Socialized Medicine. Part 4: Summary and Outlook

In the three previous parts of the series, we have discussed three paradigmatic examples of socialized medicine systems outside the USA: Germany, Israel, and Belgium.

Few voices in the US debate on healthcare advocate outright state-run care on the UK or Canadian NHS (National Health Service) model. Therefore, these three examples focused on state-regulated, rather than state-operated, systems.

Each of these systems offers some degree of competition between HMOs, but primarily on quality of services, not on price or coverage offered (which is regulated by the government). Israel’s historically had separate risk pools for each of the HMOs, but these were eventually abolished as they led to de facto bankruptcy of one of the HMOs.

Note that none of these systems would even come close to solvency were it not for mandatory insurance, which dilutes the risk pool by forcing many young, healthy, low-risk patients to join the pools. (The case of Israel, which had 95% of its population in the four authorized HMOs even before membership became mandatory in 1995, is a bit exceptional.)

Of the three systems, Israel’s comes closest to workability, and arguably offers one of the best cost/benefit ratios anywhere, possibly the very best. It however enjoys a unique confluence of favorable circumstances: a sound population pyramid (highest childbirth in the developed world), availability of a reservoir of underemployed primary care workers, and (to a lesser extent) long-standing cultural traditions concerning medicine. Yet even here, the system is showing cracks (notably in terms of long waiting times for seeing specialists, advanced diagnostic procedures,…), and increasing numbers of people are opting for private supplemental insurance. Access to the best specialists and surgeons may not be as much a function of the ability to pay as it is in the US, but it is most definitely a function of personal connections.

Germany’s is the oldest system of its kind. Relatively cost-effective, it has come under the strain of an inverted population pyramid, with ever less young and healthy people paying less and less into the system and ever more aged and frail people draining it. Germany is taking the route of increasingly paring its mandatory coverage down (eventually to bare bones), with private insurance available as an alternative for those who want better coverage.

Belgium’s system has never been particularly noted for its cost-effectiveness, and thanks to a glut of doctors (of variable quality), people take immediate access for granted. The system is coping with the same inverted population pyramid as Germany, plus (thanks to Belgium’s ultra-liberal asylum laws) an ever larger number of refugees and unemployed immigrants taking their toll on the system. The radical course in terms of liberalization and advocacy of euthanasia taken in Belgium (and the Netherlands) cannot, in my opinion,  be understood outside the context of cost containment pressures. (But as per Robert Heinlein: “some things, the more you understand the more you loathe them”.)

A few more general remarks are now in order. First, one should keep in mind that, in all these countries, government or quasi-governmental service is considered a respectable career path, and people of real ability are attracted to it. In contrast, it appears that in the USA, government service is a ‘negative career choice’, and this is inevitably reflected in the quality of the human material staffing any US government office. Even under optimal circumstances, a European (or Israeli) health care system transplanted to the USA would work considerably less well than in the original country.

Second, the phenomenon of ‘going John Galt’ (i.e., abandoning or deliberately cutting back a professional career because of diminishing returns) is not restricted to the USA. Germany actually has known doctors’ strikes, while in Israel, medicine is becoming a less attractive career path due to the combination of long hours and low government-set reimbursement rates. Others scale back the hours in which they are willing to see HMO patients, in favor of ‘private rate’ hours.

Third, none of the systems above have anywhere near the tort/malpractice suit culture that is endemic to the USA. On the credit side, it keeps down malpractice insurance premiums (and, indirectly, cost of treatment to much more reasonable figures). On the debit side, opportunities for redress in the event of true malpractice are very limited.

Virtually everybody agrees that the US system as it stands now has a number of problems that cannot remain unaddressed. However, the wholesale adoption of a Euro-style healthcare system would, at best, only trade one set of problems for another. More likely, it would entail importing the bad while leaving behind the good. At worst, it would also destroy the culture of innovation that has been making US medicine unique.