Slouching Towards Cuba

Here’s how freedom dies—one good intention at a time.  Congress is currently about to increase the SCHIP program, which is “supposed to provide health insurance for children whose families make too much money to qualify for medical welfare, i.e., Medicaid, but who can’t afford to pay for private health insurance. Initially, this meant families whose annual incomes were twice the poverty level. This amounts to a $40,000 income for a family of four in 2007.” Okay fine, it helps people get private insurance.  What’s the problem?

If President George W. Bush fails to keep his promise to veto this legislation, SCHIP would be well on the way to becoming another middle class entitlement. That is just what advocates of government-funded health care want. Rep. Steven Rothman (D-NJ) made this goal explicit when he called the House SCHIP bill “the next step toward universal health care for all Americans.” Expanding SCHIP is what Kathleen Stoll, director of health care policy at the left-leaning lobby group, Families USA, happily identified as sneaky sequentialism. The ambit of private health insurance and health care will shrink as government funding expands.

In fact, this kind of crowding out is already taking place. The Congressional Budget Office (CBO) issued a report in May that found, “For every 100 children who gain coverage as a result of SCHIP, there is a corresponding reduction in private coverage of between 25 and 50 children.” In January, MIT economist Jonathan Gruber and Cornell University economist Kosali Simon published a study that estimated “for every 100 children who are enrolled in public insurance, 60 children lose private insurance.” And why not? From the point of view of parents, the government is giving their kids free health insurance, so they can pocket the money they were otherwise spending on private insurance.

The CBO also noted that a broadening of SCHIP to higher income levels “would probably involve greater crowd-out of private coverage than has occurred to date because such children have greater access to private insurance.” Recall that 90 percent of kids living in families with incomes between 200 and 300 percent of the poverty level are insured and 95 percent of those in families with incomes over 400 percent are. Crowding out of private insurance helps force the country to take “next step” toward universal government-controlled health care. After all, almost 50 percent of medical expenditures are already paid for by government programs. Advocates of universal health insurance hope that as fewer and fewer Americans rely on private health insurance, government-funded health insurance will grow in political acceptance.

Therein lies the problem.  Even in countries with universal coverage, there are almost always options for private insurance.  In Canada they are in the midst of legal disputes over this very issue.  If socialized medicine were able to meet anything other than the bare minimum of service there would be no need for private insurance in the first place.  So the existence of private insurance in nations with socialized insurance is prima facie proof that private medical care is superior to socialized care.

Over the last 40 years or so, ever since LBJ’s “Great Society,” suckling at the welfare teat has gone from a tool in the war against poverty to an “entitlement” that guarantees people stay mired in poverty.  The same will happen with healthcare.  The more acceptable socialized medicine is, the more likely society will begin to view healthcare as the government’s job, something “they” do.  As reliance on socialized medicine increases the quality inevitably decreases. 

And thus we slouch towards Cuba, in the hopes that the 5¢ medicine will be waiting for us at the end of the rainbow.