US states could have universal healthcare

Here's how Utah could do it.

In my previous essay, I outlined how US states have the same population size and even the same authority to implement a social democracy, just like the Nordic countries. So let’s look at one specific example: Could a US state have universal healthcare? 

Utah is working on it. An organization called Common Sense Healthcare for Utah aims to put universal healthcare on the Utah ballot as soon as 2026. If passed, Utah could be the first state to offer universal healthcare to its citizens. 

You might wonder how a US state could possibly afford healthcare for all its citizens, but the truth is we are already spending the money. “Americans pay a higher rate of health care taxes than do the citizens of any other country, including the Nordic countries. So we're paying enough to get the care that we need, but we're just not getting it,” says Dr. Joseph Jarvis, chair of Common Sense. 

The US is the only high-income country that doesn’t guarantee healthcare for its citizens and now we’re paying for it. Even without funding universal healthcare, the US spends 18.3% of our GDP on healthcare while the Nordic countries average only 11%. Every year, the US spends $12,914 per person on healthcare, almost double what any other wealthy nation spends.

Source

And yet, the US has the worst health outcomes of any wealthy nation—with the lowest life expectancy at birth, the highest rate of avoidable deaths, and the highest rate of maternal and infant deaths.

Why are we paying so much more for healthcare than any other advanced nation and getting so much less? The answer is almost every possible reason. The history of healthcare in the United States is a series of bad decisions that all seemed like a good idea at the time, but wound up creating a much worse, and more expensive healthcare system than any of the ones created by wealthy countries. Now that other models have turned out much better, we’re trying to fix our system in retrospect. 

The problem is we’ve incentivized all these third-party healthcare funders—including private health insurance, Medicare, and Medicaid. These third-party entities were meant to protect us from catastrophic medical bills like cancer treatment, but now they cover everything down to birth control and eyeglasses, driving up prices of nearly every medical line item. Kind of like how a photographer might charge $500 for a family shoot, $2,000 for a wedding, or $10,000 for a Valentino ad. Because the service becomes part of an increasingly important event and an increasingly larger budget, the photographer can afford to inflate her prices, even if the same amount of work goes into each shoot. 

Our healthcare costs do that. Jarvis estimates that private insurance has inflated prices 20% above what we would spend on medical care alone. But if the problem is that we are spending too much on healthcare, he thinks the fix is redirecting the money we’re already spending to cover our healthcare costs directly.

“We spend $4.3 trillion a year on healthcare in the United States and easily $3 trillion of that is public money,” he says. “If you divide that $3 trillion up on a per capita basis to all Americans, Americans spend more than any other nation, the Nordic countries included, on healthcare. Since they have universal care and have better quality than we do, obviously $3 trillion is enough. And I'm suggesting that we make it enough.”

Here’s what we’re currently spending that $4.3 trillion on:

What we are currently spending $4.3 trillion on.

Who’s paying that $4.3 trillion bill? As of 2021, the federal government footed only 34%. The rest was covered locally: Private businesses covered 17%, state and local governments covered 15%, and individual households contributed the other 27% from their own pockets. 

Who’s footing the bill of that $4.3 trillion?

Because so much of the burden falls on states, states are actively looking for ways to alleviate it, and the easiest way to do that is to cut out the middleman. If the state and private business portion of our healthcare spending went directly to paying for our citizens’ medical bills, rather than funding multiple healthcare payers, Jarvis thinks we’d more than cover every Utah citizen’s medical bill, and for less. 

According to the Common Sense plan, Utah would still get federal funding and employers would still get a credit from the federal government for providing healthcare, but instead of using that money to pay for private health insurance it would fund Utah Cares, a statewide trust that would pay for all of our medical bills directly. 

“We will continue to collect all state tax revenues currently spent on healthcare and, in addition, we will have the state collect employer premiums for health benefits,” Jarvis says. “Then we will give that to a nonprofit private trust fund which will fund all healthcare in the state of Utah. Utah Cares will negotiate with hospitals about how they will take care of their patients and they will arrange to pay physicians for their services and all other health providers. As a resident of Utah, you would get a Utah Cares card that qualifies you to receive care and you'll walk into any hospital in the state and any doctor's office in the state and get care, and you won't have a bill after the fact.”

