Why Support Universal Health Care if it Doesn’t Improve Health?

Suppose there had been a futures market in the life expectancy differential between the US and Europe in the year 2030.  Does anyone seriously believe that the passage of Obamacare would have reduced the expected differential?  Liberals sometimes point to the higher life expectancy in Europe in support of health care reform, but I doubt that even they actually believe that’s what drives the difference.  Until a few years ago Denmark and the US had the same life expectancy.

I’ve always thought the Rand study was the gold standard of health care research, and hence it’s good to see the Oregon study confirm the results.  Robin Hanson is right, health care is not about health.  BTW, I agree with people like Mickey Kaus and Matt Yglesias that health care is partly about peace of mind.  But then I’m a hypochondriac, so I’d say that, wouldn’t I?

It’s quite possible that a 100% laissez-faire health care regime is optimal, or at least better than the current system.  But that’s not politically feasible, and I’m not all that sure it’s optimal.  However I am certain that we can do much better than our current regime, and I also believe that any move to a more sensible system would have to include universal health care.  I happen to support the following:

  1. Eliminating all tax subsidies (which amount to roughly 40% of private health care costs.)
  2. Universal health insurance at the catastrophic level, and HSAs for smaller procedures.  Subsidies for the poor.
  3. A Singapore-style high savings regime, which means I’d probably never once in my entire life have to dip into the government catastrophic insurance system, as I’m a high saver with a good income.  I’d also never have to deal with annoying insurance companies.  And I wouldn’t be forced to buy coverage I don’t want.  I suppose I’m OK with companies keeping their current health care benefits programs (insurance, HMOs, etc) as long as there was no tax subsidy.
  4. I’d also deregulate the provision of health care services.  Completely.

Because Singapore has price controls, there is currently no example of the system I propose.  But the HSA approach as been used, as has the universal coverage of major health expenses.  So I think various parts of the proposal have been tested.

Why support universal health care if it doesn’t improve health?

  1. Utilitarian grounds—it helps those who are devastated by major medical expenses, especially lower income people.
  2. Pragmatic grounds—I see it as the only way to get a sensible system that can begin to reduce the massive waste in our current system.
  3. I hate insurance companies and government bureaucracies.  I want to pay out of pocket.
About Scott Sumner 492 Articles

Affiliation: Bentley University

Scott Sumner has taught economics at Bentley University for the past 27 years.

He earned a BA in economics at Wisconsin and a PhD at University of Chicago.

Professor Sumner's current research topics include monetary policy targets and the Great Depression. His areas of interest are macroeconomics, monetary theory and policy, and history of economic thought.

Professor Sumner has published articles in the Journal of Political Economy, the Journal of Money, Credit and Banking, and the Bulletin of Economic Research.

Visit: TheMoneyIllusion

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