US healthcare is already as "socialist" as it can be

US healthcare is an extra-bureaucratic, extra-wasteful form of socialized medicine, not a compromise between socialized medicine and the free market

Let’s talk about the waste and danger of socialized medicine.

What if a distant bureaucrat in a tall building took your hard-earned money from your paycheck and socialized it into a giant collective healthcare fund? What if the bureaucrat determined which doctors you could go to, which procedures you could get done, and which medicines you could take?

You might worry that such a system would produce mediocre care at a high cost. You might worry that doctors, hospitals, and drug companies would have to cater to what the bureaucrat wanted, not what you — the patient — wanted.

Here’s the thing. The system I’ve described above is not a hypothetical scenario or a policy proposal. What I’ve described is the current U.S. healthcare system.

Socialized medicine is here

Right now, money is being taken out of your paycheck and sent to a distant bureaucrat in a tall building who then controls your access to doctors, hospitals, and drugs.

The money that comes out of your paycheck is just called a “premium” instead of “taxes,” and the tall building that the bureaucrat is in bears the name of “Blue Cross” or “United Healthcare” on it instead of “Medicare.”

Instead of having one single bureaucratic entity, we have multiple bureaucratic entities managing multiple pools of collectivized funds: Medicaid, UnitedHealthcare, BlueCross, Medicare, Aetna, and on and on and on.

Some are government-run and don’t keep profits. Some are privately run and do keep profits. But in the end, they all involve socializing money from your paycheck into collective pools under the control of bureaucrats. They’re all entitlement programs. It’s all socialized medicine.

A couple clarifications about the U.S.’s unique form of socialized medicine:

• Socialized medicine doesn’t get more efficient when more bureaucrats are added. It gets less efficient. More bureaucrats means more administrative costs. And having multiple bureaucrats negotiating separately with hospitals, doctors, and drug companies means that the bureaucrats are less capable of controlling costs that a single, unified bureaucrat is.

• Socialized medicine doesn’t get more efficient when bureaucrats get to keep some of the socialized funds for themselves (i.e., when the bureaucrats are private, for-profit corporations).

• Having lots of bureaucrats doesn’t mean that the U.S. healthcare system is some “hybrid” between a market-based system and a socialized system. A system in which the money is taken out of individual consumers’ hands and sent to bureaucrats administering an entitlement program is a socialized system, full stop. The Surgery Center of Oklahoma is market-based. The other 99.9% of U.S. healthcare is not.

What actual markets look like

Asa reminder of what an actual market-based industry looks like, consider the food industry. Consumers choose restaurants and grocery stores based on price and quality. There are no bureaucratic middlemen.

Is money taken out of your paycheck, sent to a collective pool managed by a distant bureaucrat at a food insurance company, and used to provide you access to grocery stores and restaurants? Are there in-network restaurants where you get meals for free? Does the chef send you a bill for $500 if you accidentally go to an out-of-network restaurant? Of course not.

If the food industry worked that way, no one would call it market-based. Yet this is how U.S. healthcare works, and almost everyone — from expert to layperson, from red tribe to blue tribe — operates under the impression that it’s a market-based alternative to socialized medicine¹ or a compromise between socialized medicine and the free market.

Unplanned and irrational

It’s understandable to assume that there must be some advantage to the system. After all, someone designed it, right? The surprising historical truth, without going into the details, is that actually, no, no one designed it. It originated in some relatively obscure wage-control measures enacted during WWII and evolved over time through piecemeal and haphazard legislation and regulation. It wasn’t planned by anyone, and it doesn’t reflect any coherent theory or philosophy.

This is good news for those of you hopelessly endeavoring to “make sense” of the U.S. healthcare system, because you can stop. There isn’t any sense to be made. Nothing about this accidental web of PPOs, HMOs, PBMs, Medigap, Part B, PDPs, balance billing, etc. makes sense.

The same goes for those of you endeavoring to make sense of health policy. You can stop trying to figure out which buzzwords and policy tweaks will fix the mess. “Value-based care.” “Patient-centered medical homes.” “Accountable care organizations.” The list goes on and on. They’re all just re-arrangements of the deck chairs on the Titanic. America’s system of partially privately run socialized medicine networks is fundamentally nonsensical.

You are not stupid. The reason you can’t make sense of the system is that the system is nonsense.

Why it matters

You might dismiss this article as a nitpick about the terminology of “socialized medicine.” But terminology is crucial. The entirety of public support for the current U.S. healthcare system rests on the myth that it is a market-based alternative to socialized medicine.

This myth is perpetuated by critics of the current system as much as it is by proponents. Critics continuously assail the failure of “free-market” healthcare, as if the U.S. healthcare system were market-based at all. In doing so, they do nothing but needlessly generate resistance to reform.

The more compelling — and more accurate — critique is that our healthcare system is more of an insult to Republicans’ principles than Democrats’ principles. The amount of money socialized from Americans’ paychecks and put under bureaucrats’ control in the U.S. healthcare system is roughly equivalent to the entire GDP (not just the healthcare GDP) of the Soviet Union at its peak. Yes, we have as much socialism as the Soviet Union had, and in our healthcare sector alone.

Even implementing a single-payer system would reduce the level of socialism in the U.S. — it would reduce the number of bureaucrats and, depending on its implementation, could significantly reduce the amount of money socialized from our paychecks.

A healthcare system that implemented actual free markets — i.e., having patients pay providers directly for their services — for as many services as possible could, of course, reduce the amount of money socialized from our paychecks further. Supporters of free-market approaches should advocate for limiting the scope of services covered through socialized medicine rather than defending the extra bureaucrats in our current system.

Conclusion

We need no reminders of the results of our nonsensical socialized healthcare system. It eats up 1 of every 4 dollars earned by the typical family. The share of the economy it consumes far exceeds that of other countries, weakening us geopolitically. And it produces bad outcomes: shorter life expectancies than other countries.

For progress to occur, we should stop framing the public debate as “whether or not to implement socialized medicine” and acknowledge that we already have an extra-bureaucratic, extra-wasteful form of socialism — one that benefits no one but the healthcare industry itself.

Note: this is an updated version of a Medium post I wrote a few years ago.

1. For policy wonks: here and throughout this article I’m using the publicly accepted definition of socialized medicine, under which single payer and other similar systems are considered socialized medicine, regardless of facility ownership / provider employment.