National-health-insurance schemes always start by promising health care for everyone. But they always end up establishing powerful bureaucracies whose purpose is to deny people health care through rationing. That is because in a government-run health system, centralized rationing is the only way to control costs.
Enough is known about the details of the health-care bills taking shape in Congress, with Obama’s support, to give a clear picture of how the president’s national-health-care system would work. Indeed, a revealing report from Obama’s Council of Economic Advisors (CEA), The Economic Case for Health Care Reform, which Obama has touted as showing how he would reduce costs, specifies in detail how thoroughly the new system would be government-run and how it would ration health care for all Americans.
We can start by looking at the mega health-care programs already run by government, Medicaid and Medicare. Medicaid has long severely underpaid doctors and hospitals for the care they provide under the program. As a result, 40 percent of doctors and hospitals will no longer accept Medicaid patients. This restricts access to health care for the poor, as they have to scramble for short and hurried appointments with available doctors, or wait for available hospital care. The result is worse health outcomes for the poor, including more and earlier deaths from heart disease and cancer.
Medicare is headed in the same direction, with lower and lower payments to doctors and hospitals. Doctors are already dropping out of Medicare, and government bureaucrats are already restricting what drugs doctors can prescribe under the program. Average face time with a doctor for a Medicare appointment is now down to a mere 13 minutes. Payments to doctors and hospitals are scheduled to be reduced again next year, by more than 20 percent, which would greatly worsen the problem.
Any new “public option” government health-insurance program of the type Obama vigorously supports would undoubtedly follow these same policies of sharply restricted payments to doctors and hospitals. This is exactly how Obama would follow through on his promises to reduce health-care costs through his reforms. That would result in cost-shifting to patients with private insurance, as has already occurred because of Medicaid and Medicare underpayments, raising private premiums even more sharply.
Obama has said over and over that if you like your current health insurance, you can keep it under his plan. But in the case of employer-provided insurance, it won’t be your choice. It will be up to your employer, who will likely choose to dump you into the public plan, which will cost less because of the restricted doctor and hospital payments — not to mention possible taxpayer subsidies — while private premiums soar because of the cost-shifting. Indeed, even those paying for their insurance themselves may be seduced into the public system because of the savings resulting from its greater power to stiff doctors and hospitals. Private insurers may well adopt the same compensation policies as the government in order to survive. Consequently, doctors, hospitals, and other health-care providers will see themselves subject across the board to the same restricted compensation they receive from Medicaid and Medicare today.
This reduced compensation in turn is going to reduce the supply of health-care services. In this environment, investors are not going to pony up the funds for health clinics and hospitals; new ones will not be built, and existing ones will just deteriorate over time. Investors will not be interested in funding the development and adoption of high-tech medical equipment like MRIs and CAT scans, or the development of biotech or genetic therapies. Drug companies will sharply cut back on investment in the development of new, cutting-edge miracle drugs.
Along with financial capital, human capital will flee health care. Experienced doctors will retire early and seek more remunerative post-retirement employment. Young talent will seek other, more promising professions. Some clinics and hospitals will just go out of business. It is not by accident that Great Britain’s socialized health-care system has such a high proportion of doctors coming from developing countries like India and Pakistan.