The Libertarian Perspective

Universal Health Care Would Be Universal Disaster

Rise in health care costs coincides with Medicaid and Medicare expansion


It seems everyone is jumping on board the health care reform bandwagon these days. President Bush discussed his health care tax credit during his State of the Union address, Gov. Schwarzenegger announced his statewide universal health care plan, and Democratic 2008 presidential candidates Hillary Clinton, Barack Obama, and Dennis Kucinich have all made nationwide universal health care a major plank in their campaign platforms.

Numerous others have decried sharply rising health care costs and offered many proposals, but no one can agree on a solution. One common thread to the proposed "solutions," however, is more government involvement, be it more taxes, more program expansions, more subsidies, or more mandates and regulations. Yet, government intrusion in the medical care industry has been increasing significantly for years—particularly since the birth of Medicare and Medicaid in 1965—without ever achieving the promised goals of greater affordability and better quality of care. It is no accident that the rising prices and declining quality of medical services coincide with an increasing socialization of the health care industry in America. Perhaps it is time to reexamine what it is we are trying to fix.

Gov. Schwarzenegger wants to enforce universal health care to cover 6.5 million uninsured Californians at an estimated cost of $12 billion a year. (Remember: these are government cost estimates. Expect actual costs to be many times higher. Think Medicare prescription drug benefit.) The plan would require all of us to maintain at least a government-approved level of coverage—whether we want to or not—and would require insurers to issue policies to everyone, even those who wait to become sick before applying for "insurance." The plan would be paid for by a number of taxes, including a 2 percent tax on doctors and other medical professionals, a 4 percent tax on hospitals, and a 4 percent tax on employers with 10 or more workers that do not offer health benefits. Furthermore, the Schwarzenegger plan would increase eligibility requirements in the Healthy Families program to allow families with incomes of up to 300 percent of the poverty line (about $60,000 for a family of four) to obtain subsidized health insurance for children.

In short, California's universal health-care plan would (1) significantly increase insurance costs by artificially increasing demand and forcing the young and the healthy to compensate for the costs of the uninsurable who now must be covered; (2) increase the cost of services, as doctors and hospitals pass on the cost of higher taxes to their patients; (3) make employees less able to afford coverage, as employers respond to the tax increase by cutting salaries or dropping health-care coverage altogether, and (4) provide less incentive for families earning up to three times the poverty line to acquire private insurance, as more of them would be able to take advantage of the government dole.

One of the main problems with health care today is that medical decisions tend to be made by third-party bureaucrats—whether employees of the government or an HMO—rather than doctors and patients. Cost decisions, in particular, are completely taken away from the patient.

Last year I had to have a couple of radiological procedures done, and I had the audacity to ask the nurse in my doctor's office how much the procedure would cost. Not only could she not even give me a rough estimate, she looked at me as if this was the strangest thing I could have asked. Something is wrong with this picture. If I were to get into an auto accident or need some regular maintenance done on my car, there would be no question how much it would cost me. I could even go get several estimates and choose the best mechanic based on price and quality of work. Why should it be any different with medical care?

Voters are going to hear many health care "reform" proposals over the next couple of years (and beyond). The question they should ask themselves is: Does this plan give more power to me and my doctor or to third-party decision makers? The issue is freedom and control, and the one who pays is the one who controls.

After over a generation of taxes and mandates and regulations and Medicare, we can see that government intrusion in the health-care industry only makes health care less affordable and the quality of care lower. Politicians like Schwarzenegger, Clinton, Obama, and Ted Kennedy are right that the health-care industry in our nation is sick. What they fail to realize is that government intervention is the disease, not the cure.

Adam B. Summers is a policy analyst at Reason Foundation. An archive of his work is here. Reason's California research and commentary is here. This column was originally written for The Libertarian Perspective.

Adam Summers is Senior Policy Analyst





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