When we talk about socialized health care, democratic socialists may call it by other names that mean the same thing, such as “Medicare for all” or “single-payer health care.” They all mean basically the same thing. So, how would this kind of set-up work? And why doesn’t it work in real life?
Usually there are five points that go something like this: 1) Instead of having several different insurance companies compete against each other for customers, we’ll require that they all merge together into a single entity. 2) Instead of it being a privately-run organization, we’ll make it a government-run organization. 3) Instead of people paying premiums for their health insurance to a privately-run insurance company, they’ll pay for it through their taxes, which means we’ll have to raise taxes to pay for this program. 4) Because the cost of people’s health care is hidden on the back end, through taxes, we don’t have to charge them anything on the front end, through co-pays, or bills they receive after the cost of insurance – that way, health care can appear free to all people, even though it’s really not. 5) In this way, we can level the playing field, and allow poor people to get the same health care provided to them as wealthier people, which they can’t in our present system.
All of this sounds really good at first glance, doesn’t it? So, let’s break down the different components of this strategy, this setup, to see how this all really works in real life, and why, in reality, this setup doesn’t ever work as planned. Let’s start with the first component.
1) The first component is: “Instead of having several different insurance companies compete against each other for customers, we’ll require that they all merge together into a single entity.“
Think about how the profit motive and competition, when both are utilized together, by businesses in a free market, plays out in real life. People go into business to make money – we’re talking about the profit motive here. When different businesses are competing for the same customer base, and they’re all trying to make money, that means they all are trying to steal each other’s customers, to gain more market share in their little sector of the market – because by having more customers, they’re making more money and more profits.
And how do businesses try to convince people to leave their competitors and do business with them so they can make more money? Several different ways: a) they try to provide a higher-quality product or service than their competitors, b) they try to provide the same product or service, but for a lower price than their competitors, c) they try to have great customer service to make sure their customers are truly satisfied, which motivate customers to stay with them and not leave and go with one of their competitors, and d) they innovate new products or services, that their competitors don’t have, that make them stand out from those competitors.
I don’t know how you perceive those four things I just mentioned, but all those things, to me, are better for people than not having those things. Competition in a free market basically takes greed, and channels it in a way that is useful and beneficial to the general public. And if that’s the case, the profit motive and competition, when utilized together, in a free market, are inherently pro-people, or people-oriented.
Socialized health care wants different insurance companies, that are all competing with each other for customers, which they do to try to make more profit, to merge together into a single entity that controls the entire market. Or, they want to start from scratch and create a new government-run agency that controls the entirety of the market, while letting the privately-owned insurance companies go kaput.
So, what we’re talking about here is one entity having a monopoly on the entire market rather than having different companies compete with each other for market share. And how does a monopoly work?
Since a monopoly, by definition, already controls the entire market share of an economic sector, customers have no choice but to do business with them – they can’t leave and go to a competitor, because none exists. Hence, monopolies have no motive to reduce costs, improve quality, have good customer service, or innovate with new products or services like they would if they had competition trying to steal their market share.
The profit motive is still present in a private for-profit monopoly, but it plays out differently than in a competitive market. A monopoly can study and utilize supply and demand forces in the market and use that to determine the highest price they can extract from customers to maximize their profits. They may also cheapen the quality of their product or service in order to reduce production costs so they can maximize profit that way. Compare that to a competitive market, where competitors do everything to become more efficient and cut costs to be able to charge as low of price to customers in the hopes of getting more customers.
In summary, monopolies end up having overpriced goods or services, low quality, horrible customer service, and having no motivation to innovate because they already control the market – all of these things to me appear to be inherently anti-people, precisely the opposite of being people-oriented, that is, not in people’s best interest.
So, proponents of socialized health care want to eliminate the profit motive and competition in the health care market, and replace it with a monopoly, and somehow, they think doing so would be in people’s best interest, which, if my argument is correct, isn’t. But they don’t stop there – they want to make that monopoly a government agency or department, rather than a private for-profit organization, which is even worse. How do I mean?
