Ed Dolan's Econ Blog

Sanders is Right, the US Needs a Healthcare System More Like Those in Europe

Presidential candidate Bernie Sanders has reopened the healthcare debate by urging America to adopt a system more like that of other wealthy countries. “The United States is the only major country on earth that doesn’t guarantee health care to all people,” he says, “And we end up spending far, far more per capita on health care as do the people of any other country: Canada, U.K., France, whatever.”

Yet, even though he’s right, his healthcare platform is under attack, not just from the right, but also from the left. Here is why I think his critics are wrong.

What to call it?

Sanders says he wants a healthcare system like those of other wealthy countries—one that provides better results at a lower cost than the one we have. Unfortunately, there is no generally accepted term that covers all such systems as a class.

Sanders calls his plan “Medicare for All,” but that is misleading. As we will see, his proposal—at least the brief version posted on his campaign website—differs from Medicare in some important ways. It also differs from many of the systems in other countries that he admires most.

Liberals tend to call Sanders’ plan a “single-payer” system. That is correct, in that Medicare for All would in fact be a system under which a single agency would make directly pay healthcare providers with funds from the government budget. However, many of the best healthcare systems of other wealthy countries are not single-payer systems in that sense. Their plans are surprisingly diverse. Some, like those of Germany and France, funnel payments through multiple independent insurance funds. Others, including those of the UK and Canada, are more decentralized than the “single payer” label suggests. None of them covers 100 percent of national healthcare expenditure.

Conservatives describe the healthcare systems of Scandinavia, Germany, France and other wealthy countries as “socialized medicine,” but that term doesn’t uniformly fit, either. Socialized medicine suggests something like Veterans Administration healthcare in the US—a system that not only features a single payer, but one in which doctors are salaried government employees and hospitals are government owned. That description, too, fails to capture the diversity of foreign healthcare systems, where we find a kaleidoscopic mix of salaried and fee-for-service doctors; for-profit, private not-for-profit, and state-owned clinics and hospitals; and both unified and decentralized payment mechanisms.

We could stick with “high performing healthcare systems of other wealthy countries,” but that is too long winded. For this post, I will shorten that to Euro style healthcare, despite the obvious problem that Canada, Australia, New Zealand and Japan also fit the pattern in many respects.

Enough with terminology. Let’s turn to Sanders’ critics, starting with those on the right and then moving to critics on the left.

Conservative Myth No. 1: The US already has the world’s best healthcare system

Many conservatives think, or at least pretend to think, that the United States already has the best healthcare system in the world, or at least that it did before the advent of Obamacare. Senate leader Mitch McConnell and former House Speaker John Boehner are both on record as having said so. A survey from Harvard University, taken not long before passage of the Affordable Care Act (ACA), found that 68 percent of Republicans (but only 32 percent of Democrats) thought the US healthcare system was the world’s best. To support that belief, conservatives often note that world leaders like former Italian Prime Minister Silvio Berlusconi, Jordan’s late King Hussein, and the Shah of Iran have all sought healthcare in the United States.

Unfortunately, hard data do not support that optimistic view. One of the most detailed recent comparative studies of healthcare systems in wealthy countries comes from the Commonwealth Fund. The following figure shows its ranking of eleven healthcare systems along with data on expenditures per capita (evaluated at purchasing power parity to avoid exchange rate distortions):


The United States ranks last in the fund’s overall evaluation of health care, despite having by far the largest per capita expenditures. The Commonwealth study is not the only one to have reached that conclusion. This earlier post discussed other rankings that agree. (We will return to some of the more detailed findings of the Commonwealth Fund report shortly, but the whole report is worth reading.)

Conservative Myth No. 2: European healthcare saves costs only by severely rationing care

The second conservative myth is that Euro style healthcare achieves lower costs only by employing a degree of rationing that would be unacceptable to Americans. Here, for example, is David Brooks, writing the The New York Times:

Sanders would create a centralized and streamlined system. His approach would also, as in Europe, reduce the rate of medical progress, increase the rationing of care, increase the wait times for patients, induce many doctors to retire, and centralize decision-making.

In a recent televised debate, Presidential candidate Ted Cruz put it even more bluntly:

Socialized medicine is a disaster. It does not work. If you look at the countries that have imposed socialized medicine, that have put the government in charge of providing medicine, what inevitably happens is rationing.

Canada is Exhibit A for many who make the rationing argument. Consider, for example, this “explainer video” from Vox, titled “What is Single-Payer Healthcare?” After noting that such a system could save administrative costs, the narrator says, “But there’s a catch.” The catch is said to be longer waiting times and other limits on services, illustrated by a graphic showing that waiting times for health services are longer in Canada than in the United States.

Detailed data from the Commonwealth Fund report show how unfair the charge of rationing is, especially when based on a comparison with Canada. Of the eleven countries covered in the survey, the US ranks last overall, but Canada is next to last. One of the main reasons for Canada’s poor performance is its poor record on measures of rationing, where it has the lowest ratings of the countries surveyed.

