Obama's False Healthcare Promise

“You can’t fix the economy without fixing health care,” President Obama has declared. In fact, he sells his health care policies as being essentially an extension of his economic initiatives. And certainly others have made a similar argument.

There are many good reasons to reform American health care, but do countries with universal health care fare better than the United States economically?

Shakha Dalmia, a senior analyst at the Reason Foundation, weighs in with a refreshing analysis. She looks at the recession, unemployment rates, and nearly 2 decades worth of economic growth. On the latter point: “the U.S. economic performance in the prior 18 years—from 1990 to 2007—has also been visibly better than everybody else’s… America’s GDP grew at an average annual rate of 3 percent during this period. By contrast, Canada’s grew 2.88 percent; England’s 2.3 percent; France’s 1.92 percent; Japan’s 1.74 percent and Germany's 1.59 percent.” In short, she finds no data to support the argument that universal health care is needed for economic vitality.

But she goes further and rebuts other economic arguments forwarded by the universal health care crowd. In particular, she considers the case made that universal health insurance will help control the growth of medical costs.

Writes Ms. Dalmia:

The rap against America is that it spends over 15 percent of its GDP on health care—more than any other industrialized country—and yet leaves upwards of 45 million people uninsured. If it had universal coverage, the theory goes, uninsured folks would get care sooner—not wait till they have a medical emergency—saving the system a ton of money.

It is a nice theory, but there is no evidence that it is true. Although America's per capita health care spending soared in the 1980s, a 2007 study by Kaiser Family Foundation found that it slowed considerably in subsequent years. Indeed, between 1990 and 2003, the rate of growth of America's per capita spending was 3.6 percent, only a little bit higher than France, Germany and Japan's—but significantly lower than England's 4.2 percent. That's striking given that England engages in the most aggressive rationing known to the free world, routinely delaying care to patients unless they are critically ill.

However, Canada, which too indirectly rations care for many specialized treatments by putting patients in queues, has succeeded in limiting per capita spending to 2.4 percent. At best, then, universal coverage has a mixed record in controlling health care spending increases, even after resorting to rationing.

Let’s be clear: there are many legitimate criticisms of American health care – including that millions can’t afford health insurance. But universal coverage is not the fiscal panacea its proponents make it out to be.