Acton Commentary

What’s the Matter with Socialized Medicine?


Daniel interpreted the writing on the wall for the decadent King Belshazzar. “You have been weighed on the scales and found wanting” (Daniel 5:27). Socialized medicine deserves similar judgment.

The United States medical system merits description in apocalyptic terms. However, presidential candidates and religious leaders advocating socialized medicine seem blind to the dysfunctional nature of third-party health care. Despite ostensibly compassionate intentions, expanding government control of medical care would result in greater disservice to the uninsured and precariously insured.

Government health care creates a great deal of misperception about who’s responsible for paying the bill. Resource consumption increases when people think someone else is shouldering the cost. Nobel Laureate Milton Friedman observed, “Nobody spends somebody else's money as carefully as he spends his own.” More than 60 years of “someone else” paying for health care has led to medical expense inflation. Our predominately third-party reimbursement “system,” beginning after World War II for employees and after Medicare in 1965 for the retired, has resulted in out-of-control spending. Increasing the role of government will spur unbridled medical services consumption and further harm the underserved. Medical resources are limited. An expanded government role in health care will necessarily lead to rationing, shortages of health-care providers, delay in treatment, and deterioration in quality of care.

Medicaid is a socialized medicine microcosm. In that system, price controls and bureaucracy result in rationing by deterring provider participation and delaying treatment, with subsequent deterioration in quality of care. Affluent individuals are able to access better health care outside of any government system. The majority will wonder why circumstances are worse with a single-payer system.

Government health care fails to control expenses. The combination of an aging population, technological advances and unconstrained consumption has led to an unsustainable growth in costs. Paul Starr, in The Social Transformation of American Medicine (1982) compared United States medical spending before and after President Johnson signed Medicare legislation in 1965. Seven years before Medicare, medical inflation was 3.2 percent. Five years later it was 7.9 percent and now it is approximately 9 percent. The Congressional Budget Office reports that over the past 30 years, in comparison to the nation’s gross domestic product (GDP), health care spending has more than doubled. Furthermore, the CBO predicts that it will double again by 2035, to more than 30 percent of U.S. GDP. These trends would improve if medical resources were consumed with more direct personal participation in the cost of those decisions.

Doesn’t government health care cost less than private, for-profit, coverage? Benjamin Zycher reported that private insurance administrative costs are 11-14 percent of benefits, compared to Medicare, when including relevant costs, at 6%. (Manhattan Institute, 2007) However, single-payer advocates suggesting costs savings over private insurance disregard the increase in health-care consumption by the newly covered. These additional costs would offset, and likely exceed the single-payer savings scenario. Furthermore, when considering the domestic economic losses from increased taxes to pay for more health care, the single-payer model costs conservatively rise to at least the 24–25 percent range, well in excess of private insurance.

Government health care elsewhere is inadequate. Canada and the United Kingdom provide contemporary models where rationing occurs by bureaucracy and delay. Disease specific outcome comparisons discredit studies that report greater satisfaction with socialized health care despite lower relative spending. Morbidity and mortality are worse. For example, a 5-year survival rate for prostate cancer of less than 70 percent in the United Kingdom is objectionable compared to a greater than 95 percent survival rate in the United States. A 2006 Frasier Institute study reported that the average waiting time between primary-care referral and specialist treatment increased to 17.8 weeks in a Canadian survey. The average delay between referral and orthopaedic surgery was 40.3 weeks. Wealthier Canadians commonly travel to the United States for care. The majority cannot.

Single payer advocates argue health care is the right thing to do and government ought to fulfill this duty. However, given finite medical resources, fulfilling all health-care demand is impossible. Moral theologian Fr. Thomas Williams, in Who is My Neighbor? (2005), distinguishes between moral and civil rights. Moral and civil rights differ with respect to their demands upon government protection. We can agree upon a moral duty to make health care accessible to all citizens and work toward that goal, while disagreeing about the obligation of government to provide complete health services to everyone via socialized medicine.

The common good would be better served by market oriented reforms for elective and extraordinary health care coupled with compassionate subsidization for the needy, rather than socialized medicine. Tax law changes could help improve insurance portability and affordability. Current laws perversely subsidize high income earners and large company personnel. Small business employees and others who pay for health care with after tax dollars are regressively burdened. Increasing inter-state competition for insurance companies could decrease premium cost, remove thousands from the uninsured roles, and lead to stronger demands for quality.

Patients paying for health care at the point of service would be more prudent consumers than those perceiving health-care benefits as an entitlement. People might take better care of themselves. With improved alignment of responsibility for personal health choices and medical-care consumption, scarce health-care resource allocation would improve. We cannot expect this much from government.

Dr. Donald P. Condit is an orthopaedic surgeon specializing in hand surgery in Grand Rapids, Mich. He also holds an MBA degree from the Seidman School of Business at Grand Valley State University.