  • 48 percent of Canadians reported an emergency room waiting time of over two hours (11th place) compared with 28 percent in the US (7th place) and 14 percent in New Zealand (1st place).
  • 38 percent of Canadian doctors reported that patients had difficulty getting specialized tests like MRIs (10th place) compared to 23 percent in the US (7th place) and 3 percent in Switzerland (1st place).
  • 18 percent of Canadian doctors reported a wait of four months of more for elective surgery (9th place) compared to 7 percent in the US (6th place) and 1 percent in The Netherlands (1st place).

To compare the US with Canada in terms of rationing by waiting, then, is to make a sub-par system look better by comparing it with one that is truly terrible. Most wealthy European countries do better than either of their North American peers when it comes to rationing by waiting, and still manage to spend less.

Instead of rationing by waiting, the American system practices rationing by cost. Relatively few private plans, whether employer-provided or individual, give free access to a full range of providers, drugs, and services. Most middle-class insurance plans steer their members toward hospitals and doctors who are in a preferred provider network and drugs that are on the company’s preferred list. The uninsured often find themselves rationed out of anything but emergency services by high prices.

The burden of rationing by cost shows up clearly in the Commonwealth study:

  • 37 percent of Americans reported that they did not fill a prescription, skipped a test or treatment, or failed to visit a doctor when ill—the worst of all countries. In Canada, the figure was 13 percent, a respectable 4th
  • 28 percent of Americans reported that their insurance company denied payment or paid less than expected for treatments they received, the worst of all countries. In the top ranked countries, Norway and Sweden, the figure was 3 percent.

What is more, the pressure toward rationing by cost is intensifying. A recent New York Times article describes the situation in these terms:

Once emblematic of everything wrong with health insurance, the health maintenance organization is making a grudging, if somewhat successful, comeback. But its reputation for skimping on care has so tainted the plans that the insurers and companies resurrecting them have gone through innumerable steps to try to avoid using the term H.M.O. . . . Despite the stigma and many failed efforts, insurers say they are eager to push a revamped version that revives many of the same features that restrict choices as a way of lowering costs

In short, far from achieving their cost savings through rationing, European systems provide more timely care with fewer people skipping needed services for economic reasons.

Liberal critics focus on cost

Unlike conservatives, liberal critics, by and large, approve of Sanders’ Medicare for All plan in principle. They instead focus their criticisms on its cost.

The most widely publicized critique comes from Kenneth Thorpe of Emory University. As this discussion explains,Thorpe estimates that Sanders’ plan would be almost twice as expensive as the candidate claims. Instead of leaving most middle class households better off, Thorpe claims the Sanders plan would make 71 percent of households worse off, when the taxes needed to fund it fully are set against savings in healthcare costs.

I find Thorpe’s analysis disingenuous. The problem is that he construes Sanders’ plan in a naively literal way that makes it very different from the healthcare systems of Europe as they actually operate.

The first difference concerns just who pays for what under high quality, low cost Euro style systems. When many Americans think of European healthcare, they assume that the government pays for everything, providing a broad range of services at no charge to the consumer. That is not strictly true. The following chart, reproduced from a 2015 OECD report, shows that in other wealthy democratic countries, governments do pay a larger share of healthcare costs than in the US, but they do not by any means pay for everything. The government share of total healthcare expenditures ranges from nearly 90 percent in Sweden and the UK to around 75 percent in Switzerland, compared with a little under 50 percent in the US.


The reasons for the substantial private healthcare expenditures vary from one country to another. Most countries expect copayments for some, if not all, services and medications. In many, people purchase private insurance to cover services not provided in the government’s basic package, for example, private hospital rooms. Some countries do not fully cover dental and vision services. (However, most Euro style systems have special mechanisms in place to shield low income families from some of these cost-saving measures.)

One of the reasons that critics like Thorpe come up with such high cost estimates is that they take at face value the version of the Sanders plan that is found on his campaign website. That version promises to “cover the entire continuum of health care, from inpatient to outpatient care; preventive to emergency care; primary care to specialty care, including long-term and palliative care; vision, hearing and oral health care; mental health and substance abuse services; as well as prescription medications, medical equipment, supplies, diagnostics and treatments.”

I do not think we have to take that language literally in estimating the cost of translating Sanders’ political aspirations into a specific program for implementation in the real world. The very fact that Sanders describes his plan as “Medicare for All” suggests that a final version is likely to include deductibles and co-payments similar to those in Medicare as it now exists for seniors. Nor would we need all of the features of the website version of the plan in order to meet Sanders’ often-repeated goal of equaling the quality and cost performance of other countries.

The hard part lies ahead

It is easy to criticize a campaign slogan and to inflate the cost of ambitious aspirations. Liberal critics, who ostensibly share Sanders’ aspirations, ought to put their energies into the hard part—filling in the details that would allow the US to equal the cost performance of the best Euro style healthcare systems without loss of quality.

Including Medicare-style deductibles and co-payments would go a long way toward closing the gap between Thorpe’s estimates of the costs of Sanders’ healthcare plan and the candidate’s own estimates, but it would not entirely close it. There are many other problems to deal with.

