The Perils of Government-supplied Universal Health Care

by Don Boudreaux on February 27, 2009

in Health

A loyal Cafe patron asked me to post this column that I wrote a few years ago, for the Foundation for Economic Education, on the perils of government-supplied health care.

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{ 49 comments }

T L Holaday February 27, 2009 at 9:36 am

Do these advocates of government-supplied health care never fly internationally during the summer?

Do the opponents of government-supplied health care never receive treatment from government-run clinics while abroad? Do they never look at outcomes?

Michael Smith February 27, 2009 at 9:45 am

In my opinion, it is a mistake to speak of "government-supplied" health care — because it feeds into the fantasy that government can somehow supply goods and services that are "free". In fact, to "supply" any good or service one must first produce it. But government produces nothing.

So "government-supplied" health care really means government-controlled health care — which means, government control of the entities that DO produce health care — doctors, nurses, hospital administrators, pharmaceutical companies, etc. — as well as government control of the entities consuming health care — which is basically everyone.

In America, we've already got government-controlled health care for the elderly and for those below an arbitrarily-selected income level. In both cases, the results have been exactly what one would expect: astronomically rising costs, falling levels of service, increasing taxation of those too young or too financially successful to qualify for the program — with both programs on an unsustainable path that will end in the bankruptcy of the system or the imposition of draconian, economy-killing levels of taxation.

But nothing encourages the left more than seeing the abject failure of their ideas — and the greater the failure, the harder they will push for more of the same. Thus, their response to seeing two of their programs headed for the cliff is to demand that we start a third rolling in the same direction.

Sam Grove February 27, 2009 at 10:16 am

As George attempted to deny, as far as the left is concerned, unless every possible economic transaction falls under the purview of government, then we have an unregulated economy.

Once we have totalitarian health care, then all the unproductive old people will be squeezed off this mortal coil by denial of care due to budgetary constraints.

Bob D February 27, 2009 at 10:37 am

"Soylent Green Is people!" We're halfway there! What age do you think is right for today's society?

Chris Cheney February 27, 2009 at 10:50 am

This report provides a look at what we would experience if we implemented a government health care apparatus in this country-
http://www.oecd.org/dataoecd/31/10/17256025.pdf.

Be prepared to get in line and wait a while for "elective" procedures to include bypass surgery and hip replacement.

RickC February 27, 2009 at 10:54 am

T L Holaday.

Don't have to go overseas, just join the military and go get treatment at a V.A. hospital. When I was in, for seven years, I avoided going to the doctor almost completely because the healthcare was so poor.

I was at language school in the late 80s near Fort Ord, CA. The infant mortality rate at the base hospital was so high the CDC had to come and investigate. The dental care on every base I served at was so poor that when I knew I was getting out I put off major dental work I needed until I could get it done by civilians.

I see no reason to doubt that the same will be true across the spectrum when government assumes complete control of the healthcare system.

Kevin February 27, 2009 at 11:05 am

I will express a little optimism here in that I believe with healthier lifestyle choices the people can actually make health care less of an albatross. We'll have to live without the very cool and interesting but expensive and not helpful end-of-life care that buys the living dead a few days more at a couple million per, and we'll have to prevent heart disease, diabetes, and cancer the old fashioned way, but I see no reason why health care costs will necessarily run away from us forever.

I believe the end-of-life portion will take care of itself. Once this is in government hands, the odds that a dying man could get a 7-figure emergency heart surgery on an hour's notice will drop to zero, so that problem will be no more. The caveat is whether people will actually make "healthier lifestyle choices". People today clearly find it worthwhile to eat sugar and grease for 40 years, do no exercise, and then consume "health care" for the balance of their lives. It would take a willingness to walk a new path, but I would speculate that people would make the change.

Lee Kelly February 27, 2009 at 12:27 pm

I am from England (currently living in Alabama). My brother has recently been having trouble with his back, and it has begun to effect his work. But the family has had to pay for treatment privately, because the NHS waiting lists are just too long. My brother cannot be handicapped for such a long time and continue to earn a living.

One way or another, healthcare must be rationed. Someone will pay a price, whether it be in waiting times or the cost of private treatment.

