The writer is a lawyer by training who deals with and is involved in technology. Manages a cryptocurrency investment fund, and lives in Silicon Valley. Author of the book “A Brief History of Money” and the KanAmerica.Com podcast recorder
In January 1981 at the foot of the Capitol, the new President Ronald Reagan gave his inauguration speech. After calling the smooth and orderly transfer of government in America a miracle, and referring to the challenge of inflation at a rate of 13.5%, which the new administration was facing, Reagan coined the phrase that would become the motto of his government: “The government is not the solution to our problems. The government is the problem.”
During his activist presidency, Reagan, the father of modern Republican conservatism in America, returned the country to the great historical debate between the left and the right: Is the solution to the economic problems of the United States found in a big government in the style of the New Deal of Franklin Roosevelt, the president in the 1930s of the Great Depression, or is a government desirable A small one whose main function is to ensure national security and the activity of the free market and private initiative.
Reagan summed up his worldview in a sentence that became history: “The nine most terrifying words in the English language are: I’m from the government and I’m here to help” (“The nine most I’m from the government and I’m here to help”). This is how the modern Republican Party was born on its three principles – small government, military strength, and a constant pursuit of a market economy.
Despite the fact that throughout his tenure the Congress was under the control of the Democratic Party, Reagan had a good personal and working relationship with the Democratic leadership of the Congress. He also managed to pass most of his economic agenda, Reaganomics, in Congress, which was a real revolution. Precisely in social matters, Reagan was far from the conservative discourse of today. In 1967, being the governor of California, Reagan signed an innovative and permissive law in the field of abortion – and made California a leading state in its treatment of the issue. In 1994, former President Reagan appealed to Congress in an open letter requesting that they pass a law, initiated by President Bill Clinton, to ban the manufacture and distribution of assault weapons of the type used today in many of America’s mass killings.
The party becomes a shadow of its principles
But since the days of Reagan, much water has flowed in the river, and the Republican Party has become a shadow of its old principles. Reagan’s historic sentence in divided Berlin, “Mr. Gorbachev, tear down this wall”, has been replaced by a policy of closure to such an extent that recently about a third of the Republican members of Congress voted against military aid to Ukraine. The principles of small government are not even talked about. Thus, between 2016 and 2019, Trump’s Republican administration ran a budget deficit of $2.43 trillion, compared to a deficit of $1.51 trillion in the previous three years, under President Barack Obama. It’s not just that “small government” has disappeared, when it comes to a free market economy – things are even bleaker.
There is no place where government involvement in America screams to the sky as in the healthcare industry. One out of every five dollars of the American GDP (19%) supports the health system – more than 4 trillion dollars per year. This, despite the fact that this expenditure is twice as large as the European average, and by more than 60% than in Germany (where the expenditure is 11.7 % of GDP), at 9.9% from Australia, at 12.1% from Switzerland, and at 10.5% from Great Britain.
Although there are first-class research institutions and hospitals in the USA, and the established strata have the best health services in the world, but in every existing parameter – the American health system is inferior to that of Germany, for example. Here are some examples: life expectancy in Germany is higher and infant mortality is almost half as low ( 3.3 per thousand births compared to 5.8); the number of hospital beds per thousand people is more than twice as large in Germany (8 compared to 2.9); and so is the number of doctors which is significantly higher (4.3 per thousand people compared to 2.6).
The insurance coverage is also more comprehensive. In Germany, 99.9% of the population is covered by medical insurance, while in the US about 31 million residents – about 9.6% of the population – lack any medical insurance. Not only is the American product inferior compared to other developed countries, it is also much more expensive for its users. Thus, For example, the average cost of drugs in the US is 256% higher than the same drugs in 32 other countries, which were taken as the comparison group in a recent study. Among other things, a fairly common drug called Crestor, which is used to lower cholesterol, cost about $731 in the United States in 2020 – while on the other side of the border, in Canada, it could be purchased for $210. A pair of Epifen syringes – life-saving treatment in case of Severe allergic symptoms – which cost about 700-800 dollars in the US, are available to anyone in Canada or Germany without a doctor’s prescription for about a quarter of the price. However, unlike the personal importation of firearms, there is almost no legal way for a New York resident to import drugs from a Canadian pharmacy across the border.
A phenomenon of the last decades
The astronomical cost of healthcare is a phenomenon of recent decades. Between the beginning of the 1990s and 2020, personal and collective spending on health increased threefold after deducting inflation. Thus, for example, a typical medical insurance, provided by an employer for a family with two children for a year, cost $5,791 in 1999. In 2021, the cost jumped to $22,221 – according to a report by Kaiser, a large US health care provider.
Not only did the cost of insurance jump, the amount of the deductible also increased dramatically. According to a study by “E-Hells Insurance” for 2020, the annual deductible for a family, the one paid by the insured even before the insurance begins to pay, averaged $8,439 – ten times more than in 1999.
The serious illness afflicting the American health care system has many causes, but there are a few factors common to all of them: lack of competition, rising monopolization and consolidation, and increased legislative protection of health care providers, in almost every component of the industry. Together, these have resulted in enormous inefficiency, structural corruption, and a system that serves itself to an extent unparalleled in the Western world.
