Health Care and Capitalism

Consider the following Chart:

Socialized Medicine costs less. Why?  Because:

1) Larger insurance providers (like governments) can “bargain” for lower prices. For instance, the cost of an MRI in America is over $1200 dollars, cost in Japan, $98.

2) Insurance companies operate for profit. So they have to charge more than they actually spend on health care. They also spend millions on marketing, billing, and actuary science in order to determine the risk of each and every person they cover.  Governments need not deal with these expenses. Furthermore, in a single payer system, the economies of scale work in the Government’s favor. For instance, the US military or police forces need not discern who is a “subscriber” to their services when they offer protection. Nor do they have “billing” departments. Can you imagine the paperwork and bureaucracy that would introduce? Can you imagine how much money police forces would have to put into determining who was a “risky” candidate for coverage? This is what our private health care system does with each and every individual they insure. This is why, in America today, 31 cents out of every dollar spent on health care is spent on administrative costs.

But the question remains: Does socialized medicine result in inferior care?

The World Health Organization suggests most industrial countries offer better health care than America. Gallup suggests socialized medicine offers fairly equal satisfaction: Studies show that we have fewer doctors per capita than many socialized nations.

Even Fox News admits our wait times are often longer than some countries with socialized medicine.

But if we filter out the uninsured and just focus on the insured upper/middle class, surely we’ll all admit we have some of the best health care in the world. A study published in 2007 cancer survival rates suggested the U.S. performed considerably better than Europe.

These rates appear so much higher, it suggests the number of lives our superior care saves outweighs the number of lives lost due to lack of insurance.

But that’s not the whole story. An analysis of the cancer study by Factcheck shows many non-European countries with socialized medicine to be competitive with the United States in cancer survival rates. They also point out that Europe has improved dramatically in the last 30 years making the current rates much more competitive.

Furthermore, if you read the abstract of the actual study, it says:

To compensate for wide international differences in general population (background) mortality by age, sex, country, region, calendar period, and (in the USA) ethnic origin, we estimated relative survival, the ratio of survival noted in the patients with cancer, and the survival that would have been expected had they been subject only to the background mortality rates.

This means they expected Americans to die sooner due to our lower life expectancy, and tweaked the figures accordingly… but of course, one of the reasons we have a lower life expectancy is because more of us get cancer. That should not affect the results of any individual life expectancy. So either I’m misreading their abstract or they are purposely tweaking the results to favor our system.

Lastly, the study measured only “five year survival rates”. So it’s entirely possible that those lives considered “saved” by the statisticians died shortly after the five year period.

But regardless of these shortcomings in the study, we must admit that America still leads the world in new medical technology. Yes, we pay over twice as much per capita for our health care, and leave millions of the poor to die, but if you can afford the latest and the greatest medical technology, America is the place to be.

So the more nuanced question is: Would switching to socialized health care stifle our innovation?

There’s a case to made that the only reason other countries can offer competitive health care at lower rates is because they’re riding on our coattails:  Drug and medical companies pour billions into R and D because they can earn billions of profit in America. Other countries bargaining for lower prices still benefit from these new drugs and technologies; they just don’t pay as much. This is why they can produce comparable results for such little money. They’re “drafting” off of the U.S., like a lazy biker. If America, the last great cash cow, were to suddenly start bargaining for lower prices too, the innovation would dry up, and everyone would suffer.

To my eyes, it’s the most interesting conservative argument… It’s little wonder I’ve never heard it. They’re too busy ranting about imaginary death panels. The simple truth is, right now R & D costs are paid with profit. You remove one, and remove the other.

But surely we can stimulate innovation in different ways. Mankind’s greatest achievement, setting foot on the moon, was not a “for profit” venture. Nor was our most terrible invention: The atom bomb. And it’s worth noting, many, if not most, scientific discoveries come from non-profit institutions: Academic universities.

Maybe humans aren’t the selfish profit-zombies libertarians make us out to be. In fact, many studies suggest the profit motive stifles creativity.

In fact, it’s questionable whether it’s even possible to apply the term “Free Market” to health care at all. A free market requires free choice and products people can afford. But no one chooses to get sick or injured. And when they do, no one can afford the half a million dollar hospital bills so often received.

I think it’s becoming increasingly obvious that answer to the problems in American health care lie in some sort of combination of a free market and socialization.

Right now, there are 3 basic types of health care in the world.

1) Government Run. In this system, the government is in charge of all aspects of health care. This is similar to how we run our Veteran Affairs in America. Some like to point out that our veterans have some of the  best hospitals in the country; others like to point out that they are woefully under funded. Government run health care is also similar to what they have in the UK.

2) Single payer or, on a more limited basis, the “government option”. This system uses private hospitals and doctors, but in a single payer system, the government replaces the insurance companies. In the more limited “Government Option”, the government competes with insurance companies. This is most similar to Medicare in America. It is also what they have in Canada.

3) Private hospitals and private insurers. This is what we have now. We are the only industrialized country in the world to stick to this model.

The two most appalling atrocities that need to be addressed are:

1) We need to allow people with pre-existing conditions to attain coverage.

2) We need to cover the uninsured.

I think “single payer”, or the more limited “government option” are the only systems that retain most of the strengths of the free market while addressing those two issues.

Unfortunately, this entire discussion is merely academic. The current bill under consideration contains only a watered down public option that will ironically cost more than something larger. The actual promise of universal coverage comes from an “insurance mandate” which would fill the coffers of the greedy and corrupt insurance companies that are at the root of the problem. The only effective means they have to lowering costs is to deny care.

Make no mistake, politicians (Republican and Democrat alike)  are owned by corporations.