Why Socialized Medicine Does Not Work

Contrary to the findings of socialist economist Paul Krugman, the New York Times reported Monday that socialized medicine does not work! The Canadian Supreme Court last June struck down a Quebec law banning private health insurance, citing the ban as unconstitutional. The decision has sparked a renewed push for private insurance all over Canada.

The much-admired government-sponsored healthcare system has failed in its purpose to provide efficient, timely and quality care for its patients. According to Canada’s Fraser Institute, the mean waiting time was 17.9 weeks from referral by a general practitioner to treatment by a specialist. Additionally, patients were subjected to month-long waits for procedures using expensive technology, including CT scans, MRIs, and more than a three-week wait for a simple ultrasound. The wait times are clearly a threat to public health and safety. CT scans and MRIs, often used as a means of preventative medicine and early detection, may be rendered ineffective after the lengthy waiting period in a case where, over the course of 10 weeks or more, tumors can become malignant and untreatable.

Secondly, Canada’s universal healthcare system, with its constrictive rules and regulations, has stymied consumer choice in healthcare providers. Choice in physicians should be a fundamental right of patients, regardless of income, insurance provider, etc. Clearly the Canadian system has robbed patients of these rights and is in effect rationing healthcare. Moreover, the bureaucratic red tape governing the system has eliminated innovative thinking in the medical field, according to a report published annually by the Fraser Institute, "How Good is Canadian Healthcare?" It is generally accepted that free-market approaches to industry open channels for technological innovation. The nationalization of the Canadian healthcare sector prevents advances which may serve to the betterment of patients.

While the Canadian model is a well-intentioned plan designed to equalize the distribution of healthcare services, it fails to learn from the lessons of government subsidies. Without fail, every industry ever subsidized, including the steamship industry subsidies of the 19th century, Amtrak, the agriculture industry, and now the healthcare industry in Canada, has run into serious economic problems, often leading to bankruptcy. Subsidies eliminate competition in its well-intentioned attempts to level the playing field. Yet some still seem hell-bent on subsidizing industries, disregarding the fact that subsidization serves to the detriment of citizens.

Nevertheless, in a January 27 op-ed, Princeton economist and New York Times columnist Krugman vehemently defended socialized healthcare as the correct way to go about providing healthcare to every U.S. citizens. Citing the "successes" of the Veterans Administration’s health insurance plan for retired service members, Krugman based his case, falsely, in the success of the VA healthcare system. Anyone that regularly tunes into "60 Minutes" or has talked to veterans in the system knows that the VA healthcare system is an abomination. The hospitals, quality of care and efficiency of the system are paltry in comparison with the services garnered in the private sector.

Granted, Krugman’s goal of providing universal access to healthcare services is noble. However, to say that the bottom-line costs of medication, services and procedures in Canada are drastically lower than in America’s free-market system and thus socialized healthcare is needed is misleading. The price of healthcare appears lower in Canada because healthcare costs are not coming directly out of the consumer’s pocket; rather the consumer is paying exorbitant amounts of taxes to the government, which allows the government to pay the providers. Thus, universal healthcare is not cheaper, but appears so because of a third-party payer. Furthermore, as an economist, Krugman should recognize that America is an on-demand economy in every sector that enjoys freedom of choice. Consequently, American citizens would not put up with six-month waiting periods for routine procedures which may save lives. Something tells me that Krugman, seeing the ill effects of his proposal in the United States, would immediately push for the exemption of elitist, liberal, Ivy League professors from their own socialized healthcare utopia.

Recognizing the fact that the healthcare system should insure equal access for all, we need to look at real market approaches to solving the problem that do not jeopardize the quality or availability of care. Third-party payers (government, insurance companies, and HMOs) have served to over-regulate the American healthcare industry. The conservative American Association of Physicians and Surgeons propose that the elimination of third-party payers would pave the way for a consumer-driven, free-market healthcare system in which prices would be dictated by the market.

Exorbitantly high charges would make providers lose patients to lower-priced competitors, and thus would force prices downward. While this laissez-faire model hasn’t received much attention, it is a proposal that deserves serious consideration by Americans if we ever want to solve our healthcare crises.