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Monday, February 23, 2009

"Free" Market Health Care: Fewer Doctors, More Paperwork

Among the arguments fired my way against single-payer universal health coverage is that the government wouldn't pay enough to keep doctors in business.

It is true that public health systems like in Canada, Britain, France, and pretty much everywhere else in the civilized world pay less to practitioners. An essay I'm reading this morning says public systems pay doctors and hospitals a third of what they receive in the U.S. So folks in those countries with public health systems must have a heck of a time finding a doctor or a hospital bed... right?


Although some think the United States has the largest number of doctors, we actually have fewer physicians per 1,000 population than the European average (2.4 vs. 3.1), about the same number of nurses per 1,000 (10.5 vs. 9.7), and fewer hospital beds per 1,000 (2.7 vs. 3.9) [Arthur Garson, Jr., and Carolyn L. Engelhard, "You Get What You Pay For?" Governing.com, February 2009].

Garson and Engelhart also note that "free" market health care doesn't exactly get us more efficiency: 24 cents of every American health care dollar pays for administrative costs, the paperwork and bureaucracy that's worse in our uncoordinated private system than in the centralized, standardized public systems of our global neighbors.

$528 billion a year, on paperwork instead of prescriptions. And we prefer to haggle over the $140,000 mistake Tom Daschle's accountant made.


  1. "Free market", also known as insurance company provided health care, is a blatant failure. It's long past the time that we dump it and nationalize health care. The Brits did it at the end of WWI - when they were billions in debt and had to cope with massively destroyed infrastructure.

    The pay for US doctors is seriously out of whack; but then so is the pay for banksters and many university minions (http://www.nytimes.com/2009/02/23/education/23pay.html?ref=us ). Aside from the president and supreme court justices, there is little justification for almost no one to be paid more than is received by a colonel or sergeant major leading troops in combat.

  2. What about tort reform so that lawyers could have a cap on the amount of damages they could collect in malpractice cases?

  3. I'm getting excited about boutique style health care. By cutting out the middlemen, prices could really come down along with decreasing the patient/doctor ratio. This style of health care really is the beginning of a socialized form of medicine. Once it takes off those that have this form of medicine will demand better treatment across the board. No one would go back to our current system after trying boutique care.

  4. I wish it were as simple as just corralling those darn lawyers. Alas, the essay cited above says malpractice litigation makes up less than 1% of the cost. Insurance company bureaucracy and profiteering is the big problem.

  5. The best doctors from overseas come to the US because they can make an income three times greater than in their home country. That leaves those doctors who are perhaps less talented. Remember, 50% of all doctors graduate in the bottom half of their class! I agree there is a cost issue in our country, but I like our selection of physicians compared to other countries.

  6. I am chuckling over the fact that gov't care will have less paperwork! Any gov't bureaucracy is ripe with red tape upon red tape.

  7. This sounds good to me. I'm guessing everyone would then take a 2/3rds pay cut, right? Because it seems everyone wants to make $100.00 a hundred bucks per hour. I went to have the oil changed in my ATV, they wanted $77.73. Most auto shop rates have hit $75.oo per hour. I just had a washer changed in a faucet at my business which took ten minutes, charge was $42.59, because their is a one hour minimum. A beautician wants $20.00 plus for a haircut, can typically can do 4 an hour. Oh yeah, and we want teachers to make more money for a 9 month out of the year job. Yes, healthcare is at the root of all our problems

  8. Anybody that wants to make the big bucks that a doctor makes is free to go to school for years upon years, study for hours upon hours, come out hugely in debt, start a practice, pay huge malpractice insurance, work long hours with many icky conditions, and then deal with gov't regs and paperwork. I think most of them deserve the big bucks they make. It's a job that I certainly do not want, but I'm glad that some do!

  9. Anonymi 12:39 on: do you ever read anything, or do you just prefer what you wish was true to what really is? The article said malpractice litigation is a minor factor in health care costs. Private insurers burn up more of your money on paperwork and administrative overhead than the government. And choice of doctors? Would you like to review the list of doctors my insurer says I shouldn't go see? Plus, if the countries with public health care and lower doctor ay are getting less talented doctors, the figures for life expectancy and preventing avoidable deaths don't reflect it. Pick your metric, public health systems in Europe and elsewhere meet or beat the performance of our system.

    I used to talk just like you, spouting free-market platitudes that I wanted to be true... but then facts caught up with me. Sometimes a comfy worldview just has to surrender to data and reality.

  10. Hi there...

    I have mostly been a lurker on this blog. Just felt like commenting today... Anyway, I am doubtful that the federal government could successfully manage health care. And when other people are confident that the government can solve a problem, I am surprised. Does the US federal government have a good track record of solving problems? At what point have lawmakers, judges, etc successfully solved any social or economic problem (without any help from the private sector - its talent or capital)?


  11. Private insurers burn up more of your money on paperwork and administrative overhead than the government. Corey who are you trying to kid? I am in health care have been for 29 years, and there is no way a private insurer spends more time or money in paper work that the US government. There are 3000 pages of rules and regulations to administer Medicare (a huge government failure) alone. You are trying to tell me and everyone else the private sector is more wastefull than this? Give me a break! Now you think the government can run the delivery of health care for everyone in the US? Fat chance, it will be a miserable failure.

