National health insurance: A medical disaster

Affordable health care has become one of the most important social issues of our time. Every news broadcast seems to have a special report on “America’s health care crisis” or a politician demanding “universal health insurance.” Evidence cited for the need for immediate and drastic government action includes:

High medical costs. The United States reportedly has the highest per capita medical expenditures of any country in the world. According to Insight magazine, U.S. citizens spent an average of $2,051 on health care in 1990, compared to $1,483 for Canadians and $1,093 for West Germans.

Rapid increase in medical expenditures. The average American now spends 11.1 percent of his income on medical care. If current trends continue, health care will consume over 17 percent of the Gross Domestic Product within 15 years.

High administrative costs. In the U.S., administrative costs consume nearly 12 percent of health dollars compared to one percent under Canada’s socialized system. More than 1,100 different insurance forms are now in use in the United States.

Americans without insurance coverage. At any given time, over 13 percent of Americans have incomes that are too high to qualify for Medicare or Medicaid, but are too low to pay for medical insurance themselves.

The free market in health care, we are told, has failed. The solution offered by a growing chorus of commentators and candidates is universal, mandatory, national health insurance; in other words, socialized medicine. Is socialized medicine the answer, or will it only make things worse?

How Well Has Socialized Medicine Worked Elsewhere?

Most of the developed countries of the world presently have some form of socialized medicine. How well has it worked?

Great Britain. Great Britain adopted socialized medicine in 1948, with the creation of the National Health Service (NHS). The political rhetoric in Britain exhorting the adoption of nationalized health insurance is similar to what we are heating in the U.S. today. In 1942, Prime Minister Winston Churchill declared:

The discoveries of healing science must be the inheritance of all . . . . Disease must be attacked whether it occurs in the poorest or the richest man or woman, simply on the ground that it is the enemy . . . . Our policy is to create a national health service, in order to secure that everybody in the country, irrespective of means, age, sex, or occupation, shall have equal Opportunities to benefit from the best and most up- to-date medical and allied services available.

With the adoption of national health insurance, Labour Minister Dr. David Owen predicted, “We were going to finance everything, cure the nation and then spending would drop.” Unfortunately things didn’t work out exactly as planned.

The first problem with Britain’s National Health Service was skyrocketing demand. With health care paid for entirely by the government, there was no reason not to go to a doctor. Why take aspirin or wait out a cold, when professional medical care is free? As Michael Foot observed, within months “the demand [for health care] was exceeding anything [its creators] had dreamt of.” First-year operating costs of NHS were 52 million pounds higher than original estimates.

NHS soon found itself in direct competition for funds with national defense, pensions, and all other governmental functions. Budget cuts for NHS quickly followed. British economists John and Sylvia Jewkes estimated that between 1950 and 1959 the United States spent six times more per capita on hospital construction than England. As a result, there was a steady deterioration in the quality of British medical care.

By 1977, British general practitioners rarely had any medical instruments except for stethoscopes and blood- pressure meters. They had to send their patients to hospitals even for such routine procedures as X-rays and blood tests. The waiting time for routine, non-emergency surgery had increased to years. By the mid-1970s, more than 700,000 English men, women, and children were on hospital waiting lists at any given time. The average British doctor now has over 3,000 patients, compared to 500-600 for the average American doctor. NHS doctors spend an average of less than five minutes with their patients, who usually wait hours to see them.

In 1975 Bernard Dixon, then editor of the British magazine New Scientist, provided this summary of the state of National Health Insurance:

The plight of Britain’s Health Service conflicts desperately with the avowedly utopian ideals of its founders. For most of us, it is only when we join a year-long hospital waiting list, or have to take an injured child to a hospital casualty department, that we realize just how threadbare and starved financially the service really is. Not only is there an acute shortage of resources, but the expertise and facilities that are available are all too often dispensed via a conveyer-belt system which can at times be positively inhuman.

As a result of widespread public dissatisfaction, in 1989 the British government began dismantling its National Health Service, and reintroduced mar-ket-based health care competition.

Canada. What of the Canadian National Health System, which many U.S. politicians are now championing as a less expensive and more efficient alternative to our supposed free market system?

Canada has had socialized medicine for 20 years, and the same pattern of deteriorating facilities, overburdened doctors, and long hospital waiting lists is clear. A quarter of a million Canadians (out of a population of only 26 million) are now on waiting lists for surgery. The average waiting period for elective surgery is four years. Women wait up to five months for Pap smears and eight months for mammograms. Since 1987, the entire country spent less money on hospital improvements than the city of Washington, D.C., which has a population of only 618,000. As a result, sophisticated diagnostic equipment is scarce in Canada and growing scarcer. There are more MRIs (magnetic resonance imagers) in Washington State, which has a population of 4.6 million, than in all of Canada, which has a population of 26 million.