To date, Sanders has focused on two sources of potential cost savings. Administrative costs are one. The Sanders campaign estimates that administrative savings from his plan would reduce total healthcare spending by 13 percent. Thorpe says it would save 4.7 percent. If we split the difference, the savings would be a little under 9 percent. But reducing per capita healthcare spending to the level of The Netherlands (the most expensive after the US among the eleven covered in the Commonwealth study) would require US spending to fall by 33 percent. To get to the level of the UK (the least expensive of the eleven) would require a 60 percent cut. So, even viewed optimistically, administrative savings are just a start.

The second major saving claimed by the Sanders team comes from lowering the price of prescription drugs. The US currently spends about $300 billion per year, or 10 percent of total healthcare costs, on prescription drugs. Cutting that in half—a truly heroic accomplishment—would still save only another 5 percent of total healthcare costs.

So, beyond prescription drugs and administrative costs, where would the additional 20 to 40 percent saving come from that would be needed to bring US healthcare costs down to the level of the best performing Euro style systems? There are only two possible sources: Cuts in quantity of services or cuts in prices.

Cutting quantities is not as easy as it sounds. To be sure, there are some areas where the US does seem to provide excessive services or procedures. For example, the US rate for Caesarian sections is more than 30 percent, compared to around 7 percent in The Netherlands and Scandinavia. On the whole, however, as healthcare economists like Princeton’s Uwe Reinhart note, the quantity of healthcare services provided in the US is actually lower than in other advanced countries. It does not seem realistically possible to cut service quantities further while extending healthcare coverage to the 13 percent of Americans who remain uninsured, even under the Affordable Care Act, and to do so without any loss in quality of care.

Prices, says Reinhart, are the elephant in the room. US Prices for common medical procedures like appendectomies or normal deliveries average three or four times the levels in Europe. What is more, the prices for such services, or for tests like an MRI or colonoscopy, can vary by a factor of two, three, or more even with in a city. Worst of all, says Reinhart, “Fees in the private health care sector have been jealously guarded trade secrets among insurers and providers of health care.” That makes it impossible for consumers to shop around for the best price, as they would do if they wanted a new set of snow tires.

Liberal critics don’t even pretend to address the problem of healthcare prices. The widely cited Thorpe study simply assumes that prices under the Sanders’ plan would be an average of the prices now paid by private insurers and the modestly lower prices now paid by Medicare.

The day after a Sanders inauguration, his healthcare team would have to set to work on tackling the elephant in the room. Unfortunately, there is no single solution to the problem of high US healthcare prices. Instead, the problem would have to be approached one piece at a time. Coordinated bargaining for lower prescription drug prices is just a start.

Lowering the prices charged by the most expensive hospitals to those charged by the most effective ones would help—and no, they are not necessarily the same hospitals. A single government payer would have more bargaining power. Greater transparency in pricing would help, too. So would greater competition among hospitals. The present trend toward mergers and consolidations demonstrably pushes up prices.

Another reason for the higher cost of US healthcare services are higher earnings of physicians. US doctors earn considerably more than their European counterparts do, even when we adjust fees for differences in expenses and cost of living. But changing compensation practices for American doctors would not be easy without reforming other pieces of the healthcare complex. European doctors typically receive free education, so they don’t begin practice with tens or hundreds of thousands of dollars in student debt. Entry into medical schools is not as tightly restricted in Europe as in the United States. And less adversarial systems to deal with malpractice claims free European doctors from a major cost item while giving them less incentive to practice unproductive defensive medicine.

The bottom line

It is hard not to conclude that Sanders is right to think that America needs a healthcare system more like those in Europe. True, his Medicare for All plan is still more aspirational than operational, but what do other candidates offer? Hillary Clinton proposes building on Obamacare, but there is nothing in the byzantine complexity of the Affordable Care Act that makes it easier to solve any of the cost and price problems we have discussed, and many things that make it harder. Republican candidates have a field day enumerating the problems of the ACA, but offer only the vaguest suggestions of what they would offer in its place.

So I say, better to go with someone who has the right aspirations and hope his team can work out the details as they go along. Otherwise, we are stuck with the healthcare mess we have, or with a worse one.

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37 Responses to “Sanders is Right, the US Needs a Healthcare System More Like Those in Europe”

pgdolanMarch 4th, 2016 at 11:05 am

Thank you, Ed, for this very useful information.
We can see how the US lags behind in the field of health care.

By comparison the Dutch health care system in the best offered in Europe in my opinion.: Cheap, efficient and uncomplicated.
Keep up the great work.

windrivenMarch 4th, 2016 at 11:09 am

Excellent analysis. It is impossible to have a meaningful discussion about trimming cost and improving performance when rampant misinformation suffuses the landscape.

