The Price Tag of Universal Health Care

In this recent OpEd from October 28, 2007, the Rocky Mountain News asks if the price tag for universal health care in Colorado may be too high:

Tough sell for health-care panel

Is the Colorado Blue Ribbon Commission on Health Care Reform going to lay an egg in January, when by law it must offer its recommendations to the legislature?

It's too early to say, but prospects for the commission's success dimmed somewhat the other day when the price tag was announced for the panel's own proposal - we'll call it Plan Five because the commission will submit four others, too, written by outside groups.

Plan Five's cost: between $1.4 billion and $2.1 billion a year, according to the Virginia-based Lewin Group.

Let's put those figures into perspective.

Two years ago, after a bruising campaign in which millions were spent to promote it, Referendum C passed in a statewide vote by the relatively narrow margin of 53 to 47. Yet as most of you no doubt recall, Ref C did not raise taxes; it only asked the public to give up their tax refunds. And it was not advertised as costing $1.4 billion or more per year. The total cost for Ref C was then projected to be $3.7 billion over five years (a figure that has since gone up).

Meanwhile, Ref C enjoyed far broader support than any health-care tax hike is likely to attract. Although the Republican Party was split on Ref C, the fiscally conservative Republican governor, Bill Owens, supported it and campaigned widely on its behalf. So did Hank Brown, the former Republican U.S. senator noted for his opposition to extravagant government spending, who by then had moved to head the University of Colorado.

Much of the business and civic establishment - not to mention all of the Democratic Party, most of academia and a large majority of commentators in the press - also supported Ref C.

And one final note: Ref C was sold in an atmosphere of budgetary crisis. If they didn't pass the measure, voters were warned, they would doom higher education and virtually every other program not protected in the state constitution or by federal mandate.

Such breadth of support simply isn't in the cards for Plan Five or any other proposal needing an annual infusion of more than $1 billion, and no such sum is available without a tax hike approved by voters.

"Now it's time to see if you can drive down costs in some way," John Sheils, senior vice president of the Lewin Group, told the commission.

Yes, that would be nice, especially since the law passed last year creating the commission gave it two mandates: "To expand health-care coverage and to decrease health-care costs for Colorado residents."

So far, the focus seems mainly on the first half of that charge.

The commission did devote itself to cost-cutting at a recent meeting, but the effort basically amounted to tinkering with the plan. We'd be very surprised if the price tag declined significantly without a wholesale rethinking of how health care is delivered and paid for, and how to alter the incentives that motivate consumers and providers alike. Yet if that's not in the cards, it's hard to see how the state is going to afford such an ambitious initiative - or, perhaps to put the matter more precisely, how the state will find the will to pay for it.

As we've seen repeatedly in other US states and other countries, a government mandated plan simply cannot provide health care that is (1) universal, (2) high-quality, (3) easily accessible, and (4) inexpensive, because it bypasses the free market mechanisms that make this possible. Instead, all government plans end up compromising on one or more of these criteria. In Massachusetts, they've compromised on "universal". Canada compromises on quality and easy access. Colorado should not imitate these failed models.