In Canada, as in Britain under socialized medicine, patients are denied care, forced to cope with increasingly antiquated hospitals and equipment, and can die while waiting for treatment. Canada controls health care costs the same way Britain and Russia do: by denying modern treatment to the sick and letting the severely ill and old die.

Despite standards far below those of the United States, when variables such as America’s higher crime and teenage pregnancy rates are factored out, and when concealed government overhead costs are factored in, Canada spends as high a percentage of its GNP on health care as the United States. Today a growing chorus of Canadians, including many former champions of socialized medicine, are calling for return to a market-based system.

The Worldwide Failure of Socialized Medicine

Throughout the world the story is the same: socialized medicine results in skyrocketing demand for nominally “free” health care, doctors are overburdened, medical services steadily deteriorate, and there are endless waiting lists for health care. In the Soviet Union before the collapse of Communism, anesthetics, painkillers, and most drugs were rationed; 57 percent of hospitals had no hot running water; and it was standard practice to clean needles with steel wool and reuse them. In New Zealand, which has a population of just 3 million, there is a waiting list of 50,000 for surgery.

Socialized medicine doesn’t even fulfill its promise of equal access to treatment regardless of ability to pay. For example, in Canada “a small child with a skin rash is 22 times more likely to see a dermatologist if the child is living in Vancouver [a major city] than in the East Kootenay district [a remote rural area].” In Brazil, “residents of urban areas experience nine times more medical visits, 15 times more related services, 2.7 times more dental visits and 4.5 times more hospitalizations,” than do rural dwellers.

Throughout the world, there are more and more refugees from socialized medicine. Middle-class Canadians flock across the U.S. border to avoid waiting months or years for routine procedures. In England a system of private, quasi-legal clinics has developed to care for patients who can no longer tolerate the abysmal medical services provided by national health insurance. In Russia, desperate patients bribe doctors and secretly visit them after hours to get decent treatment and scarce drugs.

Socialized medicine, like all forms of socialism, has been a world-wide failure. As people throughout the world from the Soviet Union to South America are learning, socialism cannot work. Socialism is fundamentally incompatible with human nature.

Socialism fails bemuse it denies and degrades our essential humanity by treating us as objects. Socialized medicine takes away our control over our own health and body, and gives that power to the state. Under a socialized medical system, the government, • not you or your doctor, decides what treatments, doctors, and drugs you get. If you don’t like the service the government gives you, your only alternative is to flee to another country or to break the law and bribe a doctor. Under socialized medicine, the exercise of free choice becomes a crime.

Even after it destroys quality health care and individual liberty, socialized medicine still cannot achieve equal treatment for all. When planners try to make all people equal, they confront the inescapable paradox of equality: Abolishing inequality requires massive government power. But power by its nature is unequal: there are those that have it and those that do not. Giving government the power to make everyone equal necessarily creates the worst form of inequality: that of master and subject. In practice under socialized medicine, those with more money and friends in the government get vastly better health care than those without power and connections.

Socialized medicine will not work any better in the United States than it has in England, Canada, Russia or elsewhere. Consider just the economics of socialized medicine in the U.S. Medicare and Medicaid costs are already skyrocketing out of control. State governments cannot afford the 20 percent of theft budgets that Medicare and Medicaid now consume. Where will government get hundreds of billions of dollars more for national health insurance? A complete Canadian-style national health insurance system for the U.S. would initially cost over $339 billion and require that payroll taxes be nearly doubled, or require a new, national 10 percent business tax.

Socialized medicine does not work, but has the free market failed as well? If freedom works, why is American health care now in crisis?

Government Intervention and Health Care Costs

The answer is that America does not have a free market in health care, and in fact has not had one for 50 years. What we have had is a half century of mounting government encroachment upon medical freedom, leading to more and more health care problems.

Over 42 percent of funds spent on American medical care are now controlled by government. Over 700 state laws, some hundreds of pages long, govern all health care providers and institutions. According to some estimates, for every man-hour of health services provided by doctors, two hours are spent by clerks filling out government paperwork. Dr. Francis A. Davis estimated in the March 1991 issue of Private Practice that government regulations have already increased the cost of medical care by up to 50 percent!

