Monday, June 18, 2007

Socialized Medicine - Where Free Costs a Bundle

A comment on my previous entry is based on a topic of sufficient importance to warrant a separate post, not just a comment reply. The question posed by Silas Scarborough was, "Socialized Medicine - where is it?". It's a valid question in light of the rising costs of health care in the US, the outrageous cost of prescription drugs, and the devastating affect catastrophic care has on even affluent Americans.

The most fundamental problem facing socialized medicine has to do with cost. It's certainly not free, and as seen in other nations that do employ this method, neither does it guarantee adequate health care. Let's look at the UK first. The cost of socialized health care in the UK is based on income. The higher your salary, the more you pay. One responder to the question of how well it works there admitted to paying approximately $200 (in US dollars) per month, which is almost three times what I pay per month as a single employee. That makes sense since he's also paying for those that are unemployed.

The problem doesn't stop there, though. As that poster stated, "The service you are provided with depends on which area of the country you live in, we call it the postcode lottery. The more affluent areas, usually have better hospitals and shorter waiting lists." (How well does Socialized Medicine work in your country? When surgery is needed I understand that there is a long wait if the situation is not critical. How long do you wait for an office visit? What is the monthly cost? Are doctors and patients happy?.)

Well doesn't that sound familiar? So even in a country where everyone has access to health care, the quality and accessibility is still based on your own level of income and the affluence of your community. I can't say that I'm overly surprised. It's for this reason that British citizens that can afford it also maintain private insurance and don't rely on the socialized health care. In effect, they get the pleasure of buying their own and paying for those that "can't" afford it.

How about Canada, though? They have socialized medicine as well, and they are frequently the country that Americans point to as the shining example of how this should work. Well, in Quebec, public expenditure on socialized health care amounts to 29% of the provincial budget. 20% of that comes from a whopping 3.22% wage tax imposed on employers (not employees) and the rest comes from federal and provincial income taxes. It costs $1200 per year per person for this socialized system, so a family of four ends up costing $4800 per year.

Unfortunately, in Canada there is no option for private insurance like there is in the UK. It simply isn't legal. A private insurance company is not allowed to compete with the public system. According to Pierre Lemieux in Socialized Medicine: The Canadian Experience, "The monopoly of basic health insurance has led to a single, homogeneous public system of health care delivery. In such a public monopoly, bureaucratic uniformity and lack of entrepreneurship add to the costs. The system is slow to adjust to changing demands and new technologies. For instance, day clinics and home care are underdeveloped as there exist basically only two types of general hospitals: the non-profit local hospital and the university hospital."

Mr. Lemieux also points out one of the major flaws to this type of system, and it's one of fundamental economics. Since the perceived cost of health care has gone to zero, at least for those that allegedly don't have the ability to pay for health care, demand for that care increases dramatically. In Canada, public expenses for health care have increased at a rate of 9.4% annually since its inception in 1970. Because of the rising costs and increased demand, hospitals are unable to keep pace with technological advances. Between 1972 and 1980, the number of hospital beds in Quebec dropped by 21% due to budget cuts.

To control costs, Canada also instituted a ceiling on fees earned by General Practitioners. The net result is that these same GPs reduced the amount of time they spent with patients by 11%. How did Newton describe this? For every action there is an equal and opposite reaction...

The bottom line is that I agree we need to find a means of providing health care for those that truly - and I emphasize the word "truly" - cannot afford it. With unemployment under 4.5%, though, the number of people that are in that category are far fewer than one might otherwise think. Unfortunately, socialized medicine is not the solution. The net result of socialized medicine is a dramatic increase in the cost of health care coupled with a dramatic decrease in the quality of health care. That's not a combination I'm willing to endorse.


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