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Tags: healthcare | single payer | socialism | private insurance

The Seductive Charm of Promising Something for Nothing in Healthcare

The Seductive Charm of Promising Something for Nothing in Healthcare
(Tzogia Kappatou/Dreamstime.com)

By Friday, 10 May 2019 03:17 PM Current | Bio | Archive

My Dad, of blessed memory, advised that in this world you never get something for nothing. Indeed, getting something for something was also an achievement. His wise lesson applies to so many things in life, including healthcare.

Perhaps this was the choice rock icon Mick Jagger faced when he came to New York City for his heart operation. He could have availed himself of the UK’s ostensibly free healthcare, already paid for as a part of his taxes; yet, he elected to have the operation in the United States, instead. Why didn’t he have it performed in the UK, if that socialized healthcare system was so good? Unless and until the advocates for a single payer system can satisfactorily answer that simple question, it stands as a striking rebuke to their unquestioning pronouncements about how single payer is superior. It might cost less, but that is because it delivers less. Given the choice, a knowledgeable person, unburdened by ideological baggage, would opt to obtain the best medical care, as presumably Mick Jagger did; and that’s the point.

Our healthcare system costs more but it delivers more too. Whether there are ways to make it more competitive and efficient is a separate question. However, assertions about how the system must be scrapped to afford everyone equal access to healthcare are just misguided. Consider the starting premise about access to healthcare.

Congress, more than thirty years ago, made it the law of the land, that no hospital, be it public or private, whether for profit or non-profit, could deny a person emergency medical care, no matter his or her ability to pay. In effect, it mandated medical treatment first and then only later could consideration be given to payment. The U.S. healthcare system may cost more than other systems, but it affords actual access to care.

This is in stark contrast to the Canadian single payer system. In a thorough and scathing analysis of the Canadian Healthcare system, the Supreme Court of Canada pithily concluded access to a waiting list was not access to healthcare.

This is one of the inherent problems of government-controlled socialized medicine. Unlike the free-market, where supply and demand interact to yield equilibrium at a given price, socialized medicine begins with the government budgeting the amount it is willing to spend on healthcare. In essence, it artificially fixes the total supply of healthcare in the nation. The result is effectively to prevent a person (or group of charitable people willing to finance the care of a person) from paying more to get more healthcare. Supply cannot just flexibly grow to meet demand, as it does in a free market environment. It is controlled by the single payer government establishment in charge of healthcare, which is itself shackled by its budget and annual or multi-year plan. It’s a monopoly and no other suppliers are permitted in the single payer dominated marketplace, which prohibits competition. Medical care is, therefore, necessarily rationed, within these artificially limitations. It costs less because it delivers less. The immutable rule that can’t get something for nothing prevails.

Thus, people are forced to wait often unreasonable periods of time to be seen and then treated.

The results of having to wait are sometimes catastrophic.

Then there is the problem of triage. It is not just first come first serve; but, rather, who is perceived as being more deserving of care. Older people, with heart conditions or desiring medical procedures to improve their quality of life, might find themselves having to wait endlessly in favor of those deemed more fit. This is sometimes derogatively referred to as so-called death panels, because this is often the outcome yielded by these difficult triage decisions.

A whole system of ethical and other considerations has developed in societies, like the UK, burdened by socialized medicine, which are unfamiliar to most, here in the U.S. From time to time, a particularly difficult or sensitive case might be accorded notoriety, like the one involving an infant where, despite the parents’ pleas that treatment be continued, care was terminated. This is an unfortunate feature of single payer systems, which perforce must consider denying life-sustaining treatment, based on whether the expected benefit justifies the cost to the public health system. These day-to-day decisions, which define when and if a person will receive care or treatment, typically don’t receive the same kind of publicity. Nevertheless, they are no less dictatorial.

It is respectfully submitted that the conditions requiring these triage decisions are self-induced. It is inherent in the very nature of a single payer system, which first determines how much the society will spend on healthcare and then rations it. It can deny a person the individual freedom to choose to pursue a potentially life-saving procedure, because some other person in charge deems the expected benefit too nebulous or not worth the cost.

Mr. Jagger, at age 75, decided to have his heart valve operation done at Columbia Presbyterian, here in New York City. We don’t know why; but it is, after all, a world-class medical center, with some of the finest heart surgeons in the world. It also offers the ability to have a state of the art, minimally invasive, heart valve replacement procedure now; not at some later indeterminate date or never, based on triage and other considerations applicable in the UK.

We are blessed to have virtually unrestricted access to and non-rationed healthcare. Why, therefore, suggest we wholly discard a system that attracts so many from around the world, including Canada and Europe, in search of quality and available healthcare? Why not just concentrate on fixing the problems, which relate to cost, not accessibility?

An analysis of Denmark, often cited as a model, might be helpful in providing some compelling insights. First of all it is important to recognize that Denmark is not a socialist country, per se, nor does it have a single payer healthcare system.

It does have a compulsory public healthcare system that covers only citizens and permitted residents, not undocumented immigrants. It is financed with a national health tax, at the rate of 8% of income, whether or not the person carries any private insurance. However, many items typically covered under an employer furnished healthcare insurance plan in the U.S. are not similarly covered under the Danish system. Thus, for example, the Danish system requires a very substantial co-pay for drugs and it does not cover dental care or physical therapy. It is also burdened with the proverbial problem associated with public healthcare systems of waiting lists and long waiting times; but it does permit a private option. Diagnostic tests that we take for granted, such as MRI’s, are also limited. Thus, the actual annual cost of healthcare is significantly higher than the amounts generated by just the healthcare tax.

In this regard, it should also be noted that over 25% of the Danes also purchase separate private insurance coverage and more than an additional 35% receive some form of subsidy for services not fully covered by the state, provided almost exclusively by charities. Said another way, the Danish public health system does not appear to be sufficient, since more than 60% of the Danes have some coverage outside of it.

Denmark has, however, adopted a cost saving measure that we should consider emulating, which does not reduce the level of healthcare services delivered. This is its system of tort reform, which helps reduce costs. It is akin to our no fault insurance arrangement, which limits litigation costs and recoveries. Besides the savings in direct costs, there are also indirect cost savings derived from eliminating the need to practice so-called defensive medicine.

There are other cost-saving measures, which can be adopted here in the U.S. that might actually foster improvements in the delivery of healthcare services. It begins with reinstating a free market in healthcare, which has been severely restricted by a number of anti-competitive practices and laws, creating virtual monopolies in many local healthcare markets. These include certificate of need laws in many states, designed to prevent competition; but more on this in my next post.

Leonard Grunstein, a retired attorney and banker, founded and served as Chairman of Metropolitan National Bank and then Israel Discount Bank of NY. He also founded Project Ezrah and serves on the Board of Revel at Yeshiva University and the AIPAC National Council. He has published articles in the Banking Law Journal, Real Estate Finance Journal, and other fine publications. To read more of his reports — Click Here Now.

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Our healthcare system costs more but it delivers more too. Whether there are ways to make it more competitive and efficient is a separate question.
healthcare, single payer, socialism, private insurance
Friday, 10 May 2019 03:17 PM
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