This brings us to point number 2: “Instead of health care being operated as a privately-run organization, we’ll make it a government-run organization.” So, let’s talk about this.
Think about how government agencies get their money to operate. They are always trying to get more money too, except the way they make more money is very, very different than the way private, competitive, for profit businesses make more money.
First, they get their money to operate from the Congressional Budget Office, which allocates a portion of tax revenues brought in to pay for the cost of paying for that department of government. If the head of that department truly does a good job and makes that department run more efficiently, with higher quality service to American citizens who utilize that department of government, and is able to run that department for less cost than expected, that department is “rewarded” by having less money allocated to them the next year by the Congressional Budget Office. In essence, that department gets punished, not rewarded, for providing a higher-quality, more efficient service, and for lower price to the taxpayers.
When a department or agency of government wants to have more money allocated to themselves (the government agency equivalent to a private business trying to increase their profits), they need to become artificially inefficient, and “appear” to not provide American citizens with the services they’re supposed to provide them. They can then approach the Congressional Budget Office and say, “we don’t have the funds we need to truly operate properly and give the American people the services we’re supposed to be providing them. We need you to allocate more money to us next year.” This approach is quite successful, as the next year the budget office allocates more money to that department, and that department goes through a whole new round of being even more inefficient in the hopes of having even more money allocated to it the following year.
I want you to think of another aspect to this way of doing things. Government agencies won’t just go about being “randomly” inefficient; they’ll try to make sure that the most grossly inefficient parts of their agency are the parts most visible to American taxpayers – then the media can come in, do a sob story, and try to convince you that if you truly care about your fellow Americans, and have “compassion,” and want that government agency doing its job right, then you need to support more funding of that government agency. They use this approach to try to convince you to support raising taxes, and that we need to contact our Congresspeople to convince them to allocate more money to that department so they can “do their job better.” They villainize people who see right through this scam. But such an approach is, like I said, a scam, and in my opinion is quite sinister.
That’s what supporters of socialized health care want to do – take away the profit-motive and competition and create a non-competitive government-run agency that functions as a monopoly, to fund and manage our health care. Just these two aspects alone, without the other things I’ve yet to bring up, is enough to convince me that socialized health care isn’t the way to go.
ON A SIDE NOTE, if you understand my arguments, then you know how inefficient our government is. In my opinion, our government could provide all of the functions it presently provides, with more efficiency and higher quality, for 50-75% less cost than they presently operate. If we did operate more efficiently, we could provide the American people with more government functions than we presently provide, that we can’t presently afford because of our wasteful spending, while simultaneously being able to lower taxes, which would help boost our economy and our prosperity. How do we make our government more efficient with its resources? We could start by giving rewards for discovering inefficiencies – for example, Amanda discovers that if her department stops doing “x,” that the department would save $400k per year. She gets 10% of that first-year savings as a reward, and another 10% of first-year savings are shared by other workers in her department. We should also find innovative ways to bring competition into government agencies.
This brings us to point number 3: “Instead of people paying premiums for their health insurance to a privately-run insurance company, they’ll pay for it through their taxes, which means we’ll have to raise taxes to pay for this program.” I’ve already talked about raising taxes a little bit, but I’ll talk about it some more now.
This is actually a shorter point to make. If you want all people, such as those in the black community, to thrive and prosper, then you need to create the type of environment where businesses thrive and prosper. Whether you like it or not, both of these things are inextricably linked to each other. If you create an environment where businesses don’t thrive and prosper and grow, it will mean lower wages, more unemployment, and more poor people. Whether you like it or not, our best interests as individuals are tied to what’s in the best interest of our business community – that is, improving trade and commerce.
And what kind of environment allows businesses to grow and prosper? The kind of environment that increases their profit margins, because the more profits they make, the more they can reinvest back into their businesses, which means more jobs, higher wages for their workers, more training for their workers (which makes them have higher personal capital), more machinery, new construction, etc.
