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Or why I’m a liberal, really.

Part 1. Healthcare and social security
Granted, European liberals/libertarians have already accepted public healthcare and social security. The main reason behind my support of these two ideas is that of poverty. Suppose you have been living your life healthily and suddenly you have been diagnosed with stage 2 cancer. Unless you’re upper middle class and above, in a free market environment, setbacks like these (as well as things like unemployment, death of a sole provider, and so on) can be a deathblow, pushing families into debt and even poverty.

On the first level, for those who need public assistance the most, arguments of personal responsibility doesn’t work – few are entirely rational, forward looking – and have the resources to account for such risk.

On the second level, I don’t think private charities and social support networks can fill the gap. In fact, I haven’t come across any coherent argumentation or evidence showing charities and support networks can efficiently reach the entire population of the needy.

On the third level, private solutions – i.e. insurance – don’t work to solve this problem. Insurance nominally is suppose to spread the risk around. Private insurance firms will obviously have a profit-maximizing incentive, which means that those who need insurance might not get it, and those who do will see things like denial of claims. Private insurance works in less complex places like shipping – risk are more easily quantifiable, and the asymmetry of information is not as severe.

Market incentives can still be used in a public, or even universal, healthcare system – copayments, for example, can moderate demand for healthcare services.

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2 Comments

  1. Social security does effectively reaches those who need it.

    However there’s a problem of how can we maintain it in long run without gradual increase in tax rate (or inflation if government resorting to money printing) like what is happening now to US social security.

    I’m yet to see any government social program like NHS, or state pension, or social security that are promising to be financially sustainable. There are just too much troubles with them

    • Just because it has never been done (more or less, I think the Dutch system is pretty good) doesn’t mean it is impossible. One of the key defining features of such healthcare systems is end users are not charged at all for services rendered. In Germany, cost overruns is caused by sick people heading to specialists immediately, bypassing the GP. In the UK, healthcare is rationed and a vast, expensive, bureaucracy manages it.

      A system of co-payments, the most effective tool of managing healthcare demand, is absent in most European systems. The wide-spread obsession on preventative care (i.e. sending everyone with a headache for a MRI) adds on to the demand. The Singaporean system of not subsidizing (or barely, in the case of polyclinics) GPs and heavily subsidizing hospital care, for example, manages to keep costs very low, quality of care up.

      I don’t think this would change dramatically if Singapore replaces Medisave with a more redistributionist national insurance.


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