All Commentary
Wednesday, August 1, 1962

A Reviewer’s Notebook – 1962/8

If You Are Against state-inflicted public health insurance, financed by a compulsory levy, it is enough in many quarters to mark you down as a moral monster. By im­plication it is assumed that your “negativism” means that you want poor people to suffer. But does a compulsory national health pro­gram, “free” to everybody out of taxes, actually result in a healthier society?

Since many foreign nations, from England and Germany in Europe to New Zealand in the Antipodes, have had ten, twenty, and even thirty years of experi­ence with their own versions of compulsory “medicare,” there should be a definitive answer to this question. Helmut Schoeck, a professor of sociology at Emory University in Georgia, has pinned down a vast number of pertinent facts in his symposium, Financing Medical Care: An Appraisal of Foreign Programs (Caxton, 348 pages, $5.50). The testimony of Dr. Schoeck’s many experts is that it is the general tendency of “government medicine” to inflate the cost of medical service without adding anything of value to the general level of health. It may seem like the humanitarian thing to do to make medical service a “free good,” like parks or streets or the water from the public drinking fountain at the corner. But actually everybody loses un­der most public health programs.

The Value of Nothing

The reason, if we look at the ex­perience of England, France, Ger­many, Sweden, Austria, and New Zealand, is that people do not value what they presume they are get­ting for nothing. What results from public medicine is a big over consumption of trivialities, with doctors at their wits’ end to find time to spend on serious matters.

Speaking of compulsory medical “insurance” in Germany, Werner Schollgen remarks that personally “costless” access to doctors and medical supplies “encourages the waste of huge amounts of money and medical resources on minute and imaginary ailments. Conse­quently, it cannot really, in the long run, help individuals with prolonged and catastrophic ill­nesses.”

Looking at the British experi­ence, Colm Brogan discovers that the National Health Service which came out of the Beveridge plan “celebrated its tenth birthday without having built one single hospital throughout the length and breadth of Britain.” English girls, says surgeon Reginald S. Murley, decline to take up nursing because of the inadequacy of the hospitals under the compulsory health program. The deficiency is “somewhat concealed by the num­ber of girls from Ireland and the Continent who come to Britain to nurse.”

In Germany, “free” medical treatment is accepted with con­tempt by many people who, after taking the pills they get for “noth­ing,” turn right around and spend their own personal funds on the most arrant type of quack. In Sweden, which adopted a compul­sory health service in the nineteen fifties, Alfred Zanker tells us that “the captive beneficiaries of com­pulsory health insurance… de­mand medical benefits far beyond what their specific contributions pay for.” The general attitude is “I had to pay my share, now it is the state’s turn to render any service I can think of.” “Over-treatment” and “multiple treat­ment” follow. With state “medi­care” piled on top of other com­pulsory welfare expenditures in Sweden, “tax evasion has become a matter of economic survival.” The population is not noticeably healthier. And freedom from “ma­terial” cares has not made the Swedes any happier. “Sober sta­tistics show that social ills have continued in the era of an ever more perfect welfare state. The crime rate, especially among the younger generation, has reached frightening proportions. Wide­spread alcoholism has not been curtailed. The divorce rate has reached new heights, and despite generous state subsidies… the birth rate in Sweden has fallen back to its low level of the 1930′s.”

No Way to Fix Responsibility

This sort of quotation might be multiplied many times over from Dr. Schoeck’s book. The reason for the degeneration of medicine when governments try to match free pa­tients with “panel” doctors, or dictate arbitrary “fee schedules,” or otherwise interfere with the market pricing of medical service, is that there is no accompanying way of instilling responsibility in either patient or physician.

As economist Dennis S. Lees says, the humanitarian cry for “adequacy” comes to mean any­thing we want it to mean. There is no way of deciding between the competing claims of “adequate” medicine and “adequate” public housing and “adequate” nation­alized train service if marginal utility ideas are excluded. “We do not know,” says Mr. Lees, “nor is anything built into the machinery of the public sector to tell us, whether production is optimal or not.” Yet in a world of scarce goods—and medicine is still a scarce good—there must be some way of deciding where optimal as against “adequate” resources are to go. “Men and materials em­ployed to build hospitals cannot at the same time be used to build schools and factories… Firms producing medical supplies cannot at the same time be producing ex­port goods.”

When doctors and hospitals and medical supply companies price their services, there is an auto­matic check on their indiscrimi­nate use, and money is left for education and factory building. Hardhearted? Well, if it were left at just that, it would be hard­hearted. But doctors, from time immemorial, have not attempted to wring big fees from those who come to them asking for chari­table care. The price system, which can provide for “optimal” discrim­ination, is compatible with volun­tary relinquishment of time, en­ergy, and pills to the occasional patient who cannot pay for what he receives.

