Crony capitalism or socialism: a false dilemma

By Leslee Kulba –

T.R. Reid’s The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care, was touted as having the power to convert any opponent of socialized medicine. Published in 2009, it tells the author’s story of traveling the globe to find ideas the United States could use to make its system better. To make the reading less dry, the author has as a subplot the quest to find a cure for the shoulder he messed up in a skiing accident.

The first part of the book follows a cadence. The author visits a country, extols the wonders of how they pay for healthcare, explains that it isn’t really “socialized medicine,” and somewhere in the last two paragraphs mentions that, by the way, the system is on the verge of being terribly bankrupt. The last chapters are merely rehash.

To his credit, Reid observed that healthcare in the United States, according to key indicators, is the worst among industrialized nations. For example, CIA data for 2006 ranked the United States 47th in the world in terms of life expectancy at birth. At 77.85 years, the US falls between Cyprus and Bosnia-Herzegovina. The average Japanese, Swiss, Swedish, Australian, and Canadian baby can expect to live more than 80 years. Looking at healthy life expectancy, or the number of years a person can expect to live without encumbering disabilities, the World Health Organization in 2000 scored Americans at 70 years, putting them in the 24th position, between Israelis and Cypriots. Japan led the world with a healthy life expectancy of 74.5 years. According to a Taiwanese study that used 2005 data, the US ranks tenth among industrialized nations in terms of infant mortality, with 6.8 deaths per 1000. At the top are Sweden (2.4), Japan (2.8), and Norway (3.1).

Other studies rank the US poorly just for being American. For example, the WHO determined the United States was number-one in “responsiveness,” but gave it poor marks in “goodness” and “fairness.” The last two criteria measured: (1) how “equally” a system treats patients of different incomes, and (2) how progressively the system is financed. WHO studies are also well-known for considering access to birth control a key criterion in comparative healthcare studies.

Besides having the worst vital statistics of any industrialized nation, the US has the highest per capita costs. According to the Taiwanese study, the US spends 15.3 percent of its GDP on healthcare. The only other countries spending in the double digits are Switzerland (11.6), France (11.1), and Germany (10.7). Taiwan, with a system the author argues is far superior to the US’, only spends 6.2 percent.

Reid complains that in other countries, providing universal healthcare is a moral responsibility. In the United States, it’s a business. Whereas insurance companies elsewhere cover costs of services, those in the United States spend approximately 20 percent of their budgets for nonmedical purposes, like profits, marketing, reviewing claims for denial, and paperwork. By comparison, Canada spends 6 percent on overhead; France, 6; and Taiwan, 2.

What Reid doesn’t mention is that if the US insurance market were truly free, rather than being highly regulated by the state, overhead and profits could rise only so high before entrepreneurs would break ground with econo-plans. People could pick and choose the services they wanted covered, and be stuck paying out of pocket for losing their gambles. This wouldn’t be so bad, because they could get the level of service they wanted. They could, for example, choose to forego today’s routine Cadillac procedures and preventive medicine performed to avoid lawsuits.

Reid doesn’t believe any country has a socialized system. For example, he claims some offer market-based systems funded by government. Despite his efforts to avoid the S-word, he points out that the US is a “crazy quilt,” offering different payment systems for citizens over 65 years old, military personnel, veterans, Native Americans, renal failure paitents, poor people under age 16, poor people over age 16, and members of Congress. Some of these systems, like the VA services, are as socialized as systems in Canada, France, or England.

Reid assumes the S-word is a good thing, without acknowledging that this country’s founding documents were designed to promote personal liberty, free markets, and limited government. State insurance regulators have fostered a system of crony capitalism that has led to the paperwork oligopolies now standing between patients and their physicians. Logic does not lead to the conclusion that an even more remote federal bureaucracy, with $16 trillion in debt on the books and more in unfunded liabilities, should be entrusted with running another 15 percent of the economy.

Socialism can work well in small, homogeneous cultures, where people of similar incomes share the same work ethic. It spells disaster for this country where hyper-regulation is eroding the middle class between the ambitious rich and the entitled 47 percent.

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