Keep in mind that when the demand for labor is higher than the supply of labor, as it is in the kind of business environment where businesses are growing and thriving, it drives up wages for the working class, which allows them to be more prosperous. This is what I mean by higher wages for workers.
And what kind of environment allows businesses to have higher profit margins? Lower taxes and limited amounts of government regulations help to improve the profit margins of businesses. Higher taxes and excessive regulatory structures do the exact opposite.
And how do you pay for socialized health care? By raising taxes. All to pay for something that’s set up in such a way to be inefficient, low quality, and wasteful. In the end, you have socialized health care, but an environment that hinders business growth and the prosperity of its citizens, which could eventually lead to less tax revenues being collected to pay for socialized health care, which means we’ll have to raise taxes even more to pay for it, which hinders business growth even more – hence the downward spiral into oblivion if we’re not careful. This is indeed a great problem with socialism in general, but even more so with socialized health care.
This brings us to point number 4: “Because the cost of people’s health care is hidden on the back end, through taxes, we don’t have to charge them anything on the front end, through co-pays, or bills they receive after the cost of insurance – that way, health care can appear free to all people, even though it’s really not.”
This idea, at first glance, sounds great, doesn’t it? Go to the doctor, or emergency room, or have some surgery done, and you don’t have to worry about some bill coming in the mail or some co-pays at the beginning. It all sounds wonderful, right?
It sounds great until you see how it plays out in real life. When we look at other countries that have tried, or are still trying, socialized health care, over the course of the past half-century or so, we notice that the same problem occurs every time. I’m not kidding – every freakin’ time. So, let me set this up for you.
Imagine a local McDonald’s near you is offering free Big Macs. What do you think would happen? After the word got out, that restaurant would soon be overwhelmed with massive amounts of people who want their free Big Mac. The number of people coming to get their free sandwich will be a lot higher than the number of people coming to get a sandwich that they would have to pay for.
Why is that? It’s based on the simple market mechanism of demand. In a market economy, if you raise the price of a good or service, there will be less demand for it – less people will pay for it. Inversely, if you lower the price of a good or service, the demand for it will go up – more people will pay for it.
Businesses tend to base the price of their good or service on supply. If a business has a large supply of a good, and they want to get rid of it, they will lower their price for that good, and more people will buy it. If a supply of a good is low, a business will raise the price to try to reduce the number of purchasers to match their lower supply.
With this in mind, I have a question: if lowering the price of a good or service increases the demand for it, that is, increases the number of people wanting that good or service, what do think happens when you lower the price to zero, that is, you make a good or service appear like it’s free, like McDonald’s offering free Big Macs? What do you think happens?
The demand for that product or service skyrockets. People go “hog wild” for that thing. Well, the same thing holds true for health care. The cost that people know they pay for their health care helps to control the demand for that health care. (Yes, the price of health care in the U.S. is way too high, but there are reasons for this problem that I’ll talk more about later. Now, to get back to the subject…) If you make health care appear free, the demand for health care goes “hog wild,” because people think its free, so they overuse it.
This scenario has played out countless times with every single country that has ever tried socialized health care. Before socialized health care is installed in countries that go that direction, the government makes predictions about how much it will cost – that way they can determine how much money will be needed to pay for it. The problem, though, is that this determination about how much it will cost is based on how much people use health care before its socialized, which is based on market demand, which itself is controlled by people knowing that it will cost them money.
When socialized health care is installed in a country, government leaders are shocked at how fast the demand for health care quickly surpasses even their wildest expectations. The demand goes through the roof, goes sky-high, goes “hog wild.”
Before you know it, a nation is spending much, much more of their tax money on their socialized health care than they had budgeted. Making health care appear free makes demand for it much higher than they ever anticipated.
Before long, the government is struggling to figure out how to control the amount of tax dollars, the amount of expenditures, that are spent paying for government-run socialized health care. They need to get their spending under control. So, how do they do it? Two different ways.
