In Part I of this series, healthcare economist John C. Goodman listed five things we need to know if we are to better understand health care. He lists:

• In a Public System, Patient Needs Compete Against Taxpayer Needs
• Personal is Better than Bureaucratic
• Competition is Better Than Monopoly
• Profit is Just Another Cost
• Markets Work

In Part I, I discussed the first two and today we’ll discuss the last three.

Competition Is Better than Monopoly

Competition always produces lower costs and higher quality. Healthcare is no different from this universal market truth. Proponents of Medicare for All discount this truth – or fail to understand how Medicare in its current form is actually administered.

Medicare is a government supported system of healthcare for senior Americans, but it is largely run by the private sector. Traditional Medicare is administered by Blue Cross -Blue Shield, a private healthcare insurance company. More than one-third of Medicare enrollees are actually in private health insurance plans, called Medicare Advantage. Although the government pays most of the premium, these plans are administered by multiple private insurers who compete with one another. If a senior is dissatisfied with one private insurer, they can change to another or even switch back to traditional Medicare. There are choices available. Government-run systems offer no such choices.

This is not to suggest that private health insurance is perfect. But private sector competition works – which is evidenced by the fact that Medicare Advantage plans are the fastest growing segment of senior healthcare. The Brookings Institution concludes that these Medicare Advantage plans have lower costs and higher quality than traditional Medicare.

Profit is Just Another Cost

Profit is considered something evil on the left. The word “profit” appears in the Times editorial several times and always in a negative way. The Dallas Morning News titled its investigative series “Pain & Profit”, as though profit were the cause of the pain. This is misleading in the extreme.

Goodman explains that every single dollar spent in our health care system ends up in someone’s pocket. Every one. That means someone has a financial interest in every spending decision that is made. It is equally true that every single dollar not spent stays in someone’s pocket a little longer. That would be the taxpayer.

If you’re going to understand healthcare economics, you’re going to have to separate emotions from economic facts. There is nowhere on the American dollar that you will find the words, “profit” or “wage” or “gift” or “tax rebate.” A dollar is just a dollar. The bill is just as valuable regardless of how you acquired it.

Next, you must recognize that profit is a cost of doing business. Without profit the business will fail. It’s a cost that cannot be avoided. Liberals want to eliminate the “greedy corporations” but fail to understand that eliminating profit will eliminate the products and services that these corporations provide – including jobs! This is just as true for governments as it is for private business. Governments must also show a profit for their work – or the taxpayers will feel the pain. The costs of capital are the same.

Researchers find no difference between for-profit and non-profit hospitals. Non-profits are run the same way and they pay their administrators the same way. They simply use their profits to increase salaries and build more buildings rather than pay dividends to shareholders. In fact, several studies of for-profit hospitals have found they actually provide more charity care than non-profits in the same market.

Markets Work

Lastly, market capitalism works. It is not perfect; just better than any other system on the planet at distributing economic prosperity across all economic classes. Goodman explains: “The beauty of the marketplace is that it makes it in everyone’s self-interest to meet other people’s needs. The more needs you meet, the more money you make. Ergo, if we want more needs to be met in better ways, we need more reliance on the market in health care, not less. A lot of people on the left hate that idea.”

In a government-run healthcare system, costs are controlled in two ways; delaying access to healthcare by long waiting times and denying access to expensive treatments the government doesn’t consider “worth the money.” In a market-driven healthcare system, competition with other private insurers gives incentives to provide timely access to quality treatments lest their competitors steal their market share.

No system of healthcare is perfect, but a private insurance system gives people choices and competition lowers costs and raises quality. A government-run system like Medicare for All will eliminate all private health insurance, all competition and all choices. It will lower access to healthcare and lower quality, especially for the poor. This is true in every other socialized medicine system in the world and we would be foolish to believe it will be any different in this country.

Do you understand health care? Most Americans list health care as one of their leading concerns but many do not really understand the issue, including many physicians and nurses.

Most Americans would agree that providing good healthcare for everyone should be a priority. That’s why most support the idea of universal healthcare coverage. But the issue is far more complex than simply giving everyone a health insurance card to put in their wallet. After all, what good is that card if you can’t get the healthcare that you need?

A recent article written by healthcare economist, John C. Goodman, illustrates the point. Goodman is a well-known and highly respected expert who freely criticizes both Republicans and Democrats when their rhetoric doesn’t make sense. Goodman cites anecdotal evidence of failures in providing good healthcare from National Nurses United, the country’s largest nurses’ union. To prevent such failures in the future, the union favors a universal, government-run health care system. A leading editorial in the New York Times endorsed their way of thinking.

Goodman correctly points out that such failures occur every day – in every country in the world. And more than 90 percent of the time, the insurer is the government. He reports that one out of every six British cancer patients is denied access to the latest cancer drugs because the British National Health Service has decided that the drugs are too costly relative to the gain. In other words, believing that eliminating private health insurance will solve these problems is naive in the extreme!

