Guess What, America: You Have Socialized Medicine Whether You Like It or Not

American politics is often the art of believing impossible things. One of the most popular delusions in American politics today is that we have a “free market” in healthcare or health insurance.

The problem with that delusion is that raw statistics prove that Uncle Sam is already America’s largest health insurance provider. Statistics provided by the Kaiser Family Foundation indicate that there were around 49 million Medicare beneficiaries and around 70 million Americans on Medicaid in 2012.

That means the Centers for Medicare and Medicaid is America’s largest “health insurance company,” with 119 million customers. Another shocking revelation is that around one in three Americans participates in one or both of those two programs because the national population of the U.S. was around 318.9 million in 2014.

It should be noted here that these numbers do not include Americans that participate in other programs. That would include the around 12 million people who receive tax credits through the Obamacare exchanges and the 22 million veterans, many of whom participate in the VA’s healthcare system. That means the number of Americans receiving government-financed healthcare could be around 150 million, or close to half the population.

The Woodlawn Maryland headquarters of America's largest health insurer the Centers for Medicare and Medicaid.
The Woodlawn, Maryland, headquarters of America’s largest health insurer the Centers for Medicare and Medicaid.

One third of America’s population is already participating in a single-payer healthcare plan. We have socialized medicine in the United States whether we like it or not. That socialized medicine is not very efficient nor is it fair or effective, but it is here, and it is here to stay.

The Astonishing Size and Scope of Medicaid

Most Americans simply do not realize how big or pervasive Medicaid is and how it shapes our economy. Some sobering statistics about Medicaid provided by the Kaiser Family Foundation include:

  • Medicaid accounts for 16% of U.S. spending on healthcare.

 

  • 33 million American children participate in Medicaid.

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  • 19 million U.S. adults participate in Medicaid.

 

  • 21% of Medicare beneficiaries, or 10 million people, also receive Medicaid benefits.

 

  • Medicaid covers the bills of 1.5 million residents of nursing homes and other institutions.

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  • Around 2.9 million people receive Medicaid benefits for at-home services.

 

These numbers clearly demonstrate that we have a sort of socialized medicine in the United States, and our economy is highly dependent upon it. Republican claims of a free market in healthcare are simply a fairy tale. There is no way either Medicare or Medicaid could be dismantled without devastating our economy.

Single-payer healthcare is here, folks, and Americans like it. The popularity of presidential candidate and U.S. Senator Bernie Sanders (I-Vermont), who supports single payer, and the success of an initiative to create single-payer healthcare in Colorado show us that there is strong support for such plans.

The Increasing Centralization of U.S. Healthcare

Going hand in hand with the growth of Medicare and Medicaid is the growing centralization of U.S. healthcare by large corporations. Morningstar analyst Vishnu Lekraj noted that three companies, Express Scripts Holdings (NASDAQ: ESRX), CVS Health (NYSE: CVS) and UnitedHealth Group (NYSE: UNH), administer around 70% of the prescription benefit plans in the United States.


To add to the centralization, there are increasingly only two choices on America’s Obamacare Exchanges: UnitedHealth and its main competitor, Anthem (NYSE: ANTM), which controls most of the Blue Cross and Blue Shield plans. That provides another layer of centralized bureaucracy.

It is not just insurance and prescription benefits that are being centralized. Healthcare delivery is also becoming centralized. One company, Walgreen Boots Alliance (NASDAQ: WBA), owns and operates around 8,173 drugstores in all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands. Walgreen just bought the third largest drugstore operator, Rite Aid (NYSE: RAD), which owns and operates around 4,600 drugstores. If the Rite Aid acquisition is successful, Walgreen could end up owning between 11,000 and 12,000 drugstores.

The second largest drugstore operator, CVS, which operates around 7,600 pharmacies just inked a deal to take over Target Corporation’s 1,600 pharmacies and 80 medical clinics. That would give CVS around 9,200 pharmacies.

That means just two companies will operate around 20,000 pharmacies in the United States. Both Walgreen and CVS are increasingly operating clinics and offering a wide variety of healthcare services such as tests and vaccinations. Nor is it just those companies. Kroger (NYSE: KR) operates around 1,900 pharmacies, and Walmart Stores Inc. (NYSE: WMT) operates 6,358 pharmacies.

Big Retail Replaces the Family Doctor

Not only are pharmacies increasingly centralized but they are also increasingly offering a wide variety of basic medical services and even operating clinics. Kroger alone now operates 155 Little Clinics in the United States.

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For many Americans, companies like Kroger, CVS and Walgreen have become “the family doctor.” When they want a flu shot, a blood test or a school sports physical, many families simply drop by the clinic when they are picking up their groceries.

America’s pharmacies are being transformed into one-stop healthcare providers similar to Britain’s National Health Service. For those of you unfamiliar with it, the National Health or NHS is a centralized national agency that operates clinics and hospitals in the United Kingdom. It provides taxpayer-financed healthcare “free at the point of service” to all of Her Majesty’s subjects.

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Since much of the services and prescriptions provided by those pharmacies are financed by Medicare or Medicaid, we can safely call these corporate clinics and pharmacies an adjunct to the single-payer system. America has something a great deal like national healthcare, in which most healthcare is financed by the federal government and administered through a few centrally-controlled institutions.

The Groundwork for American Single-Payer Healthcare Has Been Laid

The framework of a national single-payer system in the United States already exists. Big government and big business are working to build it right under our noses. My prediction is that it will not be long before Medicare and Medicaid will be expanded to cover all Americans and perhaps combined. The political support for such a move is strong even if politicians do not recognize it.

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A major reorganization of American healthcare that will result in a true single-payer system has begun. This reorganization is going on right in front of our faces, and it will profoundly change the way Americans get healthcare.

Smart investors should take note of these developments and place their money accordingly. As single-payer healthcare advances in the United States, a few large companies, including Walgreen, CVS, UnitedHealth, Anthem, Kroger and perhaps Walmart are poised to profit handsomely from it.

Disclosure: The blogger holds a long position Kroger.