The NHS is a behemoth, and consumes a huge proportion of taxes. My brother has already paid for healthcare which he is not receiving, because of bereaucratic inefficiencies. Now family must pay again to ensure that he can keep working and making an income.

Lee Kelly February 27, 2009 at 12:39 pm

There is little 'universal' about universal healthcare. Everyone is "covered" according to some piece of legislation, but no new resources are created, and rationing must still take place. It is not even universal in the sense that everyone must wait equally, since those who can afford to pay for private treatment frequently do.

The poorest members of society are often hurt the most, because they have no choice but to accept whatever healthcare the government supplies.

It is a remarkable indictment of the NHS that so many people in Britian still pay for private treatment, and it also hides the true costs of healthcare, both in terms of prolonged suffering and money spent privately in addition to the large sums consficated through tax revenue.

Plac Ebo February 27, 2009 at 1:24 pm

You guys need to tell the French, Danes, Norwegians, and Swedes (to name a few) that nationalized health care does not work. I'm sure they'll rush to embrace your wisdom.

Sam Grove February 27, 2009 at 1:31 pm

It is not even universal in the sense that everyone must wait equally, since those who can afford to pay for private treatment frequently do.

We can be sure that our politicos won't have to suffer what they will inflict upon us.

RickC February 27, 2009 at 2:08 pm

Plac Ebo,

http://mises.org/story/905
http://mises.org/story/905

They can keep their systems.

Sam Grove February 27, 2009 at 2:48 pm

You guys need to tell the French, Danes, Norwegians, and Swedes (to name a few) that nationalized health care does not work.

Did anybody say the totalitarian health care doesn't work?
I think what the have been saying is that it sucks.

Plac Ebo February 27, 2009 at 3:11 pm

RickC, interesting stats in your linked article. But, the editorializing sounded like something from the Onion.

You need to add more sources to your Ludwig von Mises Institute reading list.

ps February 27, 2009 at 3:15 pm

I have little confidence in the government's ability to provide services in an efficient manner. However, I must say that based on my experience with Aetna and United Healthcare it is difficult to believe that the administration by the government can be worse than that provided by those 2 carriers that I have dealt with.

Jamie February 27, 2009 at 3:21 pm

Plac Ebo, are there volume effects we, as a MUCH bigger country with considerably more low-income immigration than the French, Danes, Swedes, and Norwegians, ought to consider? Perhaps we ought to look at a more comparable nation with a well-thought-of, successful national health care system that doesn't involve a lot of private care-seeking a la Britain and Canada. I just can't think of one.

Everybody knows an NHS story or a Canadian-system story. My own is a dentistry one: on a student work visa in the UK in the mid-90s, I lost a filling and had it replaced. When I got back to the States and went to an American dentist, she recoiled in horror: "What is that?!"

Kevin February 27, 2009 at 3:42 pm

Jamie you should know the risks of seeing a British dentist, social health care or not.

Plac Ebo February 27, 2009 at 4:25 pm

Jamie, I agree that there are differences between my example countries and the United States; such as size, mindset, homogeneity, and so on. These differences likely will make implementing national health care impossible. Should a feasible plan be developed there are too many powerful opposing interests that will sabotage any chances for its success. However, my point is that if one is to believe the vast majority of posters on this site it should be impossible to find national health care that works anywhere under any circumstance. That is simply not the case.

Finally, we can all recite medical nightmares. No system is immune. However, anecdotal evidence is not the way to determine a health care system's effectiveness.

Sam Grove February 27, 2009 at 4:45 pm

However, we do know that the health provision industry is heavily permeated by government.

Whatever happened to charity hospitals?

Methinks February 27, 2009 at 5:53 pm

Plac Ebo,

We don't need to tell them anything. They've come to that conclusion themselves and have been moving toward a privatized system for years now (with the possible exception of the 5 million people who live in oil rich Norway).

Methinks February 27, 2009 at 6:08 pm

…it should be impossible to find national health care that works anywhere under any circumstance.

I believe it may be possible somewhere under some circumstances – especially if you very broadly define "works" and that definition is accepted by the population in question. However, every socialized system must agree to spend a limited amount on care. This limits choice and people, as a general rule, like optionality. Even very small countries, where socialized everything works better because of homogeneity, etc., are finding that's the case and that is one of the reasons usually listed for moving toward more private health care.

