As the debate on healthcare reform heats up in Congress, many pundits from both sides are barraging the American people with seemingly contradictory statistics and evidence. One side claims that American healthcare is inferior to other government-run systems, while others are declaring our medical care the World’s best. These widely disparate views make it difficult for the average American to distinguish truth from propaganda. In his recent book, Applied Economics (2009 edition), Thomas Sowell separates facts from fallacies. He convincingly dispels several myths surrounding socialized medicine that are perpetuated by its proponents:
Myth #1: A Government-run medical care system will bring down the cost.
According to Sowell, “A confusion between prices and costs has allowed politicians in various countries to be able to claim to be able to bring down the cost of health care, when in fact they only bring down the individual patient’s out-of-pocket costs… The costs themselves are not reduced in the slightest when additional money to pay for these costs is collected in taxes or insurance premiums and routed through either government or private bureaucracies… add[ing] to the cost of medical treatment.”
In reality, in order to appear to “bring down” actual costs the government must impose price controls. The consequences of price controls on medical care are both quantitative and qualitative. “Artificially lower prices, created by government order rather than supply and demand, encourage more use of goods or services, while discouraging the production of those same goods and services. Increased consumptions and reduced production mean a shortage…and that alone is enough to cause the total cost of medical care to rise, not fall.”
For example, after the Canadian government-run medical care system was implemented in the 1970s the number of telephone consultations decreased, offices visits increased, and time per patient decreased. “In other words, medical conditions which neither the doctor nor the patient previously thought serious enough to require an office visit, before price controls, now took up more time by both the patient (in travel time) and the doctor (in the office), thereby reducing the time available to people who had more serious conditions…In general, where the doctor is paid per visit, then a series of treatments that might have taken five visits to doctor’s office can now take ten shorter visits—or more. Therefore political leaders can proclaim that price controls have succeeded because cost per visit is now lower than it was in a free market, even though the total costs of treating an illness have not declined and—typically—have risen,” asserts Sowell.
Myth#2: A government-run healthcare system will increase quality and expand accessibility.
“Quality declines because the incentives to maintaining quality are lessened by price control. Sellers in general maintain the quality of their products or services for fear of losing customers otherwise. But, when price controls create a situation where the amount demanded is greater than the amount supplied—a shortage—fear of losing customers is no longer a strong incentive,” argues Sowell.
The qualitative consequences of a shortage include less time spent with the doctor, decreased investment in medicine, reduced cleanliness among hospitals, fewer future doctors, increased bureaucracy, and increased waiting time for treatments. These are the hidden costs of socialized medicine that often don’t make it into statistics. The most significant hidden cost is the increased waiting times for treatment—“notably pain, debilitation, and death while waiting…People can die from conditions that were initially not very serious, but which grow progressively worse while they are on waiting lists to receive medical care.”
Sowell cites a study done by the Organization for Economic Co-operation and Development that found that 38 percent of patients having elective surgery in 2001 in Britain waited more than 4 months for that surgery. So did 27 percent of patients in Canada, 26 percent of patients in New Zealand, and 23 percent of patients in Australia. Comparatively, the United States had only 5 percent of patients wait that long. Elective surgery includes important procedures such as cataract surgery, hip replacement, and coronary artery bypass surgery.
Myth#3: There are 45.7 million people uninsured.
The most common statistic that is cited by proponents of a government-run system is the 45.7 million people that the U.S. Census Bureau found lack health insurance in 2007. The media tends to treat this number as one large chronically-uninsured group. It is important to note, however, that this number is a snapshot in time and does not tell us the number of people that are chronically-uninsured for the entire year. Many people are in between jobs and are only temporarily uninsured. Other people have incomes “sufficient to purchase health insurance [but] simply choose to use their money for other things, especially when they are young and feel less at risk of medical problems,” argues Sowell. “60 percent [of uninsured Americans] are under the age of 35. Fewer that 10% of people over 55 are uninsured, despite the widespread political use of an image of old people who have to choose between food and medicine.”
Additionally, the Census Bureau shows that 20% of the uninsured families have incomes greater than $75,000 per year, 21% of the uninsured are immigrants (including illegal immigrants who would mostly likely not be included in any government plan), and 26% are eligible for some form of public coverage but don’t make use of it.
Myth #4: The high mortality rates in the United States, relative to other countries with government-run medical care, suggests that the quality of medical care in the United States is not as good.
The implicit assumption that mortality statistics reflect care is inherently misleading. According to Sowell, “Much has been made of mortality statistics which suggest that Americans’ health system is not as good as in some countries with government-run medical systems, as if medical care determines the state of people’s health. But medical care has little effect on homicide rate, on obesity or on deaths from drug overdoses that occur before any doctor sees the patient. Yet the identification of health care, as indicated by morality rates, with medical care has become so automatic that a study which showed higher infant mortality rates among black Americans than among white Americans was instantly taken as showing less prenatal care among pregnant black women as the reason. But American women of Filipino ancestry, Mexican ancestry, and of Central American and South American ancestries all had less prenatal care than white women—and lower infant mortality rates than white women. Indeed, Mexican Americans had less prenatal care than blacks and lower infant morality rates than either blacks or whites.”
A much more relevant comparison, argues Sowell, would be mortality rates between different countries on health problems in which medical care substantially effects. “This would still not be a perfect comparison, since even here other differences between the populations in the countries being compared are factors as well,” he asserts. When the American College of Physicians calculated the death rate for “mortality amenable to healthcare” the United States was in the top three countries with low death rates…out of 19 countries studied.
The reality of socialized medicine is much grimmer than proponents of it would have you believe. Admittedly, our current system is far from perfect, but more government control is a step in the wrong direction.