Monday, June 05, 2006

Why Socialized Medicine Is Bad - Part 2

Part 2 of 2

First let me say that we don’t have a free market health care system in the United States. One of the many problems with our system is the regulation and interference of the government.

The government involvement in the system causes the overall costs to be higher than they otherwise would be, by inducing distortions in the market.

Below are just some of those distortions:

1) The government subsidizes companies that pay health insurance to their employees. This effects the price of the services because a person who paid for the services themselves would be price conscious, but a third party payer levels out those types of fluctuations, thus killing price signals to a huge portion of the consumers in the market.

2) The AMA is the doctor's union, and it creates its own regulations. This means they control the supply of doctors, which our government allows by virtue of having licenses in the first place in the guise of “protecting” the safety of the consumers, which makes it sweet for them, and higher prices for the rest of us.

3) All non-profit hospitals must accept all patients in the emergency room regardless of ability to pay and all for-profit hospitals must accept all emergency room patients who are at risk of loss of life regardless of ability to pay. This also drives up prices we pay, since the government is mandating this to the hospitals.

4) The FDA extends the trial period of drugs by years because again under the guise of “protection”, they want to "protect" users of drugs for needless deaths from bad drugs. Well, what could possibly be wrong with that? The flip side of it is the delay keeps life saving drugs off the market for years and more years. The lives lost probably outnumber the lives saved. Europe manages a quicker drug approval process than us but do you hear of how they are concerned with defective drugs that kill.

5) Government paid Medicare subsidizes healthcare for the elderly, distorting market incentives. The government does not offer full reimbursement so this distorts the supply and demand pricing signals, causing the rest of us to once again pay higher prices and more taxes.

6) Government Medicaid is free for the poor, thus once again driving up the market price.

We do need real medical reform, but it needs to strike at the heart of the problem, which is too much government interference already.

As it is now, 18% of total federal outlays go to Medicare and Medicaid. We must stop these subsidies and mandates, and if we do, prices would plummet, perhaps enough to remove the need for health insurance altogether.

We also need to break up the government backed medical monopoly and decontrol drugs and delivery services. The Republicans don’t really want to do any real reform anymore than the Democrats because both parties get tens of millions of dollars from drug companies to keep the status quo.

Socialized Medicine, National Health Care, Welfare Health Care, whatever you want to call it, will always be plagued by shortages, and long lines. The long and the short of it comes from the need of government to hold back the temptation to just keep increasing taxes as the system balloons. These politicians realize that they must stop somewhere, so eventually they must restrict services and demand of customers, because otherwise they would not be able to stop the ever-rising costs.

Here is the Scenario:

Socialized medicine is advocated as the means of making medical care free or almost free, thereby enabling even the very poorest people to afford all of it that they need or “want.”

Unfortunately, when medical care is made free, the quantity of it that people attempt to consume becomes virtually limitless. Office visits, diagnostic tests, procedures, hospitalizations, and surgeries all balloon.

If nothing further were done, the cost would destroy the government’s budget. Something further is done, and that is that cost controls are imposed. The government simply draws the line on how much it is willing to spend. But so long as nothing limits the office visits, requests for diagnostic tests, etc., etc., waiting lines and waiting lists grow longer and longer.

Then the government seeks to limit the number of office visits, tests, procedures, etc., etc., by more narrowly limiting the circumstances in which they can occur. For example, a given diagnostic test may be allowed only when a precise set of symptoms is present and not otherwise.

A hospitalization or surgery may be denied if the patient is over a certain age.The above leads to the desire of the people to have private health care made available. People will naturally pay more to have problems taken care of better and faster, causing the good doctors who want to be paid well for their expertise, to naturally leave the welfare system and go to the private sector, thus exacerbating the problem to the point of doing what Canada did in 1984, (I think it was 1984), make private health care illegal. (Just recently Canada’s Supreme Court stuck down that law.)

The myths are that Canada's health care system works well and that Britain’s works well also, can easily be shown to be myths by many links that are available and I will be happy to provide some in the comments section. There are too many to list here and therefore I will not try.


At 11:30 PM, Blogger pappy said...

People need to think how would these programs be financed? Some folks say only the federal goverment has the tax base to provide basic medical care for all. This implies that the federal goverment can somehow provide "free" medical care for all, without hinting that in doing so it would run up massive budget deficits and leave future generations to drown in our legacy of debt.There is a common notion in the public mind that universal access to "free" medical care (and the solution to all social problems) can be financed by taxing the "rich" i.e. anyone who earns more then himself. But such a tax would have to cut deeply into the middle-income workers,because there are simply not enough "rich" people for the purpose.
sorry if too long winded.

