Tuesday, January 09, 2007

There is No Such Thing as Universal Health Care

But do not tell California Gov. Arnold Schwarzenegger, who has proposed just that for California as he begins his second term. To be fair, he hasn't used that phrase (although some media organizations lazily have), promising instead to give all Californians access to "coverage."

And a good thing, too, because "universal health care" is a meaningless phrase. Health care, like anything of value produced from scarce resources, must be rationed by one criterion or another. Some systems of calling forth those resources distribute the resultant health care output one way, some distribute it another. What is meant, I suppose, by "universal coverage" is that everyone would be in a position so that the expenses of their particular health-care consumption would be substantially paid for by others. But this scheme will not result in "universal health care" any more than the current system, or than a purely market-based system, where each individual is responsible (either out of pocket or through whatever third-party arrangements others are willing to sell him) for his own health-care expenses. Indeed, the very phrase "universal health care" makes no sense if it means "anyone may have any health-care services a doctor asserts the patient needs." Rather, because it is costly to produce, health care must be rationed, and the only question is how.

Under a pure market system, a patient may obtain any services he is willing to pay for, at the moment he is willing to pay for them, provided only he can persuade someone to provide them. If I want hip-replacement surgery and am willing to pay the money price the providers (doctors, nurses, etc.) ask, I can get it immediately. Who gets what kind of health care is the result of the usual dance between consumers and entrepreneurs, which generally produces satisfactory results in a world of scarcity. But some procedures are, in principle, unavailable to some patients because the doctor's asking price exceeds the patient's resources. A very poor person may be unable to muster the funds, or may have been unable to afford the insurance, necessary to pay for the open-heart surgery he needs. This assumes away the remedy of providers providing charity care or of strangers helping him out, both of which are common, and implicitly assumes that competition cannot provide the necessary insurance. But clearly, monetary resources must be a constraint for some health care in some circumstances for everyone.

But a single-payer system such as Canada's also must ration. Being unwilling to impose monetary costs on patients sufficient to cover the social cost of their services, it must choose other criteria – time, for example. And so only those who can wait long enough get needed services. This wait may merely impose dramatic physical discomfort – say, because of a two-year wait for hip-replacement surgery, during which the patient is in immense pain. If the care is sufficiently urgent to maintain life, the wait may be fatal – e.g., a wait for cancer surgery so long that the patient dies. Hybrid systems, like those in Germany or France or the U.S., ration by both time and income.

Which is "best"? This is in isolation a nonsensical question, depending on which outcome – people refused care so that they die waiting at the back of the line versus people refused care so that they die because of insufficient funds – the citizen finds more outrageous. But the market system does have several advantages. First, it is consistent with freedom in a way a pure single-payer system is not – anyone who can voluntarily persuade a health-care provider to give him care gets it, something not true in single-payer. As the saying has it, in Canada it is perfectly legal to pay a veterinarian to give your dog an MRI today, but not to pay a doctor to give your mother one. (She has to wait.) Second, the greater the reliance on market forces the greater the amount of medical innovation, because medical innovation is more profitable for entrepreneurs. Third, politicians tend to have short-term time horizons relative to entrepreneurs, and so in a single-payer system they may de-emphasize factors like keeping health facilities clean because these factors require expenses now and payoffs mostly in the future.

And so I think that the market system (including employer-based insurance if it is chosen freely through bargaining rather than imposed), is obviously the moral system. Whatever one's personal preferences about such matters, the phrase "universal health care,”being economically nondescriptive of anything, should be purged from the language.



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