation treatments and drugs (just like for breast cancer.) Who will pay for that? It can lead to incontinence. Will the diapers be a medical expense? It can lead to impotence. Who will pay for the psychological treatments to help men deal with that?

Who will be the caregivers? In many cases it will fall to their wives which involves women in the issue in a major way that breast cancer in women doesn't involve men. But if those women can't (or won't) it means nursing care. Who will pay for that?

And remember, these aren't men who are relatively young and vibrant ... they're old men, often in their mid 70s who may or may not be able to fend for themselves.

I could go on here, but you see the point by now. In Canada, we've had socialized medicine for over 40 years. Baby boomers here have been paying into this all their lives (and, of course, their parents paid into it and their children and grandchildren are now paying into the "plan" in one way or another.)

But the US is starting from "ground zero". There is no "plan" in place and the government doesn't have a surplus to fund it. Do the math and you'll see that, actuarially, it is a road to national bankruptcy.

For all of that, and other reasons, it's my view that you'll not see UNC in the US anytime in the foreseeable future.