On my podcast on Thursday, a question came up in the mailbag that I think deserves a better answer than the one I gave. So I’m going to try again.
Here was the question: why is single-payer healthcare different than paying for the police, fire services, and military?
The usual answer is that police, fire, and military are public goods, while healthcare isn’t. Public goods have two qualities: they are non-excludable and non-rivalrous. The underprovision of public goods means that government is typically expected to cover them.
Non-excludable means that nobody can be prevented from using the services; non-rivalrous means that your use of the service or product doesn’t detract from my use or service of the product. The military is a more obvious public good – it protects all of us in common, and nobody can be excluded. The military can’t really protect me without protecting my neighbor.
When it comes to the police and fire services, there’s something slightly more controversial – after all, there are finite police and fire resources, and if you use a firetruck and my station only has one, that makes fire services a rivalrous good. But the marginal cost to protect your neighbor is nearly zero; non-rivalrous vs. rivalrous isn’t really a binary consideration, but a spectrum, and police and fire are closer to non-rivalrous than rivalrous.
So what about health care? It is both rivalrous and excludable. If there is one doctor, his services are limited. And you do not have a right to his services. The cost to adding your health care to mine is double. It is a commodity more like a hammer or an apple than it is like fire service or police service. Health care is also the most personal good you can imagine, not a public good in any real way -- every solution has to be individually tailored to you, or it will not work.
Why does it matter whether you label police vs. health care a public good? Public goods generally require government intervention, because the free market allows free riders. For example, if you don’t pay for the military but I do, you’re free-riding; if we all free-ride, there’s no military. That’s not true of health care. If I pay for my health care, I get my health care. Shortages are a result of too much intervention in the market, not too little. Treating a private good as a public good creates artificial shortages and creates a free-rider problem rather than solving one.
Demand is also generally inelastic for police and fire -- nobody calls the police and fire because they have access to them. The same isn't true of health care, which is highly elastic -- you decide what level of health care to seek based on the level of health care to which you have access.
Finally, there’s the role of government itself. Police, fire, and military are all designed to protect you from violation of your rights by other human beings – from externalities. The most controversial of the three is fire services from a libertarian perspective, since nature could set your house on fire, and there’s no government role in protecting you from nature itself. By the same token the government has no role in protecting you from health failures that stem from nature. There’s a case to be made that government has a role in preventing infectious disease in the same way that it protects against fire – it’s an externality (which is why the government has typically taken the lead role in fighting infectious disease outbreak). But that’s not true for the vast majority of serious health problems, and it's certainly not true of comprehensive health coverage.
When people say that health care is a right, they’re truly undermining the functioning of the free market, creating overdemand and driving undersupply, pushing rationing. That’s precisely the opposite of the effect they’re trying to create.