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SiCKO and Universal Health Coverage

I'm not really a Michael Moore fan, but I do have to say that I enjoyed watching his movie SiCKO a few weeks ago. It's sensationalized, melodramatic, and uses his usually hyperbole. You laugh, sometimes you want to cry, your jaw drops repeatedly because of ridiculous juxtapositions, but it gets the basic point across - we have a problem here. And the movie does offer some really good background on the health-care industry and how it differs from those in other countries, particularly those in Europe.

The basic question it raises is the following: in a developed economy, should health care be an entitlement? It's a pretty interesting policy question. The ultimate goal as a nation, as I'm sure no one would disagree, is to generate the best overal health for the citizens of a country as efficiently as possible with the least amount of cost. Sounds simple. But how do you do that? Do you rely on the free markets? Do you socialize health care? What system generates the best overall return on investment? The movie argues that universal health coverage provided by the government is the best course.

The data seems to be on the side of that argument. From a US News article a year ago related to my How They Do It Better post:
The system gets some impressive results. Britain's infant mortality is lower, and its life expectancy higher, than in the United States. And, according to numerous studies, the $185 billion service also offers better value. Britain spends $2,546 per person each year on healthcare; the United States spends $6,102. Yet 16 percent of American adults under age 65-47 million people-remain uninsured.
But then there are some unusual economic side-effects to the policies as well. Mankiw had an interesting post called "Should the rich get better health care?" where he comments on a story from England of how a woman with breast cancer could not augment her treatment by buying additional drugs on her own. In that case, the National Health Service (NHS) said it was unfair because it gave richer patients an advantage over poorer ones. Mankiw makes the observation that medical care (like education) are normal goods and that the demand for those services goes up when income goes up. So, if you can pay for better medical care (or education) than the average person, is it ok for you to do so?

The beauty of universal health care is that you spread the high costs of coverage over the widest possible base of contributors. Doing so obviously gives the contributors (and hopefully) health care providers an incentive to invest in preventative care, which is great. That seemed to be the case with the NHS. But then how do you ensure that the benefits of the free-market system prevail as well - primarily innovation. That innovation is driven by investment, either via public funding or via consumers that have disposable income. How will universal health coverage ensure innovation? Tough policy problems.
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