First, they start “rationing” health care. For example, a hospital may be limited to performing only 10 knee replacement surgeries a week, even though there might be a need for 30 – this means you have to wait in line to get a needed surgery done, all because the government is trying to control their health care expenditures. It’s common to hear stories of people in countries that have socialized health care to have to wait months or years for a surgery that in the U.S. could have been done in a few days, or even immediately if need be. You often hear of people dying in these countries while waiting for treatment in what would be quick and routine treatment here in the U.S. For example, in the U.K., about 25 percent of cardiac patients die while waiting for treatment. How is having to wait a long time for something that in this country you could get done right away prove that socialized health care is better for us, and the way to go? When people die waiting for treatment, is that supposed to be proof of “compassion?”
Secondly, they impose “price controls” to keep costs down. This idea sounds good at first, until you realize how these price controls affect health care. For example, they’ll put price controls on how much they’ll pay for a surgery, which ultimately means that hospitals have to “skimp” to make sure they stay within costs. They’ll put price controls on how much they’ll pay surgeons to perform surgeries, meaning doctors won’t make as much money as they could in other countries – before you know it there’s a “brain drain” and a doctor shortage as they leave for greener pastures in other countries where they can make a higher income. The same goes for nurses – as nurses have left Canada, and their government-imposed price controls on nurses’ salaries, Canada has suffered from a nursing shortage.
There’s also the fact that putting price controls on products and services has the same impact as lowering prices in a market economy – it increases demand for those products and services, which means, when it comes to health care, that even more rationing needs to be imposed to control government spending. This rationing has a negative effect on that state’s health care.
Because these governments are always trying to control spending by putting limits on how much hospitals spend, etc., this always creates shortages – not just nursing shortages – which causes lots of problems. For example, you’ll find that in Canada north of us, they are always issuing shortages – for example, hospital bed shortages, medicine and drug shortages, doctor and nurse shortages, etc. Sometimes these shortages force hospitals to cancel surgeries or cause them to release patients early to free up that patient’s hospital bed for someone else.
Wealthier people in these countries, because of the waiting times, and the lower quality of their health care, will often leave the country and pay to get their health care done somewhere else. For example, a while back rock star Mick Jagger came to the United States to get a heart surgery done – why didn’t he just get it done in the U.K.? Because he would have needed to wait months or years, and the quality of his health care would have been low. Not a “price” he was willing to pay.
In countries that practice socialized health care, not only does demand go through the roof, but because it appears “free” to customers, doctors often prescribe massive amounts of unnecessary tests, which if you add that alongside the rationing system, greatly reduce the ability of people who truly need certain tests, or other medical treatments, to be able to get them, or make them wait an inordinately long amount of time, which helps to further increase their mortality rates. How’s that for compassion?
All of this makes the quality of health care suffer under socialized health care. And this problem has happened every single time a nation has gone down the road of socialized health care. Every. Single. Time. Do we have to repeat the same mistakes as every country that has ever tried socialized health care, or can we learn from the mistakes of others and avoid them?
Because of these reasons, you’ll find that in countries like Canada and the United Kingdom that health care is far more expensive, and the quality of the health care is far less, than it would be if hospitals, health care systems, and doctors, had to compete for patients based on their prices and their quality.
Okay, now let’s get to the last point, number 5 on my list: “By having socialized health care, we can level the playing field, and allow poor people to get the same level of health care provided to them as wealthier people, which they can’t in our present system.“
First, let’s talk about our present system of health care. Right now, hospitals are required by law to give needed health care to people even if they can’t pay. That means that the costs of health care for those that are too poor to pay themselves are absorbed into the costs of those that can pay. In this way, the “haves” are actually helping to take care of the “have nots.” In this way, we could actually argue that we already do have a level playing field between the “haves” and “have nots.” Both actually do get the treatment they need if they really need it.