At 5:30 AM, Blogger A Jacksonian said...

About the only part of medical system I can see the Federal Government actually being helpful is in these: opening up the Federal Employee system of health care options to the Citizenry, acting as a collective agent for purchasing for all drug plans that wish to pool their resources so as to get the lowest price, and, to ensure that All Citizens get some sort of basic coverage have a Federal Medical Service for those who cannot pay for their education and are willing to serve a set number of years in areas that are deficient of *any* health coverage either due to underpopulation or poverty.

I go over that as part of a Domestic Policy here. By opening up the Federal Health System, the requirements to take in anyone with any pre-existing condition that is willing to *pay* for it is maintained. Plans OUTSIDE the Federal ones are still encouraged so as to provide better and more specific care to communities. But basic care should be made *available* at cost, and everyone pays, even the poor although I am willing to see some sort of price break so as not to ruin them even more financially.

For prescription drugs the lowest price, by prescription, will be available as the Federal Government may mandate that via *contract* with drug companies. By having a large number of Citizens within this they gain all the benefits of having We the People acting as We the People. That said prescription via other plans can still get negotiated price breaks between that plan and the providing manufacturer. And all medications are available OTC at a HEFTY tax so as to discourage the wanton use of medications that would bring ill to society. Anti-biotics being a prime example should be one of the *few* medications available ONLY by prescription as over-use endangers the General Welfare by making bacteria drug resistant for those not taking full courses of their medication. Other medications and problems with them is left up to the States, as it is their reserve to decide such.

A Federal Medical Service utilizing other Federal institutions such as the VA System, NIH, CDC and other organizations, plus available rooms and office time during off-hours from health plan providers, for the health of the People, and will be on a Federal pay scale and have a set amount of time to serve based on how long an amount of time their education with Federal funds took. That said they must pass rigorous annual exams and oversight by their profession. Further, they will be assigned *as needed* to those areas of this Nation in need of basic doctoring. Leaving one day early incurs the FULL PENALTY of the tuition cost. Serving overseas in hardship areas gets time deducted *faster*. For those wishing to serve in the US Armed Forces, time gets deducted very quickly because they need good doctors the MOST. That said only those necessary professions as the Government actually *identifies* are picked up, so my guess is that plastic surgeons will end up paying their own way while General Practitioners will be finding a ready place with the Federal Service.

Luckily the Domestic Policy also cuts a number of other limbs from the Federal Government and puts a flat tax across all the People and all corporations and industry. This will *lower* the amount taken per capita, while actually raising more money from corporations which have indentured servants in Congress to create loop holes for them to sequester money away that should rightly be taxed. A low, common tax that EVERYONE pays, with only the destitute getting a break from it but paying some sort of graduated scale until they reach full income earning status.

You cannot look at health care in a vacuum. Socialists have tried to make it an institution and have made its poor performance and high cost institutionalized. Jacksonians see competition and fair payment by everyone as the solution to this.

There are problems with this plan, but it is far, far better than *anything* I have seen anyone else come up with. Personal accountability, ability to choose and go your own way, availability of medications at low cost for those who choose to do so, common availability of everything at a high rate for those abjuring the system and everyone paying for what they want.

At 9:40 AM, Blogger Free Agency Rules said...

Hey, good to see others with their "logical" thinking caps on, instead of just their "emotional" ones on.

Pappy, I agree that some people today think that government is some disassociated nebulos entity and has nothing to do with their neighbors. We know that it "is" literlly our neighbors, and specifically our "middle class" nighbors.

a jacksonian,

Thanks for stopping by and adding a great, well thought out plan. I am still re-reading it to absorb the full idea as it is fairly complex. Seems definitely better than what we have.

My thoughts for improving the system is to have one similar to the "voucher" school system used in some places and proposed for many others only have vouchers for medical care. This way people would still use a private system and competition would still be there. Then we could work to fix the current interference problems I mentioned in this post.

My ideal plan would be to see a full fledged Libertian system of government where taxes are only for things that are impossible for businesses to do, things like national defense, roads (with tolls or gas tax), and other protections of our life, liberty and property. And this way there would be a whole lot of money for charities to help those in need and more plans by churches and other means.

