One of the most persistent and intractable issues in the politics of the United States has been, and seems on track to continue being, the healthcare system. There is a general dissatisfaction with the current healthcare system in the United States, and despite perhaps well intentioned attempts in the past to improve it, the discontent and tension seem to be at an all time high. This can be seen with the recent killing of the United Healthcare CEO, over what appears to be frustrations with the effectiveness of health insurance. The public reaction to the killing reveals that it is more than an isolated incident without broader implications, as a poll by Emerson College found that among 18-29-year-olds, more people believed the killing was justified than not. This same poll also showed that among the broader populace, 70% believed that the practices of United Healthcare lead to the killing taking place.

So, it’s obvious that the effectiveness of health insurance, has gone beyond being solely a political issue, and has become an emotional trigger for the growing resentment of Americans, specifically the middle classes. What should be done with this problem? To better understand the issue, it helps to track the history of it, specifically as it has to do with government legislation

The first sweeping government legislation on health insurance was in 1965, with the introduction of Medicare and Medicaid under the Great Society programs signed into law by Lyndon B. Johnson. Medicare provides low cost medical coverage for seniors aged 65 and up and people with disabilities. Medicaid provides low cost care for low income individuals. This was the first government intervention in the healthcare industry, as before these programs, healthcare and health insurance was for the most part a matter of the private sector, excluding things like veterans’ care.

The next major intervention was the passing of the Affordable Care Act, also known as Obamacare. This legislation expanded Medicaid coverage to include individuals with higher levels of income than before, banned denials of claims having to do with preexisting conditions, introduced tax credits and cost sharing, and encouraging preventative care. Obamacare was controversial, and opponents argued that it would increase taxes, cause excess spending, and limit individual freedom.

These two legislative efforts to reform healthcare and insurance have been the two biggest and most significant such efforts in the United States. Through these programs, the United States has become the country that spends the most per person on health insurance. However, even through these programs, many still are unable to get proper coverage. It’s commonplace for claims to be denied by health insurance companies, for seemingly no other reason other than the company can’t afford to spend the money. This is clearly part of the motivation for the widespread discontent with the current private healthcare system in the United States: high costs of premiums with high rates of claim denial.

Why are the costs so high and why must the insurance companies charge such high prices? Are the insurance companies just scamming everyone? The answer is that people who think they will need health insurance are the ones that are buying it, while those who think that they will not need it do not buy it, apart from those that get insurance through work. This is epitomized in the demographic of the “young poor,” young people who have little money to pay for optional private health insurance. They buy health insurance at strikingly low rates, according to Urban Institute. On the other hand are individuals who are aging or chronically ill. Those individuals who will be making extensive claims are the individuals who buy healthcare the most often. The insurance companies, then must charge higher premiums, because the only people that are buying insurance are those that will be inundating them with claims. They lack customers who will pay a premium and not make as many claims.

On top of the already existing problem inherent in the nature of healthcare, a mixed private-public system exacerbates already existing problems. When free government-funded healthcare is available to demographic groups like the “young poor,” even the few individuals who were originally buying voluntary private health insurance will now be covered by the government, and as such they will end their private plans. This raises premiums for individuals who desperately need the coverage, making an already significant problem worse.

So, what can be done about this? In his book The Undercover Economist, Tim Harford explains an alternate healthcare system that could be carried out far more efficiently, with less cost per person to the government. Instead of private insurance, the government could take a certain amount of money off each person’s tax bill each year, and put it into a high-interest savings account. Spending in this account could be limited to only healthcare. For individuals who make less than that amount of money per year, the government would step in to put that money in that healthcare only account. This would save the average person a significant amount of money, and more importantly, this introduces the factor of choice. Each person could choose to buy whichever medical treatments they think that they need, rather than an insurance company deciding which ones they can afford. Individuals typically do not need extensive medical treatment every single year, and as such, they will not empty their new healthcare accounts each year. Their accounts will slowly grow, and in the event of a higher than normal bill, they will be able to pay for it. This would be particularly effective if the accounts are opened when citizens are young. These young people, as already explained, need less healthcare generally than others, and their accounts will grow to a large sum by the time that they are older, and will actually need to spend that money on healthcare.

