Why Universal Health Care Keeps Failing

The Wall Street Journal has an interesting piece on the failure of California’s attempt at universal health care and what it means for the rest of the nation. It is interesting to see how many of these plans have failed to pass or ended up being scrapped due to cost overruns. If universal health care was such a great thing and so economically compelling, it’s hard to see why so many states would be having such a hard time making it work. The reason why is simple: universal health care doesn’t actually work in the real world:

Like collapses in Illinois, Wisconsin and Pennsylvania, this one crumpled because of the costs, which are always much higher than anticipated. The truth teller was state Senate President Pro Tem Don Perata, who thought to ask about the price tag of a major new entitlement amid what’s already a $14.5 billion budget shortfall.

An independent analysis confirmed the plan would be far more expensive than proponents admitted. Even under the most favorable assumptions, spending would outpace revenue by $354 million after two years, and likely $3.9 billion or more. “A situation that I thought was bad,” Mr. Perata noted, “in fact was worse.”

This reveals that liberal health-care politics is increasingly the art of the impossible: You can’t make coverage “universal” while at the same time keeping costs in check — at least without prohibitive tax increases. Lowering cost and increasing access, in other words, are separate and irreconcilable issues.

Universal health care has a basic and fatal flaw, you can’t simultaneously reduce the cost of a service and increase access to it. If you have universal access, you have to find a way of paying for people to get that access, which raises costs. If you want to keep costs down you can only economize so far before you have to restrict access. Universal health care is a bit like a perpetual motion machine—it would be wonderful in theory, but it can’t actually exist in reality.

What inevitably ends up happening is that governments cut costs first—which requires them to cut off access. This is how Britain’s NHS and the Canadian system work. You end up either waiting in line or having a government bureaucrat deny your request for treatment. That’s why the healthcare systems in those countries are having such trouble managing costs without drastically cutting back on services—and why both are more and more turning to private agencies to provide services they cannot.

The failure of the California plan isn’t a shock—people support universal health care in theory, but when confronted with the fact that there’s no such thing as “free” health care most people balk at the price. A further sign that the support for universal care is theoretical comes from evidence that most Americans are satisfied with their current health care coverage. When confronted with a plan that forces people to change their coverage—and not necessarily for the better—it’s not surprising that the theoretical support for universal coverage ends up losing to the desire not to lose what people already have.

Universal health care is not the only solution, and already there are better solutions out there. In fact, of all the possible solutions, universal health care is almost certainly the least advantageous. Corporations love it because it passes on the costs to the federal government—turning it into a corporate welfare transfer payment. Bureaucrats love it because it gives them more power, as it would with politicians. However, it’s hard to see where the groundswell of demand for universal health care really is. If there was such a groundswell, a liberal state like California wouldn’t be balking at the price.

The failure of California’s initiative demonstrates why universal health care simply doesn’t work. The laws of economics and human behavior go against it, and those factors can’t be legislated away. You can’t square the circle of trying to simultaneously lower costs and increase access without throwing a ton of money at the problem and continuing to throw more and more money at it until the system collapses. If even California legislators can learn that principle, hopefully Congress can as well.

9 thoughts on “Why Universal Health Care Keeps Failing”

  1. “If universal health care was such a great thing and so economically compelling, it’s hard to see why so many states would be having such a hard time making it work.”

    States will never be able to make it work on their own, when so many competitor states like Texas don’t give a damn how many of their residents go without health insurance. The wise thing to do would be waiting for the inevitable federal universal health care plan. Beyond that, the states are almost all ridiculously stupid in their plans to finance universal health care plans, expecting to finance them almost universally with the perpetually diminishing returns of regressive tobacco taxes.

    “Universal health care has a basic and fatal flaw, you can’t simultaneously reduce the cost of a service and increase access to it.”

    False. Americans spend a higher percentage of our income on health care than any other nation….including countries that provide universal access.

    “Universal health care is a bit like a perpetual motion machine—it would be wonderful in theory, but it can’t actually exist in reality.”

    Except, of course, for the 90+% of the industrialized world that does have universal health care. Those would be the everybody-but-Americans.

    “What inevitably ends up happening is that governments cut costs first—which requires them to cut off access. This is how Britain’s NHS and the Canadian system work.”

    That scare tactic would be much more effective if Canada’s health care system didn’t have a citizen approval rating pushing 80%.

    “when confronted with the fact that there’s no such thing as “free” health care most people balk at the price.”

    Well, “most” rich people do at least. You know, the guys who already have acceptable health care plans but monopolize influence on the body politic.

    “it’s not surprising that the theoretical support for universal coverage ends up losing to the desire not to lose what people already have.”

    You’re ultimately correct that in our monstrously self-serving culture, we’re probably not quite there yet when it comes to the political muscle necessary to successfully advance a universal health care plan. But with soaring premiums, fewer employers offering worthwhile plans, and more people qualifying for existing government health care programs, it’s only a matter of time before the existing health care system flames out and government-provided health care wins the day by default.