A book called “The Richest Man in Babylon” talks about how it is possible for every citizen to be very well off. Rich enough to afford all of life’s necessities and then plenty of life’s luxury’s as well. That is my dream. Make everyone rich, instead of bringing down the middle class to help the poor. Helping the poor does not make less of them.


At 8:43 AM, Blogger A Jacksonian said...

FAR - My pleasure to add in.

I do come from a different direction than Libertarians (or even the small "l" more generalized sort) starting at the Preamble to the Constitution and moving on outwards from there. I truly do want the leanest form of government possible that can barely stand up and do the few things it needs and do them well and be held accountable to those things, from top to bottom. So vouchering and taxation puts forth that the former is a necessary part of the latter. I prefer to take the latter and make it a cold, hard and evenly given reality to everyone who can stand up in this Republic, businesses included. The truly destitute do get a break and a help *up* to stand and shoulder their part of the burden. They do not get a hand *out* once and forevermore. Socialism wants that latter and dependence upon government. That is anathema to a Free People.

That said, no matter where libertarianism starts, I find the move to keep on wanting to move rights up in the chain of the Preamble to be a clear problem for the Republic, also. Each of the People has a hefty burden and the outlay from the Preamble is a that given in the rest of the Constitution: responsibilities first and how you are to fulfill them second. That list of responsibilities is not long, but all-inclusive as the People are responsible for the entire Republic. There are times when the large Libertarians seem to be turning into an 'every man for himself' group, and that is patently *not* the case in this Republic. Your rights come *after* the outlay of responsibilities and are to be used to *fulfill* them.

My plan addresses the whole of the Republic... the neediest and most hurt get *help* but *not* a dole, those in the middle sharing the equal burden from rich to poor and all businesses included then have a plethora of choice from forms of insurable care that cannot turn an individual down to partially insured but with prescription medications going untaxed to all the way to DIY healthcare and the Individual pays a hefty amount for taking their life in their hands. Lots of choices in that conception and leaves space for individuality and freedom while putting the Government in the least amount to help get a break for those seeking good care and letting those know that think they are smarter than the medical community that they will pay to do so. And by giving help to those that are in need the very bottom of society is strengthened but not made into supplicants.

Harsh, honest, fair, evenly adjudicated. Expand choices so the Republic may flourish and ensure the general Welfare by *not* making a welfare system.

Of course I also see that chopping off many limbs of government as necessary... and quite some number of other things so that the People can shoulder their responsibilities and get away from passing the buck upwards. And their rights along with them.

But then, I have strange thoughts.

At 1:14 PM, Blogger Intellectual Insurgent said...

Can you provide the links about Canada and Europe's healthcare system? I will bet that for every person who has to go to Hungary, there is an American that has to go to Canada or Mexico for affordable medication. In any event, I don't understand why the debate is framed in such narrow terms - Capitalist medicine v. socialist medicine. Isn't there something else? A middle ground?

A friend of mine, and infrequent commenter on my blog, is a doctor who just spent a year doing a fellowship in medical policy. He has made the point several times that there are positive aspects of the systems in Canada and Europe and we should take the best from various systems and make something better rather than reject a system wholesale.

At 4:37 PM, Blogger jj said...

FAR you continue to talk about government stealing from you to pay for your neighbors care. Even if I agreed with that (I don't) as I have said before you are already paying for it. If we had a single payer system the cost would go down for those that pay and those that don't would have coverage they could afford. According to one study, marketing costs are about 30% of a drug manufacturer's budget. There is now one pharmaceutical sales representative for every ten physicians.

II makes a great point about taking the good points from other health system. No matter what it will never be perfect but or system is badly broken

