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Who has Socialized Medicine?

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Nick Weininger wonders


In debates about health care it is often assumed by all sides that the US has the least socialist, most free-market health care system of any modern developed country...

But is that premise true?

...It seems clear to me that the right criteria for judging how free-market or socialized health care is in a country are:

1. the percentage of GDP (not of total health expenditures) that the government spends on health care

2. the level of regulation the government applies to private health care providers: that is, the degree of government-imposed restriction on whom they can treat in what ways, how much they can charge for that treatment, etc.


He points out that as a percent of GDP, what the U.S. government spends on health care is close to the median for OECD countries.

I suspect that the health care accounts understate government payment for health care in some important ways.

First of all, I believe that when government workers are reimbursed for health care, this is counted as "private" insurance payments. (Please use the comments section to confirm or contradict this.) If so, then a large percentage of "private" health insurance is really government funded.

Second, there is the tax subsidy for employer-provided health insurance. In a sense, the government is funding some of those health care reimbursements, also.

On the issue of regulation, I would rate systems like Canada or the UK as more regulated than the U.S., because doctors work for the government there.

My favorite line about whether the U.S. represents free market heatlh care was what Alex Tabarrok wrote.


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COMMENTS (4 to date)
Half Sigma writes:

I've written previously in my blog how our healthcare system is more like a socialized one than a free market one.

Jake writes:
First of all, I believe that when government workers are reimbursed for health care, this is counted as "private" insurance payments. (Please use the comments section to confirm or contradict this.) If so, then a large percentage of "private" health insurance is really government funded.

Second, there is the tax subsidy for employer-provided health insurance. In a sense, the government is funding some of those health care reimbursements, also.

I am hesitant due to the purely speculative basis of my comment, but here goes:

If intricate aspects of government funded healthcare such as these are not included in American government healthcare expediture reports, then it stands to reason that other governments would not include similar programs.

Thus, their government funded healthcare expenditure statistics would be negatively skewed.

Conversely, more socialist leaning government pride their vast dollar expenditure amounts and would probably take credit where they deserved none over leaving something out that they actually did provide.

It may not be possible to resolve this without a detailed examination of the healthcare statistics used to derive healthcare expenditures as a percent of GDP.

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Now, on a semi-tangent. Is anyone familiar with the workings of the American Medical Association? A friend of mine is under the impression that they restrict the amount of potential doctors entering the market. He also claimed that a new medical school had not been built (until just recently in Florida) for the past 30-some years. Is there any merit to this?

spencer writes:

I'm not sure what you are driving at with your comments on govt employees reimbursed for health care. Govt employees buy health insurance just like employees on most large corporations do. They do not get "reimbursed" in the sense that a payment they have made is paid back to them, like in an expense account.

For all practical purposes the govt employee health care system is private in that the power of the state is not used in the system. It works well because it incorporates a very high level of competition and the existence of a very large "good" pool of insurance buyers. It is a great example of a well managed system-- did not want to call it a business because it is not trying to make a profit.

Virtually all business expenses are tax deductable. So why should health insurance be different?

Victor writes:

I assume you are talking about the National Health Account splits. If so, here's a link that, I believe, confirms your suspicion: Methodology for calculating private health insurance totals in the NHA ... the link only dates through 2000, but I'd be surprised if the data definition has changed. Local, state, and federal employee's health insurance is counted as "private" because they all fall under the umbrella of employer "sponsored" "health" "insurance".

As an aside, I will point out that too many people take these health account numbers at face value. They are indeed *estimates*, but some of them -- private health insurance premiums and payments especially -- are very rough. I am amazed that they can form a reliable estimate at all (come to think about it, I don't know for sure that they actually *have* a reliable estimate).

This brings up another difficult to answer question: are we comparing apples and oranges in international spending analyses?

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