Can We Afford Universal Healthcare?

A country that issues its own currency can always afford to pay for healthcare in that currency. The real question is whether the economy has enough doctors, nurses, hospitals, and medical equipment. In most developed countries, the answer is yes. The financial "cost" question is the wrong question.

Mainstream economics frames universal healthcare as a question of fiscal affordability. Economists typically argue that because government budgets are constrained—like household budgets—the question becomes whether a nation can 'afford' the tax revenue or borrowing needed to fund the program. Cost estimates are weighed against GDP and existing tax bases, with concerns that high tax rates to pay for healthcare would reduce work incentives or economic growth. The debate centers on whether the benefits justify the fiscal burden and whether alternative funding mechanisms (user fees, employer contributions, means testing) might be more efficient. Crowding-out concerns—that government borrowing drives up interest rates and reduces private investment—also feature prominently in mainstream cost-benefit analyses.

From an MMT perspective, the 'affordability' question is fundamentally misconceived. A currency-issuing government like the US cannot face a financial constraint on spending denominated in its own currency—it can always purchase real healthcare goods and services available in the economy. The real question is not whether we can afford universal healthcare financially, but whether we have the real resources: doctors, nurses, medical equipment, hospital capacity, and pharmaceutical supplies. The archive material on the NHS illustrates this clearly: when the NHS was properly funded, it functioned effectively; inefficiency emerged only when political choices led to underfunding. Healthcare is a natural monopoly best organized as a single-payer system because markets cannot efficiently price health services—individual interests conflict with collective welfare, making private systems inherently wasteful. The constraint on universal healthcare is inflation (can the economy absorb the demand without overheating?) and real resource availability, not the government's ability to create money. Just as the government funds Social Security without insolvency risk, it can fund universal healthcare by issuing its currency. The sectoral balances identity shows that government spending creates private sector net financial assets; a healthcare deficit becomes private sector wealth. Administrative efficiency and resource deployment—not financial constraints—should dominate the policy design conversation, as the MMT framework clarifies that public provision avoids the sales, marketing, and profit margins that inflate private healthcare costs.

A country that issues its own currency can always afford to pay for healthcare in that currency. The government cannot run out of its own money. The financial affordability question is a distraction from the real question: does the economy have sufficient doctors, nurses, hospitals, medical equipment, and pharmaceutical capacity to treat everyone who needs care? In every developed nation, the answer is yes.

Real Resources vs Financial Costs

The distinction between financial costs and real resource costs is the most important concept in this debate. Financial costs are denominated in a currency that the government issues. A currency-issuing government always has the financial capacity to spend, as explained in why governments cannot run out of money. Real resource costs are the actual doctors, nurses, hospitals, medical schools, pharmaceutical plants, and research facilities needed to provide healthcare. These are the genuine constraints.

The US already spends more per capita on healthcare than any other country in the world. In 2022, US healthcare spending reached $4.5 trillion, roughly $13,500 per person. The UK's National Health Service spends roughly $5,000 per person and covers everyone. Canada spends about $5,900 per person with universal coverage. The US has the resources. It has more MRI machines per capita than most countries, more medical researchers, and some of the highest-paid healthcare workers in the world. The problem is not a lack of resources. The problem is that those resources are allocated through a fragmented, profit-driven system that leaves 27 million people uninsured and millions more underinsured.

The financial argument against universal healthcare assumes that the government must "find the money" before it can spend. This reverses the actual sequence. The government spends by crediting bank accounts. It does not need to collect taxes or sell bonds first. Taxes serve to manage demand and prevent inflation, not to fund spending. As the evidence shows, taxes do not fund government spending in a country with its own currency.

The "How Will You Pay For It?" Trap

Every proposal for universal healthcare in the US is met with the same question: "How will you pay for it?" This question assumes that the government must find revenue to match every dollar of spending. It is never asked about military spending, tax cuts for corporations, or bank bailouts. The question is selectively deployed against programs that would benefit ordinary people.

