HOW TO PAY FOR HEALTH CARE -
The Moral Case For Private Health Care
by Dr. Lawrence Wilson
© August 2019, LD Wilson Consultants, Inc.
Some Democratic Party politicians are offering “free” health care for all Americans. Some nations already have what is called nationalized or socialized medical care. This article discusses exactly what this means and how it works.
ONLY TWO WAYS TO PAY FOR HEALTH CARE
In reality, there are only two options to pay for any service, including health care. These are:
1. You pay for it directly. This is called fee-for-service, free market, or private health care. It includes buying health insurance if one wishes.
2. You pay for it indirectly. This is called socialized, nationalized, universal or single-payer.
In this case, the government forces everyone to pay a high tax. Then they set up a bureaucracy to administer health care that costs millions of dollars a year to run. Then the bureaucrats pay the medical people and the hospitals, and control everything.
Note that there is no free health care. Doctors, nurses, administrators secretaries and many other people must be paid for their time. In addition, buildings must be paid for, drugs must be paid for, and much more. Thus, any politician that offers free health care is lying.
ADVANTAGES AND DISADVANTAGS OF EACH METHOD OF PAYMENT FOR HEALTH CARE
Advantages of private payment are:
- You choose what you buy. This includes the kind of health care, the amount of care, who will be your doctor, when you get the care, and where you get the care.
- There are incentives to save money. It is your money and you can oversee exactly how your money is spent to be the most efficient and cost-effective.
- Innovation. Competition in the marketplace between health care providers tends to continuously improve the quality and types of services available in order to attract your business.
- Control. Most important, you are in control of your health care.
Disadvantages of fee-for service care are:
- Uneven. Some people have more money than others, so they can spend more on health care than some other people.
The ways this problem is handled in America and other nations are:
1. Private charities, churches and foundations are available to help those who have less money.
2. Some doctors, clinics and hospitals will adjust their fees to accommodate those who have less money.
3. In America, the government forces all hospitals to provide basic care for everyone at no or little cost if they cannot afford to pay.
Advantages of single-payer or socialized health care:
1. In theory, everyone is treated the same. However, this is not really true. In Canada and Europe, for example, wealthy people can go to a few private hospitals. This is true around the world. In fact, in all nations with socialized medicine, there is a two-tier system – one for the wealthy and one system for everyone else.
2. Health care seems free or almost free. This is illusory, however. Nations with socialized medicine such as Canada, Europe, Australia and others all must have high taxes to pay for their health care system.
3. Easy. You don’t have to think about or shop around for health insurance, for doctors or other health care options. You get what the government gives you.
4. More buying power. When there is only one payer, they have more control over the price of some items. For example, a single payer can often negotiate a cheaper price for drugs. Insurance companies sometimes do the same thing in a private health care system.
5. No profit motive. The fee-for-service system allows medical personnel and hospitals to charge as much money as they wish. Some say that this drives up costs and this factor is not present in government-run health systems.
In reality, however, if there were a free market in health care, there would be plenty of competition between care providers and hospitals, so they could not charge whatever they wish. This was the case in America for 120 years.
The problem is that the medical and hospital licensing laws, passed about 100 years ago in America, get rid of the competition in doctors and hospitals. This destroys the mechanism that can control prices. For fee-for-service to work properly, these laws have to be repealed.
These laws certainly do not protect the public, as they claim to do. In fact, they were put in place in America expressly for the purpose of helping doctors make more money. If you do not believe this, read about the history of the American Medical Association in a book called Patient Power by John C. Goodman and Gerald L. Musgrave (1992).
Disadvantages of socialized medicine:
1. The incentives are scary. For example, it is in the government’s financial interest to offer as little health care as possible in order to save money.
Also, the government has no need to treat you kindly and compassionately because they are not trying to win your patronage or get repeat business. You are just a burden to their system.
2. All government programs are very inefficient because they are subject to waste, fraud and abuse. These are serious problems of all bureaucracies. The cause is difficulty policing the system from a far away office, and there is little incentive to police the system well.
Waste. This means the waste of money and resources. Bureaucracies have no incentive to save money. If they run out of money, they just raise taxes on you to get more of it.
Fraud. This means cheating. It is easy to cheat the government and again, the bureaucracy has little incentive to stop fraud. They just ask for higher taxes to pay for it.
In America, for example, experts estimate that cheating by doctors, clinics, hospitals and others adds at least 15% to the cost of Medicare and Medicaid. These are socialized programs for the elderly and the poor in America. If my math is correct, this amounts to about $225 billion dollars every year in America alone.
Other abuse. This means incorrect practices and other things that go on, again because there is little incentive to check and because it is difficult to check everyone from a central office that can be thousands of miles from the site of health care.
3. You are out of control of your health care. This is the worst problem and it is a primary moral issue. With government-controlled health care, the government controls everything – how much, where, when and with whom you will get care.
The people are completely out of control and make very few, if any decisions about their treatment. This is a serious moral issue because being in control of one’s life is a basic value. None of the other arguments for socialized medical care are nearly as important.
4. Rationing. All socialized, nationalized or universal health care systems ration health care. This is part of their budgeting process. What it means is they decide that, for example, if you are over 55, you don’t qualify for organ transplants, or surgeries, or tests, or whatever they decide. It is an important way that they throw the people out of control of their lives.
Politicians routinely promise that their proposal for single-payer care will not ration care. This is always a lie. They all do it and they must to control their budget.
5. Getting rid of the profit motive is also a problem. The profit motive is an important part of economic liberty. It helps those who work hard to earn more money and it motivates people to learn more, to innovate, and to work harder. It is an essential part of the way a modern society evaluates its goods and services.
Without it, there is much less motivation for people to excel and to work hard.
In fact, government health care is always really just a way to control the people. It is very effective for this. If you don’t go along with what the government wants, they can scale back your health care and let you die. This sounds cruel, and some will say it cannot occur. However, it does occur in all nations with socialized medical care.
WHAT ABOUT THE “RIGHT” TO HEALTH CARE?
This is another confusing political issue.
There are two possible ‘rights’ to health care.
Right #1. The right to choose your health care. This is what occurs in a free market, fee-for-service, or private health care system. You have the right to choose what, where, when and who will provide care.
This right is very good, costs the taxpayers nothing, polices the system to stop waste, fraud and abuse and puts you in control of your health care.
(You don’t totally have this right any more. In the past 100 years in America and for even longer in some other nations, medical licensing laws forbid many people from offering care. You only get to choose between the licensed personnel.)
Right #2. The right to some amount of goods and services. This is what the Democrats and socialists offer. The problem is that you cannot predict what you will get and the government always decides how much care you will get, and where, when and with whom you will get it.
This is actually an inferior ‘right’ that takes away the first right above. It is often just the right to stand in line.
Canada is experiencing this right now. The government is cutting back on the amount of staff at their hospitals and offering less and less care.
So please do not vote for anyone who promises “Medicare for all” or “universal” health care.