from the New Yorker-
One of the great mysteries of political life in the United States is why Americans are so devoted to their health-care system. Six times in the past century—during the First World War, during the Depression, during the Truman and Johnson Administrations, in the Senate in the nineteen-seventies, and during the Clinton years—efforts have been made to introduce some kind of universal health insurance, and each time the efforts have been rejected. Instead, the United States has opted for a makeshift system of increasing complexity and dysfunction. Americans spend $5,267 per capita on health care every year, almost two and half times the industrialized world’s median of $2,193; the extra spending comes to hundreds of billions of dollars a year. What does that extra spending buy us? Americans have fewer doctors per capita than most Western countries. We go to the doctor less than people in other Western countries. We get admitted to the hospital less frequently than people in other Western countries. We are less satisfied with our health care than our counterparts in other countries. American life expectancy is lower than the Western average. Childhood-immunization rates in the United States are lower than average. Infant-mortality rates are in the nineteenth percentile of industrialized nations. Doctors here perform more high-end medical procedures, such as coronary angioplasties, than in other countries, but most of the wealthier Western countries have more CT scanners than the United States does, and Switzerland, Japan, Austria, and Finland all have more MRI machines per capita. Nor is our system more efficient. The United States spends more than a thousand dollars per capita per year—or close to four hundred billion dollars—on health-care-related paperwork and administration, whereas Canada, for example, spends only about three hundred dollars per capita. And, of course, every other country in the industrialized world insures all its citizens; despite those extra hundreds of billions of dollars we spend each year, we leave forty-five million people without any insurance. A country that displays an almost ruthless commitment to efficiency and performance in every aspect of its economy—a country that switched to Japanese cars the moment they were more reliable, and to Chinese T-shirts the moment they were five cents cheaper—has loyally stuck with a health-care system that leaves its citizenry pulling out their teeth with pliers...

FAR you also subscribe to the "moral hazard" theory which simply does not hold water. You think if people were offered free health care they would use more.

..In 1968, the economist Mark Pauly argued that moral hazard played an enormous role in medicine, and, as John Nyman writes in his book “The Theory of the Demand for Health Insurance,” Pauly’s paper has become the “single most influential article in the health economics literature.” Nyman, an economist at the University of Minnesota, says that the fear of moral hazard lies behind the thicket of co-payments and deductibles and utilization reviews which characterizes the American health-insurance system. Fear of moral hazard, Nyman writes, also explains “the general lack of enthusiasm by U.S. health economists for the expansion of health insurance coverage (for example, national health insurance or expanded Medicare benefits) in the U.S.”

The moral-hazard argument makes sense, however, only if we consume health care in the same way that we consume other consumer goods, and to economists like Nyman this assumption is plainly absurd. We go to the doctor grudgingly, only because we’re sick. “Moral hazard is overblown,”

he rand Corporation did an extensive study on the question,
..Poor people in the high-deductible group with hypertension, for instance, didn’t do nearly as good a job of controlling their blood pressure as those in other groups, resulting in a ten-per-cent increase in the likelihood of death. As a recent Commonwealth Fund study concluded, cost sharing is “a blunt instrument.” Of course it is: how should the average consumer be expected to know beforehand what care is frivolous and what care is useful? I just went to the dermatologist to get moles checked for skin cancer. If I had had to pay a hundred per cent, or even fifty per cent, of the cost of the visit, I might not have gone. Would that have been a wise decision? I have no idea. But if one of those moles really is cancerous, that simple, inexpensive visit could save the health-care system tens of thousands of dollars (not to mention saving me a great deal of heartbreak). The focus on moral hazard suggests that the changes we make in our behavior when we have insurance are nearly always wasteful. Yet, when it comes to health care, many of the things we do only because we have insurance—like getting our moles checked, or getting our teeth cleaned regularly, or getting a mammogram or engaging in other routine preventive care—are anything but wasteful and inefficient. In fact, they are behaviors that could end up saving the health-care system a good deal of money....

Some of the other affects of our system.-

The leading cause of personal bankruptcy in the United States is unpaid medical bills. Half of the uninsured owe money to hospitals, and a third are being pursued by collection agencies. Children without health insurance are less likely to receive medical attention for serious injuries, for recurrent ear infections, or for asthma. Lung-cancer patients without insurance are less likely to receive surgery, chemotherapy, or radiation treatment. Heart-attack victims without health insurance are less likely to receive angioplasty. People with pneumonia who don’t have health insurance are less likely to receive X rays or consultations. The death rate in any given year for someone without health insurance is twenty-five per cent higher than for someone with insur-ance.

At 6:00 PM, Blogger Free Agency Rules said...

a jacksonian,

I like any plan that is not "Robbing from Peter to Help Paul." :)


First Britan. Here are some of the links:


and here

and here

and here

(this one may be broken) Boy to travel to India for surgery

People on waiting lists die while waiting

I have lots more.


Over 55

and here

Free if you can wait

Lots more available.


I am not saying that ours doesn't need revising, as I said in this post, there is too much govnt involvement as it is now.

And I would be in favor of some sort of voucher system, because of practical reasons of not being able to go "cold turkey" to the real solution.


At 2:53 PM, Blogger A Jacksonian said...

