I often buck the orthodoxy…on specific markets and investment plays, for example.

I fit into that mode well, especially when it comes to public policy issues. For example, I am against health care.

Personal freedom? We are no more free to choose our own doctors with most private insurance plans than we are with a single payer system.

Irresponsible bureaucracy? Insurance company administrators are just as horrible as the government variety.

Expensive subsidies? If you get your insurance from your employer, you get a massive tax subsidy. Your insurance benefit is not taxable even though it is as much a part of your compensation as your paycheck.

But the big problem for me is this: the economy-wide benefits of having affordable health care outweigh the costs.

This is my case… and I want to know if it convinces you.

How did we get here?

The United States does not have a health care “system.”

What we’ve developed from an agreement between the United Automobile Workers and Detroit automakers in the late 1940s. Workers would accept lower wages if they had cheap health coverage on the company account.

But no one expected that deal to be permanent. They assumed that postwar American citizens, many of whom had just sacrificed to preserve their country’s liberties, would eventually get government-sponsored health care to support the private system.

But that didn’t happen. Instead, the company-based insurance system expanded to cover all industries. Eventually, government-sponsored programs like Medicare and Medicaid sprang up to fill the gaps for those out of work: the unemployed (Medicaid) and retirees (Medicare).

Then both the business and government systems found themselves entrenched by special interests.

For a variety of reasons, basically employers, employees, insurers, and the health care industry had no incentive to control costs and premiums, the system got to the point where the US has one of the worst health outcomes of any developed country.

And the highest bankruptcy rate due to medical bills.

In other words, our health care “system” is a hodgepodge of temporary fixes and counter-fixes that became permanent because no one could agree on anything else.

It hurts our economy enormously.

The United States spends more of its gross domestic product (GDP) on health care than any other country: 16%. But other economy-wide effects of our employer-based insurance system reduce our GDP below its potential. Let’s consider three.

1. work lock: Many people take and keep jobs because they have health coverage. They stay in those jobs longer than they otherwise would. That means overall labor mobility in the US economy is lower, undermining labor market efficiency.
2. Lower rates of entrepreneurship: The United States has one of the lowest rates of start-up formation in the developed world, and it’s getting worse. This is because starting a business here is riskier than in other countries…because until you make a good profit, you can’t afford health insurance. Young people in their prime do not start businesses for this reason, which hurts job creation.
3. Delayed retirement and weak labor market: Older workers tend to stay longer at their jobs in the US to maintain access to company insurance. That means less space for younger workers, keeping them underemployed and hurting their career prospects in the long run.

In addition to $4 trillion in annual direct costs, by some estimates, these dysfunctional aspects of our health care system cost the US economy 3-5% of GDP. every year.

Could you afford a private highway?

So is favoring some form of public support for health care “socialist”? Hardly.

Here’s how I see it: Health care has economic effects similar to the highway system, the justice system, and national defense.

Each is more than the sum of its parts. Done right, these “public goods” contribute more to economic activity than they cost. If you try to do these things individually, you sacrifice a lot of economic dynamism.

The typical argument, of course, is that public health ends up rationed. We hear horror stories of Canadians or Brits standing in endless queues for medical procedures. (Of course, under a private system, there is also rationing… if you can’t afford it, you’re not in the queue.)

But a UK-style NHS is not the only option.

Many countries, including most of the Latin American nations favored by American retirees, have hybrid systems. The most common is to have a public system of primary and preventive care -neighborhood clinics where you can take your child with a cold or get vaccinated- and a private system for more advanced health needs. If you want to take out private insurance and go to a private hospital for surgery, nothing stops you. If you can’t afford it, you may have to wait in line for public care.

But there are considerable advantages. First, we would avoid job lockout, low entrepreneurship rates, and delayed retirement. Second, the availability of low-cost primary and preventative care would reduce the incidence of long-term chronic conditions that end up costing us a lot of money when the uninsured show up at the ER: diabetes, heart disease, etc.