Milton Friedman gets in touch with his socialist side

Free-market demigod Milton Friedman wrote an article a couple of years back which raised the possibility of government-funded catastrophic health insurance for every American– what Matthew Yglesias calls single-payer lite.

Friedman concluded, “While so radical a reform is almost surely not politically feasible at the moment, it may become so as dissatisfaction with the current arrangements continue to grow.” But he didn’t exactly recoil in horror from the possibility.

Friedman’s first choice for reforming the “high cost and inequitable” US health care system is tax-free medical saving accounts. But as he added:

A more radical reform would, first, end both Medicare and Medicaid, at least for new entrants, and replace them by providing every family in the United States with catastrophic insurance – i.e., a major medical policy with a high deductible. Second, it would end tax exemption of employer-provided medical care. And third, it would remove the restrictive regulations that are now imposed on medical insurance – hard to justify with universal catastrophic insurance.

This reform would solve the problem of the currently medically uninsured, eliminate most of the bureaucratic structure, free medical practitioners from an increasingly heavy burden of paperwork and regulation, and lead many employers and employees to convert employer-provided medical care into a higher cash wage. The taxpayer would save money because total government costs would plummet. The family would be relieved of one of its major concerns – the possibility of being impoverished by a major medical catastrophe – and most could readily finance the remaining medical costs. Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary. The demonstrated efficiency of private enterprise would have a chance to improve the quality and lower the cost of medical care. The first question asked of a patient entering a hospital might once again become “What’s wrong?” and not “What’s your insurance?”

I don’t think Friedman’s idea goes far enough, but I like that last sentence. And I’m pleased that even he recognizes government can sometimes actually play a role in reducing bureaucracy and holding down costs.