Risky operation: socialized medicine comes at a cost.

EARLY in August, both houses of Congress voted by clear majorities (and the Senate by a bipartisan one) to extend for another five years the so-called State Children's Health Insurance Program (or S-CHIP), which had been scheduled to expire this September. This program had originally granted free health insurance to the children of "poor working families"--defined as those earning up to 200 percent of the poverty level.

As well as extending S-CHIP's life, however, the House bill expanded the definition of poor working families to include those earning up to 400 percent of the poverty level. Thus, children in families where the annual income is as high as $82,000 will become eligible for free health insurance. Since an estimated 77 percent of children living between 200 and 300 percent of the poverty level--and 89 percent of those between 300 and 400 percent--already have private health insurance, this extension will push them from private into state health insurance. It will, in a word, "socialize" their health insurance. According to the non-partisan General Accounting Office, 2 million Americans will go from private to state insurance--not all of them "children" as conventionally understood. The rules in 14 states allow children as old as 25 to enroll in S-CHIP. That kind of thing could give "bracket creep" a bad name.

This is a very appealing prospect for the Left. Liberals believe in universal health insurance for both idealistic and self-interested reasons. They genuinely believe it will provide everyone, especially the poor, with both good health care and a sense of "health security"--of which the second is politically the more important. A recent poll by the liberal Democracy Corps found that "knowing I will always have healthcare coverage" mattered significantly more to voters than quality of care, cost, or choice of physician. As the pollsters Anna Greenberg, David Walker, Stanley Greenberg, and James Carville commented: "A key selling point to a universal system is not simply covering the 47 million uninsured Americans ... but also that a universal system means health care can never be taken away from average families." Once socialized medicine arrives, it is irreversible.

In addition to moving 15 percent of Gross Domestic Product permanently into the control of government, moreover, universal health insurance would also strengthen the Left politically. As the leftwing writer Rick Perlstein recently exulted over the Democrats' defense of an unreformed Social Security system: "These programs make life in America fundamentally better.... These gooses [sic], Social Security, Medicare, lay golden eggs. They manufacture Democrats." Very simply, entitlements create large client constituencies. Because the Democrats are reasonably seen as their creators and defenders, the entitlements become a reason for voting Democratic. Other things being equal, they tilt the political system in the direction of Democrats.

All this is true. But it is not the sole political truth about universal health insurance. What such calculations omit is the political effect of how socialized medicine works in practice.

All health-care systems aim to achieve three things: (a) cost control, (b) universal access, and (c) provision of the full range of medical services. Alas, only two of these can be achieved simultaneously by any system. Pick (b) and (c), for instance, and costs will spiral out of control. But all three can at least be reconciled--automatically and efficiently--in a free-market health system by the price mechanism. Once demand for health care is no longer limited by price, however, it will rise indefinitely until it consumes the entire national income. Nations with universal health systems in effect deny this. They promise their citizens good-quality health care free at the point of consumption. How do they keep their promise?

Britain adopted its National Health Service in 1948. The NHS was not invented de novo; it knitted together existing charitable, voluntary, local, and commercial medical services. It was immensely popular less because it provided "free" health care for the poor (who already enjoyed that) than because it relieved the middle class of "health insecurity." It has remained popular ever since, attaining an almost religious status in the minds of respectable Britons, equal or superior to that of the monarchy.

It also remained relatively uncontroversial for more than two decades. There was a dull accounting reason for this. For the first 14 years of its existence, the NHS kept its promise of free, quality health care by consuming capital. Until the first hospital building program was launched in 1962, socialized medicine lived off the capital invested in hospitals and clinics by philanthropic Victorian capitalists. Money that should have gone into capital investment went instead into current health spending. Rising demand for health care was satisfied.

Once that expedient was exhausted, however, and because they were committed to universal access, successive health ministers had to juggle cost control and the provision of full medical services. Cost control won. For at least another decade, ministers kept the NHS going by relying on various forms of informal rationing by clinicians. One overworked doctor in the 1960s told me that he rationed care by assuming that any first-time patient was healthy; only if the patient returned for a second visit would he seriously examine his symptoms. Many told elderly patients with conditions that were expensive to treat that "nothing could be done." They were assisted in that by another Victorian legacy: the deference of polite English people to professional opinion. A third expedient was to underpay doctors and nurses, accepting that they would emigrate to Australia and the U.S., to be replaced by doctors from India and Africa. (Doctors moonlighting as terrorists is a recent development unconnected to the NHS's wider problems.)

By these expedients U.K. spending on health care was a mere 6 percent of GDP at the start of the 1980s--possibly the lowest of advanced industrial countries. At that point several crises occurred at once: The decaying infrastructure of health care became a scandal; deference collapsed, both generally and, because AIDS affected many socially confident people, towards the medical profession in particular; and the knowledge of rationing became widespread. All these led to fierce criticism not of the Health Service itself--that was invariably praised as "the envy of the world"--but of whatever government happened to be presiding over it.

Here was where Rick Perlstein's political calculation proved its worth. Though Mrs. Thatcher was massively expanding government spending on health care--it rose 40 percent in her first two terms before her 1987 health-reform package--she was denounced for starving the NHS. Though false, this was credible: The Tories were genuinely more skeptical of the value of socialized medicine and Labour was seen as its progenitor. The alternative to blaming Mrs. Thatcher was to blame the NHS itself--and that was unthinkable. She survived that bullet, but eventually it found its mark. In 1997 Tony Blair was elected on a program that included a large increase in health spending as a response to Tory "neglect."

Blair and his Chancellor, Gordon Brown, poured money into the NHS. They also attempted some desultory and ineffective reforms. But they were up against the political reality that the NHS inevitably produces long waiting times for operations and the withholding of expensive drugs--and that these failings are equally inevitably blamed on the government.

Ten years later, spending on the NHS has doubled in real terms. An ambitious program of "targets"--e.g., reductions in waiting times for operations--has been launched. Such targets are a formal acknowledgment of rationing and poor-quality service, but are also frequently not met. Patients are kept waiting for many months for outpatient appointments and in-hospital treatment and, in some cases, denied life-saving drugs on the grounds of expense. It is the Labour government that is now blamed for these failings, the Tories who preach their fidelity to the ideal of socialized medicine, and the NHS that soars, fuelled by its own inherent shortcomings.

For the moment, what Digby Anderson calls the "spell" cast by Britain's version of socialized medicine remains politically intact. But it has ceased to work its magic for the benefit of the Left. And its internal contradictions can only get worse.

Coming soon to a district near you.