Socialized Medicine

In 1961 Reagan spoke out against socialized medicine. Since 1965 when Medicare and Medicaid were enacted, the federal government controls payment for most U.S. healthcare: hospitals, drugs, doctors, nurses, and so on. Has this been a blessing or a curse?

Milton Friedman, the small, talkative, smiling genius, perhaps the best economist ever, argued that governments should give the deserving needy money to buy education, housing, and healthcare, but should never give goods or services such as govenment schools, government housing, or medical services.

Would this small change make a big difference? Prior to 1965, U.S. health insurance was medically underwritten. When a person applied for insurance, they were weighed and tested to see how healthy they were. If they were unhealthy, premiums were high, and coverage limited.

The result was that people had powerful financial incentives to adopt a healthy diet and lifestyle. Under Medicare, Medicaid, and Obamacare, medical underwriting is illegal and the financial incentive for a healthy diet is eliminated. Epidemics of obesity, type 2 diabetes, and chronic disease since 1965 are the result. And the cost of medical services without market competition has exploded.

If the elderly and needy were paid in cash rather than medical services, and purchased medical services in competitive, risk-based markets, people would have strong incentive to adopt fiber-based diets of vegetables, fruit, nuts, seeds, and whole grains, and avoid animal foods and low-fiber processed foods that promote chronic disease.

The left blames the food industry for our poor diet, but the federal government’s control of medical services and abolition of medical underwriting are the true causes of the obesity and diabetes crisis that afflicts America, and the reason healthcare is so amazingly expensive. Competitive markets would benefit the elderly, the needy, and the country.

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