You Don't Have to Support Universal Health Coverage to Support Caring for the Needy

Liberals often accuse opponents of universal health coverage legislation of wanting to let the poor go without coverage — and suffer and die as a result. Let's be charitable and assume that liberals actually believe that this is the only possible alternative to universal coverage orchestrated by the government.

The problem, of course, is that it's not.

It is possible to oppose both the current fiscally rotten entitlement system and expansions of that system — like the 2010 health care overhaul now awaiting a Supreme Court decision — and still favor a basic safety net for the truly needy.

What might such a safety net look like? Here are a few basic principles.

It would focus effort and resources on providing care for the truly needy rather than on providing subsidies for seniors or the middle class. Right now we subsidize the health insurance of the middle and upper classes through the tax system, which has distorted the market for medical care for decades. The health care overhaul, should it stand, will add an additional layer of subsidies for households earning up to 400 percent of the poverty line, or nearly $90,000 for a family of four. Medicare is not means tested, and provides taxpayer-financed health coverage for the wealthiest cohort of Americans. It's a hefty transfer from the poor and young to the rich and old. Medicaid, meanwhile, is a deeply dysfunctional program that regularly fails the poor and, thanks in part to the perverse incentives of its joint financing system, is the subject of constant squabbling between state authorities and the federal government. American health care policy today offers lopsided benefits to politically influential groups like seniors at the expense of the poor and vulnerable.

It would do as little as possible to control prices or suppress price signals. Since World War II, medical prices have been systematically distorted and suppressed all over the Western world. As National Center for Policy Analysis president John Goodman extensively documents in his new book, Priceless: Curing the Health Care Crisis, individuals, employers, providers, and even payers — public and private — have been shielded from seeing the true costs of care, which has helped generate cost inflation and excess spending. A better health care system would be far more transparent to all parties, ensuring clear prices for specific services and service bundles throughout each layer of the system.

It would emphasize catastrophic coverage instead of subsidizing routine care. Rather than attempt to cover relatively predictable health expenses, a better safety net would focus on ensuring that health care expenses did not lead to financial ruin for the most needy. In other words, the focus would be on providing insurance against disaster rather than day-to-day comprehensive coverage, encouraging individuals to take responsibility for care that can reasonably be expected in advance while also offering some peace of mind that worst case scenarios are covered.

It would allow for flexibility and experimentation when possible. Because the price system has been suppressed for so long, and because so much of medical practice is directed or heavily influenced by government payment systems and regulations, any system would have to emphasize freeing providers and patients to experiment with new models of care, payment, and administrative practice. Experimentation should be locally driven rather than centrally planned, and, whenever possible, should not require obtaining advance permission, which tends to give competitors an opening to block competition. It would also need to free state and local governments to experiment with competing public health policies.

Would a system based on these principles be perfect? No, not even close. But it would provide more effective help to the truly needy while allowing and encouraging the sort of market-driven innovations that are desperately needed in the health care sector. Perfect, anyway, is not possible. It is unfortunate but true that people slip through the cracks in universal systems all over the first world: Cancer patients fight for access to treatments in the United Kingdom's politically driven socialized health care system; Canadians in excruciating but not-quite-life-threatening pain wait months for treatment and cost the country billions in productivity losses. Coverage, as we have also seen in the U.S., is not always a guarantee of care. It is not necessary to support government-driven universal coverage in order to support finding more sustainable and effective ways to care for those who need it most.

The Mercatus Center's Tyler Cowen laid out some suggested principles for supporters of free-market health care here. Reason's Nick Gillespie and Veronique de Rugy make the case against the current entitlement system in the cover story of Reason's August/September print edition, which is currently on newsstands. So subscribe now!