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Universal Health Care Not Best Option

by Michael D. Tanner

This article appeared in The Bulletin on February 23, 2009

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Supporters of a government-run national health care system often urge the United States to learn from the experience of other countries and they are right. But those lessons may not be exactly what the political left expects. For example:

• Universal health insurance does not necessarily mean universal access to health care. In practice, many countries promise universal coverage but ration care or have extremely long waiting lists for treatment. Those countries that have single-payer systems or systems heavily weighted toward government control are the most likely to face waiting lists, rationing, restrictions on the choice of physician, and other barriers to care.
• Those countries with national health care systems that work better, such as France, the Netherlands and Switzerland, are successful to the degree that they incorporate market mechanisms such as competition, cost-consciousness, market prices, and consumer choice, and eschew centralized government control.

In France, for example, co-payments run between 10 and 40 percent, and physicians can balance bill over and above government reimbursement rates, something not allowed in the U.S. Medicare program. On average, French patients pay roughly as much out of pocket as do Americans. The Swiss government pays a smaller percentage of health care spending than does the U.S.

• Rising health care spending is not a uniquely American phenomenon. While other countries spend considerably less than the U.S. on health care both as a percentage of GDP and per capita, it is often because they begin with a lower base of expenditures. But their costs are still rising, leading to budget deficits, tax increases, and/or benefit cuts. In 2004, the last year for which data is available, the average annual increase for per capita health spending in European countries was 5.55 percent, only slightly lower than the United States’ 6.21 percent. As the Wall Street Journal notes, Europeans face steeper medical bills in the future in their cash-strapped governments. In short, there is no free lunch.
• While no country with universal coverage is contemplating abandoning a universal system, the broad and growing trend in countries with national health care systems is to move away from centralized government control and to introduce more market oriented features. As Richard Saltman and Josep Figueras of the World Health Organization put it, The presumption of public primacy is being reassessed. Thus, even as the U.S. debates adopting a government-run system, countries with those systems are debating how to make their systems look more like the U.S.

Looking at other countries and their experiences, then, can provide guidance to Americans as we debate how to reform our health care system. In most cases, national health care systems have successfully expanded insurance coverage to the vast majority, if not quite all, of the population.

But they have not solved the universal and seemingly irresistible problem of rising health care costs. In many cases, attempts to control costs through governmental fiat have led to problems with access to care, either delays in receiving care or outright rationing.

In wrestling with this dilemma, many countries are loosening government controls and injecting market mechanisms, particularly cost-sharing by patients, market pricing of goods and services, and increased competition among insurers and providers. As Pat Cox, former president of the European Parliament, put it in a report to the European Commission, we should start to explore the power of the market as a way of achieving much better value for money?

Moreover, the growth of the government share of health care spending, which had increased steadily from the end of World War II until the mid-1980s, has stopped, and in many countries the private share has begun to increase, in some cases substantially. There is even evidence of a growing shift from public to private provision of health care.

If the trend in the U.S. over the last several years has been toward more of a European-style system, the trend in Europe is toward a system that looks more like the U.S.

Therefore, if there is a lesson which U.S. policymakers can take from national health care systems around the world, it is not to follow the road to government-run national health care, but to increase consumer incentives and control.