Today’s New York Times carries a piece by Krugman called “Death by Insurance.” It’s a rant in favor of the “single-payer system,” i.e., explicit socialized medicine along the lines of Canada and other countries. The article concludes with the words:
So here we are. Our current health care system is unraveling. Older Americans are already covered by a national health insurance system; extending that system to cover everyone would save money, reduce financial anxiety and save thousands of American lives every year. Why don’t we just do it?
Here’s part of the answer to Krugman’s question:
From The New York Times, February 20, 2006:
Ruling Has Canada Planting Seeds of Private Health Care
By CLIFFORD KRAUSSTORONTO, Feb. 19 — The cracks are still small in Canada’s vaunted public health insurance system, but several of its largest provinces are beginning to open the way for private health care eventually to take root around the country.
Last week Quebec proposed to lift a ban on private health insurance for several elective surgical procedures, and announced that it would pay for such surgeries at private clinics when waiting times at public facilities were unreasonable.
The proposal, by Premier Jean Charest, who called for “a new era for health care in Quebec,” came in response to a Supreme Court decision last June that struck down a provincial law that banned private medical insurance and ordered the province to initiate a reform program within a year.
The Supreme Court decision ruled that long waits for various medical procedures in the province had violated patients’ “life and personal security, inviolability and freedom,” and that prohibition of private health insurance was unconstitutional when the public health system did not deliver “reasonable services.”
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My old girlfriend moved recently from BC to Quebec, and the first time she went to see a doctor in La Belle Provence she exclaimed “And I thought BC was a socialism nightmare.”
My bigger question is, has Krugman ever read an economics book? His opinions leave me mystified. How can one have seriously studied economics, and end up a socialist/communist? The two options seem mutually exclusive to me.
What’s the point of Reisman’s example of private insurance in the Canadian model?
Queing is the byproduct of limited supply. Introducing a private system means that some people will jump the que making the wait longer for others.
Unless of course, that private insurance will pay for certain procedures in the United States.
Hmmmmmm? I guess that would mean the line would get shorter in Canada for everyone. A win win situation!
Except of course, for the slubs in the US.
Whatever happened to economics being the study of market efficiency? Isn’t that fundamentally what economists do: identify ways to maximize utility while minimizing costs?
I understand why people don’t want a totalitarian overlord dictating prices and medical care guidelines but doesn’t standardization and simplification make sense at a certain level? Is there anyone out there who feels that our current system is efficient and free of shortages, or even if US healthcare is in total that much better than the rest of the world to justify the lofty price tag? I’d like to hear from a ‘free market’ economist who has a solution that will cut our medical costs in half so we could approach the efficiency (measured in total national medical cost per capita) of the next worst industrialized nation, Switzerland, which spends almost half as much on medical care annually yet still boasts a higher life expectancy and lower infant mortality than the US.
Aside from anecdotes about ex-girlfriends in Canada and long lines in Europe, I don’t see many facts used to justify our current system in light of our rather meager overall performance.
The studies I’ve seen don’t seem to indicate that our non-single provider system is getting us much bang for our buck, which doesn’t seem very economical to me.
Damien,
You said:
I don’t see many facts used to justify our current system in light of our rather meager overall performance.
Neither do I, which is precisely why I support free marke. . . .oh, I’m sorry: were you implying that the U.S. health care system is currently unregulated by the government and therefore has failed?
If you’d like a good free market defense of private health care, do a search of this site. There are all kinds of wonderful resources (full-text books, etc.) that are available.
Rothbard on health care:
http://mises.org/Econsense/ch35.asp
http://mises.org/Econsense/ch20.asp
Others:
http://mises.org/daily/1616
http://mises.org/daily/1456
http://mises.org/freemarket_detail.aspx?control=172
http://mises.org/freemarket_detail.aspx?control=458
Lew Rockwell in “Speaking of Liberty”
http://mises.org/etexts/sol.pdf
(That’s a large document; the speech on medicine and the state begins on pg. 113)
mark and Damien,
The problems w/ US health care are due in large part to the fact that “health insurance” (there’s actually no such thing) has become a part of most employment contracts and insurers are unable to discriminate w/i the employer-based pool. Thus, young, healthy people end up paying for old, obese hypochondriacs. Also, insurance is a terrible way to pay for anything other than a catastrophic trauma or illness. Yet due to a plethora of laws and regulations, people are unable to bargain for coverage much more closely tailored to their particular situation. Private insurance has the same effect as welfare: it increases demand. Since insurers can’t discriminate against bad risks, they have no choice but to raise premiums and the cycle of high demand, high prices continues.
Quite right, Reactionary. What you’ve explained is so true, so simple, but so universally ignored. And while you have detailed how demand is artificially increased by state action, there is also the fact that supply is artificially restricted by licensing schemes and burdensome regulation.
Canada is a good lesson on the failure of socialism. Not only is socialized medicine a tyranny, it’s economically impossible to carry out. Economic laws — extensions of human behaviour — cannot be modified by acts of Parliament. There’s no law to be passed that will produce good health care (or any other service) any more than a law can change gravity or the melting point of water.
Reactionary, excellent post!
It makes sense that someone who uses more health care would want more coverage if he could get others to pay for it.
Thus the total coverage of the pool is greater then the sum of its parts.
As has been pointed out, the perversion of both the supply side and the demand side is what causes prices to increase dramatically.
Now for some anecdotal evidence. In California in the 1950′s (before semi-socialized medicine) a 3-day hospital stay to deliver a child cost about $900 in 2006 dollars (about $8000 today). Doctors used to make routine house calls for $5. My grand-uncle’s appendicitis cost him $1200 in 2006 dollars (about $6500 today). People used to pay out of pocket for routine and non-emergency visits. Harry Browne sold emergency health insurance $60/month in 2006 dollars.
No, it’s not the medical equipment that is the bulk of today’s cost. Just like computers & electronics get better cheaper, medical equipment would as well, in a free market.
To those that are concerned with health, and are unaware of economic theory can at least look at the facts. Anywhere and Everywhere that government was not involved in health care – you saw good and cheap health care.
As I argued before, the other major contributing factor to the extremely high health care costs in the US is the intellectual property laws.
And let’s not forget about the state-sponsored medical guild and the artificial restriction of supply of medical personnel.
Most illnesses do not require treatment by a highly-trained professional, all that low-grade doctors should know is to recognize when the patient needs an advice of a more quailfied doctor.
Most illnesses do not require treatment by a highly-trained professional, all that low-grade doctors should know is to recognize when the patient needs an advice of a more quailfied doctor.
This is the most dangerous statement and most profound truth. One need only read “Why we get Sick” by Nesse to understand this.
“Why we get Sick” is an evolutionary understanding of illness. The so called poor performance of US health care in terms of life expectency relative to other western countries is attributed to modern day behavior patters that the human body has not had time to adapt to.
Warning: “Understanding evolution can undermine libertarian ideals as readly as socialist myths”
Darwin takes no prisoners.
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