TCS Daily


Taking the System Out of the Health Care System

By Henry Sturman - January 6, 2005 12:00 AM

Health care systems are failing all over Europe. People are paying more and more for their health care through taxes and insurance premiums, and yet the quality of medical services seems to be getting worse and worse. Every year thousands of people die because they were not treated in time due to waiting lists, which are getting longer and longer. Doctors hardly have enough time to provide their patients with information about their illnesses and discuss treatment options with them. More and more patients find they have to deal with a health care system that treats them as obstacles rather than as welcome customers. And their options for choosing better alternatives are limited.

If you want a repairman to come by to check your plumbing he will be delighted to do so, be of service and earn money for the job. He won't ask you whether the problem is really urgent enough for him to come by. He doesn't care, because he's being paid. But if you call your doctor to come by to check your health, chances are you'll have to do your utmost to convince him that your illness is really serious and that you're too sick to go to the doctor's office. And if it's in the middle of the night the doctor will refuse to come by no matter in how much pain you are, except if you're in a life threatening situation. At least this is the case in the Netherlands, where I live. Apparently government regulation makes it not worth while financially for doctors to go on house calls. And in addition general practitioners are simply too busy, because regulation has limited the number of them available.

In short, European health care systems are plagued by: high costs, limited choice, waiting lists and arrogance for the customer. These symptoms are exactly the hallmarks of a communist system (except in the former Soviet Union at least in theory the disadvantages of limited choice, waiting lines, and arrogance were balanced by low prices). The similarity between European health care systems and a communist economy are not difficult to explain. Both are unavoidable results of central planning. While free markets lead to competition, efficiency, choice, innovation and respect for the consumer, central planning has led to uniformity, inefficiency, arrogance and chaos wherever it was tried.

When Milton Friedman was once visiting China, a deputy minister asked him: "Who in the America is in charge of materials distribution?" It was difficult for the minister to comprehend Friedman's reply that in America there is no such person. Materials distribution in a free market is done by thousands of independent entrepreneurs whose actions are coordinated by the price system in such a way that materials are available where they are needed in the quantities they are needed at the time they are needed This anecdote supplies us with a rough test to ascertain whether a certain service is produced primarily via the free market or via a central planning. If there is an answer to the question "Who in county X is in charge of distribution of Y?" then we can assume that Y is produced via central planning, while if there is no answer we can assume that Y is produced via the free market.

In all European countries plagued by health care problems there is an answer to the question "Who is in charge of distribution of health care?" The answer is: the Minister of Health. Because European countries do not have a Minister of, say, materials while they do have a Minister of Health, we can assume that materials are handled mostly through the free market while health care is mostly centrally planned. This also explains the word "system" in the phrase "health care system". The word "system" implies central planning. Note that goods and services handled through the free market are not called "systems". We don't have a restaurant system, a materials system or a grocery system.

The above leads to the following conclusion. If we want health care to be just as efficient, payable, innovative and customer oriented as services such as telecommunication, airplane travel or restaurants, we need to take the word "system" out of the health care system. European health care is not in need of reform but of a radical transformation to the free market. We need drastic health care deregulation and an end to government planning financing. And we need to get rid of the Minister of Health.

This essay received honourable mention in the recent TCS essay contest on fixing European health care systems.

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