Amollo: American health care policy could have consequences for the rest of the world

Benson Amollo

In “Hot, Flat and Crowded,” Pulitzer Prize recipient, renowned economist and New York Times columnist Thomas Friedman explains how the world is victim to capitalist bureaucracy. He writes that today, the actions of the industrialist West or East, in their pursuit for largesse, put all the rest of the world in a vulnerable place — from pollution to exaggerated pricing.

Thus, the politico-socio-economic decisions of the West are crucial to the well-being of the rest of the world. And this week, the world became hotter, flatter and more crowded following the U.S. Supreme Court’s decision to uphold the Patient Protection and Affordable Care Act.

The grand decision that has split political hairs has also set the debate rolling globally. There are several implications from the state of health care in the United States to not only the developed pockets of the globe but as far distant places as Bamako, Mali.

First of all, the United States has remained and will maintain its lead in controlling the health care market. American innovators are always scratching their heads to develop new products and ways to sell them at exorbitant profits. And even though European countries like Germany and France have made great strides in medical research and new ways of delivering care, most of prescription drug research is done in the United States. Since 1997, reports indicate American laboratories have outproduced their European counterparts by a margin of two to one.

So, last Thursday’s decision by the Supreme Court to uphold the expensive health care law means only one thing: Costs of medication across the world are likely to remain higher, if not swell up, in the next 10 or so years. And that would mean that poor countries in the developing world will be the most exploited. Developing countries heavily rely on pharmaceuticals from the developed world, and these medications are delivered to them at very high prices — mostly out of reach from a paramount number of the populations.

New drugs are expensive because the sale price must recoup not only the cost of manufacturing the pill but also the years of research and development before a single pill was made. American consumers pay this full price. In Europe, however, government health care monopolies can use their market muscle to force discounts. Soon enough, the patent expires, and generic manufacturers cut the price even more radically.

But everything rests on that first decision by the American drug consumer to buy a new product at a high price. If changes in U.S. health policy stunt American drug development, it is not only Americans who will suffer.

The U.S. health care policy also bears heavily on global peace and security. The U.S. taxpayer pays the cost of the military protection that shelters most of its allies across democracies in the world. The American defense budget costs about 4 percent of the nation’s annual gross domestic product. Rapidly rising U.S. health costs call into question America’s ability to pay that bill.

The United States operates far and away the most expensive health care system on earth: 17 percent of GDP and still rising. Most other developed countries spend between 10 percent and 12 percent. Runner-up Switzerland pays 13 percent.

If the United States paid as much for health care as Switzerland, it would be the equivalent of getting the defense budget for free. Instead, health care and defense are becoming competitors for straitened government resources.

And one of the most noteworthy things is that, despite the supposedly “private” nature of U.S. health care, the majority of the dollars in the system are tax dollars: Medicare (for the elderly), Medicaid (for the poor), and benefits for veterans, Indian tribes, public employees and children.

The first of the baby boomers became eligible for Medicare in 2011. Medicare will soon surpass defense as the largest single item in the U.S. federal budget — and federal budget-cutters will begin eyeing defense as a source of Medicare funding. That’s what happened in Europe, where defense budgets have declined below 2 percent of GDP, in many countries nearer to 1 percent.

At 3 percent of GDP, the United States could still buy the world’s most powerful military — but not a military so powerful as today’s and likely not a military that can secure all of America’s allies as they would like to be secured.

When Americans talk about today’s health costs, they are also talking about tomorrow’s defense budget — the budget that protects us all from a world of dangers and wins new allies, especially in the war on terror. Most of such costs will remain hidden in the foreseeable future.