What Most Americans Don't Understand About Socialized Medicine
We pause this midlife crisis for an economics lesson ...
After my post about my son’s experience in a hospital in Portugal (and perhaps in particular the mention of a child dying at said hospital on the day he was admitted) several people reached out with personal messages, questions or comments.
Many wanted more information about navigating the medical system here; some just wanted to offer emotional support for what I went through but a few had comments along the line of “well, that wouldn’t have happened if you went to a hospital in America.”
“I’m sorry, what wouldn’t have happened?”
I wouldn’t have walked out of the hospital with no medical bill not even a stupid deductible or copay? Yes, that for damn sure that doesn’t happen in America.
Maybe they thought that children never die in America because health care workers are over worked and make mistakes despite doing their very best?
I can’t argue that it would have been easier if I was fluent in Portuguese but hey that’s on me - I’m the one living in their country.
Truly though I believe the core issue is a long-held belief by many Americans that socialism and in particular socialized medicine are dirty words.
I’m always amazed when people who have never tried something somehow consider themselves experts. This isn’t my first rodeo living in a country with socialized medicine, so I actually think I have a pretty good perspective on the good, bad and the ugly of it. However, the reason I’m a fan isn’t due to my life experience but oddly enough because I was an economics major.
When people fight over whether or not America should allow universal health care (and no Obama care didn’t really give us that) they argue over free markets; or barriers to non-essential procedures; concern that there will be no incentives for medical breakthroughs. Personally, I believe there are ways to solve for those problems. What you can’t solve for is inelastic demand.
What is inelastic demand?
The easiest way to explain it is via an example. Let’s say you need a repair for your home or your vehicle. You will most likely look for service providers, check online reviews and compare pricing. Given the ease of information access it is very hard for someone to over charge you. If they did the market would kick in - people would stop using them; there would be bad online reviews and the expensive or bad quality outlier would need to improve quality and reduce their prices.
Compare this to going into an emergency room after a car accident; or a heart attack or a child’s airway closing due to tonsil inflammation.
Do you ask for a cost estimate up front? Do you look at the Google reviews? If the doctor wants to order crazy expensive procedures like MRIs or CAT scans, do you suggest that you’ll drive to another hospital for a comparative quote? Do you negotiate the costs - Ok we’ll do the bypass surgery but only if you take $1,000 of the price? (I have to admit the snarky part of me would LOVE to do that one day just to see the look on the doctor’s face!)
No, you don’t. That is inelastic demand in action. The problem is with most medical procedures effectively you're a captive consumer - your demand isn’t flexible because you have no choice. That is inelastic demand.
Now compare this to a single payer such as a government that can for example go to the manufacturer of hernia meshes or stents and guarantee a large order and negotiate the price. Compare that to being able to evaluate the fair market cost of a colonoscopy and telling all the hospitals this is what will be paid.
Without a single payer who commands economies of demand and the ability to negotiate quantity discounts the individual has no power. After all you can’t go to your local cardiologist and say, “Hey, I think I’ll do three heart transplants this lifetime can we work out a bulk price.”
You still might think socialized medicine is a bad idea. That’s your prerogative but the next time you go to the doctor and see the insane prices on your itemized bill maybe you’ll remember this article and at least you’ll know why. (Not to mention discussing inelastic demand at a cocktail party will make you sound very smart.)
Maybe the next time you need a mammogram you’ll pair up with a friend and can ask the doctor when she will be running a BOGO.
Maybe when she gives you a shocked look and informs you that isn’t how things work maybe you’ll rethink the whole capitalistic model of medicine and consider giving socialism a try.
Good post - thank you. It ignores that the US (with it's lack of "socialized medicine" not only spends orders of magnitude than other G7 countries, it has worse outcomes by almost any metric. Further, much of US healthcare is "socialized", i.e., Medicare (which people generally quite like) and is further "socialized" due to the tax deductibility of insurance premiums - a horrible accident of history that sadly linked health insurance to employment.
I'll also note that there are multiple other solutions to Universal Access than Single Payer (like Canada or UK), Germany has private insurance as a first line solution and, here in Spain (and, I believe Portugal), private insurance is readily available at minimal price.
US subsidizes drug discovery for the rest of the world and, even worse, allows rapacious behavior by investor-owned hospitals and insurers. I could go on but...
M.E.G., I do love your writing, and when you sink your teeth into something.., yikes.
I tried to think of something humorous to say here but nothing comes to mind. FFS.
‘Experts’ suggest that are many factors that contribute to the high cost of healthcare in the US including wasteful systems, rising drug costs, medical professional salaries, profit-driven healthcare centers (!!!), overprescribed medical practices, health-related pricing, etc. Put simply, greed, gouging, control and paranoia are among the many perverse pillars that now support the US medical industrial complex.
Hardly the model of public service to trumpet about..
:P