Does Socialism Work? Debunking the Myth

By John C. Goodman

David Himmelstein and his wife Steffie Woolhandler are associate professors at Harvard Medical School. Together they are a one-couple team, promoting Canadian national health insurance in the United States. They provide the intellectual leadership for the Physicians for a National Health Program. They are about the only academics around whose scholarship routinely gives aid and comfort to the advocates of socialized medicine, unless you count the Commonwealth Fund. They are pleasant (at least to me); they are dedicated; and they are wrong.

I first debated David on a college campus about 15 years ago. My most recent debate with them is reprinted in Annals of Thoracic Surgery. In between the two debates I had an epiphany. I discovered that the worst features of the Canadian system are not the differences with our own system, but the similarities.

But first things first. Since our last debate, new information has become available that helps debunk three widely touted myths.

The Myth of Low Administrative Costs. In a series of articles, all published in medical journals, Himmelstein and Woolhandler (H&W) claim that the administrative costs of the Canadian system are much lower than our own – so much so that we could insure the uninsured through administrative savings alone. However, H&W are not economists. They count the cost of private insurance premium collection (e.g. advertising, agents’ fees, etc.), but they ignore the cost of tax collection to pay for public insurance.

Economic studies show the social cost of collecting taxes is very high. Using the most conservative of these estimates, Ben Zycher has shown that the excess burden of a universal Medicare program would be twice as high as the administrative costs of universal private coverage.

The Myth of High Quality. H&W say that Canadian life expectancy is two years longer than ours, implying that the health care systems of the two countries have something to do with that result. Yet, doctors don’t control our overeating, overdrinking, etc. Where doctors do make a difference, the comparison does not favor Canada. In an National Bureau of Economic Research study, David and June O’Neill draw on a large US/Canadian patient survey to show that:

The percent of middle-aged Canadian women who have never had a mammogram is double the US rate.
The percent of Canadian women who have never had a pap smear is triple the US rate.
More than 8 in 10 Canadian males have never had a PSA test, compared with less than half of US males.
More than 9 in 10 Canadians have never had a colonoscopy, compared with 7 in 10 in the US.

These differences in screening may explain why US cancer patients do better than their Canadian counterparts. For example:

The mortality rate for breast cancer is 25 percent higher in Canada.
The mortality rate for prostate cancer is 18 percent higher in Canada.
The mortality rate for colorectal cancer among Canadian men and women is about 13 percent higher than in the US.

Amazingly, there are quite a few people in both countries who are not being treated for conditions that clearly require a doctor’s attention. However:

Among senior citizens, the fraction of Canadians with asthma, hypertension, and diabetes who are not getting care is twice the rate in the US.
The fraction of Canadian seniors with coronary heart disease who are not being treated is nearly three times the US rate.

Apparently, putting everyone in (Canadian) Medicare leads to worse results than having only some people in (US) Medicare – ensconced in an otherwise private system.

The Myth of Equal Access. The most common argument for national health insurance is that it will give rich and poor alike the same access to health care. Surprisingly, there is no evidence of that outcome. Indeed, national health insurance in Canada may have created more inequality than otherwise would have existed. (Similar results have been reported for Britain.) The O’Neill’s study shows that:

Both in Canada and in the US, health outcomes correlate with income; low-income people are more likely to be in poor health and less likely to be in good health than those with higher incomes.
However, there is apparently more inequality in Canada; among the nonelderly, white population of both countries, low-income Canadians are 22 percent more likely to be in poor health than their American counterparts.

Be careful what you ask for, you may get it.

John C. Goodman, Ph.D., is founder and president of the National Center for Policy Analysis and a Senior Fellow for the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. The full text can be found at http://www.john-goodman-blog.com/. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.