This article was featured in The Bulletin (Philadelphia-area newspaper) on 4/9/09, and the Bucks County Courier Times on 7/5/09.

“Universal health care for every single American must not be a question of whether, it must be a question of how.”

-President Barack Obama

Perhaps you saw this shocking headline last week from the Associated Press: “9 Patients Made Nearly 2,700 ER Visits in Texas.” From 2003 to 2008, these patients visited the ER at an average of once every six days, each visit paid for by local taxpayers. With an average cost of over $1,000 per visit, these 9 patients alone cost taxpayers approximately $3 million.

Imagine if this occurred in your town, and at your hospital. Imagine if you saw your taxes steadily rising because a small group of people decided to abuse a vital service in your community. Imagine if your husband or wife desperately needed medical attention, but was held up because of someone else’s indiscretion. Now imagine this on a much larger scale, spanning across the country to each healthcare provider, doctor’s office, and community. That is the picture of socialized healthcare, a picture that must be addressed as President Obama’s budget moves through Capitol Hill.

The President’s budget, passed in different versions by both the House and Senate last week, includes $634 billion to move the country toward socialized health care. The budget proposal says that this massive spending is only the first step in the process: “The Budget calls for an effort beyond this down payment, to put the Nation on a path to health insurance coverage for all Americans. However, additional funding will be needed.” Most analysts believe the full cost of President Obama’s socialized healthcare plan, once enacted on a national level, will reach $1.6 trillion. To put that number in perspective, if President Obama decided not to fund socialized health care and to instead write a check to all taxpaying citizens, each taxpayer would receive approximately $12,300. Which would you prefer? Which would stimulate the economy more?

But the cost of the program is only the beginning of the problem with President Obama’s proposal. The more serious flaw with socialized healthcare is highlighted by the Texas ER case: Where there is no cost, there is no discretion. The Texas ER case is a fundamental example of moral hazard–the prospect that a party insulated from risk will behave differently than if it were fully exposed to the risk. If a driver, for instance, knows that no police officers are patrolling his road, he will be more inclined to speed. The risk factor of being pulled over has been removed, so he acts with little regard to the law. The same is true with the financial bailouts-if the downside risk of failure is removed, or success is guaranteed by the government, then investors will be inclined to take unreasonable risk to attain unprecedented profit.

Simply put, the nine patients in the Texas ER case abused the system because they had no reason not to. The government, by paying their bills, had removed the fundamental risk factor of healthcare: Cost. So, with a free medical system at their fingertips, and no disincentive present, nine patients used critical ER resources and staffing 2,700 times in five years.

President Obama’s healthcare proposal does not stray far in likeness or in form from the Texas ER case. Fundamentally, President Obama wants the government to provide either free or extremely cheap healthcare to all citizens. In function, all essential costs would be covered, with a sliding scale of government payment increasing for lower income individuals. Those using the healthcare system would have no stake in the system; moral hazard would almost demand abuse. At best, the reduction of the key risk factor of cost would lead to significantly impaired discretion.

The fallout from socialized healthcare would be immediate. The system would be flooded with appointments, procedures, and visits; some of them legitimate, many of them irrational. Cost for any abuse of the system would be passed directly to taxpayers, while healthcare as a whole would be buried beneath bureaucracy. America would suffer the same damage as our British and Canadian counterparts, where patients must wait up to three years for important procedures like hip replacements due to patient backlogs. There is a reason members of both countries continue to come to America for medical procedures. This all, of course, is not to mention the flaws in government control and price regulation, the disincentive for doctors to excel, and the exorbitant burden placed on state governments to run the programs.

At the base of it all, however, we are taken back to the Texas ER case. A system with no cost is a system without prudence–moral hazard always reaps abuse. Taxpaying citizens would pay for someone else’s healthcare, and worse, for someone else’s indiscretion. It is not only a fundamental redistribution of wealth, but a fundamental redistribution of risk and responsibility.

Socialized health care, like most social government programs, sounds wonderful in theory. Shouldn’t everyone have the ability to get reasonable health care? Shouldn’t the sick be cared for? We can’t simply throw the sick out on the streets and let them suffer, can we? That line of reasoning is certainly understandable, and justifiably evokes feelings of compassion for the needy. In the end, however, government is not meant to be run by emotion or even compassion. It is meant to be run on principle, prudence, and justice. And we must always remember that every government dollar spent is a dollar taken from its citizens. That action must always be met with prudence, and never moral hazard.

-Matt Benchener from TruPolitics.net