    You all better get used to government health care, health care reform is in the spending (not stimulus) bill. So to you who welcome government in health care, be careful what you wish for, it may come true.

    Some of the health care reform is patterend to thoughts Daschle has written in his book. One thought that should be particular troubeling is Daschle says health-care reform “will not be pain free.” Seniors should be more accepting of the conditions that come with age instead of treating them. What does this mean?

    It means that many conditions that the elderly suffer will not be treated. One of the many complaints of the current system is the cost of health. At least you are treated, under the new system you just might be told, sorry go home and die.

  12. Hi, Fastidious! Welcome to the show!

    So, just to be clear: is your point that government in general can't effectively run health coverage (in contradiction to evidence that federal governments of other countries are able to save money and lives with their public health systems), or are you contending that the U.S. federal government is uniquely incapable of performing such a feat?

    Firebird: I'm not trying to kid anyone. I'm looking at the evidence. I'm also looking at personal experience: walk inot a hospital in Canada, even as a foreign national, and you don't sign one paper to get treatment. Private insurers make sure that never happens in America. Private insurers are also more eager to deny coverage and drop clients than any government.

  13. Cory:

    I will concede to you the point about private insurers dropping a client.

    But also speaking from personal experience, there is a mountain of red tape now, it will only get worse not better. Look at Medicare, look at the VA hospitals. Does anyone honestly think that there will not be red tape and hoops to jump through?

    Think again

  14. And right now some employers are having a hard time finding an insurance company to cover their employees at any cost, let alone affordability. It's easy if your pool of employees are young and file few claims (profitable for the insurance co), but if you have a group of older folks with a history of claims, good luck. That's no joke. 10:08 is right: Salaries are out of whack - article was good reference.

  15. caheidelberger: "So, just to be clear: is your point that government in general can't effectively run health coverage (in contradiction to evidence that federal governments of other countries are able to save money and lives with their public health systems), or are you contending that the U.S. federal government is uniquely incapable of performing such a feat?"

    In a roundabout way, I was attempting to suggest that no bureaucracy has the capital or talent to effectively administrate and mete out health care. Further, I was seeking an historical example from the US federal government... If I am to trust the US federal government to design, implement, and administrate my health care, I would like to see and analyze an historical example of the US federal government's successful design, implementation, and administration of a program that did *not* rely on private capital or talent for success.

    All of these hypotheses and papers are charming, but they merely are hypothesis and predications. Maybe my analogy is faulty, but it would be as though the wolf is telling the sheep that since he's got on sheep's clothing, he's turned vegetarian. At some point, that benevolent wolf is going to get hungry...

    Anyway, thanks for the warm welcome!


  16. Well, I was trying to suggest in a very direct way that numerous federal bureaucracies around the globe have proven themselves capacble of administering health care more effectively and justly than our patchwork private system. The USFG administers its sizable health care with far less overhead (3%) than private insurers, meaning more health care dollars spent on actual health care. Public health coverage still relies on the private talent/capital of doctors, nurses, etc.; it just cuts the fat from the payment process.

    The world abounds with empirical examples. It is the United States that needs to get beyond its charming hypothesis that the free market applies to health care. The U.S. needs to act on the data that says public health coverage saves money and lives.

    Wolves in sheep's clothing: private insurers are by far more wolfish. Again, the government doesn't drop people from Medicare. Public health care provides health security and frees workers to pursue the jobs that suit their talents best.

  17. Government did so well handling Louisiana hurricane. I heard we're still paying for 16,000 in motels, 3 1/2 years after the event.
    Now that is real efficiency.

  18. Government also handled World War II and building and plowing every road you drive on.

  19. Corey:

    I mean no disrespect here, but you don't have a clue as to how government fincance of health care works. There have been many small family owned pharmacies that have gone out of business since Medicare Prescriptions came available. Why did they go out of business? Because of slow reimbursment due to paper work demands.

    I can not tell you how many times we have to resubmit claims to get reimbursment. Medicare rules and regulations are so complex that Medicare employees do not even understand them. You think this will all go away when the government manages health care for 300 million people? Fat chance, as I have stated over and over again it will get worse, not better.

  20. To comment on the title of this tread, there is only more paperwork because of federal government mandates.

    Additional staff have to be hired at hospitals and clinics just to take care of the federal mandates, many of which are unfunded.

    There is only one industry that is more regulated by the federal government than health care, and that is the nuclear energy industry.

  21. ...doesn't sound worse than how our previous health insurer, a very small operation, managed to make a mistake that we had to call about on almost every billing or reimbursment. My family's and friends' experience with government health care has invovled less paperwork and more efficient care. My experience with private insurance companies has been... less than satisfactory. I would rather we work together as a society through government to take care of our neighbors than permit the continued denial of basic care to our fellows due to profit motive. We are a better people than that.

  22. I guess I'm of the thought that the Government that governs best, governs least. AND this little nugget from Jesse "The Mind" Ventura.

    "If the government is going to do it FOR you, the government is going to do it TO you!"

  23. Wish I had said this:

    " You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."
    ~~~~~ The late Dr. Adrian Rogers, 1931 - 2005 ~~~

  24. I love that quote by Rogers - says it so perfectly. Thanks for posting it.


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