The inefficiency starts already with the training of the doctors. According to the Association of Medical Schools in the USA, by 2032 there will be a shortage of between 47,000 and 122,000 doctors in America – a number that is not surprising considering the fact that medical studies cost between 250 and 330,000 dollars for four years. On the other hand, the system makes it very difficult to expand study options and specialization, as well as the reception of undiagnosed immigrant doctors. If the artificial shortage of doctors is not enough, patent laws that are immeasurably broad protect the pharmaceutical companies. In a report titled “Excessive Phyton”, the “Institute for Medicine and Knowledge” concludes: “The current system is not at all balanced, manufacturers The pharmaceuticals turned the patent system into a strategy designed to protect their business from competition. This is to earn huge profits for many years, far beyond what the system was designed to be.” Over the years, many attempts have been made in Congress to reduce these patent protections, but to no avail. In the summer of 2021, a bipartisan bill to address the issue passed in the Senate Legislative Committee, but since then the proposal still Stuck in the corridors.
Trump promised something “phenomenal” and “amazing”
The bureaucracy, regulation and practices of medical insurance companies are so complicated that sometimes medical treatment paid for without insurance is significantly cheaper than with it. Thus, for example, according to a 2019 “Los Angeles Times” investigation, the cost of the medical treatments reviewed was three times higher when paid through the insurance companies, than their price if the patient himself paid for them directly.
In 2010, Congress sought to pass a comprehensive reform of the American health care system. The reform was called Obamacare. The long and complicated law is designed to reduce medical costs in America, as well as increase the availability of medicine, including through subsidies for vulnerable populations. Among the innovations of the law were establishing a personal charge to purchase medical insurance, limiting the rate of collection allowed to the medical insurance companies beyond what is paid directly to the medical service providers (maximum plus 15-20 percent), canceling the possibility for the companies to reject certain insurance applications, and establishing a public system for purchasing medical insurance with the right to receive a subsidy for those in need.
After fierce battles in the Senate, the law was passed. But the law, which did not promote competition in the healthcare field, turned out to be, at best, a very limited success. Although the program did reduce the number of uninsured, from about 46.5 million people to about 30 million, medicine in America has not stopped becoming more expensive, far beyond the increases in the index. Specific problems were indeed addressed, but the monopolies were not reduced, on the contrary. So is the medical bureaucracy, which is responsible for about a third of all healthcare spending in America. This is according to a Harvard University study from 2017.
The Republicans in the Senate opposed any compromise or clause in the Obamacare reform. Over the years, they have repeated one promise: to “repeal and replace” Obamacare. Donald Trump also returned and promised in his election campaign at every opportunity that he would repeal the law and replace it with something else “phenomenal”, “fantastic” and “amazing” when he gets to the White House. When he became president, he returned, promising again and again that very soon he would present to the public and Congress a new health care plan. Four years have passed and no “amazing”, “phenomenal” or “cheap” program has been introduced. At one point there was silence. The dozen-year clamor about good and cheap ways to fix the health care system is gone. In its place, new and equally vociferous public debates began, on exciting topics such as transgender people, mixed toilets, and theories about rivers of colored immigrants being brought in to change America’s demographics and politics. In this context, it is interesting to note that 28% of doctors in the US are immigrants, most of them non-white.
Thousands of lobbyists in the service of medical companies
But while the attention of the crowd is diverted from the issue that affects every fifth dollar in the US economy to silly slogans, the medical industry and its representatives in Washington do not lose focus. It is the medical industry that spends the most on lobbying in Washington. In 2021 alone, the industry employed more than 3,000 lobbyists, Half of them are government employees and former politicians, and spent about $690 million on lobbying efforts with Democrats and Republicans alike – more than five times what the energy industry spent. This is according to “Offen Secrets”, a non-political organization that deals with documenting the connections between money and politics in America.
The medical lobby, of course, is not the only one busy spending money in Washington. In 2019, about 12 thousand active lobbyists helped their clients spend over 3.5 billion dollars on such efforts. This continued flow of funds to Washington is a profitable and worthwhile investment. According to a study conducted by the “Sunlight Foundation”, a non-profit organization that aims to increase transparency in Washington, which examined 14 million documents between 2007 and 2012, for every one dollar that the companies invested in lobbying or contributions to election campaigns – they received a return of $760 In direct subsidies, tax benefits or other beneficial legislation such as that which reduces competition or expands patent protections.
Here is a convincing explanation of how and where the old ideas about small government and a free and competitive market disappeared. Under these circumstances, is it any wonder that the counties with the highest per capita income in the US are actually located in the Washington area? According to a survey based on government data and covering the years 2013-2017, of the 3,142 counties in America, the five richest were around Washington – where they are divided The finances and the laws are set Another survey conducted in recent years found that out of the ten richest counties in America, six are located around Washington, and two are in Silicon Valley.
Our eyes see therefore that politics is big business in America, which diverts trillions. Politics is too important to be left in the hands of the masses, who sometimes have enough of fiery, populist or rogue leaders, spouting passionate but insignificant slogans on rather esoteric subjects, which do not necessarily touch life itself. This is also the story of Ronald Reagan’s old Republican Party. According to the words of the song, the work of the poet T.S. Eliot: “This is the way the world ends, not with an explosion but with a whimper.”