Hawaii has ended an experiment with universal health care for children because it proved a little too successful.  Seven months after launching Keiki Care, a flood of enrollments caused it to run over budget.  The social engineers in Hawaiian government just learned a lesson about free-market economics and the effect of government distortion (via The Corner):

Hawaii is dropping the only state universal child health care program in the country just seven months after it launched.

Gov. Linda Lingle’s administration cited budget shortfalls and other available health care options for eliminating funding for the program. A state official said families were dropping private coverage so their children would be eligible for the subsidized plan.

“People who were already able to afford health care began to stop paying for it so they could get it for free,” said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. “I don’t believe that was the intent of the program.”

Fink gets this entirely wrong.  Taxpayers didn’t get this for free.  They paid for it with their taxes.  Keiki Care took taxes and directed it into creating a universal health-insurance program for children, and apparently didn’t set any income requirements for entry.  Why wouldn’t the taxpayers whose money funded the risk pool take advantage of it?

Furthermore, the surprise of Fink and Lingle at the effect of a “free” service in a competitive marketplace only proves the economic illiteracy of our governing class.  What happened to the sale of Internet browsers when Microsoft offered Internet Explorer for free?  Did that only entice low-income web surfers to use IE, while leaving Netscape for those who could afford it — or did it kill the market for for-profit browsers?  Introduce a no-additional-cost alternative to any market of goods or services and consumers will flock to it, and in the process kill the market for anyone looking to maintain their own share of the market. That’s more basic than Econ 101.  It should embarrass Hawaiians that anyone would have to explain it to their elected officials.

For their relentless cluelessness about the free market and consumer behavior as well as the non-“free” nature of government programs, Fink, Lingle, and the Hawaiian Legislature win the prestigious Captain Louis Renault Award for their shock, shock! that people would take advantage of a no-fee program … that they themselves funded.