Healthcare in America

HEALTHCARE IN AMERICA….In the midst of an effort to show that America is too better than other countries, David Bernstein makes this comment about our healthcare system vs. the socialized versions common in the rest of the world:

The U.S. in fact has a quasi-socialized health system, in the sense that the government pays most (yes, most!) of the health care costs (from Medicare, Medicaid, and the Veterans Administration) and is responsible for a good chunk of the remainder (through tax subsidies, mandates to insurance companies, mandates re emergency care, etc.). Indeed, I remember seeing a study noted in the Economist a while ago showing that the private sector in the U.S. doesn’t account for a substantially larger share of health care spending than in many European nations, but that the U.S. health care system has just been socialized in a more haphazard and inefficient way, creating greater costs while insuring fewer people.

This, I think, is actually a very pithy way of explaining the whole mess. The United States really doesn’t have a free market in healthcare at all; in fact, it’s just a bizarre melange of jury rigged policies that seem to provide the worst of all worlds. We don’t get the universal coverage and bargaining power of a single-payer system, but we also don’t have the competitiveness and price pressure of a true free market system.

I don’t have the numbers at hand, but I believe that governments at various levels fund about 50% of all healthcare in the United States, while in Europe it averages around 75%. In other words, as David suggests, the difference isn’t really that great.

So what, then, is the big problem with simply trying to rationalize the system? More people would be covered, there would be at least a chance of implementing some kind of cost control, rich people could still get private care if they wanted, and employers could get out of the healthcare biz and turn their attention to their real businesses. Sure, taxes would go up, but private healthcare costs would go down and the net result would probably be a wash. In fact, if the system were well designed ? never a betting proposition, I admit ? overall costs might even be a little less.

Where’s the downside?