Would universal health care save money or cost more?

March 20, 2008  |  General

It seems to me there are two sorts of arguments about the advisability of having a universal healthcare program, one which would cover all Americans. One of these is a moral and philosophical one — that we should have it because it is the right of all Americans to have access to healthcare. If you subscribe to that view, as I do, then the issue is not if, but how. Working through how best to structure it — public, private, or some combination of those — would necessarily involve trying to make the program as cost-effective as possible. But saving money is not the reason to do it.

Proponents of universal healthcare, however, often make the argument it will save money in the long run. The notion is that with better primary and preventative care, people will be able to avoid costly medical needs later by heading off complications of chronic conditions. I have no doubt many individuals would be helped in this way. But I think any savings of that sort would be swamped by the huge influx of people, bringing with them previously unmet demands for medical services. This demand will inevitably increase costs.

Can we do anything about this? Since any budget would be limited in some way, would we need to ration care? Honestly, perhaps we would. But the first thing to do to reduce demand is to weed out the many, many treatments research has shown to have marginal benefits over cheaper alternatives; some are even worthless.

There are many good places you can read about this giant gorilla in the room — the need to control demand for healthcare services in some way — and suggestions about how to do it. One key observation for the most expensive new drugs and services is that their development tends to drive the demand for them, rather than the other way around. You can read more about how this works (with some good illustrations) on Maggie Mahar’s excellent Health Beat blog.

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