Friday, October 2, 2009

The True Nature of Socialized Medicine

Co-editor Chris Izenour offers a clear story of "free" healthcare and its effects.
As found in Capitalism by George Reisman

“To make something free to the individual and chargeable to the group as a whole, is to make the consumption of the individual virtually costless—both to himself and to every other individual

Socialized medicine provides an excellent illustration of this principle. When visits to doctors are made free to the individual and chargeable to the taxpayers collectively, then each individual perceives the benefit of his going to the doctor, while he and every other taxpayer experiences a personal cost equal to the cost of the visit divided by the number of millions of taxpayers. In such circumstances, every individual is encouraged to take advantage of the situation and, as a result, the overall cost to everyone actually ends up greatly increasing.

What happens is this: A doctor’s visit that might cost an individual fifty dollars, is passed on to, say, one hundred million taxpayers, to each of whom it costs a hundred-millionth of fifty dollars. But now, perhaps, two hundred million people each want to make five times as many visits to doctors, and so the total cost to everyone ends up being vastly greater than it would otherwise have. Furthermore, the absence of cost to the individual patient is responsible for an enormous increase in the amount of medical tests, hospitalizations, and surgeries performed, which add even more to the cost of the system. And, of course, there is the substantial overhead cost added by the need for a large bureaucracy to administer the system.

Ironically, even though they pay vastly more, people end up obtaining less actual medical service than before. In large measure, the effect of the system is simply to make doctors’ and other medical fees rise to create shortages of doctors’ time and hospital beds—as manifested in crowded waiting rooms and reduced time with the individual patient, and in waiting lists to enter hospitals.”

Professor Reisman goes further:

“In what is perhaps the supreme iron of the system, in efforts to control costs, the government ends up actually opposing advances in medical technology. It comes to regard such procedures as the implantation of artificial hearts as a major threat to its budget. This is with good reason, since, by the logic of socialized medicine, everyone who needs it is entitled to demand a procedure as soon as it becomes recognized as practicable. The result of this is that the normal, free-market incentives which work to reduce costs before something becomes available to a mass market are not present under socialized medicine. Thus, for these reasons, advances in medical technology become feared and arrested under socialized medicine.”

Professor Reisman also stated:

“Along these lines, the government begins to deny medical care to those whom it regards as only “marginally valuable to society,” such as the aged. From the perspective of the government’s budge, medical care for the aged is a poor investment: the cost is high and the remaining ability of the aged to pay taxes is relatively small in view both of the limitation of their remaining years and their possibly diminished capacity, or total lack of capacity, for working an earning taxable income.”

Professor Reisman clearly states how the health care market operates under a socialized system. One has to wonder why anyone would want to have healthcare managed by the government.

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