Do We Need a Government Healthcare System?

The American healthcare system is in trouble: costs are far too high. Not to the consumer – the average consumer pays only 16¢ on the dollar for medical expenses, after government and employers step in. The government pays for 50% of that, and even more for those on medicaid and medicare. The expenses are ballooning, far more quickly than many other areas of government expenditure (not including social security, of course). The government can’t pay a theoretical infinite sum in the indefinite future: something’s got to give. What are the causes of the ballooning costs?

The answer is a risk-unfamiliar culture. Americans have come to expect top-notch medical care for whatever ails them in any circumstance, and that immediately. Thus America has the highest access to medical care in the world and also the most efficient doctors, but at a price. We often hear of risk factors and their cost to the American healthcare industry: smoking, obesity, poor diet, etc. These cost the American public so greatly that many have proposed further regulation to incentivize healthy living: higher cigarette taxes, junk food tax, healthy food subsidies, etc.

This solution, however, is like cauterizing a wound with a hot sawblade. The fundamental problem is that the costs of risky health behaviors is significantly lower because the government subsidizes them. Collectivized health risk encourages people to be more cavalier with their health. Without monetary consequences, why not enjoy that pack of cigarettes or that bucket of ice cream? People wanted government to subsidize healthcare. That wound was cauterized, so to speak, but in the process opened up a series of new wounds: a range of incentive problems and moral hazard as above.

The solution is obvious then: we do not need to scurry about quashing each problem with more regulation when it is that itself which is causing the problems. Let the wound heal itself. People talk about changing the culture in America to be less self-indulgent and more health-conscious. We could tax junk food and subsidize healthy food towards that end, but that opens up an entirely new set of economic problems. Alternatively, the government could step out of healthcare entirely. With more money at stake, people begin to think twice about that next beer, or that second piece of cake. Taxes and subsidies change peoples’ behavior, not their motives. The only way to fix the healthcare system in America is to make it expensive to the consumer to get sick.

Is this harsh? Perhaps. Those with left-leaning sentiments will decry this system for a lack of coverage of the poor. But healthcare is not, and never has been, a human right. It is simply not feasible for it to be so. Nor is this a moral issue since often times it regards life and death. We have seen that without reference to a higher power, human life cannot be anything more than an economic good. Thus if we are to take separation of church and state seriously, the government cannot regard human life as a supereconomic good (this is also a great argument for the deregulation of the organ market, but that’s an article for another time). Health insurance is not for all people. It is not worth its cost to all people, and it’s silly to force it upon them.

Hospitals would indeed have to turn away people without means of payment, but this would arguably not be many. The lack of government interference opens the playing field for all kinds of charities, which are the proper and only effective social safety nets. Such charities already exist to provide meals, transportation, and education to the needy, and it is not at all a stretch to say that healthcare charities would pop up all over the place. Furthermore the consumer is not, under most circumstances, responsible for the total cost: employers would still have healthcare packages as benefits, but as a proportion of income rather than the arbitrary income-independent coverages of today (which leads to a lot of overinsured people as well, driving costs up further).

This healthcare system would have the benefit of being used less not only because those who would previously have taken it no longer find it worth it, but because the natural incentive structure would encourage healthy lifestyles. Thus, not only do we not bankrupt the government, but the overall absolute cost is substantially lower.