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January 9, 2019 by Dr. Kyle Varner in Policy
This article was originally published on freedomandeconomics.org
Each year, Americans spend more and more on their medical bills. Last year, the average American spent $9,086 on health care, a shocking 17 percent of their take-home income. And the numbers just keep going up.
Unsurprisingly, outraged Americans are demanding a solution to these insane costs. Many are even calling out for a system of ‘Universal Healthcare’ like that in Canada or the UK to put an end to these bankrupting medical bills.
One of the main arguments for government-sponsored universal health care is that through the government’s collective bargaining power and central planning that the state would be able to lower healthcare costs across the board. But how has that played out in reality?
As one of the first systems of universal health care, the National Health Service (NHS) in the UK is frequently given as a model example of the government intervening to reduce healthcare costs. But all it takes is a quick look at its financials, to see that this has not been the case.
In the mid-1950s, the entire NHS budget, including money spent on all its doctors and patients, was under £20 billion a year. This constituted 11.2 percent of the UK’s national budget at the time. By 2017, costs had grown to require a budget of £150 billion a year and is now over 30 percent of the budget.
This is only expected to get worse as the UK’s senior citizen population, which currently makes up 15 percent of the population, rises to 25 percent. On average, health care costs five times as much for an 80-year-old compared to the average 30-year-old.
Meanwhile, in Canada, we’re seeing a major crisis in the supply of doctors. More than a third of Canada’s physicians were age 55 or older in 2010. This signals an impending shortage that’ll be more severe as these doctors age out of the industry –and it will inevitably increase healthcare costs further.
Despite having ‘radically different’ and allegedly superior government-run healthcare systems than the US, Canada and the UK have a lot of the same poor outcomes as American health care.
The reason is that today, the UK, Canada, and the US all basically have the same system! They didn’t start out the same, but they all wandered down the same path and hit the same dead end.
Each of these countries throws billions at the entire healthcare industry, from medical schools to hospitals to patient coverage. They then take their finite resources and set quotas, thresholds, and ceilings, in the hopes of doing the best they can with what they’ve got. And costs continue to spike while people continue to not have access to care. Government- provided ‘universal healthcare’ is just more of the same bad system. Here’s why…
Stripped down to its most basic form, here’s how government-imposed universal health care works. The government takes your money, bureaucrats keep some of it for themselves for ‘administration.’ And then with what’s left, they’ll give you some of your money back in the form of government healthcare services. Whether the catchphrase is ‘universal healthcare,’ ‘single-payer,’ or ‘Medicare for all,’ the same rules apply.
Some people, typically the very poor or the very sick, benefit from such a system. Not because a bureaucratic healthcare system is efficient or good, but because their healthcare costs are subsidized by the rest of the population.
Meanwhile, the great majority of people are far worse off under such a system, as their costs go up and they lose autonomy over their healthcare decisions. Because when the government provides health care, medical services are provided on their terms, not yours. He who has the gold makes the rules.
With a ‘universal’ system, you don’t get to pick your own doctor, you have one assigned to you. In order to receive treatment you must be accepted onto a pre-approved list. You don’t get to pick your own medications, you have to settle for what your insurance provider is willing to cover. In every instance, quality goes down, patients lose out, and inevitable shortages result.
Yet market economies never seem to have shortages of things like food, and these items are just as essential to survival as health care. Why is that?
It all comes down to prices. Prices are a signaling mechanism. When there’s a shortage of something, prices temporarily rise and new producers are drawn into the market. For example, every time a tornado or hurricane tears through a town, you can bet there will be someone selling water bottles for $20 a bottle until someone else comes in selling them for $10. When competitors come up with cheaper or better services, that increases the competition, which in turn pushes prices down.
Another feature of competitive markets is that prices decline towards the cost of production. Have you heard of the Southwest effect? When Southwest Airlines opens a new route, prices charged by the other airlines tend to fall almost immediately. This is what competition does. And when you have competition, the consumers are winners.
The United States has universal food, universal shoes, and almost universal smartphones. We also don’t have any type of command-and-control bureaucracy distributing these crucial things. That’s not a flaw–it’s the main reason these goods are so abundant.
Universal health care imposed by the government really means universal shortages and low quality. No one wants that! Luckily, a darker future is avoidable.
We can have universal health care the same way we have universal food and universal shoes: allow the mechanisms of pricing and competition to ensure widespread availability, drive down prices and drive up quality. And most important: drive up abundance.
Rather than picking up the playbook of failed economic policies based on feel-good theories that have killed millions in practice, let’s base our reforms on proven economic principles that have raised billions out of poverty. These have given us lifestyles that even kings couldn’t have had 100 years ago.
So if you want universal health care, look to the only system with a proven track record: free market capitalism.
This information is intended to help readers be more informed about their health options when speaking with a professional, but it should not be used alone to diagnose, treat, prevent or cure any disease or condition. Be sure to speak to a qualified doctor before taking any action to make sure that your choices reflect your actual health situation.