The right seems to ignore the competitive disadvantage that our high health care costs puts us at. The left is busy circling their wagons around the tepid insurance reform that is ACA. In the vortex between the two, nothing much is happening to change the status quo.

benl8March 4th, 2016 at 3:47 pm

Very useful information, and difficult to find. I looked at the Commonwealth Fund national comparison pages at the beginning of their report. Among the nations, England came in first in clientele approval, US the worst. "Works well, minor changes needed" shows UK 63%, US 25%, "fundamental changes needed": UK 33%, US 48%, "needs to be completely rebuilt": UK 3%, US 27%. Socialized medicine began in the UK. The Kaiser Family Foundation found that inflation adjusted prices of health care increased by 100% in the last 14 years in the US. And I think there's an OECD report out there that says the per capita expense in the US is 2.5 times higher than the OECD average, while of course our rate of not seeking care because of expense is the highest. And lastly, a look at the Supplemental Poverty Measure shows that Medical Out of Pocket expenses made the poverty rate higher by 3.5%, it would have been 11.8% but is 15.3% because of MOOP. — page 9 of latest SPM. Also, to complete my comment, I remember that Ed Dolan did not allow some previous comments I made to appear because they disagreed with his analysis. I don't expect Ed Dolan to remember this, but I do. So, I wish he would allow his critics to appear. But I continue to read Ed Dolan for his high quality work. I wish Dan Alpert were still appearing on this web page. Thanks for the helpful report, as most of your reports are.

Ed Dolan EdDolanMarch 4th, 2016 at 7:43 pm

Whoa! When did Ed Dolan (me) ever disallow a comment because of its analysis???

My policy is NEVER to delete a comment except for obscene or other ad hominem content, never because I disagree with the analysis.

There are two possibilities: (1) Economonitor staff have the right to pre-moderate comments, but as far as I know, they only consider technical issues. They may have made a mistake. (2) Sometimes I close comments on old posts because of excessive spam, so you may have been unable to post a comment.

Please let me know more about your deleted comment and I will deal with it appropriately. You may post it as a comment here, or you can go to the contact box on my profile and send it to me as an e-mail.

I am sorry if I have inadvertently offended you. And thank you for you comment here, useful observations.

benl8March 4th, 2016 at 11:15 pm

Ed, I've always appreciated your work, but in fact I made two comments that never appeared. I thought it had to do with disagreeing. One concerned Venezuela, long ago. And the other more recently dealt with the banking and financial article you published. I don't know why the comments did not appear. As always my comments are very intelligent. No worries. I'm pleasantly surprised by your depth and clarity. We readers are studying a complex process, and your contributions are valued. Today, I was thinking of placing a link to your health system article, this present one, at the American Prospect site, it contains three articles — one by Gerald Friedman, another by Thorpe, and another by Paul Starr, two anti-Sanders with one pro-Sanders. Yours evens the scale. I write a blog, you can find it if you look. Right now I'm trying to show the disappearance of the middle class. That's an assignment you should take up. Use the Pew Research paper, the Supplemental Poverty Measure, and the Congressional Joint Committee on Taxation description of income distribution, and any other sources you can find, and show that the middle class is kapoot. Thanks, anyhow.

Ed Dolan EdDolanMarch 5th, 2016 at 7:17 am

Yes, middle class is a good topic. Maybe I'll get to it. But I'm afraid I can't find your blog–give me a hint what to search for.

I'd appreciate a link at American Prospect, exactly my intention–to join the debate with Friedman, Thorpe, etc. who have somethings but not everything right.

As for comments–if you post something that does not appear, please send it to me via the "contact" link that appears at the top of every post on the version that has the url (that is, the old version). You have probably noticed that Economonitor has been redesigned, and my posts now appear on the front page, in a different format with a pretty picture at the top and no /dolanecon/ in the URL. I do not personally do the comment monitoring on that version, and it is sometimes slow. Also, both version of this blog have an obscenity filter, and sometimes (rarely) an innocent word or phrase in a paragraph mistakenly sets it off. Anyway, keep your comments coming and use "contact" if need be.

Patrick R. SullivanMarch 5th, 2016 at 11:58 am

Here's an antidote to Professor Dolan's paean to European healthcare, by a Swede who fled to America to avoid it;

Free universal healthcare came about in the 50s as part of the Social Democratic project to create the “People’s Home” (Folkhemmet). This grand effort also included free education on all levels, modern housing for the poor, mandatory government pension plans and more. Let us grant benefit of the doubt and assume that some of its proponents had good intentions; as so often, these intentions paved the road to a hellish destination.

It has taken awhile, but it is now becoming obvious even to the man on the street that every aspect of this project has been a disaster. He may not be able to connect the dots, but he can see that the system is definitely not working as advertised, and it is rapidly deteriorating.

Before the utopian project got under way, Sweden had some of the absolute lowest taxes in the civilized world and, not surprisingly, was ranked at the top in terms of standard of living. The project changed Sweden into a country with the second highest tax rate in the world (Denmark is higher), periods of rampant inflation, and a steadily deteriorating economy.

Now he lives in the USA where he's free to buy his own healthcare and describes the experience;

When I moved to the U.S., our family health insurance took three months to kick in. One of my family members broke a leg in this period. We found a “five-minute clinic” half an hour away, had the leg X-rayed, straightened and casted, with no waiting time — all for $200 cash. That kind of service is non-existent in Sweden. It is an example of how a market, not yet totally destroyed by the state, can create affordable and high quality services.

