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Scare Tactics 101: “Socialized Medicine” Part II

booYesterday we looked at the history of the term “socialized medicine.”  We found that the phrase “socialized medicine” does not accurately describe the public insurance option.

 The other issue to address here is whether the negative connotation that goes along with the term “socialized medicine” is warranted. 

In other words, should members of the public fear socialized medicine, or even just a greater government role in healthcare, as they have been taught to do over the years?

Because let’s face it: opponents are going to call the public plan, or even a single-payer insurance system, “socialized medicine,” whether it is or is not technically so.

When you look at other developed countries that outperform the U.S. on cost and quality measures, most of them have some sort of “hybrid” public/private healthcare model, similar to what President Obama is proposing. 

Take Japan, for example. 

  • The country has a social insurance system, where all citizens are required to have insurance.  Many have insurance options through their work, and those who don’t may purchase coverage from a non-profit, community-based provider.
  • The majority of healthcare facilities are private: 80% of hospitals are privately-owned.
  • Premiums cost $280 per month for a family of four.  Employers typically cover half of the premium cost, and the government provides subsidies to those who can’t afford to pay.
  • Japan spent just 8% of its Gross Domestic Product (GDP) on healthcare in 2007. 
  • Japan keeps costs low by negotiating on prices: Every two years the Ministry of Health develops a price list for every procedure by negotiating with doctors and hospitals.
  • Japan is highly ranked when it comes to health indicators: It has the highest life expectancy and lowest infant mortality rate in the world.

Japan’s insurance system is similar to those of Germany, Switzerland and even Taiwan.

A Note on the U.K.

Only the U.K. (and Canada) has a completely socialized system where the government pays the providers, and owns the healthcare facilities.  It is important to remember that none of our proposed healthcare reform packages would require, or even allow, the government to own the healthcare facilities, or to employ providers directly.

Health outcomes under the British National Health Service are generally very good, especially when it comes to primary and emergency care.

A few years ago, there was concern amongst patients about months-long waits to receive elective procedures like hip replacements in Britain.  In response, then-Prime Minister Tony Blair established an incentive program to reward hospitals and providers that had shorter wait times.  This initiative reduced overall wait lists considerably.

You can learn more about the specific conditions in Germany, Japan, the U.K., Switzerland and Taiwan by viewing the PBS documentary, “Sick Around the World,” online. 

Here is a breakdown of the amount of GDP that these countries spend on healthcare.

Source: PBS’ “Sick Around the World” Graphs

How do other developed countries stack up when it comes to life expectancy at birth, for example?


Source: PBS’ “Sick Around the World” Graphs

The U.S. also lags when it comes to the treatment of chronic conditions

This Commonwealth Fund report found that U.S. residents with one of seven chronic conditions– high blood pressure, heart disease, lung disease, diabetes, cancer, arthritis and depression- were more likely to 1) forego medical care due to costs and to 2) experience medical errors than were their peers in Australia, Canada, France, Germany, the Netherlands, New Zealand, and Britain.

  • 44% of U.S. residents with chronic illnesses said that they did not receive recommended medical care, fill prescriptions or visit a physician at some point because of high costs, compared with 7% of study participants from the Netherlands.
  • 41% of chronically-ill patients in the U.S. spent more than $1,000 on out-of-pocket medical costs last year, compared with just 4% of folks in Britain and 5% of French patients, according to the study.

In short: “The study’s findings belie the notion held by many American politicians that health care in this country is the best in the world.  That may be true at a handful of pre-eminent, medical centers, but it is hardly true for the care provided to a huge portion of the population.”

What About Spending Growth?

In addition to spending a smaller percentage of GDP on healthcare, other developed countries do a better job of holding down healthcare spending growth. 

  • Between 1997 and 2002, U.S. health expenditures grew 2.3 times faster than GDP. 
  • In comparison, health expenditures across other developed countries outpaced economic growth by just 1.7 times.

And even within the U.S. health matrix, we’ve seen that the public sector does a superior job of controlling costs than the private sector. 

  • According to the Medicare Payment Advisory Commission (MedPAC): “Despite Medicare’s older and less healthy population, Medicare’s per enrollee spending has grown at a rate that is 1 percentage point lower than for private insurance over the 1970-2002 period, and these differences have been more pronounced since 1985.”
  • Medicare is better able to control costs due to 1) its clout in bargaining for lower prices, and 2) its much lower administrative overhead.
  • UPDATE: We do acknowledge that Medicare is an expensive program overall.  Medicare is expected to consume 13% of GDP in next year’s federal budget.  It is crucial that legislators work to reform the Medicare program and to rein in total spending.  However, when you consider the extensive health services that Medicare provides to our elderly population, it has done a remarkable job of controlling costs.

This information strengthens the argument that we should expand the role of the public sector in healthcare, and not be so fearful of anything the AMA decides to term “socialized medicine.”

To the Public: Don’t believe the hype about socialized medicine and the loss of personal choice under a public plan. 

To the President:  It may be time to move away from your unwavering commitment to bipartisanship.  Failure to do so will result in the passage of a watered down bill that doesn’t really accomplish anything.

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