Medicare for All, single-payer healthcare, and socialized medicine are just euphemisms for government control of all healthcare. It means the elimination of private health insurance – which means the elimination of all competition in healthcare. If you believe the current system fails to deliver the quality of care you deserve, just imagine what it will be like when there is no alternative. This is the situation now in the Veteran’s Administration and we all know the scandal just a few years ago when veterans were dying while waiting to see a doctor. That’s what you can expect from government-controlled healthcare.

Goodman lists five fundamental truths we need to understand about healthcare:

• In a Public System, Patient Needs Compete Against Taxpayer Needs
• Personal is Better than Bureaucratic
• Competition is Better Than Monopoly
• Profit is Just Another Cost
• Markets Work

In a Public System, Patient Needs Compete Against Taxpayer Needs

Goodman tries to help us understand healthcare economics. A dollar is a dollar. It doesn’t matter whether it is spent on healthcare or something else. When it is spent for one thing, it isn’t available to spend on something else. That means healthcare spending is a matter of priorities. Just as a family must prioritize spending within a budget, government must do the same. The real issue is how should decisions on health care spending be made?

In a government-controlled healthcare system, spending on healthcare must compete with spending on other taxpayer needs, like defense, education, and welfare. Goodman says on the same day as the Timeseditorial about private healthcare failures, the Dallas Morning News reported a horrible incident in the Texas Medicaid program. A severely disabled child who was not given proper care is now in a “vegetated state.” This is only one of hundreds of examples of patient abuse the newspaper discovered in a year-long investigation of the state’s Medicaid program. In other words, government-run programs can have disastrous outcomes at least as bad or worse than private healthcare.

Personal Is Better than Bureaucratic

Every time we go to the drug store and purchase over-the-counter drugs we are making a choice. We are choosing lower prices and convenience over going to see the doctor where we pay higher prices and suffer inconvenience. We are opting for self-medication over seeking professional advice. Most of the time this works well for us but sometimes it does not. Sometimes that cough that won’t go away is pneumonia instead of the common cold.

Goodman is the “father of Health Savings Accounts”, an idea he pioneered in 2003 to give consumers a larger role in making their own healthcare decisions. By empowering consumers with HSAs, he gave patients more control over their healthcare spending. This is good for controlling the rising costs of healthcare and for making the system more efficient. But this kind of empowerment would be eliminated by a government-run system. When bureaucrats are in charge, there is only one way to do everything.

(For more on Understanding Health Care, see Part II next week.)

Medicare for All has come and gone already. That’s the opinion of insurance analyst, Robert Laszewski. He knows what he’s talking about.

The proof is in the response by Democrats to Senator Elizabeth Warren’s rollout of her Medicare for All plan. Until she laid out the details of her plan she had the greatest momentum of any presidential candidate. But since the rollout her numbers are dropping fast and Mayor Pete Butigieg is the latest darling of the left. It seems that even Democrats can’t stomach Medicare for All.

According to the Real Clear Politics average of national Democratic primary polls, Warren has dropped from a high of 27% in October’s average to 16% at the end of November. In New Hampshire alone, her support fell by half, while she lost five points in Iowa during the same period.

The reason for this plummet in the polls is obvious – voters don’t believe her claims that Medicare for All will lower healthcare costs and not require huge tax increases on the middle class. Avik Roy, healthcare economist, states, “Elizabeth Warren’s health care plan could increase the deficit by more than $15 Trillion over decade. The Warren plan is overly optimistic in its effectiveness at raising tax revenue without harming economic growth. In addition, the plan will incentivize soaring demand for health care services, increasing health care spending.”

Laszewski says Warren is already backtracking from her Medicare for All plan by advocating the Public Option for ObamaCare. She now says she would first enact a voluntary public option, toward an eventual move to Medicare for All, over a period of three years, as she built public support for a single-payer system.

This is precisely the Biden plan, and the Obama plan, and the Pelosi plan, and the Harry Reid plan – exactly what they all stated before the passage of ObamaCare. They all want to get to a single-payer plan eventually – just as soon as they can convince enough voters to go along with them!

I wrote an earlier post called Democratic Healthcare Choices in which I described three different Democratic healthcare plans of presidential candidates that all arrive eventually at the same destination – single-payer healthcare. There was the immediate approach of Bernie Sanders and Elizabeth Warren, called Medicare for All, which promised single-payer within 4 years. Then there was the middle of the road approach of Kamala Harris that promised single-payer in 10 years. Last, but not least, there was the Biden plan of single-payer healthcare sooner or later. Different roads to the same destination.

Now that it is clear, (just as in 2010) that the timing isn’t quite right, yet, for immediate elimination of all private health insurance – as Medicare for All demands – Warren will wait a little longer like Biden to eliminate your private health insurance when it is forced out by the Public Option. (To understand why that is inevitable, read my post Pubic Option Kills Private Insurance.)

That leaves only Sanders still advocating for immediate Medicare for All, but that’s not surprising since it was his idea in the first place. But don’t think for a minute any of the other candidates will spare your private health insurance. It’s only a matter of time until every Democratic presidential candidate will put us all on government-controlled healthcare.