Socialism, oh Socialism......

One rallying cry for those opposed to healthcare reform has been that we are moving incrementally toward the socialistic decadence of western Europe. While these countries provide high quality health care to all of its citizens at half the cost, the very idea of a government run system is anathema to the free marketers here in the good old U.S. of A.

This argument has been very successful in rallying support against a greater role for government in healthcare but is ultimately specious. While it is true that the public plan (proposed as a hybrid of Medicare to compete with private corporate insurance plans) is a definite move toward socialism, the unvarnished truth is that we are NOT moving away from a free-market system.

Medicare has set reimbursements for medical services for years; physician fees are set and DRG's (Diagnosis Related Groups) have set hospital reimbursements for decades. To a large degree, private insurance has followed suit by paying some percentage premium or discount to these set payments. Yet...Medicare (the government) has set the basic price; Medicaid, Medicare's ugly sister, pays at a steep discount to Medicare....often at a level below the providers' actual costs incurred in providing those services.

In our existing system, an entrepreneur is NOT free to make a capital investment which might make him a nice profit....the very bedrock of the free enterprise capitalistic system. He or she must obtain a "Certificate of Need" to build or upgrade a facility. If an entrepreneur wants to build an MRI center to compete with a local hospital, he must obtain a certificate of need from the government--a lengthy and possibly politically charged event.

The Stark Amendment prohibits doctors from referring patients to a facility which they may have built as a way of providing better or more-timely care. Stark reasoned that (oh my god), they might have a conflict of interest and make a few bucks from the investment of time, energy and capital. Stark thus prevents the very entrepreneurial role of return- on- investment embraced by free market capitalism.

Many other examples abound, but only serve to provide further examples of the point that we do NOT have a free market form of capitalism at work in our health care system. Rather, we have a system of authoritative capitalism--the nucleus of the form of capitalism that we have seen at work in China over the past two decades. This system, also based on return-on-investment, picks winners and losers at the discretion of the regulators. This form can and does squash entrepreneurial activity which does not enjoy strict government approval. Unfortunately, the winners so anointed are often chosen on the basis of political influence rather than on total utility to the system. Corruption is always lingering in the background.

Free market capitalism may not work for the healthcare system. Maybe the health care system (like the military) is too important to the public to allow it to function under free market rules. Health care is really not optional. However, the next time that you hear the fear-mongering cry of "Socialism is taking over health care", think about where we really are now and whether an incremental move toward a more socialistic system (government run), is an improvement or a deterioration to the system that we now "enjoy".