Free Healthcare Ain't Cheap

With talk of lavishly expensive healthcare reform beginning to percolate the headlines, the time for consideration is upon us. One of my goals here at the Founder’s Porch is to aid those poor souls caught reading this in confronting the issues that rise in everyday conversation about the news, politics, etc. And just what would you say to your neo-socialist co-worker who took the time to pull out their iPod ear-buds and stop sipping their overpriced latte to inform you that Sugar-Daddy-in-Chief Obama is going to save American healthcare?

Of course, they’re armed with a host of pithy pseudo-intellectual one-liners ripped from the likes of certified human wasteland Michael Moore and Keith Olbermann (who feels the need for a cigarette and some pillow-talk after any segment on his show featuring King Barack). Could you fire back? What you don’t know is that this marginally burnt out social parasite just lobbed you an easy pitch, right in the wheelhouse. Wouldn’t it feel good to crank one over the left-field wall? To silence your pretentious counterpart?

You could swing at this pitch several different ways. You could try explaining classical liberal political theory—steeped in rich philosophy, theoretical economics and a well-digested understanding of history—thus damning the notion of emptying the public coffers for the benefit of few and to the detriment of many. Unless those listening to you have read Hayek, Tocqueville, and hopefully Aristotle you’ll strike out looking. While you’re busy making the case, your counterpart will be fantasizing about owning a new Prius (but not to cruise for chicks, that’s done via bicycle bro).

There’s always the empirical proof that universal healthcare is a nightmare. You could cite any number of studies on the performance of government health programs in other countries (such as the authoritative work of Michael Tanner). The existing research varies in complexity and conclusion. But statistics are fickle things. They are also very boring things. Unless your audience consists of economists they’ll begin to glaze over thinking of more interesting things like self-flagellation. You’ll strike out swinging here when your counterpart insists they’ve read contradictory studies (translated as: “hey man, I saw ‘SiCKO’ and out system is like, messed up dude”) and subsequently ignore your points.

I don’t want to preclude the importance theoretical arguments or empirical studies, they are both formidable and insightful. However, neither is likely to get make solid contact with your average person (certainly not a leftist). To hit the home-run you need, let’s talk about something that most everyone can relate to; it’s concise and makes profoundly simple, logical sense.

The argument you should make is that free health care is outrageously very expensive in the long run. Of course, it’s easy to see the price to pay those who bear the heavy tax burdens. But it will make healthcare in general catastrophically more expensive, not just the taxes used to pay for it.

To make your point, simply draw a logical parallel. Ask the proverbial Obama disciple what they think about tuition inflation over the past several decades. In case they don’t know, inform them that college tuition has been rising much faster than inflation since the late 1950s. On average, tuition increases about 8% a year. It is consistently 2-3% higher than inflation rates (as measured by the Consumer Price Index). With those simple numbers in hand, they should affirm that “it’s like, a bummer man” that college is so pricey these days.

(Source: Bureau of Labor Statistics, Commonfund Insitute and http://www.finaid.org/savings/tuition-inflation.phtml)

Now, how did it get so pricey? simply explain that additional demand for a college is driving the steep climb in tuition, the cost to receive a college education. The price of a normal good increases as a result of an increase in demand or a decrease in supply (all else equal); that’s easy enough to understand, even for an amateur. The supply of tertiary education has been increasing, but not enough to meet the rising demand. There has been an explosion in the demand for college education. The percentage of students entering tertiary educational institutions is growing by leaps and bounds.

(Source: U.S. Department of Education, National Center for Education Statistics, EarnedDegrees Conferred)

Then next step is to ascertain what is driving the increase in demand. The answer is very simple: government funding. Prior to the 1950s, government funding tertiary institutions was virtually non existent. It has since become wildly popular for politicians to endorse the notion that every child deserves a college education, regardless of the truth that some kids could be spending their time in better places. As is the way in politics, money seems to follow the populist impulse.

(Sources: http://www.usgovernmentspending.com, Federal Funding of Tertiary Education, 1900-2007; he graphs shown are exclusive Founder’s Porch content; the raw data was compiled by various institutions but the statistics, graphs, and analysis are solely my own.)

If given the additional means via grants, subsidized tuition, cheap student loans, etc. more students will go to college. Those on the margins (who otherwise might have gone to trade school or directly to work) are now given a new set of conditions to make their decision: one that favors going on to tertiary education.

So, you now agree with your new leftist friend on three things. First, college is too expensive. Second, it is over-demanded (most reasonable people will acknowledge that some kids are better off going to work rather than majoring in beer-bongology with a minor in female anatomy). And third, the government has been enabling those who might have otherwise chosen an alternative to now bid up the price of education.

The parallel to universal health care is evident. With every dollar the government spends to make health care “more affordable” it will stimulate an increase in demand. In likeness to those who would choose trade school or work rather than college if the incentives were different, so too will healthcare be accfected. That means that a young man with stomach pains today may hold out to go the emergency room until it’s obviously an urgent condition. In tomorrow’s “Obamacare” world, that same man has little reason to go to emergency room at the first twinge of pain in his gut. After all, it’s free so what’s the drawback?

Multiply the marginal decision of a single man over millions of people and you’ll see the same effect we have with the explosion in college tuition. Free healthcare will be bring burdensome costs to fruition, and we will all pay the price. But most everyone will be equal in the sharing of misery. And those bemoaning the current state of healthcare may have far more to cry about, but efficient and effective care will be little more than a memory.

The logic is clear, the parallels are palpable; anyone can see that the government interfering with education, healthcare, or whatever the topic-du-jour may be is an economic disaster.