Why Universal Health Care is a Bad Idea
It sounds great: Not having to file claims. Not having to pay for coverage. Not having to worry if you are covered. And fair: everyone is covered.
Healthcare is something that everyone needs. It needs to be universal, to be fair. Health is not a luxury — it is a necessity. Given that we have health technology, it is unfair to distribute it unevenly, in my opinion.
At least to a point: if someone does not take care of their health, then perhaps they don’t deserve convenient healthcare as much as those who do take care of themselves. But if they simply don’t have the money, then to be denied is unfair. Not everyone deserves concierge care, but we should at least make sure that everyone who makes an effort to stay healthy should be given access to care that keeps them healthy or that saves them from an unexpected chance illness such as cancer, if at all possible.
That’s just being humanitarian. It’s being kind.
But is universal health care, sponsored by the government, the best way to achieve that?
In some small countries that works. In Kuwait, the UAE, and Qatar everyone is covered; but those countries have vast oil-derived incomes — so much that they also pay for many other things and there is little or no income tax. They therefore offer top-shelf care — to everyone.
Then there is Britain, where everyone is covered by the National Health Service.
It’s terrible. And that’s why most people who have a decent income supplement their free NHS service with private insurance. And while “basic care” is fine for colds and ankle sprains, if you get really sick like cancer or a degenerative eye condition, you want to find the best care — doctors on the cutting edge — and they often work in universities or special clinics outside the government-run healthcare system.
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Britain is a small country compared to the US. Size matters. Things that work at small scale often do not work at large scale. At large scale, there are, of necessity, more layers of management. Special interests are able to work their way in with less notice. Inefficiency seeps in over time, as those within the system seek to preserve their position, building fiefdoms. Corruption becomes rampant. The system becomes about protecting itself instead of providing the service defined in its mission.
Then there is the rigidity that results from government in general. Private companies can change their approach very rapidly as technology changes and circumstances change. Governments cannot. What they decide gets locked into law. Change takes years, while private companies can change in months.
It was Medicare that locked in the fee-for-service pattern that has come to define medical care. It standardized billing codes, procedures, separate reimbursements for tests and visits, and the need to document every supporting service. That whole approach became essentially the only way that doctors and hospitals could work since it became embedded in the whole insurance and care industry.
Yet the fee-for-service model is inarguably the biggest problem in healthcare today. It distorts incentives: providers are incentivized to provide as many services as possible, rather than make you healthy so that you don’t need services.
My fear is that if we institute universal government-sponsored healthcare, it will wipe out plans that companies like Amazon have for getting into healthcare. If Amazon provides something, it is efficient. And it rapidly adapts to what is needed, rather than being frozen in law.
What we need to do is align the interests of companies like Amazon around the right incentives: making people healthy.
I am not going to prescribe here what that might look like: that’s a whole article (a book actually) in itself and I would want the medical community to define it, not me. But here’s an idea: What if providers (e.g. Amazon) made the most money by keeping you healthy? E.g. what if they were paid from a pool based on the average lifespan of all of their subscribers?
There is surely an optimal formula for this, to incentivize them the most to keep people healthy. So coming up with that formula here is not important: one can surely be derived. The key is to align their incentives with keeping people healthy and long-lived.
Companies like Amazon have the resources to integrate vertically to take on the whole end-to-end problem. They can do research to cure diseases, instead of finding incremental treatments. Right now drug companies are incentivized to find patented incremental treatments, and keep people coming back for more instead of curing them. We need to fix that.
My concern is that government-sponsored universal healthcare that is based on a fee-for-service model will kill the chance that companies like Amazon and others might take on the healthcare problem and provide new approaches that are more effective.
Before we rush to expand today’s model to everyone, let’s question the very model itself. It’s broken. Extending it to be “universal” will lock us all into a system that does not deliver health, but instead delivers dependency on ever-increasing high cost treatments — after-the-fact patching up rather than curing and keeping healthy.
