Gavin Newsom set to Socialize San Francisco Health Care. Part II - What if?
If Mayor Newsom's plan were to be implemented, what would be the response of those who are insured? Consider someone who makes a moderate living, and is able to pay for their own coverage. With the passage of Newsom's plan, that person now sees their taxes increased; helping the poor has hurt the middle. Many of those who could previously afford health care would now be priced out of their situation due to the increase in their taxes. Yet, they could then turn to the city for their coverage, further raising taxes. Pricing out a portion of the middle class would have the net effect of increasing the number of uninsured.
For anyone who has read the book Freakonomics (also check out the Freakonomics blog), the world is shaped by incentives. So, what incentive is there for an employer to provide health care, and what incentive is there for an employee to continue to pay for coverage? The answer to both is none. In fact, there is a clear financial incentive not to participate in an employer-provided health plan. Again I reference this article which claims that "companies that provide health care to their workers are at a competitive disadvantage with companies that don't". This is a backwards view (see my previous post), but with government provided health care this becomes a true statement. Employers who do provide health care are at a competitive disadvantage to those who don't.
The implementation of this plan, aside from pricing out some people from paying for their own care, has another negative effect to those employed in mid-level positions. A position with a higher wage and better benefits naturally attracts more skilled, better qualified employees. These employees who have earned such a position are now at a disadvantage to those who have not. The value associated with their job has diminished, and their taxes have increased. The hard work that has resulted in them landing a better job has been negated.
With these considerations in mind, does it seem like Mayor Newsom's plan will fix the problem of the uninsured? No. It would make it worse by removing the incentive for employers to provide it, and eliminating a person's incentive for paying for their own coverage, and eliminates much of the incentive to seek better employment. Furthermore, the bureaucracy of government involvement would likely further increase health care costs, exacerbating the initial problem. Socialized health care would be a nightmare - anyone with any experience at the DMV should understand this and expect it.