When Congress approved $2.2 trillion for the CARES Act in March 2020, no one asked "how will you pay for it?" The money was appropriated and spent. When the Federal Reserve created over $4 trillion in new reserves through emergency lending programs in 2020, there was no fundraising campaign. The institutional capacity to spend was never in question. The "how will you pay for it?" framing is applied selectively to create the impression that some spending is financially impossible when the government has already demonstrated, repeatedly, that it can spend whatever it decides to spend.

The more productive question is: will this spending cause inflation? If the government dramatically increases healthcare spending without increasing the number of doctors, nurses, and hospital beds, it could bid up wages in the healthcare sector and increase prices. This is a real constraint. The solution is not to avoid spending but to plan for expanding real capacity: training more doctors and nurses, building more facilities, and expanding medical education. These are investment decisions that produce returns over time, not costs that must be offset by cuts elsewhere.

Countries That Already Do This

The UK established the National Health Service in 1948, when the country was recovering from World War II and carrying debt exceeding 200% of GDP. Britain was materially poorer than any developed nation today. Rationing was still in effect. Cities were bombed out. And yet the government created a universal healthcare system from scratch, because it had the sovereign authority to spend and the political will to direct real resources toward public health. If a war-ravaged 1940s Britain could afford it, every developed nation today can afford it.

Canada implemented its universal healthcare system (Medicare) province by province between 1962 and 1972. It was controversial at the time, with doctors in Saskatchewan going on strike in 1962. Today, it is one of the most popular public institutions in the country. Canada achieves comparable or better health outcomes than the US at roughly half the per-capita cost. The administrative simplicity of a single-payer system eliminates the enormous overhead of insurance company billing, claims processing, and profit extraction that consumes an estimated $350 billion annually in the US.

Taiwan designed and implemented a universal single-payer system in 1995, studying healthcare systems worldwide and choosing the most efficient design. Within a decade, it covered 99% of the population. Taiwan's experience demonstrates that universal coverage is not only possible but can be implemented relatively quickly when the political decision is made. The constraint was never financial. It was political.

During the Covid-19 pandemic, governments worldwide demonstrated that financial constraints on healthcare spending are politically chosen, not economically necessary. The UK built emergency Nightingale hospitals in weeks. Governments purchased billions of doses of vaccines before they were even approved. Testing infrastructure was scaled from nothing to millions of tests per day. The resources were mobilised because the political will existed. The money was never the binding constraint.

The Real Question Is Public Purpose

Every dollar spent on healthcare goes to someone: a doctor's salary, a nurse's wage, a pharmaceutical company's revenue, a hospital's operating budget. Healthcare spending is not money thrown into a void. It employs millions of people, develops technology, and produces a healthier, more productive population. The real cost of not providing universal healthcare is measured in preventable deaths, untreated chronic conditions, medical bankruptcies, and the economic drag of a population that avoids seeking care because they cannot afford it.

The US loses an estimated 68,000 people per year who die because they lack insurance. Millions more suffer with treatable conditions because they cannot afford copays, deductibles, or medications. Medical debt is the leading cause of personal bankruptcy. These are the real costs of the current system. The question is not whether we can afford universal healthcare. It is whether we can afford not to provide it.

The economic benefits of universal healthcare extend beyond direct health outcomes. A healthier workforce is more productive. Workers who are not tied to their employer for health insurance have greater labour mobility, which improves job matching and economic efficiency. Small businesses and startups benefit enormously when healthcare is decoupled from employment, because they no longer face the crushing cost of providing insurance that large corporations can absorb. The entrepreneurial dynamism that politicians claim to value is directly undermined by an employer-based healthcare system that makes starting a business a health insurance risk. Universal coverage removes that barrier and unleashes productive potential that the current system suppresses.

Preventive healthcare, which universal systems emphasise far more than the US model, reduces long-term costs dramatically. Catching chronic conditions early, providing routine screenings, and ensuring access to primary care prevents expensive emergency interventions later. The US system, by pricing millions out of preventive care, generates far higher costs downstream as treatable conditions become emergencies. Universal coverage is not just more equitable. It is more efficient.

Explore the Economy Simulator to model how increased government healthcare spending affects employment, output, and inflation in an economy with unused capacity.

Can we afford universal healthcare? A currency-issuing government can always afford to pay in its own money. The real question: do we have enough doctors, nurses, and hospitals? Yes, we do.