Government regulations and controls now intrude upon virtually every area of health care in America. These regulations increase tremendously the cost of health care. Here are some examples:

The War on Drugs. U.S. federal drug certification requirements are the most burdensome in the world. It presently can cost $231 million and takes 12 years to develop, test, and certify a single new drug in the U.S. The introduction of many drugs, which have been thoroughly studied and used safely in Europe, has been delayed for years or even decades in the U.S. by the Food and Drug Administration. FDA delays in the introduction of just one drug, the beta-blocker propranolol, used to treat angina and hypertension, caused at least 30,000 avoidable deaths in the U.S.

Literally hundreds of thousands of Americans have died in the last two decades, and millions have suffered needless pain and expense, as a result of government drug regulations. Further, the prohibition of marijuana, heroin, and cocaine has created a growing public health crisis in America.

Consider the medical implications of the government’s ban on marijuana. On September 6, 1988, Drug Enforcement Administration (DEA) Administrative Law Judge Francis L. Young stated: “The evidence in this record clearly shows that marijuana has been accepted as capable of relieving the distress of great numbers of very ill people, and doing so with safety under medical supervision. It would be unreasonable, arbitrary and capricious for DEA to continue to stand between those sufferers and the benefits of this substance in light of the evidence in this record.”

Judge Young concluded that many classes of patients could potentially benefit from medicinal use of marijuana, including sufferers from glaucoma, chemotherapy, multiple-sclerosis, spasticity, and hyperparathyroidisim. Glaucoma sufferers alone currently number over two million Americans. Despite this finding by the DEA’s own administrative judge, marijuana continues to be totally banned for all uses, including medical applications. Indeed, penalties for possession and use of marijuana have steadily increased over the last 20 years.

Medicare, Medicaid, and Tax Policy. A growing chorus of politicians and social activists decry the “high cost” of medical care in the United States and the increasing percentage of our Gross Domestic Product that it consumes. What is seldom mentioned is that mounting health care spending and prices are largely a result of escalating demand, public policies, government health care entitlements, and tax policies.

Medicare and Medicaid, our major health care entitlements, were enacted in 1965. Closely allied with the Social Security system, Medicare provides health insurance for approximately 30 million Americans, primarily the elderly. Medicaid provides health care for tens of millions more of the disabled and indigent, and is administered by the states. In the last 25 years Medicare and Medicaid expenditures have soared: from less than $5 billion in 1967, to $79 billion in 1984, to over $160 billion in 1990.

Prior to 1983, Medicaid used a “cost-phis” system for reimbursing medical providers. Doctors were allowed to base their billings upon the cost of the services they provided. Thus the higher a doctor’s costs, the more a doctor would make. The cost-phis system made it in a doctor’s self-interest to make his costs as high as possible, contributing to a rapid growth in health care costs.

Overall, the effect of Medicare, Medicaid, and other rapidly expanding government health care spending has been greatly to increase the demand for medical services and facilities of all types, which has led to rising health care prices.

Government tax policies are another major factor in escalating demand for and prices of medical services. When health insurance is provided as an employee benefit it is fully tax-deductible; in other words, it is paid for with pre-tax dollars. But when health care is paid for by employees directly, it is paid for with very expensive after-tax dollars, and is not fully tax-deductible. Hence there is an incentive for health care to be provided by employers in the form of insurance, rather than for employees to pay for health care directly out of their own pockets. Largely as a result of U.S. tax policies, “The share of health care spending paid by business increased from 17 percent in 1965 to 28 percent in 1987, while the share paid directly by individuals fell from almost 90 percent in 1930 to just 25 percent in 1987.”

The growing reliance of Americans upon insurers (public and private) to pay their medical bills has destroyed virtually all incentive for health care consumers to monitor and control costs. As Louise B. Russell noted in her 1977 Brookings Institution study:

This incentive structure means that at the point at which decisions are made about the use of resources, the people who make those decisions are able to act as if the resources are free. Rationally they can and do make decisions that bring little or no benefit to the patient, since the resource costs of the decisions—to the people making them—are also little or nothing . . . . [T]here are virtually no economic constraints left to prevent decisionmakers in medical care from doing everything they can think of, no matter how small the benefits nor to whom they accrue.

More here

***************************

For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

For more postings from me, see TONGUE-TIED, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC, GUN WATCH, EDUCATION WATCH, AUSTRALIAN POLITICS, DISSECTING LEFTISM, IMMIGRATION WATCH and EYE ON BRITAIN. My Home Pages are here or here or here. Email me (John Ray) here. For times when blogger.com is playing up, there are mirrors of this site here and here.

***************************