The reason American insurance-based healthcare is so expensive is that it is heavily regulated and legally connected to the equally-regulated insurance industry. Both are well protected from competition by regulation. Obamacare will make them even more expensive, bureaucratic, and inaccessible. The way to fix U.S. healthcare is by excising the central planners and regulators from it, not by implanting droves more of them.

I have seen (and lived in) the future of American health care, and it does not work.

benl8March 5th, 2016 at 2:01 pm

I see the "Contact" button to find a way to send an e-mail. If it comes to that. After years of reading off the Internet I've found about a half dozen sources that I follow regularly and maybe two dozens I admire a lot. My blog, Economics Without Greed, I taught elementary school in a low-income neighborhood in Oakland, CA, my birth town. I developed a nagging suspicion that poor performance was tied to the income insecurity of parents, and their powerlessness. I looked into economics to protect a small stock market investment in 2006, found an essay by Dean Baker, pulled my money out in time. Kept reading. The concern for low-income citizens has never left, and I continue to seek measures to make prosperity a norm. Thanks for replying.

Ed Dolan EdDolanMarch 5th, 2016 at 2:25 pm

Thanks for your comments. I found them in my comment queue waiting approval and approved them, as well as BenL's missing comments.

I am trying to figure out why these comments are not getting approved automatically. There are some spam filters operating that may be malfunctioning. One is supposed to catch comments with multiple URLs, which is supposedly a sign of spam. Another has a list of key words like "poker" and "pharmacy" that supposedly indicate likely spam. I believe these filters are malfunctioning and inadvertently withholding approval of legitimate comments as spam. I have reset some of the filters and I will monitor the situation more carefully in the future to make sure they are working right.

It is my fault to have assumed that checking the option to "post all comments immediately" rather than to"hold all comments for moderation" would mean that literally all comments would be posted. I have operated under the philosophy that it is better to let all legit comments through and manually delete spam as necessary. However, to reduce spam on archived posts, I have recently begun to close comments on old posts. If you or anyone else finds comments closed on an old post you want to comment on, you can use the "contact" button to notify me.

Thanks for your participation in the discussion!

Ed Dolan EdDolanMarch 5th, 2016 at 2:33 pm

Well, of course, there is no system that makes everyone happy. The bottom line is, though, that the US system makes too many people unhappy. I do agree with your Swede that Obamacare is a kludge that will make a significant number of people more unhappy than before, even though it does make some happier.

The really big issue in Obamacare is the preexisting conditions clause. It is just plain impossible to run a genuine private insurance system if you don't allow experience rating, which means not letting people who already have known losses insure those losses. That would be like allowing someone with a house on fire to first call 911, then call to sign up for insurance. At the same time, the preexisting conditions clause is by far the most popular element of Obamacare, regardless of ideology or party affiliation, so the "repeal and replace" crowd on the GOP side all promise to keep it. I just don't see how you can do that without going to some full-scale social insurance.

Business beatMarch 6th, 2016 at 7:03 am

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Patrick R. SullivanMarch 6th, 2016 at 11:03 am

I think the biggest problem with reforming the American health care delivery system (and thus making it as affordable as it was when Eisenhower was President) is to stop with the focus on insurance. A card in your wallet that says 'I'm insured', is not the same thing as medical care.

Which the Swede in the article I linked to, goes into chapter and verse. Any system that has one party receiving a good or service that is provided by a second party, with payment provided by yet a third party, is going to be suboptimal. Something economists should know in the marrow of their bones.

There are plenty of reforms out there that would improve matters (especially for the poor and chronically ill). One obvious thing would be to open up competition in health care. If you want something to drop in price a sure fire way to do it is increase the supply.

Stop with the pointless 'insurance for all' schemes. That's counterproductive.

Adam IraeMarch 7th, 2016 at 5:13 am

The problems with the linked article are a) The Swedish system beats the American system thoroughly and comprehensively on the measures of results. Life expectancy, infant mortality, amenable mortality, years lived in good health, maternal mortality, years lost to ill health, etc. I notice the author of the linked article spends a lot of time on reasoning about how he believes healthcare works, and avoids any comparisons of results.

b) The author makes some rather peculiar assertions about how things work in Sweden. Things like people having very little money left over after paying 70 % tax. Anyone who has ever worked in Scandinavia knows this is nonsense.

c) It is from the Mises Institute, which champions "an unfettered free market" While this does not necessarily make it wrong, it should be approached with some critical reading skills when an article scrupulously avoids mentioning real-world results, or anything from the actual discipline of health care economics.

