Government-Run Universal Health Care Fails

Last October, Hawaii is dropped the only state universal child health care program in the US just seven months after it launched. All children were eligible for the program (it truly was universal). The reason it dropped the program is because it was too expensive, costing the state about $26 per child per month.

The sad truth is that the State was paying less than half the actual expense – the remainder came from corporate “donors” that taxed their paying customers by increasing fees. The universal health care system was free to the end users except for copays of $7 per office visit.

Why did this service fail? The plan undercut the market prices for children’s insurance. As a result, families dropped their commercial insurance for their children and enrolled in the lower cost universal program. Put another way, the parents in Hawaii acted rationally.

State health officials complained that most of the children enrolled in the universal child care program previously had private health insurance, indicating that it was helping those who didn't “need” it. "People who were already able to afford health care began to stop paying for it so they could get it for free," said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. "I don't believe that was the intent of the program."

This is the very definition of an unintended consequence of liberal lawmaking, and reason number one why it should be avoided. Universal Health Care is by definition universal. It is not needs-based, and its creators sowed the seeds of its own destruction by attempting comprehensive reform. They achieved comprehensive failure.

Two good things came out of this experiment. First, the State acted in the best interest of the children and the State taxpayers when they realized it was a failure – cancelling the plan was the right thing to do.

Second, and most important, this experiment is demonstrates that low cost high quality Universal Health Care with doctor choice and no rationing – what Barak Obama claims he wants – is not achievable through government efforts. Increasing the scale of the exercise will only increase the scale of the failure.

You cannot legislate past the laws of economics.