An Addendum to Brian’s Health Care Lectures

I plan on making a two-part addendum to Brian’s health care series based on my experience debating the French Health Care resolution from Public Forum.

This first post is in embrace of a free market health care system which is at the very least, somewhat similar to our current system. At the very least, it is a criticism of any plan which might jeopardize certain stable elements of our health care industry.  Additionally, it will criticize the French health care system.

My first argument is that socialized medicine tends to limit, if not halt, medical innovation.

The April 14, 2008 edition of the Economist explains this problem;

[The French Healthcare System] does not reimburse new technologies very generously and because of… budgets and fee restrictions, there is little incentive to make capital investments in medical technology.”  Even before the recession hit, France’s pharmaceutical sector planned to reduce its staff by 22,000 fewer researches by 2015.  This is due to both excessive regulation and spending controls.

I feel that this could happen in America if we wanted to dramatically cut costs through government intervention.  Let me explain why.  Assuming government run, French style health care, dramatically reduced health care costs in the US.  This would decrease the aggregate demand for health care services, and therefore reduce the investment in health care industries.  This is supported by Jonathan Cohn, the senior editor for the The New Republic who in 2007, stated that

“Today, we devote 16 percent of our gross domestic product to health care, by far the largest proportion of any country in the world.  [This] incentive for them to do research and development–[is] the kind, that plays a significant role in breakthroughs.”  The United States economy is by far the most productive in the world; we are the only people who can afford to invest these incredible amounts into innovation.

One of the greatest contributors to increased investment spending is excessive profits.  According to the Organization for Economic Cooperation, “[In France] global budgets and fee restrictions for hospitals have led to a recurring lack of capital investment, resulting in a shortage of medical technology and lack of access to most advanced care.”  A universal care system would undoubtable create fee restrictions and greater budget restraints, which would limit patients access to top quality care.

In the US these major costs have brought about significantly greater benefits. The October 30th, 2008 edition of Forbes magazine glowed, “Health care spending also brings huge economic gains by increasing individuals’ productivity. University of Chicago economists Kevin Murphy and Robert Topel determined that the longevity gains associated with medical innovation are currently worth $2.8 trillion annually.” [For example, Pharmaceutical Research and Manufacturers of America stated that “The progress made in reducing death rates from just heart disease and strokes is saving the lives of over 1 million Americans each year.] This is further supported by Research from Columbia University economist and professor, Frank Lichtenberg, who found that every additional dollar spent on healthcare in the U.S. produces health gains worth $2.40 to $3.00.  I don’t mind “wasting” a dollar if its benefits are 240-300% greater.

Also, I am very skeptical of the claim that government control would reduce administrative costs.  It seems to me that profit costs would be much less than the government’s administrative costs.  I have always believed that bureaucratic control and oversight is rarely effective. The Heritage Foundation estimated that due to waste, fraud, and abuse, 30% of the money spent in government health care is wasted.  At the very least, we should be very skeptical of major change.  Just think of the DMV, or a veterans hospital.  The government tends to be very inefficient.

I feel that government health care might become more inefficient and costly over time.  I have heard arguments about social security and Medicare/aid’s rampant growth and inability to change with the times.  It just seems analytically reasonable that government programs tend to get worse over time, while private markets encourage greater efficiency.  Unless an effective government watchdog can restrain skyrocketing costs, I might place my trust in the free market.

Finally, universal care could devastate our future medical output.  This is supported because universal care will decrease the incentive for students to spend time and energy training–for the field suddenly became less profitable.  Additionally, it will make current doctors quit. The Atlanta Business Chronicle, on May 15, 2008, reported that “20% of doctors say they will quit practicing medicine if universal healthcare insurance coverage is implemented.”  We are already on the brink: our doctors are already overstretched and overworked. Reuters reported on November 18, 2008, that “Seventy six percent of physicians said they are working at “full capacity” or “overextended and overworked.”  This was seconded by an October 30th, 2008, article warning Americans to reject Universal health care, written by The American College of Physicians, who concluded that universal health care “will fail unless we address this critical issue of primary care and who is going to take care of people. Having insurance is not the same as having access to care.”

So far, my three objections to universal care have been that it will; 1) hurt medical investment–which is a net 1.8 trillion dollar a year positive boost, 2) make doctor’s want to quit, and students avoid the field, fueling a health care crisis, and 3) increase overall inefficiency and decrease access to care.

If a system can both increase coverage and decrease costs, while still ensuring funds for further investment, as it keeps doctor’s content, I will likely support it.  Though, this seems very unlikely to me.

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