Everyone else is doing it, why shouldn’t we?
I received some excellent feedback from my article advocating free market pricing in health care. The reader questioned why other advanced countries with universal health care seem to have better health outcomes at lower cost. This is a complicated question which merits its own article.
The major obstacle to discussing this topic is the conflation of terms involved. Health care is the delivery and consumption of medical goods and services. Health insurance is a mechanism of protecting against financial loss when unexpected medical costs arise. Currently in the US, health insurance is not used as insurance per se. It is mainly used as a form of pre-payment for predictable future medical consumption. Think about the difference between utilization of health insurance and auto insurance. You bill your auto insurer for a wreck, not gas, new tires, nor oil changes. You certainly could choose to insure against those types of expenses, but no one does as it makes little sense to insure against things you know will happen. You just pay for them when they are needed, you shop for best value and limit your consumption to what you deem necessary. We are currently billing our health insurers for routine medical consumption, which is just a highly inefficient way of financing predictable expenses. As I’ve explained before, this 3rd party payer model is bad because it gives the impression that services consumed are “free” and results in higher consumption levels with minimal consumer-driven downward price pressure.
Universal Health Care is touted as the way to go, but here again we run into the same conflation of terms. Notice that its advocates do not call it Government Health Care; why do you think that is? Maybe it’s because the public is generally aware that government provided goods and services are typically inferior to those offered on the free market. Would you choose an Apple Computer or a theoretical US Government Computer? In any case, we should be clear what we are talking about when comparing the US to other countries. We can have government financed health care, which would mean that medical services are provided privately and financed through tax dollars (think Medicare, what’s that costing these days?). We can also have government provided health care, which means the government is the producer of said services (The VA, operating swimmingly at the moment). Or we can have some combination of both.
If we choose to have the government finance all health care consumption, we have not solved the problem of limited earthly resources nor the 3rd party payer problem. We will have just made the problem bigger. There will still be no incentive for people to consume less medical resources, as they are not directly paying for them. Over-consumption will be addressed through rationing at the bureaucratic level. This means that you as a medical consumer will have little say in the timing and the nature of the services you are allowed to consume, there is no other way around it. We see these problems all the time in our status quo. How many times have you heard someone complain about their health insurer limiting their choices? At least in the status quo we can change insurers if we are unhappy. This would not be the case under government financed health care, unelected bureaucrats would call the shots as to what we get and when we get it.
As for government provided health care, this is even more of a monster which isn’t even a theoretical discussion. We already have a real world example of how well the US government delivers health care, it’s called the Veteran’s Administration. The government has total control over this department, with essentially unlimited financing. A brief google search for news stories regarding the VA will show sad examples of poor access to care, high cost, and questionable quality. Essentially the VA is offering a product few, if any, would pay for by choice. Another helpful corollary in thinking about this topic is the defense industry. The federal government’s primary constitutional role is national defense, it builds and maintains a military. However, does it produce its own weaponry? No, the feds long ago figured out that weapons production is much more efficient when left in the hands of private producers, hence the proliferation of defense contracting companies. If the feds tacitly acknowledge they can’t do better than the free market in producing something they are supposed to care about, why would you think they could do better in the provision of medical services to us little people?
Well, don’t countries with government provided and financed health care have better health outcomes? I don’t know, and neither does anyone else. “Health outcomes” is a massively ambiguous term which is essentially meaningless. Does it mean longevity, infant mortality, obesity rates, or something else? As an orthopedic surgeon, I can tell you that my specialty can’t really agree on anything ranging from how to diagnose conditions, best treatments, or the proper definition of a “good” outcome. For health policy advocates to state that government control over health care leads to better “health outcomes” is the height of conceit; what are they even talking about? My position is that general well-being in terms of health stems primarily from differences in genetics and lifestyle choices. Is it a rational conclusion that Americans are “less healthy” than European counterparts because they lack government control over the health care system? Or could it be that Americans eat an unhealthy diet and don’t exercise enough?
Ok fine, well isn’t health care spending less per capita in countries with full government control? I’m sure it is, when the government is holding the purse strings they can spend as much or as little as they please. However, spending per capita tells us nothing about quality, outcomes, nor satisfaction with the system. Satisfaction surveys in socialized countries are often touted to show that people in those places are super happy with a government controlled system. I would point out that when you survey a large group of people, most of them are going to be healthy and do not have much interaction with the government apparatus. I would be much more interested in hearing the opinions of those in socialized countries with medical problems requiring frequent interaction with the system. Maybe try asking our vets about their satisfaction with the VA?
It would be nice if the government was capable of solving the problems in the health care industry through the bureaucratic method. We wouldn’t have to think about anything, just pay our taxes and go get us some “health care” when we need it. However, the real world suggests that this utopia simply doesn’t exist, we are going to have to fix it ourselves. More to follow on that!