    “If even California legislators can learn that principle, hopefully Congress can as well.”

    You really are lost in 1994, aren’t you?

  2. States will never be able to make it work on their own, when so many competitor states like Texas don’t give a damn how many of their residents go without health insurance. The wise thing to do would be waiting for the inevitable federal universal health care plan. Beyond that, the states are almost all ridiculously stupid in their plans to finance universal health care plans, expecting to finance them almost universally with the perpetually diminishing returns of regressive tobacco taxes.

    States have implemented universal health care schemes—Tennessee tried it with their TennCare program. All of them have failed. The argument that the only way such programs would work is if it were a federal program doesn’t hold much water. Under the McCarran-Ferguson Act insurance products are regulated by state law. State governments can and almost always do regulate the sale and administration of insurance products.

    You’re making an argument without any support—there isn’t a great deal of cross-state competition for health care services. Someone who is sick in Iowa isn’t going to drive from Des Moines to Minneapolis for treatment unless they need specialist services from a place like the Mayo. The argument that Texas’ health care system effects California doesn’t make a lot of sense, especially when most states make it illegal to purchase health care plans from another state. That argument simply doesn’t explain why these programs keep failing.

    False. Americans spend a higher percentage of our income on health care than any other nation….including countries that provide universal access.

    No, that doesn’t disprove my contention. Even if that’s true, it doesn’t mean my contention is false. It’s that those countries still limit access to services via denying services or forcing people to wait for lengthy periods before getting services.

    Not only that, but your assertion misses the point that under a socialized system an individual should theoretically spend none of their income on health care—that’s the whole point. The difference is that they pay higher taxes and have less access to services. That’s exactly why the California plan failed. It would cost too much and it would require the rationing of care to keep costs down.

    Except, of course, for the 90+% of the industrialized world that does have universal health care. Those would be the everybody-but-Americans.

    Of course, there isn’t a country with the diversity of population and number of people that have universal health care. The US is the largest industrialized democracy. We have the most diverse population. A system that would work in a small homogenous country doesn’t work in a large and diverse one. Even if the universal health care systems worked in other countries, the same program would fail miserably here. The closet analogues, Britain’s NHS and the Canadian system all work by rationing health care and both are experiencing problems keeping quality up while maintaing access. Those systems are slowly failing, and they both have the benefits of smaller and less diverse populations.

    That scare tactic would be much more effective if Canada’s health care system didn’t have a citizen approval rating pushing 80%.

    The Canadian government says you’re wrong about that. The number of people “very satisfied” health care services in Canada was 43.7% in Canada. In the US it was 53.3%.

    If the Canadian model works so well, why did a Canadian court strike down a law banning private insurance on the basis that the government-run system was not providing adequate care?

    Well, “most” rich people do at least. You know, the guys who already have acceptable health care plans but monopolize influence on the body politic.

    It’s not just the rich who lose out. The backlash that would happen when people realize that Grandma gets left to die on a government waiting list would be immense—the Democrats had better hope that they never get universal health care passed, because the backlash would be severe. Americans complain about waiting a few days for surgery—what do you think people would do when they learn that the waiting times are causing thousands of preventable deaths? Or that if you’re overweight the government will deny you from having surgery to save costs?

    If you think people have a problem with the health care system now, the results of a system like the NHS would lead to a revolt the likes of which this country hasn’t seen in a long time.

    You’re ultimately correct that in our monstrously self-serving culture, we’re probably not quite there yet when it comes to the political muscle necessary to successfully advance a universal health care plan.

    Your inner socialist is showing. The idea that wanting quality health care is “self-serving” is exactly why universal health care will fail in this country. This country was founded on the idea of individual rights, which means that a system that denies people health care to pay for someone else’s care will never be politically popular—and much of the current problems with the system is that we already do that to a large extent. Universal health care would just make the problem worse.

    But with soaring premiums, fewer employers offering worthwhile plans, and more people qualifying for existing government health care programs, it’s only a matter of time before the existing health care system flames out and government-provided health care wins the day by default.

    And yet a majority of Americans are still happy with their current plans. The idea that the only solution to our health care woes is to have a system that takes the worst of our current system and gets rid of the best is exactly the sort of plan that is doomed to fail—just like it failed in Tennessee and California.

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  4. Thank you Jay for your insightful analysis, supported by factual data and references. I find it rather appalling that there are those who continue to make claims without providing a sound basis for their reasoning. I ran across your blog while researching universal healthcare as it is a topic much discussed in this season of campaigning. I count myself fortunate to have ran across this site. As a young professional attempting to develop a valid understanding of the policies and issues of concern in today’s complex environment, I have come to sincerely admire and appreciate those who take the time to share well-constructed, well-researched and well-supported information. Cutting through the chatter, there is a voice of reason. Thank you.

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