the __earthinc

While it broke the then political noise level some weeks back, discussion on welfare state never took off in a satisfying manner. PAS was the one that rolled the ball but apart from rhetoric and how Islam advocates a welfare state, actual details have been sparse and it is unclear how much thought has gone into the proposal. That notwithstanding, an idea of a welfare state almost always involves an establishment of a universal health care program to at least provide subsidized health care to all citizens. While the goal of universal health care is noble, it is not necessarily the perfect or even a desirable policy, with all things being constant.

Again, the goal of the policy is admirable. It is really hurtful to witness sick individuals unable to gain access to drugs or health facilities because he cannot afford it. Kantian categorical imperative may work to force us to provide the needy individuals with help. Universal health care policy provides us with just the tool we need to answer our conscience and absolve our guilt by doing supposedly the greatest good for the greatest number of people. Categorical imperative or not, validly utilitarian or not, it is wise for us to take a step back and consider a weakness of universal health care program — by implication, welfare state as well — before we jump off the ledge into a possibly 10 feet deep dry pool.

Universal health care does little to encourage healthy behavior. The rationale behind this relates to one essential lesson in economics: people respond to incentive, perverse or otherwise. Smoking is a clear example of this.

There is a number of health risks associated with excessive smoking of tobacco. With a universal healthcare system in place, smokers do not have to overly worry about treatment cost. This takes away the disincentive to smoke. Indeed, smokers do suffer when their health is adversely affected but they do not terribly suffer due to availability of modern and effective subsidized or even free treatments. Pain is a strong incentive to stop smoking and universal health care takes away that incentive.

In many cases, it may already be too late for those that have finally paid the price. The younger generations on the other hand have the opportunity to learn from others’ past mistakes. The availability of a free health care system however fails to emphasize the adverse effects of smoking and so, offers limited lessons to learn from. When the young observe that their elders do not suffer too much from smoking, they recalibrate the weight between gratification from smoking against its associated future increased health risks. These rational individuals do so because the welfare state policy encourages them to favor enjoyment derived from smoking and discount the associated health risks.

Such system is often funded by public resources. Riddles of high maintenance cost await a system that happily provides free treatments but falls terribly short in preventive measures.

In purchasing typical health insurance, one of few questions that affect premium calculation revolves around tobacco: do you smoke? If the answer is yes, the premium would go many notches up to match uncertainty — or really, increased certainty — linked with smoking. In a system which the risk cannot be compensated, it will struggle to keep up with demand in the long run and somebody will have to pay for it. When the giant collapses, I pray that I will not be there.

A compulsory health insurance scheme may partially solve that problem but that involves coercion. As a libertarian, I do not favor it. Besides, not everybody requires the kind of insurance offered by that scheme.

Admittedly, scenarios involving tobacco smokers in a universal healthcare system is somewhat specialized. There are individuals that suffer diseases right from birth and their behavior may not be adversely affected by a universal health care. Yet, there are other cases that run parallel with smoking such as over-consumption of sugar or cholesterol and crucially, those cases illustrate how skewed cost and benefit created by a universal health care system adversely affect judgment and only to eventually undermine the system itself.

Lesson?

A universal healthcare system, much like other welfare state policies, does not target the root cause of the problem. In hope to achieve immediate good rather hastily, it distorts incentives and causes greater problem in the future. Is that the kind of system worth investing in?