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Obamacare failed in Europe

Different versions of this article were published in The Providence Journal (July 6, 2009) and in The Washington Examiner (June 30, 2009).

President Barack Obama’s proposed « public insurance option » for universal health coverage seems logical: A large public insurance fund will provide quality coverage for the uninsured and force competing insurers to lower costs. In practice, though, one needs only look at what decades of government health care have done to ramp up the financial and quality problems endured by Britain and France.

The Obama plan is supposed to make health insurance more competitive. But heavy subsidies will give it a big advantage, pulling an estimated 118.5 million people from private insurers to the public system. This government-subsidized system will eventually dominate the market in a way that would overrule competition.

This is precisely what happened in Britain. The state provides most health care, via the National Health Service. Patients have almost no say over which physician, surgeon or hospital they can use, while professionals have to conform to government plans and targets.

After its birth in 1948, planners soon found that « free » health care multiplied demand. NHS founder Lord Beveridge predicted free health care would cut spending as health improved.

The opposite was true. Between 1949 and 1979, it tripled in real terms. The service now costs twice as much as it did 10 years ago, with productivity down 4.5 percent.

One way government tries to limit demand is to decree which new drugs can be prescribed. Many drugs, widely available in America and continental Europe, are denied to British patients.

State mismanagement has also created waiting lines for hospitals, on average causing 8.6 weeks of waiting. Once inside, budgetary cutbacks on cleaning and maintenance mean higher rates of an antibiotic-resistant variety of staph infection. This « superbug » has turned even routine surgery into a lottery of death.

Britain may be an extreme example. Many point to France as a better example of public insurance delivering high-quality, equitable care. While it’s true that French patients do enjoy better care and shorter waits than the British, this is due to a far greater reliance on independent health care and greater freedom from government for doctors and patients.

Yet this plus side is expensive. The French government is trying to control costs by increasing regulation of the private sector, meaning it will soon become more similar to Britain.

In France, there are already « medical deserts, » particularly in the suburbs and countryside. In some places, patients wait more than six months to see an ophthalmologist.

In 2004, 286 of the country’s top hospital doctors signed a petition bemoaning the shortage of doctors and nurses and increases in waiting lists. The petition read, « In casualty units, sick people have to wait for hours, sometimes even days, on gurneys, because there are no beds. »

Yet France hasn’t saved money. Despite regular cost-cutting announcements, the books haven’t sustainably balanced since the system started in 1945. Obama, who recently agreed with health professionals to reduce the annual growth rate of health spending by 1.5 percentage points, should take note.

America can certainly draw lessons from overseas about saving money on health care. But in the cases of France and Britain, these lessons are in what not to do. These countries show that nationalizing care damages care.

Guillaume Vuillemey is a researcher at the Institut Economique Molinari, and Philip Stevens is a researcher at the International Policy Network.

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