A Shot in the Arm...or in the Head? The YFP's Arron Ring and Jonathan Berry debate the viability of universal health care as compared to a free market system. November 2004

Aaron Ring:

          As reported by the World Health Organization in 2000, the United States spends more than any other nation on health care: 14 percent of its GNP. Even so, it has the highest proportion of uninsured citizens among industrialized nations and ranks only 37th with respect to the quality of care. Few deny that the U.S. health care system is in peril, with rising insurance premiums, decreasing benefits, and compensation dropping to below the cost of care. Yet many disagree about the role of government in addressing these problems, and whether universal health care could provide an effective solution.
          The need for universal health care arises from the responsibility of government to ensure the natural rights of life, liberty, and property for all. Universal health care provides a necessary framework to secure the right to life. With this premise in mind, a system of universal health care should entail more than just treatment for catastrophic injuries or diseases. In addition to the striking emotional and humanitarian reasons for broader care, the current system of emergency-room treatment for the uninsured is not costeffective. On average, ER visits for nonemergencies cost $383 each, while doctors’ office visits only cost about $60, according to Blue Cross/Blue Shield. Additionally, uninsured patients who can receive only catastrophic health care coverage place a greater burden on the health care system by entering care with more advanced stages of illness and often failing to return for follow-up treatment.
          Two more fundamental questions about the viability of a universal health care system remain: who is going to pay for it, and how would it work? A single-payer national health insurance system offers a startlingly feasible mechanism for universal health care. Two former surgeon generals and over 8,000 doctors endorsed such a proposal in the August 2003 Journal of the American Medical Association. Why does a single-payer system make economic sense? In August 2003, the Christian Science Monitor put it best: “Currently, about 26 cents on every U.S. health care dollar is spent on paperwork and administration. Replacing private health insurance companies with a single government insurer like Medicare, which spends about 3 percent on administration, would save the country $200 billion dollars annually.”
          Thus, universal health care provides an economically feasible framework for ensuring the natural right to life and offers an effective solution to the current health care crisis.

Jonathan Berry:

          As the cost of health care skyrockets and quality plummets, the crisis today stems from state intervention that distorts market incentives. A single-payer system would exacerbate the crisis, not end it.
          The fundamental problem with health care today is that the purchaser and the user of care tend to be different people. Employer-provided insurance, Medicare, and Medicaid all promote this separation. Production costs fall because consumers increase consumption when firms lower prices. Those providers in turn seek out technological and economic innovations to save money, allowing them to cut prices while reaping greater profits. Quality increases through the same process, as consumers will demand more of a product if producers can improve it.
          Single-payer proposals pose the same difficulty as do employer-provided health insurance, Medicare, and Medicaid. Such systems sever normal economic communication. The amount the user pays for care does not correspond to the amount he consumes, so he overindulges. In this system, more health care will be consumed than in a free market, so total costs rise. Government must then either raise taxes or tolerate shortages, exacerbating the crisis further.
          Local knowledge, such as an individual’s preferences as to price and quality, cannot be centralized. Every economic transaction tells firms where to grow, through signals only the individual producer can understand. Markets efficiently ration goods by driving producers to economize and avoid shortages, while giving voice to consumer demand for lower prices and better quality.

Aaron Ring:

          The assertion that “the fundamental problem with health care today is that the purchaser and the user of care tend to be different people” provides one of the strongest reasons to adopt a system of universal health care. The cost of providing health care in modern hospitals with today’s technology is too high for any but the wealthy to afford. It is therefore unreasonable to expect everyone to pay for their own health care directly.
          The real reason for the rising cost of health care is not that government intervention has inflated prices. It is that insured health care users often abuse the system while uninsured users strain it to its limits through wasteful emergencyroom care. Indeed, the problem is one of incentives: the insured users have no reason to decline excessive treatment, and the uninsured have no financial incentive to seek preventative treatment.
          The argument that consumers will “overindulge” in a single-payer system is fallacious, akin to the argument that one would drive endlessly on the highway if there were no tolls. Just because there are no barriers to available health care does not mean there are no limits on its use. Moreover, the free-market system focuses on profits, not on care. What incentive does a so-called free market hospital have to operate expensive and highly unprofitable enterprises such as trauma care?
          Ultimately, health care must not be seen as a for-profit business but as a necessary and humane service to our fellow man.

Jonathan Berry:

          If “the cost of providing health care in modern hospitals with today’s technology is too high for any but the wealthy to afford,” how would splitting the check among taxpayers make the bill any more affordable? Unless the “wealthy” make up more of this country than most liberals admit, the money to pay for today’s care does not exist.
          If “modern” health care costs so much, poorer people could pay for “pre-modern” care instead. Just a few decades ago, general practitioners used to make house calls regularly and inexpensively. Personal attention is a lot cheaper than a laser, yet it can be just as important to a patient’s health. Doctors make more money, however, in a system that rewards profligacy, where they can prescribe “excessive treatment” that “insured users have no reason to decline.”
          Universal health insurance means that no one will have a reason to decline anything. Bureaucrats will decide who gets what treatment, or costs will explode. Employer-provided health insurance suffers from bureaucracy, too, but HMOs hardly evolved out of a free market.
          Would-be central planners should regard the recent budgetary collapse of TennCare, the Left’s health care poster child, as a readily foreseeable consequence of their utopian schemes. Government intervention rarely solves problems created by government intervention. This cure is worse than the disease.

Aaron Ring is a freshman in Branford College. Jonathan Berry is a senior in Ezra Stiles College and Managing Editor of The Yale Free Press.