We're moving from a hybrid monster to an even more terrifying (as you point out) government nightmare. Countries like Norway are used to justify this move and that's what terrifies people and makes them dig in their heels.

Plac Ebo February 27, 2009 at 7:04 pm

… They've come to that conclusion themselves and have been moving toward a privatized system for years now …

Methinks, you've got some serious rationalizing going on here if you think that the tinkering done with European socialism is an endorsement of your libertarian philosophy.

Methinks February 27, 2009 at 7:36 pm

It's not, Plac Ebo. It's a response to the inadequacies of socialized health care – namely rationing. The reason for socialized health care in Euorope is philosophical. The move toward more private health care is practical.

Some Americans labour under the delusion that they will get unlimited amounts of health care for a single price if only it were nationalized. Actually, a frighteningly large number of Americans. Surely you see that. Is it wrong to disabuse people of this fantasy?

Sam Grove February 27, 2009 at 9:30 pm

I'm fairly certain that those of totalitarian medicine persuasion see no connection whatsoever between France's socialism and the recent riots.

Plac Ebo February 27, 2009 at 9:53 pm

Some Americans labour under the delusion that they will get unlimited amounts of health care for a single price if only it were nationalized. Actually, a frighteningly large number of Americans. Surely you see that. Is it wrong to disabuse people of this fantasy?

Methinks, you are a beacon. I can see little to disagree with in your last post. Expectations of unlimited health care are as realistic as a thriving libertarian society.

And, I'm sure that you can understand the fear that many Americans have of an unrestrained capitalistic health care system dictated solely by greed and profits.

brotio February 28, 2009 at 1:14 am

And, I'm sure that you can understand the fear that many Americans have of an unrestrained capitalistic health care system dictated solely by greed and profits.

I can't. In every area of commerce, greed and profits create a more customer-oriented service philosophy than government provides. Why would medicine be any different?

maximus February 28, 2009 at 2:37 am

"And, I'm sure that you can understand the fear that many Americans have of an unrestrained capitalistic health care system dictated solely by greed and profits"

Bullshit. That's because ignoramous' like you have been sold that propaganda by the STATE. Fact is services have been limited by government intervention. Wanna ask someone who was in medicine prior? Talk to my father.

Plac Ebo February 28, 2009 at 10:50 am

Brotio, of course you can't. How could any thinking person not embrace a system where, for example, pre-existing conditions are routinely excluded; insurance doesn't follow when one switches jobs; and manipulated drug research results are all too common.

The endless pressure to maximize profits often conflicts with the efficient delivery of health care. There are too many incentives to cut the people that most need health care out of the system, and to over-treat/drug/test those that remain.

Plac Ebo February 28, 2009 at 11:17 am

Maximus, you're a societal neanderthal. A hundred years ago the "laissez-faire" experiment was soundly rejected. A prospering democracy spurns it every time. As time passes the pendulum of regulation swings, makes adjustments; but, it never returns to its origin.

Since you appear to endorse laissez-faire health care why don't you provide a real-world example that modern democratic societies would embrace.

Sam Grove February 28, 2009 at 12:31 pm

insurance doesn't follow when one switches job

I do believe this is due to the tax code related government interventions.

The endless pressure to maximize profits often conflicts with the efficient delivery of health care.

Let me mod that for totalitarian health care:

The endless pressure to meet budget constraints often conflicts with the efficient delivery of health care.

Methinks February 28, 2009 at 12:50 pm

Plac Ebo,

Most of the problems you mention are real but, as Sam begins to address, are due to a completely idiotic insurance regulatory structure and state mandates. In other words, this is the specter of government intervention and foreshadows what is to come. Pre-existing conditions are only an issue because regulations allow moving to another state or another employer to constitute a break in coverage.

Ideally, insurance companies would be forced to compete for customers by offering a wide range of health insurance choices from only catastrophic care to soup to nuts care programs. Newborns are today covered by their parents insurance at birth and there is no reason that should change. Government would enforce contracts, as is its proper role. In this case, centrally enforcing contracts instead of allowing the states to do so would be beneficial because one can keep the same coverage as one moves around the country – which Americans are wont to do. A comment section of a blog is not the place to hash out details, but this would go a long way to solving the cost and care issue.