This is very different from how the Nordic countries do it, and that’s by design. “There's actually not one Nordic system, right? In some Nordic countries, the government owns the hospitals and employs the physicians and that's what socialized medicine is: government-owned hospitals, government-employed health professionals,” Jarvis says. “That is not my goal, because socialized medicine is not popular in America. But healthcare is very popular in America and public funding of health care is very popular in America.”

Common Sense aims to keep private hospitals and private medical providers, but have the state pay for them directly, instead of relying on third-party insurers to do it. “I suggest we have hospitals in the private sector and physicians operating their own clinics and physical therapists doing their thing, with everybody employed by these private institutions,” Jarvis says. “But it’s still publicly funded because that's how we fund healthcare in the United States, and we always have.”

If Common Sense plans to preserve the private sector, it does still replace Medicare and Medicaid. Medicaid is already predominantly paid for by the state so Jarvis wants to simply use that money for Utah Cares with the caveat that Utah Cares would be paying for all the usual Medicaid recipients. Medicare is a federal program and thus a bit trickier, but Jarvis says there is a pathway where Utah Cares could function as the Utah provider of Medicare plans, with the federal government putting that money directly into the Utah Cares trust.

The plan also eliminates private health insurance, and this is where Utah’s plan differs from other state attempts at universal healthcare—like Vermont, which tried and failed to implement it because they attempted to strike a compromise. “They proposed, not to eliminate the health insurance companies, but to allow them to continue,” Jarvis says. “You cannot get the efficiencies that I'm proposing if you allow multiple health insurance entities to continue to function. They each have an overhead that’s well over 20%. We're proposing an overhead for financing that’s less than 4%. That 15% to 20% difference made it too expensive for Vermont to pull off.”

If this idea seems like an uphill battle—something health insurance providers will pour all of their energy and resources into avoiding, you’re right. But Jarvis thinks Utah is ideally suited to pass such an initiative. Thanks to the state’s predominant religion—The Church of Jesus Christ of Latter-day Saints—the state might lean red in all the ways conservative states do, but they also lean humanitarian when it comes to taking care of the people in its community. “People in Utah, as red as the state is, don't want to see people go without health care,” Jarvis says. “They would rather raise taxes and pay for people on Medicaid than then have them go without it.”

Utah has proved that once before. In 2018, Utah voted to expand Medicaid.

And what would happen if Utah suddenly became the only state to offer universal healthcare? Well, suddenly it’s the best place to raise a family because you get free healthcare for all of your children. It’s also the best place to be an entrepreneur or to retire because you don’t have to worry about being able to afford healthcare premiums. If you are a company, you might want to headquarter your offices in Utah or at least hire more Utah employees, because they’ll cost the company much less in healthcare costs than paying for a health insurance plan.

In the market for citizens, Utah will compete with other states and win. The state will become more economically prosperous for all of its new incoming workers, and it will become more innovative for all their entrepreneurial creations. Other states will have to adopt social programs too if they hope to attract citizens of their own, and pretty soon all of the states will have their own universal healthcare and maybe even other universal services too.

Maybe then the federal government will have to cede more tax dollars to the states so they can manage their own social programs, and maybe then US states will become more like EU countries, with the autonomy and the money to manage their own social democracies, just like the Nordic countries.

But I’d love to know your thoughts.

It’s worth noting that I do not necessarily think this is the “right” health plan—rather it’s “a” plan—but that’s why our Wednesday literary salon this week will be studying a completely alternative one. Can’t wait to chat with you about that!

Then next week we’ll be flipping the script. If my last two essays have wondered how blue states might become social democracies, what might red states do? This is all part of my exploration of federal vs. state governments, and what we think each governing entity should have the authority and the money to do. It is part of my government series. 

Thank you so much for reading,

Elle Griffin