James PugsleyMarch 7th, 2016 at 4:31 pm

Great article that gave me a more nuanced picture of existing alternatives to American healthcare. I've wondered though- what would happen to employment if we brought our per capita health expense down to the next-highest one, say, the Netherlands? If the reform happened within a short length of time, something like 5% of our GDP, now going to excess health spending, would vanish in a short length of time. Millions of workers have now invested in training and years of their careers in this surplus economic sector that adds little value, thanks to our distorted insurance system. This means to me that we would have a much deeper problem that simply figuring out how to prune wasteful medical spending- we'd have to have a plan to employ the vast numbers that would be put out of work, at some salary similar to what they have now, if we were to avoid a bad recession. Such an outcome would probably crater the political careers of whoever fomented the change. The article tells me that the change isn't just single payer vs. not-single-payer, but we'd have to know what we'd be changing to in much more detail so we could predict its effects on employment, and prepare for them.

Ed Dolan EdDolanMarch 7th, 2016 at 6:24 pm

It seems to me that there is little chance that the changes could happen all at once. The problem of excess healthcare costs has too many small pieces; they could not realistically all be fixed at the same time.

Of course, every time you get rid of a bad policy, some people who invested in it lose their jobs. For example, I am among the many people who think that ethanol subsidies have been bad economics and bad for the environment–but ending them would cut corn farmers' incomes and end the jobs of people who work in ethanol distilleries. That is one of the reasons that even people who dislike ethanol usually talk about phasing out the subsidies, not ending them cold turkey.

Patrick R. SullivanMarch 8th, 2016 at 11:15 am

Adam, I even quoted from the man's 'real world results';

'When I moved to the U.S., our family health insurance took three months to kick in. One of my family members broke a leg in this period. We found a “five-minute clinic” half an hour away, had the leg X-rayed, straightened and casted, with no waiting time — all for $200 cash. That kind of service is non-existent in Sweden.'

Sweden was the fourth richest country in the world in 1950, l;argely because it was a low-tax, free market economy. It was always filled with the healthiest people in the world (Swedes in the USA are pretty healthy too). Since the Swedes decided to go 'third way socialism' the situation has deteriiorated, and they've been backing away from it.

Like most European countries, Sweden is trying to be more like America, now.

Patrick R. SullivanMarch 8th, 2016 at 11:24 am

Here's a longer piece, by economist Nima Sanandaji, that strengthens the argument made by the Swede writing at the Von Mises site;

From which;

'[Statistically] Nordic nations are characterised by unusually good health [and long life expectancy]. Paradoxically, they are also world leaders in public spending on disability and sickness absence.'

The author goes on to cite a study from the OECD that shows that 5% of national income in Norway was spent on unemployment due to disability and sickness in the years, 1990, 2000, and 2005. In Sweden it was 4.4% and 3.2% in Finland. Compared to 0.4% for Japan and Canada, and 1.3% in the USA.

The anomaly extends to Nordic youth too. They have exceptionally high levels of 'retired' 18-29 year olds in Denmark, Sweden, Finland and Norway.

Which allows their country's statisticians to avoid classifying them as 'unemployed'.'

Ed Dolan EdDolanMarch 8th, 2016 at 7:59 pm

Thanks, I'll look at this. The disability thing opens a whole can of worms. If a country has higher disability rates, does that mean that more people are really disabled, for example, because they receive poor heath care, or does it mean that there is some incentive for people to declare themselves disabled so as to get benefits?

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blueicetwiceMarch 13th, 2016 at 3:26 pm

This is what the Bern is proposing and the author is endorsing.

"Bernie’s plan would create a federally administered single-payer health care program. Universal single-payer health care means comprehensive coverage for all Americans. Bernie’s plan will cover the entire continuum of health care, from inpatient to outpatient care; preventive to emergency care; primary care to specialty care, including long-term and palliative care; vision, hearing and oral health care; mental health and substance abuse services; as well as prescription medications, medical equipment, supplies, diagnostics and treatments. Patients will be able to choose a health care provider without worrying about whether that provider is in-network and will be able to get the care they need without having to read any fine print or trying to figure out how they can afford the out-of-pocket costs."

This program would be administered by the federal governmental unit. It would also collect
premiums from recipients and provided means testing for those whom could ill afford the cost.

Once again, this is supported by those whom always think taxpayer support programs work
the best.

This health program would fail like the National Flood Insurance has and most other governmental unit handouts; but it is more than just about providing health coverage.

The real goal – is to provide dependence and other class of voters for the Socsheviks.

And if your program works so well as the Professor maintains, why just simply make it
completely voluntary, which of course you will not.

It is another ruse by the Progressoes and the educated.

Ed Dolan EdDolanMarch 13th, 2016 at 8:20 pm

You say, "The real goal – is to provide dependence and other class of voters for the Socsheviks."

You could possibly be right, although you provide no evidence, and I assume this is just your opinion. However, I would point out that in the many OECD countries that do have universal health care, the hope (if that was their intended purpose) that they would create a permanent majority of socialist voters has proved ill-founded. Essentially all OECD countries, from UK to Sweden to France, have had democratic transitions back and forth between leftist and rightist parties. The only thing the universal health coverage systems has created is a clear majority of voters on both left an right who recognize that those systems are better than the alternative American variant. I have never heard of a party (at least one with enough support to get into parliament) in any OECD country, that proposed giving up universal health coverage once it was established.