FAR - Income redistribution via taxation I think is an abomination to a Free People to remain free. I prefer to let people have as much as they possibly can and make their own decisions without the help of a 'benevolent government' to do so. Remember that for every responsibility you hand over to government you also hand over your rights to it. Your right to decide upon it, your right to have a say in it, your right to hold it accountable. All are given away in the hopes that a bureaucracy will actually function at the behest of government.

On to what can be learned from other systems...

Some things can be taken from other Nations and semi-used here... setting the guidelines for those plans that the government currently uses for its workforce, and then putting in place a mass purchase and bargaining agreement. But those who wish to opt for other plans will still get the no-tax prescription capability, and those plans may be able to get an equal cost to what everyone else gets in the more strictly laid out systems in the federal sphere.

But as a Free People the use of coercion to force individuals to use a government health system that is 'one size fits all and fits none well' is not only folly, but against the basis for supporting the general welfare. Government takeover of responsibilities is a power grab of the general welfare, and no government should be trusted with that.

I support diversity, freedom to choose or NOT and let the individual take their own risks and gain their own rewards or failures such as they may be. Encouragement can be given towards better use and utilitzation of healthcare, but a 'use this and only this because you are TOLD TO' is anathema to the Republic. That is removing a blessing of liberty and replacing it with the force of the State.

Outside of some very few Agencies, and almost all of those are within the DoD and have extremely harsh and high expectations to meet, I can think of no bureaucracy imposed by government fiat that actually works well or quickly. Unless it is to slather out pork... that slides along well enough.

SSA? Forget it! My own government tells me I am disabled for my job on the one side and on the other says I can basically go anywhere, do anything and keel over all the time and be employed. Is *that* Citizen friendly?

FEMA? Hello to the folks in Florida waiting 4 years and more for recovery help.

Department of Education? Johnny has the exact same reading rate as he had in 1958 when he couldn't read. It has been a flat line with increasing spending. And one of those great 'lets put it into the Federal Arena where *nothing* will happen to it ideas'.

IRS? Heh. Ask them to find your return from 3 years ago... and then they have their very own court system where they make the rules! Wheeeee!

Dept of Agriculture? How much is being given to Agribusiness in desert areas so as to employ illegal aliens? And what about those water subsidies to same?

National Institutes of Health is mostly R&D with a good sized investagive group. They can help set guidelines and appoint oversight to something a bit bigger, but that is it. An entire health system is beyond them.

Ditto for the CDC, which concentrates on things going on already or finding ways to stop potential threats.

NASA? Take the last 30 years of advancement in space travel. Take ANY 30 years since the discovery of flight. Note that the private industries have done far, far, far better than a government bureaucratic monopoly.

To those wanting a single payer system, show one place where it is timely, efficient, cost effective, has no waiting lines weeks or months long for critical illnesses that are not immediately fatal, has wonderful and harsh oversight of its physicians, drug prescription and use, and, finally, does not consume 10% of its money in pure paperwork.


All at the same time, no cherry picking.

For my condition I did a bit of research just to see what it would have been like in Canada. I spent about 8 months going through medical tests, seeing scads of specialists, tracking down many things that it *wasn't*, then narrowed it down to one specialist who had to go through 4 tests, two of which were 24 hour affairs, an MRI scan and a PET scan. In Canada I would still be waiting to see the specialist as it is a debilitating condition but not immediately life threatening. Because all of the other tests would have taken a long, long time to schedule and get done. And the PET scan waiting list in Canada for such procedures was something like a year... just for *that*.

So, I paid a bit more, and in the case of the PET scan it was totally out of pocket, but I was diagnosed, started treatment and got well enough to handle the disability paperwork... when printed out it was a stack over 2" thick *before* I even added in the 3" of test results and doctor's diagnoses.

So Canada is more cost effective if your problems don't become so bad waiting for it to gain you that effectiveness that you have to be moved up to a higher priority. In the US I made my choices early on based on my health conditions and adjusted over time to compensate so I could get timely and cost-effective care. It did not cover everything, but I knew that going in and *planned* for it.

And before the *too poor for health care* card is laid out, may I point you to that section of my proposal? The neediest damn well get care because that is what it means to be a Republic. To show honor to those that have been most hurt by life and care for them until they can stand up on their own. THAT is the understanding of a Republic. It is *not* socialized medicine so you get told what to do now and forevermore. It is a help up so that one can make their own decisions for good and ill, and while doing so being a full member of society.

Not a supplicant to a bureaucrat.


Post a Comment

<< Home