Maybe you’ve heard that other countries with socialized medical systems manage to spend far less money on healthcare per person than we do in the United States. This is true. How can they do it? Well, there are several contributing factors, including important differences in our lifestyle and demographics as well as payment systems.
But one way that countries with socialized medicine (and indeed, government health insurance programs within the U.S., like Medicare and Medicaid) “save money” is simply by paying health providers less. They can do this by setting prices (or, as they are called in health care, “reimbursement rates”) or by outright denying or delaying access to care.
In a way, our healthcare system is experiencing this right now due to the COVID pandemic as revenues for hospitals and other health providers dry up. Yes, they are treating COVID patients, but these services aren’t big moneymakers. With reduced revenues, hospitals are facing the same realities other businesses are: budget cuts, pay cuts and furloughs.
Medicare for All, the popular plan to socialize health insurance in the U.S., would result in a 40 percent decrease in reimbursements to health providers relative to what they currently receive for treating privately insured patients. Of course, many patients are already on Medicare, and Medicaid reimbursement is even lower (and would increase under Medicare for All). But overall, health providers would see reduced revenues under Medicare for All. And the pandemic is showing what reduced revenues mean: budget cuts, pay cuts, and furloughs. None of this is good for access to health care, as we faced a physician shortage before the pandemic.
Why are hospitals getting lower revenue, even in the midst of a pandemic? This demonstrates another downside to socialized medicine: Millions of Americans are, right now, waiting longer than normal to access many non-COVID healthcare services, including elective surgery. These are the services that hospital business models rely on to bring money in the door. But delaying these services has a downside for patients, not just hospital budgets.
The word “elective” is a bit misleading because elective does not mean optional. In the context of elective surgery, elective simply means non-urgent. During normal times, Americans enjoy some of the fastest access to elective surgery in the world. Countries with socialized health care or socialized health insurance have much longer wait times.
Waiting for surgery is, for many people, no big deal. But for some, it means living in pain, being unable to work, or facing other problems. It’s reasonable to accept these consequences in order to reduce health system capacity for coronavirus patients during the height of a pandemic (and to reduce transmission to surgery patients by keeping them out of the hospital during this time).
But during normal times, patient access to timely elective surgery and other healthcare services is important and worth spending money on. How much money?
Well, that’s hard to say, since the value of faster services will vary situation-to-situation, patient-to-patient.
One way to reduce America’s healthcare expenditures would be to use government to reduce payments made to healthcare providers. But sometimes when you pay a lower price for something, you get what you pay for. Or, in other words, sometimes when you pay less, you get less, and Americans deserve to make the decision for themselves rather than having government implement a one-size-fits-all solution.
Certainly, there are many problems with America’s health payment system. It is inefficient and lacking in transparency and competition. There are ways we could reduce costs without resorting to socialized medicine. But if you like hospitals bleeding money, cutting pay and laying off staff, and if you like patients waiting for care they need, well then you are going to love Medicare for All.