Be wary of "free" health care

The universal health care issue is such an emotionally charged issue that it's difficult to have a rational discussion about it. The problem with universal health care isn't specific to health care but rather to any solution that involves 100% coverage.

So to try to move the discussion away from a hot topic like health care, let's instead look at it in a way that more people will understand without emotion kicking in.

After being elected emperor, I decide everyone should have a television.  Because I have only so much to pay for these televisions, everyone receives a 35 inch TV.  After all, we couldn't afford to give everyone 60 inch plasma TVs and 35 inch TVs are pretty good.

So now everyone has a 35 inch TV.  But what about those people who want a plasma TV? Well, the price has gone up because you no longer have economy of scale working in your favor. Enough people are satisfied with the 35 inch TV that sales of the higher end ones plummet and so the cost of higher end TVs goes way up.

You then end up with a small group of rich people who get the big plasma HDTVs and the rest have the "free" TV.  But what's wrong with that?

Well it gets worse. So time passes and because sales of the higher end TVs are so low, the TV manufacturers have cut back on R&D.  And since the government has agreed to give everyone 35 inch TVs, there's no incentive for the manufacturers to lower their price on those TVs. In fact, they can slowly increase the cost on those TVs over time since, after all, what is the government going to do about it? And what does the government care anyway when "Caring" is measured in dollars spent, not results (look at federal education spending).

So rather than having seen increasing sales of higher end TVs in our reality that would bring the cost of older generation TVs down, we instead are stuck with these 35 inch TVs year after year after year.

This is precisely what happens in socialistic countries. The more socialistic it is, the slower the improvements are. Why make 1 inch thin, 75 inch HDTV displays when few people will buy them? Why even try when you know that the government is going to buy millions of the 35 inch displays each year?

Over time, the result is that we all end up with crummier TVs. At first, it wasn't so bad, everyone got a free 35 inch TV. Not too shabby. But by taking individuals making their own purchase choices out of the equation we effectively eliminate the incentive to innovate. 

We also effectively limit competition.  If the government goes with a single supplier such as Sony (or worse, builds its own TVs) then other TV producers will effectively be driven out of business or to the fringes. Or if the government goes with a confederation of providers, you end up with an artificial competition with only 1 buyer -- the government and the rest colluding on price (which is what happens in other industries).

Now this example is obviously an over-simplification. But you get the general idea. Any system that guarantees 100% coverage is artificial by definition and results in a slowing of improvement and quality of service. After all, in a capitalistic market, you can walk away - you can choose not to buy a product or service. But in a socialistic market, you are forced to buy -- you have to pay your taxes.

The reason why the United States enjoys the best material standard of living in the world is because it made a fundamental cultural decision long ago: Individual are on their own.  As a culture, we have decided that we can live with a small percentage of people failing utterly so that the rest of society can move forward. It sounds harsh and cruel on the surface but the alternative is a system in which all people are treated equally cruel.

Improvements in health, medicine, consumer goods, and services are almost always the result of individual initiative and the best way to encourage that is to create a system of self-interest -- where individual initiative is rewarded. That the selfishness of the individual benefits society.  That is, in effect, the goal of regulated capitalism.

In the United States, most people have health care. In fact, over 90% of the people in the United States either have health care or could easily afford it if they chose to. That is an impressive accomplishment in a capitalistic society such as ours.

It is a system that enables someone who is diagnosed with a heart condition to get in and have surgery within that week. It allows someone (like me) who wants to get Lasik to get an appointment and have it done within a couple of weeks. It allows someone who has the flu to make an appointment and get in that day to see the doctor. And it does this at a relatively reasonable cost.  And it does this with an incredible array of improvements being made technologically all the time (most improvements come from the United States btw -- nations with socialized health care make relatively little medical progress and find their improvements largely as a result of taking advantage of breakthroughs from the USA).

So the question you have to ask yourself is, how much are you willing to give up so that the last 10% of the citizenry receive "free" health care (free in the sense that you're paying for it). Keep in mind, right now, most Americans literally pay nothing for their healthcare. It's part of their job compensation and they don't have to claim it as taxes (and many companies let you opt out of it and take it as direct money compensation). Whereas a "free" system means you'll be paying it in taxes not just for yourself but for others too. And for vastly inferior service and a slowing rate of improvement.