Healthcare policy has been, for decades, a political football.
Health care was the number one issue in the 2018 midterm elections, even absent a global pandemic. Now, thanks to COVID-19, this issue – along with the related economic downturn – is pretty much guaranteed to be top of mind for millions of Americans in the next election and the years ahead.
Our debate essentially boils down to this: Which is better, private health care or government health care? Thankfully, a new paper from Linda Gorman at the Independence Institute (and endorsed by the Steamboat Institute and the Centennial Institute) adds important information to this debate. It summarizes the evidence from other countries with socialized medicine, and it takes stock of our public health programs in the United States, comparing all of this to private care.
Gorman also applies the following analysis to recent healthcare reforms:
- What are the basic numbers underlying the reform proposal?
- What baseline will be used to measure policy success or failure?
- Is the proposed policy lowering costs, raising costs, or just shifting costs?
- Have programs based on similar policy ideas worked?
- Are there less expensive ways to subsidize the target group?
Indeed, these are important questions to ask about any new proposed policy.
Gorman’s paper also explores a handful of themes that consistently emerge in the healthcare debate:
- International comparisons. There are many considerations when it comes to international data, which is often not apples-to-apples because different countries measure health statistics and outcomes differently, and of course because demographic and lifestyle factors – not just medical system quality – have an effect on outcomes. Because these comparisons can be fraught with problems, Gorman offers a detailed comparison between public health systems in the U.S. (the VA, Medicaid and Medicare) and U.S. private care.
- Costs v. Expenditures. If these two words sound like the same thing, that’s because they are often mistakenly used interchangeably. The U.S. has higher health expenditures than other countries with socialized health care, but patients in those other nations bear costs that Americans often don’t. Specifically, longer wait times for care cause pain and suffering, disability, and increased risk of other poor health outcomes.
- Targets and Terror. Governmental health systems, in efforts to hold health providers accountable after they take public money, often develop targets to reduce “unnecessary” care or lower rates of certain events, like hospital readmissions, cesarean section births, or “low-value” screenings. This approach misses the important fact that, for some individual patients, the value of some screenings is very high, even if they are of low value on average. That’s why decision-making is better at the individual level: Some people might prefer to pay a little more to lower their risk; others not. Government targets in health care also create incentives for providers to skimp on care or game the system for the appearance of compliance.
- Global Budgets v. Fee For Service. These are two competing ways for paying health providers that are loosely comparable to paying for dinner “prix fixe” or “a la carte.” Global budgets give a lump sum; FFS pays by the service. Often ignored, Gorman writes, are the ways that these two approaches can impact patient care, with sicker patients suffering worse outcomes under global budgets.
- Healthcare Spending. Does the U.S. spend too much on health care or do other countries spend too little? In the present pandemic, it’s been frowned upon to attempt to measure the value of human life in dollars. Of course, this is off putting. But the reality is that how we spend money affects human life and health. And tradeoffs must be made. Middle-class after-tax incomes are much higher in the U.S. than in other countries, meaning we leave more of those tradeoffs to be made by individuals, spending their own money. Of note, the cash market for care in the U.S. sees lower and lower expenditures over time as a result of economization, competition, and innovation.
The final conclusion of the paper is stark:
Reform proposals that substitute government spending for private spending increase health expenditures, increase health care costs, decrease innovation, and harm the sickest patients — politically controlled health systems typically spend less on screening and treatments for seriously ill people than individuals would like. Interest group politics makes them difficult to change, hostile to innovation, and prone to wasting money on activities that individuals would not willingly pay for. Programs financed by tax revenues also create deadweight economic losses by reducing the production of the goods that are taxed and increasing consumption of the goods that are subsidized.
The sound you just heard was an intellectual, evidence-based mic drop.
Bottom line: Private health care is better able to respond to the individual needs and preferences of patients, meaning it can offer longer life and better health. It’s more agile, more customizable, and more affordable. With freedom from overregulation and interference, private health care is in the hands of patients. Government health care is in the hands of politicians. Pandemic or not, I know which I would choose.