You’ll find that across Europe, due mainly to socialist propaganda, there is a myth that poor people and the elderly don’t receive any health care at all here in the United States even though they are required to by federal law. Not only that, but many elderlies receive health care coverage through Medicare and Medicaid – they are highly flawed socialist programs that work badly but provide health care coverage for lower-income and over-sixty-five groups of people. Let’s bust that myth right now.
And if you think that socialized health care will level the playing field between the “haves” and “have nots,” you’re absolutely wrong. I’d love to say that you’re right, I really would, but I can’t based on the facts, that is, the realities of how politics and government really work in real life, and the evidence that comes pouring in from countries that have socialized health care.
What tends to happen is that hospitals in wealthier districts are better equipped and higher quality than hospitals in poorer districts. They’ll have more doctors available, more staff present, more resources at their disposal, and wait times for treatment that are far shorter than the wait times at hospitals in poorer districts.
You know that whenever government allocates their resources for anything, including health care in countries that have socialized health care, those that are more affluent always get a disproportionately large share of benefits at the expense of those who are less affluent. And why is that? A lot of it has to do with politics – it’s usually the wealthy that fund political campaigns, not the worse-off, and so, in this case, giving them better health care is basically a “returning the favor.” Besides, if affluent areas didn’t get better health care, those politicians would quickly get replaced by ones that do give them what they want.
When it comes to socialism, the only power worth having is political power, and the affluent are always better at wielding political power than are the poor. So, no, there won’t be a leveling of the playing field, only more disparity between “haves” and “have nots.”
In many countries with socialized health care, for example, Sweden, medical care givers are told to prioritize patients based on their status as future taxpayers, meaning younger people take precedence over older people needing medical care.
What you’ll also discover is that in some countries that have socialized health care, the political elite will have their own hospitals and health care that is far higher quality than their fellow citizens receive. This means there’s still a disparity between the “haves” and “have nots,” but that disparity is now between the political elites and those not connected to the government.
In Summary
So, what did we learn today? Socialized health care, the way it’s set up, takes away the market elements that help to control costs, improve efficiency and quality, and bring about innovation, and replaces it with something that’s wasteful and inefficient and reduces quality. It becomes something run by a government agency, which makes money very differently than competitive, for-profit businesses in a free market. The higher taxes to pay for it hinders economic growth and prosperity. Because people view it as free, demand quickly outpaces government expenditures, leading to rationing and price controls. And it doesn’t get rid of the disparity between the “haves” and “have nots.”
If you think I’m wrong about all these points, please understand that, like I’ve said before, we have more than a half century of data and information from a multitude of countries that have gone down the path of socialized health care. We don’t have to approach the subject from a blind standpoint, but we can learn from others. And what can we learn from other nations that have gone down the road of socialized health care? Everything that I just told you in this article. That it doesn’t work out as well as it sounds. It never does. It actually lowers the quality of health care in a nation while hindering medical innovation.
In fact, if you do your research, you’ll find that most countries in Europe that have socialized health care are moving away from it. They are introducing market-oriented reforms that are bringing private sector competition inside the health care industry. They are learning from their mistakes all while we are ignoring their mistakes and want to repeat them. We are telling people who don’t want to repeat those mistakes that they “have no compassion” and we subsequently villainize them like they’re horrendously evil people. Seriously, let’s learn from the mistakes of others and not repeat them.
Solutions, Anybody?
So, why are our health care costs so high and out of control here in the United States? There are many reasons. One such reason has to do with government regulations and laws that limit free-market mechanisms and competition, which you need to keep prices down. Another reason is that insurance helps to hide the real price of health care from the public, which makes it appear lower cost and drives up demand, which are corrected in the marketplace by raising prices. Another is the multitude of middlemen between us and health care services, particularly when it comes to health insurance. These are three of the reasons why our health care costs are going through the roof.
Socialized health care is not the remedy to solve our overpriced health care system. I do have some solutions, though. You can find it in my article How to Substantially Lower the Cost of Our Health Care.
Thank you for your time.
