The Hidden Logic of Health Care

At my birth in 1936 in Hungary the country already had 30 years of experience with a nationalized health care system, founded in 1907. That program was called “National Workers' Sick-Benefit and Accident Fund”; it was replaced, in 1928, with the “National Social Insurance Institution.”  The country has had such a system ever since, more and more inclusive and entirely state run and funded.  By the way, the first insurance program that only covered part of the population, miners, went back all the way to 1496.

With this in my background, is it any wonder that I have a rather negative view of the health care debates in the United States. Every member of my own family had directly experienced the benefits of so-called “socialized” medicine from birth on forward. In addition, my Grandfather was a doctor; and his grandfather had been a very prominent doctor as well, responsible for all mental diseases in Hungary. Therefore we all had close contact and knowledge of the profession that delivered the services—always being paid civil services wages.

These memories arose today because Brigitte came across a brief book review, H. Gilbert Welch’s Less Medicine, More Health (Beacon Press, 2015). Welch argues that we have too much health care with many decidedly negative concomitants—and that it costs way too much. The brief article also suggested to me that we tend to overlook the fundamental logic of health care—and how that logic is violated when we let the Hidden Hand decide how medicine should be practices.

Another memory arose as well. Once long ago in Kansas City I gave a talk to a group of medical students. I’ve completely forgotten my subject, but afterwards I had a chance to socialize with a small group of students. I made an attempt to discover what had motivated these men (all men then) to follow their chosen profession. An amazing six of the seven people I talked with all pointed to the potentially high income medicine promised them. One man only half shamefacedly confessed that service to humanity had drawn him into doctoring. And yet another: While living in Minnesota, we got to know a skin doctor who’d moved to the United States from Canada and, well-established there, actively boasted that he’d crossed the border because the Canadian system had failed to give him the opportunity to turn his arduous learning into wealth. I’m actually understating what all he said…

The logic of health care therefore runs something like this. Medicine might attract too many people to practice it for the wrong reasons. For them a Free Market medicine provides all sorts of wrong incentives—to treat more, and more intensively—because every transaction increases income. In a socialized framework they can never get rich; therefore those drawn to medicine will be drawn by its inherent character, the opportunity to help people. Much as in Minnesota we changed skin doctors, so throughout our life here we’ve sought out doctors who have the genuine motivation and avoided the others.

With nationally controlled income for doctors, many of the problems cited by Dr. Welch would disappear on their own accord. We’d have much less unnecessary testing, fewer visits, lower administrating staffing, and much more affordable and probably more effective health care. We’ve seen it practiced like that in Hungary, Poland, Germany, and France. When you work as a provider of care in countries like that, you won’t need anyone to manage your wealth. You won’t have any. But you’ll live in comfort. And I’d like to tell all this to the Hidden Hand—if only I could see it.