If you want a glimpse of what you can expect from total government health care, you can look at public housing.
I visited a hospital in Poland in 1990 that was in worse shape than this housing project on the left. The building itself was more deteriorated, the equipment was old, much of it was not working, and patients were lined up in the hallways with no privacy.
I had been invited by the local doctors to tour the facilities because they had heard an American was in town. They were seeking any type of second-hand equipment that was being replaced in the US, because it was better than what they had. These were highly educated people, very compassionate and concerned for the welfare of their patients, and they worked long hours. The only difference is that everything depended on the government, and the government was broke. It had other priorities.
Typically when a government procures something, whether it be a high-rise building, a hospital, or a hammer, it pays more than the market price that a private buyer would pay. Government decisions to buy things are politically driven, not market-oriented. The manufacturers and builders know this and tend to overcharge because they know the government’s decision is not economically driven.
When government projects are new, they are often “state of the art” and their planners and procurers demand that they look good–for political reasons. However, you can not depend on future budgets to keep the new item in good repair. Nor, can you expect the people that move in and live there to care for it as though it were their own. In conclusion, government-owned housing tends to both cost more and get run down and torn down faster than privately owned houses.
We could expect that true socialized medicine, e.g. doctors employed by, and hospitals owned by government would suffer the same fate as what I witnessed in Poland.
Habitat for Humanity on the Right Track
One program that has been successful, and has been supported by President Jimmy Carter, is habitat for humanity. Habitat for humanity is a system that begins with community involvement and leads to low-cost ownership of a house. Like the old-fashioned barn-raising, a group of community volunteers get together to help a family starting out, or down and out, by basically building them a house and deeding it over to them at low cost. In this case, the person living in the house is the owner and will be more likely to care for it than if it were government-run. It is especially true if the owner of the new house lives among his neighbors that helped build it. The social pressure of seeing them face-to-face each day provides an extra impulse not to fail to maintain the house.
Governments Can’t Imitate Habitat for Humanity
The tragic history of government high-rise housing projects, and the success of low-cost housing like Habitat for Humanity, inspired Congress to use its political power to coerce banks to provide subsidized loans. But the banks, corporate institutions aimed at making money, would never actually subsidize a house. Therefore the government had to guarantee a subsidy to the bank if the owner failed.
The problem? A house will still cost a market–or above market–price. Thus the owner was not getting a house for a lower price–just lower payments (that were often scheduled to readjust after 5 years). No one is voluntarily helping someone to get on their own feet. Further, the owner, not living among the politicians and Wall Street bankers that provided the loans, had little social pressure to avoid a foreclosure.
The Result? Everyone suffered.
But Wait: The Democratic Federal Health Care Bill is not Socialized Medicine
This is the ironic twist; it is a government guarantee of corporate health care. The proposed federal health care “solution” is thus parallel to the low-cost housing loans scheme. Like the government gave the big banks a guarantee on their unsound loans, they will now give insurance companies a guarantee on unsustainable health insurance policies. Insurance stocks are skyrocketing on Wall Street.
Therefore insurance companies will continue to decide the fate of a patient’s health care. Because insurance companies are primarily driven by economic incentives, they will care for a person’s life no more than a socialist government will. They will be happy to continue to provide a service, year after year, because every year they continue to make a profit. However, if third-party employers and governments are to remain the primary payers of insurance policies, the prices of medical cost will continue to escalate at out-of-control rates.
The Federal Health Care bill has not provided any real fixes for third-party payments, defensive medicine, excessive medical lawsuits, and inflated costs that are the source of escalating health care prices.
Individuals–unless they are very wealthy–will still not be able to determine the fate of their own bodies. They will be given “choices,” among which none will be ones the preferred by the patient. They will be treated “equally,” just as the patients in hallways in Poland in 1990.
The Coming Health Insurance Bubble
All of the stars are aligned for the creation of a health care boom followed by a bust. The big health care bubble is coming. It portends to be bigger and nastier than the housing bubble. Of course, we could do something to create sustainable health care, but that would take the involvement of local communities in a way parallel to habitat for humanity, where you move people from dependence to independence in housing. But, of course the Federal government could then not claim political success. But this present “success” will be short-lived if it passes. Be prepared to watch health insurance stocks skyrocket as everyone gets on the bandwagon until the smart investors begin dumping their stocks in a couple of years. It took about a decade for the housing bubble to develop and burst.
March 22 Update:
Wall Street Seems to agree. Stocks rise to new 18 month high as government promises more health coverage using 118 agencies to oversee payments and 16,000 new IRS employees to enforce it. A bubble will follow, but maybe not burst until after the 2012 election, if the Democrats are lucky.