Europe Will Also Be Affected by US Healthcare Reform

Obama's proposal for healthcare reform addresses two critical aspects of the US health system: controlling spending, which has gone out of control, and the absence of any form of health coverage for 15% of the population. Both issues are complex, and if Obama manages to solve both he will have pulled off an astounding feat and will have secured a place in American social history. On the other hand simple accounting shows that a system that spends 15% of GDP and leaves 40 million uninsured, is not only unfair, it's highly inefficient. First of all, comparatively higher spending does not translate into comparatively better health. Higher US spending is mostly due to higher administrative and insurance costs, costlier factors of production (skilled labor, medical technologies and pharmaceuticals) and malpractice lawsuits (doctors need to buy costly insurance to protect themselves from them). It's also a waste providing health care to uninsured people, who often have to be treated in emergency rooms at a higher cost. If common sense suggests that a reform is necessary, the analysis of the entrenched interests at play gives pause for thought. 15% of GDP going to healthcare also means that one seventh of the country's incomes come from there, which means that enormous political stakes are involved. The majority of physicians, insurers, hospitals, pharma companies and medical suppliers are doing all they can to block the reform or diminish its impact. It also must be remembered that the uninsured are the poorer minority of the population, having little voice and less clout in American politics. On the other hand, the fear that the quality of healthcare provision will be lowered among those already insured makes many in the middle classes hostile to any vision of solidarity, which is traditionally not very strong in most of the United States. However, US healthcare not only has domestic repercussions, but also international implications. If Obama succeeds the policy spillovers could be considerable. If Obama were to warrant universal coverage in healthcare, the symbolic effect would be considerable, since the last bastion of private healthcare among advanced countries would fall. Universal systems would thus become the models to be imitated by emergent economies. For Europe, the effect would be to sanction existing government-funded universal healthcare systems to the detriment of those in Eastern Europe who still favor privatized healthcare.

A second international effect would be on global health industries, Big Pharma in particular, which claims that the high prices it secures on the US market are vital to fund R&D. If Obama were to succeed in controlling prices, would it negatively affect biomedical research? Would there be repercussion on the prices of drugs on the European market? It's hard to make forecasts on the global effects of Obama's reform, but one thing it's sure: it will have significant repercussions on the rest of the world.