Tag: healthcare

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.

SCHIP Veto Override Fails

As expected, the House failed to override the President’s veto of the SCHIP legislation that would have extended government child health care benefits to families making over $80,000 per year. The bill would have eroded the health care market, raising premiums for everyone, while providing benefits to families that don’t need government-paid child health care. A family with an annual income of over $80,000 is not “poor” by any stretch of the means. The government has no business providing benefits to those who don’t have any need for them.

Politically, this move will probably hurt the GOP, but given that the election is a year out, the effects will be minimal. What the GOP needs to be doing on the political front is strongly pushing for a compromise bill that preserves the current SCHIP program while encouraging responsible solutions at a state level. That way, the Republicans can claim that they helped the poor without compromising the rest of America’s healthcare system.

The SCHIP expansion is part of an incremental strategy advancing this country towards the failed policies of universal government-run healthcare. The last thing this country needs is a bureaucratic system like the NHS in Britain or the Canadian healthcare system. The smaller populations of those countries have helped slow the inevitable collapse of those systems. If tried in the United States, such a system would collapse with even greater speed and lead to the same widespread rationing of care that already exists in the UK and Canada. Government price controls lead to shortages—the economic evidence is virtually irrefutable. Yet the Democrats in Congress, ever desirous of more and more power in the hands of the state, are perfectly willing to sacrifice the quality and accessibility of American healthcare to to achieve their political ends.

The SCHIP veto holds the line against this back-door attempt at socialized medicine, but in order to avoid political consequences, the Republicans need to be able to push out a better solution. There are viable policy proposals that keep the essential mission of SCHIP alive without expanding it into yet another runaway entitlement. The Republicans need to be able to spearhead these initiatives in order to demonstrate that they can get things done—unlike the party across the political aisle.