Some Hopeful Signs

In America, there is a tired feel­ing in many quarters that compul­sory “medicare” is part of the in­evitable “wave of the future.” But “it ain’t necessarily so.” In both Switzerland and Australia, the voters have firmly rejected the de­mands of the socialists that medi­cine be made a compulsory “free good” financed by taxes or social security levies. The Swiss, in 1958, had 1,109 separate voluntary in­surance plans recognized by the federal government, with a mem­bership totaling 4,011,925. “Be­tween 80 and 90 per cent of the Swiss people are members of such associations,” says Marcel Gross­mann. The federal government in Switzerland does give some sub­sidy help to voluntary plans which meet formal requirements as non­profit mutual companies, but that is all. The insured have free choice of physicians, and the doctors set their own price on their services. The Swiss are certainly as healthy as the Swedes or the English, and they are not afflicted with sky­rocketing medical costs. Moreover, the traveler in Switzerland notes practically none of the social ills that afflict welfarist Sweden.

In Australia, where the Labor Party ruled at the end of World War II, there was an assumption that the people would vote a Na­tional Health Service Act on the order of the British legislation. But, miraculously as it must seem to us, the Australian Liberal Party beat back the Laborite de­mand for a comprehensive compul­sory system for supplying doctor’s services, drugs, hospitalization, and dental benefits.

When a Liberal government as­sumed office in 1949, a physician, Sir Earle Page, was appointed Minister of Health. Sir Earle helped put the Commonwealth government behind a subsidy of voluntary insurance societies which left the Australian equiva­lents of our own Blue Cross and Blue Shield to take care of their own members. Nobody in Austra­lia is compelled to protect himself by insurance against the “hazards of living and dying,” but the coun­try is pretty well blanketed by the voluntary system.

The Australian Health Plan, says Sir Earle, “has started to pay for itself in shorter illnesses, less sickness, shorter hospitalization, with a consequent turnover of hos­pital beds and a saving of millions of hours of working time.” And because there is no central admin­istrative expense, “the govern­ment’s paper work in connection with the Plan is carried on in Canberra, the national capital, by no more than fifteen or twenty people. Everything else is handled—and well handled—by the insur­ance societies themselves, each of them dealing with its own sub­scribers.”

One Control Leads to Others

One fear expressed by Dr. Schoeck and some of the contribu­tors to his symposium is that when governments undertake to provide comprehensive state plans for compulsory medical insurance, the mounting costs will lead to regimented preventive medicine. Dr. Schoeck raises by inference the Orwellian specter of compul­sory setting up exercises, compul­sory fat-free diets, compulsory ra­tioning of cigarettes and alcoholic beverages, and other such inter­ferences with the ancient idea that a man’s home is his castle, includ­ing the type of table he may care to set in the castle’s dining room. The logical authoritarian answer to high compulsory medical costs is an equally compulsory enforce­ment of “preventive” health stand­ards. Well, if compulsion is to be the universal wave of the future, why not? So, one-two-three-four, bend that back.

Libertarians who would prefer to leave the promotion of any and all medical benefits to private hands will not fail to note that the coercive “wave of the future” has swept over “voluntary” Switzer­land and Australia to some extent: both countries tax their citizens to provide relatively small amounts of subsidy money for bestowal on selected private medical insurance societies. But if one must choose between types of public health co­ercion, the Swiss and Australian systems are certainly greatly to be preferred to the British, German, Austrian, or Swedish variety. At least, the patient and the doctor are left free to find each other in

Switzerland and Australia, on terms that are mutually agreeable. At least there is a competition be­tween societies to serve their members. As for the U.S., it has the grand opportunity to remain with the Swiss and the Australians on the side of relative medical vol­untarism. Dr. Schoeck’s book illu­minates a score of pitfalls and out­lines at least one or two ways to relative sanity. One can hope for it a wide reading before the coun­try makes its final choice between common sense and going off the deep end.     



What Is True Benevolence?

There is increasing evidence that more and more of our phys­ically fit citizens are enjoying their position as voluntary victims of the welfare state. Through their own thoughts and efforts they are becoming unfit, unwilling, or unable to take care of themselves. Nations grow strong through the strength of their citizens. The citizen’s strength is gained by struggling, mentally and physically, to meet difficulties and overcome obstacles. Let us grow under the attitude developed by the exchange of service instead of withering under the attitude of entitlement through outright gifts at the hand of a so-called benevolent government.

Ralph E. Lyne, Taylor, Michigan

  • John Chamberlain (1903-1995) was an American journalist, business and economic historian, and author of number of works including The Roots of Capitalism (1959). Chamberlain also served as a founding editor of The Freeman magazine.