Socialized medicine articles

From National Review Online Socialized Failure by John C. Goodman

The health-care systems of all developed countries face three unrelenting problems: rising costs, inadequate quality, and incomplete access to care. A slew of recent articles, published mainly in medical journals, suggest that the health-care systems of other countries are superior to ours on all these fronts. Yet the articles are at odds with a substantial economic literature.

What follows is a brief review of the evidence. As other writers demonstrate elsewhere in this issue, the American health-care system has plenty of problems. But it is not inferior to other developed countries’ systems — and we should therefore not be looking to these systems, most of which are characterized by heavy government intervention, for inspiration.

Scott Atlas at the NCPA concludes:

Conclusion. Despite serious challenges, such as escalating costs and the uninsured, the U.S. health care system compares favorably to those in other developed countries.

Wall Street Journal

But the comparison between public and private plans is a false comparison. Private insurance and public benefits are not the same business. For all its warts, private insurance tries to manage care. Medicare is mostly about paying the bills presented to it.

Many who favor a public plan as part of comprehensive health-care reform dismiss the administrative "overhead" of private plans as having little or no value. Ways and Means Health Subcommittee Chairman Pete Stark (D., Calif.), for example, insists that "most private plans are poorly managed." Contrasting them with the supposedly sleek and efficient Medicare program, he labels commercial insurance "the General Motors of medical care."

In fact, the administrative expenses of private insurance plans represent money well spent for their members. Here are four reasons:

First, private insurers must build provider networks. These networks can include high-value providers and exclude low-quality providers. Except for certain circumstances, including criminal acts, Medicare is forbidden from excluding poor quality providers. It lets in everyone who signs up. So one question to ask is, will the public plan have Medicare's indifference to quality -- or invest in the cost of a network?

Second, private insurers must negotiate rates. Medicare just fixes prices using a statutory and regulatory scheme. And anyone who imagines a public plan would be less costly than private plans must keep the following issue front and center: In the many procedure categories where Medicare's statutory price does not cover full provider costs, shortfalls are shifted to private payers who end up subsidizing the public program. So, will a public plan negotiate rates or simply use fiat as a means of gaining subsidies from private insurance?

Third, private insurers must combat fraud -- or go out of business. Indeed, these payers have every incentive to invest in antifraud personnel and strategies down to the point where return and investment are equal. But anyone who thinks that a public plan could serve as a "yardstick" for the private sector needs to consider Medicare's dismal record with regard to fraud, waste and other abuse.

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Fourth, private insurers must incur the administrative cost of marketing. Medicare, of course, does not need to market. A public plan competing with other alternatives would have to market itself to the public, and this means tax dollars used to advertise against private plans. Or the public plan could "compete" by using heavily subsidized marketing channels not available to private insurers, such as Social Security mailings, welfare offices, unemployment check stuffers, and the constellation of government-funded "advocacy organizations."