More "Health Care Mythology"
by Clifford Asness, PH.D.
Myth #4 Socialized Medicine Is Better Because Their Cost/GDP For Health Care is Lower
The favorite statistic of fans of socialized medicine is that in the US we spend more as a
percentage of GDP on health care than in many countries with ?universal coverage.? I do not
argue with their statistics, but their logic is, as usual, way off. Warning, this list of why these
cost/GDP numbers are misleading is long, here goes...
? Measuring cost/GDP is inaccurate as it leaves out most of the cost, the cost of lower GDP
growth. As one would expect, countries with larger government sectors (including
socialized medicine) generally seem to experience slower GDP growth. People are great
at measuring costs that they easily can look up, but those are not all the costs!
? If I?m right about the US subsidizing the world of course their costs would be lower!
? Many of the countries we are being compared with come from, frankly, healthier cultures
than ours. I do not think the government should be allowed to make, for instance, your
health vs. fast food trade-off for you. If free Americans more often than others go for the
Wendy?s Triple w/ Cheese like I do, our cost/GDP will be higher. Freedom sometimes
ain?t sugar-free. By the way, if we change our system to socialism, but these habits
persist, our costs will still be higher. So, here come the diet and exercise laws...
? I do agree the US system could be better. I mention this again at the end, but I do not
think health care should be tax-free if provided by an employer. Being provided by
employers in the US leads to over-consumption (as it?s pre-tax and the marginal cost of
service is lower to the consumer), and worse, does indeed help lead to the fractious less
efficient organization of insurance (and the famous, and real, ?portability? problem). I
certainly agree that this structure raises costs, but if you have a simple problem like this,
you fix it, you do not say ?hey, let?s try communism.?
? A large fraction of health care costs are sadly in the short period before death from long-
term illness. If socialized societies ration these costs then their total cost/GDP could
indeed be lower than in the US. But, I can not see disallowing free people from spending
their own money on their last few months of life. If people have what economists would
call a ?taste? for this (in this case the word seems callous but it?s accurate) then a free
system could indeed voluntarily choose to spend more per GDP on health care. That is
not a bad feature of the system. It?s a wonderful feature of the system, as it allows
someone who spent a lifetime saving for retirement to use a little bit of that to live a bit
longer if it?s their desire. Just because you (perhaps) do not agree with the choice does
not mean you have a right to dictate to these people.
? As I mention again near the end, we also have a true cost problem in this country
emanating from our insane tort system. Some argue that this is exaggerated as they
measure the cost of the literal payouts to plaintiffs and say that while it is higher here
than in other countries it is not enough to explain our cost differential. But, again, they
only measure what they can see and fail to account for the massive cost of ?defensive
medicine? we force doctors to practice in anticipation of these tort lawyers. This indeed
makes our cost/GDP spent on health care too high, but the solution is again not the gulag
for us all, but perhaps only for half of the American Bar Association (ok, just cap their
awards, that would be fine).
? I admit this is near a matter of religion for me, but do fans of socialized medicine really
want to argue that if both were properly organized and not fettered with things like
voracious ambulance chasers, that the government could deliver material goods and
service, like health care and drugs, cheaper and more efficiently, for the same efficacy, as
the private sector? Really? Wow, even writing this essay, I just didn?t think anyone
could really believe that... And, by the way, by ?religion?, all I mean is I?m really sure,
it?s fact not faith based!
So, all considered, we should indeed be measuring our cost/GDP, and within a free system
attempting to keep it reasonable through reasonable policies (like rational tax and tort policies).
But a dictatorial socialist system is unnecessary for this purpose. It?s only necessary to enslave
the population.
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Note that doctors also get paid comparatively very little in these countries. This was a bait and switch on the
current generation. It remains to be seen if it can be done again to the next generation, though one has to presume
not. The best and brightest will choose other careers. Another reason why the future for the socialized medicine
Nordic El Dorado is less bright than it's current reputation.