Beware the Pitfalls of Universal Health Care

Written August 26, 2008

It is election season and once again one of the hot topics is health care in this nation. Many have called for universal health care. I say, be careful what you wish for.

This article gives an excellent viewpoint from an educated citizen.

Of course, I have my own thoughts. Before I share, please allow me to state my credibility, er, bias.

First, I lived for over four years in a country with socialized medicine (The Netherlands - you know, windmills, tulips and wooden shoes). Every citizen had free health care provided by the state.

Second, I am an insurance agent who provides group health insurance to mostly small businesses in Texas.

This is what I know about the pitfalls of universal health care.

First, we must answer the question of who pays for it. The citizens do. In the Netherlands, the tax brackets start at 33.60% and top out at 52%. Imagine working until July to finally clear a dollar that you can call your own. Also, beginning in 2006, citizens of the Netherlands are REQUIRED to purchase health insurance at a rate of about 95 EUROS a month plus a percentage of income (about 4%). So much for Universal Health care. The system was going broke so they came back and asked for more.

Second, what does the state provided health care provide? Typically, a citizen has access, but the quality is limited and the lines are long. Forget about going to the doctor if you have a cold. You’ll be better before you get in. And yes, I know that the Netherlands is considered by some to have a better health care system than the US, but a HUGE part of their ranking is access. And as I said, every citizen has access because they are REQUIRED to pay for it.

Third, in order to support such a system, the overall quality reduces to match the funding. Basically, in the US you could expect one of the top health care systems (in terms of quality of care) in the world to reduce to the lowest common denominator so that we could fund it.

Well, what if we only required employers to provide health insurance so that the working class is always covered? This sounds awesome, especially in light of the fact that I sell group health insurance to businesses. The problem is that you cannot get blood from a turnip. As costs continue to increase, I see more and more small businesses cease offering health insurance because it is simply cost prohibitive. As if the small business owner didn’t have enough of a challenge competing with the monolithic companies for quality employees. Should we ask each small business to lay off one employee and use their salary to fund the health insurance? If you mandated companies to offer benefits, you wouldn’t have to ask….it would just happen. What would the unemployment rate be if every one of the 5.7 million small businesses with employees suddenly had to fire one employee?

So, what is the answer? We have to fix the economics of our health care system. It shouldn’t cost $125 to see a doctor for six minutes and say “ahhh”. The cost must match the service (and technologies) provided.

The other culprit is the drug companies. I used to be in electronics manufacturing and we used a process that basically called for economy of scale. If you made one of something it cost $100,000. If you made 100,000 of something it cost $1 each. Sure, drug research is expensive. Most of it comes from the private sector, as it should. However, government oversight can go a long way toward shortening the time between drug approval and generic equivalents. Drug companies should not be allows to fleece the public for 10 to 15 years with each new drug. The government should be able to receive a report (during FDA trials, for instance) that shows how much the research cost. Once the research is earned back in sales profits, then the government should be able to regulate the profit margins to a certain degree. They already regulate profit margins to health insurance companies. Why not regulate the margins for drug companies?
Too much government involvement, you say? Well, remember all of this started with someone clamoring for universal health care. How much government involvement do you want?

I’m sure I’m missing something, so please feel free to leave your comments.