There will never be enough money for universal health care

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The famed philosopher and economist Milton Friedman had this simple parable.

Suppose you went out to buy yourself something. You’re going to find the best quality at the best price. It’s your money so you try to spend as little as possible, and you care a great deal about what you get so you get the best quality you can get.

Suppose instead you’re buying a gift for your friend. Even though you care a lot about your friend, you really don’t know what your friend needs. So you buy something good but probably not optimal, and you try to spend as little money.

Suppose instead someone is paying for something you want to buy. With someone else’s money, you buy the best thing you get and you don’t care about the price, as long as it’s within range. You see this when companies pay for their employee’s lunch when they’re on a business trip. The employee will try to get the best food they can but they won’t try to save money.

Suppose instead you had to buy something for someone you care about, and you were using someone else’s money. As in the gift scenario, even though you care about your friend, you probably don’t know what they really need. And as in the third scenario, you don’t even care much how it costs.

If you want things to cost as little as possible, you have people spend their own money.

If you want things to be as high a quality as possible, you have them buy things for themselves.

Now, for my point: Universal health care will never have enough money. Since the people who use the system aren’t paying for it directly, they’re simply going to get as much health care as they can and they won’t take reasonable measures to keep costs down. On the other hand, the people who administer the system won’t really care much about the quality of health care people receive. See, they might be careful buying a gift for their friend, but they simply can’t care about the millions of people who live in a country and what each individual actually needs.

Universal Health Care cannot work and does not work. People tout how wonderful it is, but in practice, it is obviously worse than what we have in the US which is really bad to begin with.

How do you fix health care? It’s actually really simple. Have people buy their own health care with their own money. That’s all there is to it. If they’re spending someone else’s money, they won’t care about price. If someone else is making health care decisions, then they will be bad decisions.

How do we get there from here? Obviously, we could simply erase all the laws on the books that have anything to do with health care. That’s one option, and if I were supreme commander of the United States I would do it. Political reality suggests a different plan may be in order.

First, we can replace Medicare and Medicaid with vouchers. Seniors can use the money however they see fit, but when they run out, they run out and that’s it. As a bonus, they can keep the vouchers and spend it on something else besides health care.  Perhaps a lump-sum payoff would be ideal — just write a check and be done with the systems. We could also refund all the people who have paid into those systems at the same time. Not only would this inject a huge supply of cash into the economy, it would also relieve the huge impending doom that Medicare and Medicaid have in store for everyone. We simply cannot continue these systems. Something has to break. Either people stop getting health care, or our money becomes worthless. If you feel bad about seniors that use up all their health care dollars, perhaps we can create a matching program. For every $10k a senior spends on health care beyond their limit, the government can match with $10k or $5k or $20k or whatever. The idea is that the seniors have to spend their own money, and not just meet a minimum to unlock infinite spending. Seniors must weight the cost and benefit of health treatment, and having them do so will drive down costs and direct capital and resources to the health care seniors want and actually use.

Next, we can relax all the federal regulatory burdens on medical care. Disband the FDA and leave it up to the states to make their own health laws. The only law on the books should be laws that allow people to travel between states or out of the country for health care, or that allow people to purchase health products and plans across state lines. Our current system is a great burden on health care because it is so antiquated and impenetrable.

In addition to the above, we can allow the creation of health charities and give tax breaks and even additional tax breaks upon tax breaks on organizations that service the health needs of the poor, that invest in medical research and training, or related things. Note: Tax breaks, not subsidies. Giving a tax break doesn’t encourage people to go crazy with their money; subsidies that aren’t spent tend to disappear, which inflate prices.

I want to close with this. I like to fantasize like everyone else and wish the world wasn’t the way it really was. But we must accept the reality that the world is the way it is and work within its rules and limits. One of those limits is the economic topic of scarcity. While health care is extremely valuable, it is also scarce. It is hard to train new doctors, hard to keep hospitals running, and hard to have people give correct and precise advice. If we’d like people to have more access to health care, there are really two ways to approach this, and only one has worked historically. On the one hand, we can hand out medical care for free; on the other, we can create huge incentives to optimize the few resources we have to provide medical care. What inevitably happens when you hand out something for nothing is people treat it like it is worth nothing and they abuse it. But when they have to pay for it, then the economy can go to work directing resources where they are needed most and ensuring that all innovative ideas that are worthwhile are tried out.

I think if we went with a market-based approach, we would see people take the time and effort to stay healthy, since by staying healthy, they won’t need to spend as much money on medical care. Obesity in America will decline; people will be far more careful about what they eat and how they live their lives. Not only that, but doctors will be treated with respect and patients will actually finish their bottles of antibiotics.

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