In wealthy societies, there is always the question of the people who are simply too poor to buy insurance for themselves. But, that issue is no different than food, clothing and housing. Personally, I support the negative income tax over the inefficiency and indignity of payments in kind.

The point is, if we allow the free market to actually work, then we can figure out where the real deficits are and we can begin a discussion about what we are willing to do to fix them. We can't thwart the market in its attempts to provide the product and then blame that market for failing to do so.

Chris Cheney February 28, 2009 at 1:03 pm

Ultimately, our current health care strengths (access and quality) will suffer if we rid incentives from this market in the name of "equality."

Plac Ebo February 28, 2009 at 1:10 pm

Methinks, once again I agree with much of what you presented. However, if I understand you correctly you see the need for centralized insurance regulations (and I agree). But, for "the free market to actually work" as you state, why are any regulations necessary?

Chris Cheney February 28, 2009 at 1:36 pm

They are not. We are headed towards more regulation and governmental influence in this market. So, federal governmental contract managers will have their test and they will fail, as shown in the past (on a smaller scale). The Post articles highlighting the mismanagement of federal contracts within the past five years (ie. Department of Homeland Security and the Department of Defense) has highlighted what is to come…

Luk Arbuckle February 28, 2009 at 1:53 pm

Methinks, you have restored my faith in the Austrian economic view. I find your comments here to be respectful and insightful. I certainly need to learn more about negative income tax, as from what I skimmed online it sounds quite interesting (in theory, at least).

Are you familiar with the health care systems of Germany or France? I'm curious to know how they have managed to get parallel public and private health insurance to work, at least in the sense of wait times. Don't the low wait times of these countries suggest it is possible to have a parallel system that works? I maintain that the problem in Canada is one of monopoly.

brotio February 28, 2009 at 3:43 pm

How could any thinking person not embrace a system where, for example, pre-existing conditions are routinely excluded; insurance doesn't follow when one switches jobs; and manipulated drug research results are all too common. – Plac Ebo

You either presume that I believe we have free-market medicine right now, or you're like Mierduck and believe that anything that isn't run by government is a free-market. Others have already explained to you why this isn't a free market.

Many of the problems with efficient delivery of health care are due to the fact that someone other than the recipient is paying for the services, and that for probably 80% of us, someone other than the recipient is in charge of paying for their insurance. We've handed control of life or death to our employer, and because GM is insufficiently concerned over the health and/or cost of maintaining the health of its 200,000 employees, we are told that the remedy to this is to hand over control of our health care decisions to an entity responsible for 300,000,000 and everything will suddenly be Shangri-la. Forgive me for having even less faith in government than I have in General Motors.

If your boss is insufficiently interested in your health care needs, why would you suppose that some bureaucrat in DC would be more responsive?

Plac Ebo February 28, 2009 at 5:10 pm

Brotio, obviously you're an unfettered free market fanatic. Prove that it works for health care. Provide some real-world examples that modern democratic societies would embrace. It's a big world. Certainly you can find an example somewhere.

brotio February 28, 2009 at 6:23 pm

Prove that it works for health care. Provide some real-world examples that modern democratic societies would embrace.

Plac Ebo, obviously you're a dyed-in-the-wool socialist, and you ignored my question (If your boss is insufficiently interested in your health care needs, why would you suppose that some bureaucrat in DC would be more responsive?

Posted by: brotio | Feb 28, 2009 3:43:09 PM)

Why should I bother with yours?

Plac Ebo February 28, 2009 at 6:49 pm

Brotio, I figured you were either being rhetorical, or venting, or tossing out straw men. To answer your question, I don't know all the motivations. I'll venture that the DC bureaucrat is not being influenced by the profit motive. Regardless, earlier in this topic examples were given of nationalized health care that works. Once again it is your turn to provide example(s) of the laissez-faire alternative.

Oil Shock February 28, 2009 at 7:12 pm

I'll venture that the DC bureaucrat is not being influenced by the profit motive.

Sure! They are in the business of charity. They have no ambitions of their own, they don't take any compensation for their "work".