Do you have any counterexamples? Maybe I am missing something.

blueicetwiceMarch 14th, 2016 at 11:04 pm

My Dear Esteemed Professor:

"You could possibly be right, although you provide no evidence, and I assume this is just your opinion."

A record 47% of Americans, pay no income tax. The largest or second largest budget item by the central government unit is spending on welfare programs. There is a strong correlation between spending and targeted statutes for special interest groups (minorities; LGBT; labor gangs; non-profits; green earthers; etc) whom provide massive electoral support (+66%.).

The cause and effect of this behavior is empirical in nature but maybe also supported

"However, I would point out that in the many OECD countries that do have universal health care, the hope (if that was their intended purpose) that they would create a permanent majority of socialist voters has proved ill-founded."

Ever since the end of WWII, Europe has drifted to the left and even further to the Shinning Path. This is clearly supported by the lack of GNP growth and per capita for the past three

"Essentially all OECD countries, from UK to Sweden to France, have had democratic transitions back and forth between leftist and rightist parties."

I must take exception to your claim, Professor. The Euro political divide is rather blurred
these days, especially if we apply classic American political standards. The right has more kinship
with the middle than what is suggested. This is demonstrated by the unrelenting move to
the quintessential socialist model. Again, in the past three decades, could name only a
single Euro Prime Minister, whom was unequivocally a Conservative. I ask the audience,
what does that say about the political structure of Europe? Is the Prime Minister of Great Britain a Conservative? He is a vassal only in name. And what of Chancellor Frau Merkel,
she is a heretic to true Conservative values. Even the much touted Ms Le Pen and her "right wing" party do not pass muster, unless they are at a carnival ! Please, examine the platform of the National Front and one would be shocked at what they espouse. There is even a Euro nexus with the "thousand points of lights" and Bush jr claim of the Conservatism.

"The only thing the universal health coverage systems has created is a clear majority of voters on both left an right who recognize that those systems are better than the alternative American variant."

The World is a much better place because of America and it's leadership and free enterprise.
And anyone whom welcomes the machinery of government and the destruction of freedom of association, is by any consensus, no Conservative.

"I have never heard of a party (at least one with enough support to get into parliament) in any OECD country, that proposed giving up universal health coverage once it was established."

Yes, Professor Dolane, this is indeed true. The voting in Europe is fractional and most parties
receive some form of proportional representation. This is why it requires so many times the formation of coalition to form a government. It is easy to see why little can be done or changed
with so many parties involved in governance. Another salient difference between the continent and
the brave new world.

Oddly enough, Conservative practices and values can be found in the east, which had to
endure Communism and their overlords, the USSR. The Baltic states and Poland are exciting
growth stories because they have embraced the free market model.

Allow me to remind all, that one of America's greatest economic expansion occurred
during the time period of 1869 to 1918; wherein America lacked not only a Central Bank
but a massive and intrusive federal governmental unit.

The hour is late, so I must take leave. I hope to reply to your health thread tomorrow.

Ed Dolan EdDolanMarch 15th, 2016 at 7:10 am

Thank you for your amplification. I see now that our apparent disagreement hinged largely on the definition of conservative, which I agree, does differ between Europe and the US.

Your definition of conservative appears fairly close to what Friedrich Hayek used in his famous essay "Why I am Not a Conservative." (… )

Hayek described himself as a classical liberal, not a conservative. As such, he had no problem with the concept of a social safety net. In "The Road to Serfdom," he wrote "[T]here can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody. … Nor is there any reason why the state should not assist the individual in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. " (… ).

I hope you are right to think that Europe has permanently exiled conservatism, in the Hayekian sense, to the political sidelines. Perhaps we will be lucky enough to see the same thing happen in the US. If better healthcare policy moves us in that direction, then I will welcome it.

blueicetwiceMarch 22nd, 2016 at 11:00 am

[Previous comment too long requiring an additional post.]

Why is there no pricing transparency? Reduce the countless hours of paperwork required by both the insurance industry and governmental units. These are hidden costs, which the consumer can not account for but must pay.

Reform the deform AMA's educational mandates, which requires a minimum of 12 years to
as long as 18 years, until a practitioner is fully approved by the AMA to operate without

Allow for client options of other providers, which the clinic can not provide rather than engage in the time honor industry practice of steering.

Before the critics blame the free market for it's ills, allow it to operate in a competitive market
place unrestricted before it is denounced for it's high costs and exclusions.

The industry itself must also be restructured so that it become more transparent and competitive rather than sheltering itself with varies and unwanted, opaque practices; which
only helfes to fuel inefficiencies and thus inflationary price increases.

The health industry is neither healthy nor sane and requires a series of serious dozes of medication: It is in fact on a gurney, destination – intensive care.

blueicetwiceMarch 24th, 2016 at 8:46 am

[This is the beginning of the second post above]

have always been rather amused by these types of articles, in which cost
comparing is made between to vastly different health deliver systems.

Certainly, we can all agree that the current private health care costs, as well as public welfare health costs are reaching levels which may not be sustainable or begin to effect productivity
and the economy.

