Friday, June 1, 2007

Socialism by any other name .....

I received an e-mail criticizing me for calling the various 208 programs socialist. The writer said that Chavez socialized oil companies, and Cuba socialized private companies in Cuba. He also indicated there was no way we would ever have socialized medicine in the US.

This is a modification of my response to him and why I think it is important to call these programs of government control over health insurance or medicine by the name of socialism.

Socialism is the political theory where government owns and controls the means of production. Some of those programs discussed by the 208 Commission for future medical care in this state do indeed want medicine in the hands of the government -- doing away with private hospitals and clinics -- and having only public non-profit (i.e., state-owned or quasi-state) hospitals and clinics. This is also the British model.

More common proposals would require that all residents be taxed, and the state or federal government would then dole out the money to four or five or twenty insurance companies who would then pay for the medical care. This is state-run health insurance -- control of the insurance industry -- providing certain proscribed benefits. This is more like Medicare. Economists usually refer to this as fascism -- a state where the government controls an industry, but nominal ownership is left to the individual companies. It is nominal ownership, because true ownership allows the owners to make decisions about what products or services to sell, pricing, choice of customers, etc.

Many programs would require doctors, hospitals and other providers to be paid the same price for the same services, regardless or quality, location or experience, or any other factors. Some do not allow providers to opt out or to offer services that the program doesn’t cover. This is either fascism or socialism, depending on whether there is insurance, and whether the providers are state employees. Although Medicare allows doctors to opt out, a participating doctor can’t offer uncovered services (those not provided by Medicare) at any price to a patient.

From an economic perspective, fascism differs from socialism based on ownership of the productive means. But, fundamentally, there is little, if any, difference. The fundamental nature of all of these programs is government control of medicine and health insurance. Canada, Britain, Germany, France, and Sweden are some of the most discussed medical programs. Under economic analysis, some may be fascist. But they are not referred to in that manner -- they are called socialist medical programs. Each has its own variation. Some have "private" insurance companies, some have only national health insurance or no insurance. Hospitals and clinics can be state-owned or private, quasi-state facilities. Doctors can be state employees or employees or partners in groups or clinics.

But, in all of these countries, there is no capitalist free market in medicine or health insurance. The government determines what services are provided, what is the appropriate and recommended treatment, when you can get that treatment, and what prices the doctors are paid. Fundamentally, that is Statism, and that is what is wrong with these plans. It is not simply that they are economically inefficient – that makes efficiency the standard of judgment. What is crucially, fundamentally, wrong with these plans is that they turn doctors, hospitals and patients into widgets. Individuals have little power or choice over their own careers, jobs, treatment or payment --- someone else, somewhere, in the name of the government (or its quasi-agency), makes those decisions for every doctor, hospital, insurer, patient and consumer. It is precisely because life and health are so important that these decisions should be made individually, without government being involved.

And that describes in detail, precisely, two of the plans that the 208 Commission selected. A third plan has a bit less control -- it simply would force every resident to purchase a state-approved health insurance policy. The fourth option would essentially eliminate health insurance for another 550,000 Colorado residents earning, by making them eligible for Medicaid, thus taking away any incentive for insurance companies to compete in that market because Medicaid is subsidized.

It might be more proper to call these statist or fascist programs. I have no quarrel with that although I don't think most Americans today would understand or recognize those terms. But it is important to name them government control of medicine -- in any of its forms -- socialism, fascism or statism.