Private insurance could still exist, but it would only be limited to catastrophic costs, say, over $25,000. These incidences are rare, and for that reason, this kind of insurance would be fairly cheap. The old problem of young people not buying insurance would not apply here, as while young people are less likely to need all types of healthcare when compared to older people, they are about equally or even more likely to get these unexpected types of bills, for example from car crashes. Young people are three times more likely to get into car crashes than older adults according to the CDC. These types of bills would be from things like extreme injuries from a car accident, or rare diseases that require expensive treatments or medications. Since these risks apply equally to old and young, would mean that nearly everyone would buy this type of insurance. This would bring the cost of it even lower for the average person, increasing the efficiency of the system. Of course, when these types of claims are made, the insurance companies still an incentive to provide the customer with the cheapest treatment available, but the problem is far less severe, since nearly everyone is paying into this type of insurance, and the insurance company would not be so tight on money. The majority of bills, however, would be able to be paid for out of these new healthcare accounts, and when these accounts can’t cover a whole bill, this kind of insurance could step in.

This all sounds nice in theory, and it’s elegantly explained by Harford in his book, but does this system actually work in practice? It does, actually. In Singapore, a country, by the way, where citizens live about five years longer than Americans, citizens are made to put a certain amount of income in healthcare accounts like the ones described above. Individuals can then choose to do exactly what they want with their own money. Paradoxically, government organized systems like the one in Singapore actually lead to a more perfect and free market than the optional private system of the United States, usually seen as being more “free market,” and “capitalistic.” In the United States, the quality and type of care is usually decided by the insurance company when they choose whether or not to approve your claim, whereas in Singapore, its literally just your money and you can do what you want with it, as far as healthcare goes.

Just as described above, Singapore has a government-run health insurance system, only designed to cover extreme or unexpected costs. The limited and specific scope of this system ensures that the costs are low, and since young and old are equally likely to wind up with extreme or unexpected costs, the vast majority of individuals choose to buy into this program, keeping the costs low. So this type of economic theory can actually be put into place effectively.

So why has such a system not been implemented? There are two main reasons. The first reason is the ideological aversion amongst Americans to anything seen as close to mildly socialistic. 49% of Americans are against government organized healthcare, and opponents of such programs cite concerns of “free markets” or “socialism” to support their positions. These people fail to realize that the current healthcare system is not a perfect or free market, as individuals cannot usually choose what treatments they will receive. They must realize that a small and unintrusive tweak by the government can lead to a freer and more perfect market, where individuals choose what to do with their own money, not to mention the far cheaper cost.

These individuals are not wrong to criticize government organized healthcare, as it has been carried out in countries such as the UK with stunning incompetence. In the UK, the government provides, for no cost, all types of healthcare. The fact that people are not actually spending their own money when they go to the doctor’s office means that they will come in for anything and everything, leading to long wait times and wasteful spending. On top of this, the government plays the same role as private insurance companies in America, in that they must pick and choose which treatments they will approve. This leads to many valuable treatments being excluded from coverage, such as important treatments for Age-related Macular Degeneration, the leading cause of blindness in the UK according to Harford. It’s quite true that systems like these, lack a free market and are alarmingly reminiscent of socialism . However, government organized healthcare need not function like that.

The second reason why a system like this has not been implemented is because it would effectively decimate the current health insurance business. Current health insurance providers, who are now the primary payers, would lose large amounts of revenue, and market share, something probably not appreciated by the owners of these companies. It’s common knowledge that healthcare companies donate to political campaigns, with $41 million donated in just 2024, and it’s unlikely that elected officials would institute a policy that would cripple the exact industries that helped them gain power. This raises questions about corruption, and it suggests that such lobbying may not be good for the average American.

If America could overcome these two hurdles and implement a system like that of Singapore, the U.S. could lose that undesirable position as the country that spends the most on healthcare but doesn’t receive the best health outcomes. Individuals would pay less to, something that is important, as only 16% of Americans approve of the current cost of healthcare according to a Gallup poll. There are so many other further details about the issue of healthcare that are important to discuss, such as corporate plans for employees, drug price control, and overcharging by healthcare institutions, but it’s clear that the issue of healthcare need not be as complex and divisive as it is now, and that better options exist for a problem that has plagued American politics and society for several decades.