We should also be able to agree that government provided health care service will never
become efficient, in either providing well executed services nor limiting high costs increases.
The VA health system is an example of objective failure, not to mention the broken UK health
system, etc.

Those who think that governmental unit employees are devoted to their clients as are the
private sector are gravely mistaken. There are only a hand full of agency that generate a
meaningful profit, with the rest ever soaring costs. It is little known but government consumes 1/2 of all health care costs. Moreover, 1 our 4 New Yorkers are on Medicaid. Over $133 billion per year or 1/3 of medicaid is to fund welfare rest home coverage for the indigent.

Added to your hidden medical costs, are the hundreds of thousands of visits to hospitals
ER and admission by freeloaders as mandated must serve laws. About 25% of my county
tax bill, goes to operate our welfare hospital. Another 25% goes for welfare programs, all the
while county roads and bridges are in disrepair.

The salient question is, why is the private health care system failing, when 1/2 century
ago it provided such good care and was affordable?

Ask yourself, why is the AMA graduating the same level of doctors that it did in the 80s?

There is all to little price discovery by the consumer, which of course is encouraged by the health industry. How many consumers would shop for groceries not knowing the costs until checkout? There are federal mandates for restaurant caloric intake values but no mandated menu pricing for medical services, for the LARGEST industry in America! It is no wonder
that your "medical providers" are leftwing voters and supporters.

The medical industry does not wish to compete based on pricing. They form large associations of doctors and clinics, wherein the patient are treated within it's system. As explain by one practitioner, the smaller clinics are either merging or closing because of costs;
paper work and the insurance industry reluctance to provide inclusion.

The fact is, whether due to regulations or contrivance the medical industry does not operate
on free market principals, but rather in a vacuum wherein pricing and the laws of supply and
demand are conducted.

Rest assured, that at least 10% of your care costs are due to governmental units mandates
and legislative statutes. The dilemma is that Socsheviks continue to debase the private health system annually with more mandates, which of course in due time, begins to effect the
economic welfare of the end user. As the cost rise, the Statist begin their calls for a new government program to solve the failure of the free market place. A great scheme to advance one's ideology! Shackle the market place with fiats and regulatory agencies, until efficiency is
destroyed and no longer affordable and then send governmental units to rescue!

The insurance industry is also a culprit, as a third party intermediate their primer concern
is only that of maintaining gross margins. This is certainly witnessed by their gleeful, willingness to partake in Barrocko Care. Only after the withdrawal of their guaranty to subsidized their underwriting losses, have they threaten to leave ACA.

What are the solutions? Remove all governmental units' interference. They are only capable
of turning junk into gold and gold into lead.

Cash and carry. The consumer must be personally responsible for providing for their health
maintenance. This is not the responsibility of your neighbor nor that of Rotham's village(s).
There must be consequences for bad behavior, which the Socshevikes allow to propagate
because it serves their political agenda. There are clinics which do operate on a C & C,
which results in pricing significantly lower than their traditionalist counterparts.

Why have plastic surgeons fees increased less than the CPI for the past thirty years?
Because most of their procedures are not covered by insurance.

In the Minneapolis and St Paul metroplex, the entire "community" is controlled by three
large medical organizations. Why is this allow? Why permit such concentration? Where is
the call for anti-trust action?

Why is there no pricing transparency? Reduce the countless hours of paperwork required by both the insurance industry and governmental units. These are hidden costs, which the consumer can not account for but must pay.

Reform the deform AMA's educational mandates, which requires a minimum of 12 years to
as long as 18 years, until a practitioner is fully approved by the AMA to operate without

Ed Dolan EdDolanMarch 24th, 2016 at 9:56 am

I don't know. Word Press and Intense Debate both have various filters that can be set at different levels to speed the comment process or, alternatively, to filter unwanted content more aggressively. I have set the filters at a permissive level that should, it seems to me, allow all legitimate comments to post immediately, but for reasons I do not understand, that does not happen. Please keep in mind also that the filters do serve a legitimate purpose, since this site, like others, is impacted by a steady stream, sometimes dozens per day, of spam comments offering everything from lady's handbags to plagiarized term papers. That spam itself disrupts the comment process if unchecked.

I have recently begun to monitor the manual moderating function more actively to speed comments that get stuck in moderation. However, please keep in mind that my normal daily activities often take me away from the screen for hours at a time and prevent timely moderation.

Please do not let these difficulties discourage you from actively participating in the comment stream. I value comments as one of the most rewarding parts of blogging.

blueicetwiceApril 12th, 2016 at 6:15 am

Mr Sullivan, a most excellent link and read.

This was indeed a very well written opinion piece. I shall
bookmark it for future purposes.

blueicetwiceApril 12th, 2016 at 6:25 am

Hear is another example of services in an industry too heavily regulated,
a ride to your local hospital. According to IRS records, the first responder industry
has an average of 50% net margins. Now, it should be no surprise that your
local community fire department provides this service with the margins and
profits being buried in the annual financial report.