Sam Grove February 28, 2009 at 10:51 pm

As has been illustrated, the profit motive is apparently the root of all evil in the eyes of the left.

The problem is that this leaves us with the conclusion that all humans are motivated by evil as all humans hope to profit in some manner from their actions.

What is usually missed by almost everybody is how much of the wealth that we (and those before us)have produced is pissed away by the government in so many ways: the empire, business subsidies, foreign "aid", bureaucracy, etc.

If we, the people, had retained all the wealth that we have created, we would have very little concern about providing health care for ourselves and for those that cannot provide it for themselves, for we would be a nation full of very wealthy people.

MnM February 28, 2009 at 11:41 pm

"if one is to believe the vast majority of posters on this site it should be impossible to find national health care that works anywhere under any circumstance. That is simply not the case."

Odd that we would find this straw-man even after Sam pointed out that no one here made such arguments…

MWG March 1, 2009 at 12:18 am

"A hundred years ago the "laissez-faire" experiment was soundly rejected."
-Plac Ebo

Care to elaborate???

brotio March 1, 2009 at 4:12 am

Plac Ebo, nowhere in this thread were any examples given that convince me that totalitarian medicine works better than even the cluster fuck schizophrenia that is US health care as it stands today.

We have too much government in health care, and it sucks. The Brits, Canucks, Frogs, and Krauts have even more government in their health care, and it sucks worse than ours. My conclusion: Government screws up health care, and practically everything else it gets its mitts on.

It boils down to the same thing with you as it does with Mierduck. I don't care if you want totalitarian medicine, but like all socialists, you're not content to burden yourself with your socialist (nightmare) dream, you insist that I tag along and bear the cost.

brotio March 1, 2009 at 4:21 am

I'll venture that the DC bureaucrat is not being influenced by the profit motive.

EXACTLY.

Neither is the union, job-for-life-no-matter-how-bad-I-fuck-up asswipe at the post office. When is the last time you saw one of them leave their break two minutes early because customers were lined up out the door? Even Wal-Mart cashiers have more gumption.

Plac Ebo March 1, 2009 at 8:58 am

Sam, most of us in the center realize that the profit motive is not the answer to every problem, and instead makes many problems worse. Maybe this will help:

The profit motive is …
… mostly good for making widgets.
… mixed results for providing health care.
… mostly bad for beginning wars.

Plac Ebo March 1, 2009 at 9:10 am

MnM, have you spent much time reading this board? Read Brotio's post that follows yours. Tell me that his post isn't representative of the majority of libertarian fanatics that inhabit Cafe Hayek.

Plac Ebo March 1, 2009 at 9:19 am

Brotio, laissez-faire health care is going to be a tough sell if you cannot provide any modern day examples. I know it's fun to bitch and moan about every injustice. But, it's not very constructive when your solution will never be an option in the world we live.

MnM March 1, 2009 at 12:57 pm

Plac Ebo, you clearly missed my point (and Sam's).

Brotio can only speak for himself. Whether or not what he/she says is representative of "libertarian fanatics" is irrelevant. Examine the arguments or don't. Your call. If you choose not to, please don't expect me to take you seriously.

The argument isn't that government sponsored health care doesn't "work". "Work", here, is a normative term. I have no idea what you mean by "work" or what anybody means by "work".

The argument is that because government does not respond to the appropriate incentives, resources will not be allocated efficiently. This will translate into longer waits, medicine shortages, and more generally, a health system plagued by the kind of service one finds at the DOT. Does the DOT work? In a sense, yes. However, the service is appalling because they have no incentive to meet the needs or wants of those consuming their service.

Add to this questions about privacy, Constitutional limitations, and the willingness of those in power to abuse those they have authority over, and it's little wonder that "libertarian fanatics" would oppose government sponsored health care.

It is fine with me that you object to placing your health in the hands of private industry (at least, that is what it seems to me you are doing; please correct me if I've misread you). Brotio, myself, and others would object to having our health placed in the hands of government for the reasons I've given and some that I haven't given. Brotio has not, nor has anyone else here, except perhaps the straw-man you have erected, said that government sponsored health care does not work. What they have said is that it is worse than the alternative.

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