Yesterday, I got caught up in a conversation about Obamacare – and it occurs to me that there is, what we might call, a fundamental failure to translate what it means into a South African context.
Here in South Africa, we have a health system where:
- Many people have private medical aid plans; and
- If you don’t have a medical aid plan, then you go to a government hospital where you pay fees relative to your income (basically, the lower your income level, the more nominal your fee).
Yes, there may be issues with state-funded healthcare – but at least it’s there. And private medical aid schemes are mostly affordable.
In the US, the healthcare system consists of:
- Employee-sponsored medical aid;
- Some privately-bought medical aid;
- A limited number of people who qualify for Medicare and Medicaid (the aged and the very poor);
- And the rest of Americans, who can’t afford medical aid and don’t qualify for either Medicare or Medicaid.
I went onto healthinsurance.org to see what medical aid plan I could get in California as a 30 year old resident of San Francisco. On the “most affordable” plan I could find (at $332 per month, or about R5,200 per month at today’s exchange rate):
- I’d be responsible for the first $3,750 (R60,000) worth of annual medical expenses before the medical plan started to pay out, and that goes up to the first $6,500 (R104,000) of annual medical expenses if I was receiving medical attention outside of the plan’s network.
- Once I’d spent past my annual limit, I’d be paying about 30% of whatever else is on the bill (50% if out of network).
I could do slightly better, and get a plan that’s about $100 per month more expensive, with lower deductibles – but that comes with the caveat that any medical treatment outside of the plan’s network would not be covered at all.
As South Africans, we look at numbers like that as though they’re mad. For us, that “most affordable” plan is more expensive than the most expensive plan that Discovery Health offers (The Executive Plan, at R4,953 per month). A plan which offers unlimited hospital cover and virtually unlimited “above threshold” cover once you’ve exhausted medical savings (already included in that R4,953 per month).
The trouble is that healthcare costs in the United States can (and do) drive people into bankruptcy. And the cost of covering yourself against that, even after Obamacare has come into play, is equally as bankrupting.
So why the big objections and all the Obama vilification?
From what I can tell, the public resentment toward Obamacare comes from three places:
- People who don’t have medical aid because they feel like they don’t need it, and who are really angry about the new tax penalties for not getting health insurance;
- People who feel like paying for medical aid means paying for other people’s illnesses; and
- People who incorrectly assume that the increases in their premiums are being caused by the influx of people onto medical insurance schemes under Obamacare (it’s almost certainly being caused by moving onto plans where there are lower deductibles and better coverage).
But, frankly, facts:
The US spends far more on private healthcare expenditure than everyone else.
And are Americans any healthier for it?
[pause for effect]
My suspicion is that, one day, the United States will near-venerate Barack Obama for his healthcare reforms. As well as future presidents that improve on them.
And also, we should probably rejoice in South Africa’s healthcare system.
Rolling Alpha posts about finance, economics, and sometimes stuff that is only quite loosely related. Follow me on Twitter @RollingAlpha, or like my page on Facebook at www.facebook.com/rollingalpha. Or both.