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Socialized Medicine: Saving Money By Killing Grandma

Medicare for All
Democrats, such as Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez, have recently begun to show their true colors and advocate openly that America should become a socialist country. The sales pitch for Americans to abandon constitutional liberty is that socialism is fairer and will give every American equal access to the essentials of modern life; healthcare, education, food, housing, etc.

To those struggling to pay-off student loans for degrees in women’s studies, find housing in over-regulated urban housing markets and obtain affordable health insurance after the debacle of Obamacare this probably sounds pretty attractive.

However, as the President’s Council of Economic Advisors documented in its recent Economic Report of the President (the CEA Report), the historical evidence suggests that the proposed socialist program for the U.S. would create shortages, or otherwise degrade the quality, of whatever product or service is put under a public monopoly. The pace of innovation would slow and living standards generally would be lower.

Indeed, in other countries where socialism has been imposed in the past, production of whatever was socialized often (and quickly) fell by about 50 percent.

The Economic Report of the President has several interesting sections on the effects of socialist policies and one of the most interesting is its examination of socialist healthcare plans, such as the Socialist Democrats’ “Medicare for All” (M4A) legislation.

Current proposals to increase government involvement in healthcare, like “Medicare for All”, are motivated by the view that competition and free choice cannot work in this sector. These proposals, though well-intentioned, mandate a decrease or elimination of choice and competition. We believe that these proposals would be inefficiently costly and would likely reduce, as opposed to increase, the U.S. population’s health. We think the data shows that funding them would create large distortions in the economy. Finally, we agree with the the CEA Report that the universal nature of “Medicare for All” would be a particularly inefficient and untargeted way to serve lower- and middle-income people.

However, despite the large volume of data supporting the contrary position, a free, single-payer healthcare system has become the cornerstone of current socialist policy proposals in the United States. The Senate and House “Medicare for All” (M4A) plans, sponsored or cosponsored by 141 Democrat members of the 115th Congress, are designed to use the scale economies of a public monopoly to sharply cut costs (S. 1804; H.R. 676).

These plans make it unlawful for a private business to sell health insurance, or for a private employer to offer health insurance to its employees. Although, at the time of passing the Affordable Care Act, it was promised that consumers could keep their doctor or their plan, M4A takes the opposite approach: All private health insurance plans will be prohibited after a four-year transition period.

M4A would not make healthcare providers government employees, rather it would be a Federal program having a nationwide monopoly on health insurance. The price paid to the government monopoly (the analogue to revenue received by private health insurance plans) would be determined through tax policy.

The quality or productivity of health insurance would be determined through centrally planned rules and regulations. As opposed to a market with competition, if a patient did not like the tax charged or the quality of the care provided by the government monopoly, he or she would have no recourse. In addition, price competition in healthcare itself, as opposed to health insurance, would be eliminated because all the prices paid to providers and suppliers of healthcare would be set centrally by the single payer.

Proponents of M4A often refer to European-style programs of socialized medicine as their role model, but the European programs appear to deliver less healthcare to the elderly and result in worse health outcomes for them. Many of these programs ration older patients’ access to expensive procedures directly or through waiting times.

Current Medicare beneficiaries would likely be hurt by M4A’s expansion of the size of the eligible program population. The evidence for a trade-off between universal and senior healthcare is supported by both the European single-payer experience that limits care for the elderly compared with the U.S., along with the recent domestic U.S. reforms under the ACA that reduced projected Medicare spending by $802 billion to help fund expansions for younger age groups (CBO 2015).

The President’s Report documents that United States’ all-cause mortality rates relative to those of other developed countries improve dramatically after the age of 75 years. In 1960—before Medicare—the U.S. ranked below most EU countries for longevity among those age 50–74, yet above them among for those age 75 and higher.

This pattern persists today.

In a study cited in the CEA Report, Ho and Preston (2010) argue that a higher deployment of life-saving technologies for older patients in the U.S. compared with other developed countries leads to better diagnosis and treatment of diseases of older people and greater longevity.

Cancer is the leading cause of death in many developed countries, especially among older individuals, and it constitutes an important component of overall U.S. healthcare spending. The availability and utilization of healthcare are particularly important for cancer longevity.

The President’s Report cites data from Philipson and others (2012) which found that U.S. cancer patients live longer than cancer patients in 10 EU countries, after the same diagnosis, due to the additional spending on higher quality cancer care in the U.S.

The CEA Report also cites data from Ho and Preston (2010) pointing out that in Europe, where the proportion of surgically treated patients declines with age, five-year survival rates for colorectal cancer are lower for elderly patients than younger patients. However, in the United States, where utilization of surgery does not decline with age, colorectal cancer survival rates do not decline for elderly patients. (Emphasis ours.)

This effect is not confined to cancer treatment, noted the President’s Report. For ischemic heart disease—the world’s leading cause of death—the use of cardiac catheterization, percutaneous coronary angioplasty, and coronary artery bypass grafting declines with patients’ age, but declines more steeply in other developed countries than in the United States. Compared with these developed countries, the U.S. has a lower case fatality rate for acute myocardial infarction (the acute manifestation of ischemic disease) for older persons but not for younger persons age 40 to 64 (Ho and Preston 2010).

This disease-specific evidence is more informative about the benefits of healthcare than often-discussed cross-country comparisons of nationally aggregated outcomes, such as overall population longevity and aggregate healthcare spending.  The fact that many wealthy foreigners who could afford to obtain care anywhere in the world come to the U.S. for specialized care is perhaps the strongest indication of its superior quality concludes the CEA Report.

The authors of the CEA Report go on to review other measures of healthcare quality, such as wait time for surgery, wait time to see a specialist, and found that all decline under socialized medicine.

The recent push in Congress to enact a highly restrictive “Medicare for All” proposal to increase access to health care would have the opposite effect—it would decrease competition and choice. The CEA’s analysis finds that, if enacted, this legislation would reduce longevity and health in the United States, decrease long-run global health by reducing medical innovation, and adversely affect the U.S. economy through the tax burden involved.

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Socialized Medicine

We are already seeing the effects. Since passing the ACA in 2010 for the first time since we have been measuring, the life expectancy across America is declining! This is exactly what we should expect from a plan that extorts money from people, and provides "healthcare" that does NOTHING until your costs exceed $7000. The ACA is NOT health insurance, it IS a redistribution of wealth plan that is costing American lives.