Seven Reasons To Abandon The Public Health System – OpEd

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By Łukasz Jasiński

Despite the numerous permanent problems faced by public healthcare systems, a significant number of people (such as citizens, politicians, and doctors) still seem to deem them necessary and believe that the problems associated with them can be solved by, for example, better management, increased expenditure, or central planning. Therefore, in this essay, the main arguments in favor of a gradual departure from public systems will be presented alongside the benefits of (unhampered) market solutions.

1. The Public System Overly Restricts the Role of the Consumer

In the market, despite the important role of entrepreneurs and capitalists, it is the consumer who is the most important link. In the economic sense, the whole process and organization of the production structure is subordinated to consumers. They are the ones to decide the success or failure of entrepreneurs because everything is subordinated to their satisfaction. The greatest “weapon” in their hands is the freedom of choice. Entrepreneurs have no other option than to meet their needs in the best possible way.

Therefore, meeting their health needs under market conditions would produce many benefits. The consumer would be free to choose from the offers of health insurance or entities providing their services directly. Competition processes would emphasize improving quality, lowering prices, or offering a wider range of goods and services.

Meanwhile, in the case of public systems, there is no mention of consumers, only patients, the insured, or beneficiaries. Although the public system seems to be subordinated to them, the impression is false. The insured have little or no influence on how much money will be allocated to specific services, which doctor will be assigned to them and when, or what means or technology they will be treated with. In short, their key role as consumers in the public system is strongly marginalized if not eliminated altogether, while their sovereign decisions are replaced by arbitrary procedures devised by officials and politicians.

2. The Public System Adversely Restricts the Role of the Producer/Supplier

In the case of the manufacturers and suppliers of medical services, the situation is very similar. If they wish to operate within the public system, they must meet a series of criteria imposed on them not by the consumers guided by their value judgments but by a bureaucratic system, which further inflates the costs. Although these manufacturers and suppliers are private entities, they can never fully develop their capacities as they would be able to do under market conditions.

They gain more freedom when operating outside the public system, but due to its universality, the number of customers is limited in advance. Not everyone can afford to pay a second time. Another problem may be further regulations limiting the scope of services offered on the market so that they cannot compete with public solutions.

Furthermore, another adverse effect of this situation may be the belief of a part of the population that public systems, known for their problems, nevertheless offer “free” healthcare, while market solutions, despite the better availability of services, offer higher prices.

3. The Public System Leads to the Creation of an Irrational Structure for the Financing of Medical Services

The universal healthcare system imposes taxes and premiums on the “insured” to finance access to medical services. It also leads to the creation of a single-payer system—a state-owned insurer responsible for the appropriate allocation of the funds obtained in this way. However, such “insurance” has nothing to do with market insurance, where the calculation of premiums based on the health risk of the insured plays a key role. Moreover, one cannot get insurance against all possible occurrences, such as against events that have already occurred or in cases where it is not possible to apply the theory of probability and thus estimate the risk.

“Lumping” everyone together into one “bag” or pot also has the fatal property that the insured do not purchase medical services based on the price system. This applies both to correctly assessed health insurance premiums and to direct payments. The direct expenditure on specific medical goods or services is marginalized, which makes it difficult to discern the situation. “Free” healthcare creates the illusion of abundance and accessibility when, in fact, artificially stimulated demand leads to queues and limited access to services.

Another disadvantage is that the single (public) payer is also the main buyer of medical technology. Because it pays for it with money that is not its own, it does not show the characteristics of a frugal consumer. Suppliers are also aware that there are no mass and individual consumers behind their purchases. Therefore, they do not have sufficient motivation to reduce costs and prices, even tending to artificially inflate them.

4. The Public System Introduces a Bad Relationship between the Patient and the Doctor

Another group that cannot properly spread their wings in the public system are doctors. To save money, they are burdened with a lot of administrative responsibilities that distract them from their patients. Each procedure, order of research, or consultation must be described, and the expenditure of funds on it must be justified. This has at least two negative consequences. First, physicians must comply with systemic guidelines rather than the needs of patients. Second, when attending to patients, physicians spend more time at their desks absorbed in paperwork. As a result, the public system has a negative impact on the development of the relationship between the patient and the doctor.

Health is an intimate sphere of the patient, and therefore, the patient’s problems need to be approached humanly. This requires time, attention, and empathy from doctors. In the rigid framework set by public systems, this is difficult to achieve.

5. The Public System Limits Our Responsibility for Our Own Health

When consumers do not provide medical services for themselves through their own expenses, it is more difficult for them to understand their own needs. I am not arguing that the public system automatically leads to irrational behavior in terms of one’s own health but rather that depriving individuals of much of their decision-making power in this area can result in undesirable consequences.

If society is convinced that the public system gives it the right to healthcare, its attention and vigilance regarding possible solutions offered on the market may be weakened. Thus, the social activity in taking care of one’s own health through proper nutrition, a healthier lifestyle, systematic use of services offered by private institutions in the field of periodic preventive examinations, or the monitoring of the market in search of solutions protecting against the consequences of serious diseases or accidents decreases.

Analogously, spending one’s own money on food makes the consumer pay attention to the quality and price, as well as show more interest in each product in a broader context. On the other hand, when the funds are beyond one’s direct control, the consumer may adopt a more passive attitude.

6. The Public System Leads to Further Interventions in Other Areas of the Economy

Organizing one’s own private healthcare system requires individuals to have adequate funds at their disposal. The more resources that people spend on purchasing medical services, the more satisfactorily their needs will be met. It does not matter whether one must buy private health insurance, buy a medical subscription, or pay for the services directly out of one’s own pocket. Thus, any intervention that directly or indirectly limits this range of possibilities may be met with less public support.

This will also make individuals more aware of their own needs and interests. In addition, such an open environment will increase the opportunity for a better understanding of market processes—in particular, the effects of interventionism in healthcare and the market economy in general.

7. The Public System Limits Aid to the Most Deprived

In contrast to public solutions, there are many charitable institutions on the market that use voluntarily raised funds to help those in need. They do not operate based on rigid rules; thus, their activities are not burdened with additional costs or bureaucracy. Such institutions do not have a centralized structure managing them from above, which allows them to develop quickly where it is most needed. An additional benefit is greater social awareness and the development of appropriate ethical attitudes.

In addition, it is worth noting another important fact: private charitable institutions do not create the illusion of helping. They clearly communicate that for their actions to succeed, they need the generosity of specific people willing to give part of their property to others. By contrast, no politicians who promise additional spending on healthcare to help those in need can show their sensitivity and ethical attitude in the same way because they do not devote their own resources to that purpose.

Conclusion

There are certainly more reasons to abandon public systems. Contrary to popular belief, public systems are not special or specific, and they can be implemented without much concern for our health. It is important for the public not only to be aware of the disadvantages of public systems but also to see the advantages of market-based solutions.

About the author: Łukasz Jasiński is economist at the Mises Institute of Economic Education (Poland, Wroclaw) and assistant professor at the Faculty of Economics of Maria Curie-Skłodowska University in Lublin (Poland).

Source: This article was published by the Mises Institute

MISES

The Mises Institute, founded in 1982, teaches the scholarship of Austrian economics, freedom, and peace. The liberal intellectual tradition of Ludwig von Mises (1881-1973) and Murray N. Rothbard (1926-1995) guides us. Accordingly, the Mises Institute seeks a profound and radical shift in the intellectual climate: away from statism and toward a private property order. The Mises Institute encourages critical historical research, and stands against political correctness.

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