Written by John C. Goodman
Bruce Bartlett once worked for Jack Kemp and for Ron Paul. He served in the Reagan and Bush (41) administrations. He even burnishes these credentials over a column at The New York Times economics blog. Yet his columns these days are invariably anti-Republican and increasingly leftwing.
In his latest post, he purports to make “a conservative case for the welfare state.” After accusing Republicans of wanting to abolish Social Security by privatizing it and wanting to abolish Medicare and Medicaid through vouchers and block grants he serves up this tidbit:
In a new paper for the New America Foundation, Professor Lindert…points out that there are huge efficiencies in providing pensions and health care publicly rather than privately. A main reason is that in a properly run welfare state, benefits are nearly universal, which eliminates vast amounts of administrative overhead necessary to decide who is entitled to benefits and who isn’t, as is the case in America, and eliminates the disincentives to work resulting from benefit phase-outs.
This is strange because the rest of the world has come to the opposite conclusion. More than 30 countries have fully or partially privatized their retirement pension systems, having decided that funded pensions — rather than unfunded Ponzi schemes — are good for the economy and good for economic growth. None of these countries, by the way, thinks it has “abolished” social security through privatization. To the contrary, they believe they have strengthened retirement security instead.
Sweden, once thought of as the model for the modern welfare state, now has a full-fledged school voucher system, has privatized large segments of its health care system and is on the way toward privatization of almost all of its welfare state. Britain, which once boasted that its system of socialized medicine was “the envy of the world” has been privatizing health services for the past decade. Since 2008, National Health Service (NHS) patients have been able to choose any provider (NHS, private for-profit, private non-profit, etc.) they wish for elective care.
There are two problems with most left-wingers who write about health care: (a) they don’t know any economics and (b) they only communicate with each other. The first mistake produces foolish statements and the second ensures that the nonsense gets repeated over and over again. Bartlett (who has complained more than once that he was shunned on the right) is only too happy to join the crowd.
For example, Bartlett repeats the leftist canard that Canada’s health care system has lower administrative costs than the U.S. system. This has never been the conclusion of any serious economic study. It is instead propaganda produced by non-economists who wouldn’t know how to measure an administrative cost if their lives depended on it. For a review of the serious literature, see my book Priceless and the relevant chapter in Lives at Risk.
Bartlett also cites OECD statistics showing that the U.S. spends far more on health care than any other country and even claims that we could cut our payroll tax in half if we copied the British health care system. I’ll give him some slack for going to a reputable source, but anyone who writes about health care should know how unreliable those numbers are.
Every developed nation has so completely suppressed normal market forces in health care that no one ever sees a real price for anything. When the national income accounts folks try to measure what is happening in health care, therefore, they are always looking at phony prices. When you add up all the individual transactions (each with a phony price) you end up with one large phony number. Since other nations do more than we do to shift costs and disguise costs, their phony numbers tend to come in lower than our phony number.
A look at real resources, however, tells a more revealing story. We have fewer doctors and nurses per capita, fewer beds, fewer bed days, fewer doctor visits and fewer of most other inputs (but not technology) than the OECD average and our outcomes are as good or better. Again, see the review of the literature in Priceless and the relevant chapter in Lives at Risk.
Sorry to see Bartlett write like Paul Krugman on a subject about which neither is very informed. Both should know better.
Postscript: Linda Gorman, Devon Herrick, Robert Sade and I have produced a comprehensive review of the literature comparing U.S. health care with the health care systems of other countries. It’s a few years old, but still quite good.
John C. Goodman is President of the National Center for Policy Analysis, Research Fellow at the Independent Institute, and author of the bookPriceless:Curing the Healthcare Crisis.
The Wall Street Journal and the National Journal, among other media, have called him the “Father of Health Savings Accounts.” Dr. Goodman’s health policy blog is the premier right-of-center health care blog on the Internet. It is the only place where pro-free enterprise, private sector solutions tohealth care problems are routinely examined and debated by top health policy experts across the ideological specturm.