Milton Friedman – Socialized Medicine

I'm going to talk about the economics of medical care this is an area in which is we all know there has been a trend toward ever greater government involvement the spending for the provision of medical care inevitably leads to control over the fees that are charged for medical care and it should if government is going to spend money and ought to be concerned with what it pays for what again control over fees inevitably leads to control over the practices that are followed over the behavior of the medical personnel and if this trend continues it inevitably leads to completely socialized medicine I believe that this trend including many of the steps that have already been taken is very much against the interests of patients of physicians and the other health care personnel and in the brief time I have available today I want to explain why I believe the trend is is so much against their interests why it has occurred and what if anything can be done about it the trend toward increasing government involvement in healthcare is not an isolated phenomenon it is not restricted to health care it is part of a general trend in our society toward replacing voluntary free-market arrangement by government control and regulation it is a trend that is happening happening all over it has happened in one industry after another there is nothing special in this respect about the move to replacing private voluntary medical arrangements with compulsory governmental arrangements this movement in the medical care field is not special in another sense in industry after industry producers who protest most strongly their belief in free markets have fostered and helped produce government take over government regulation government control to begin with a greater involvement of government in medicine may seem to serve the interests of at least the purveyors of medical care by providing an additional source of finance this is a honey that has landed persons in industry after industry to support and promote governmental involvement which is reacted ultimately against I have been impressed again and again with how often businessman leaders in various areas who are very farsighted when it comes to their own activities into concerns within their enterprises are very short-sighted when it comes to the area of Public Policy and allow themselves to be led by small advantages to foster in favor policies which ultimately redound very much for their disadvantage in the medical case the initial inducement is that here is a new source of money and presumably this is why organized medicine has been schizophrenic about the trend toward government involvement it has on the one hand tended to protest against the move towards socialized medicine it has on the other hand engaged in activities which have promoted that development as the one the government is taking over any activity there is more money available but what typically happens is once the government has taken it over the situation changes there are no more votes to be gotten by taking it over some more you have to move on to new fields and take over new areas in order to get some new homes and the result of that is that those areas already taken over gets starved and instead of there being more resources available there are fewer in addition to the fact that the ultimate result of a government takeover is less resources you invariably get lower quality in a lower quantity of medical care I am going to cite from a study that was made by a British physician dr. max gammon who spent five years studying the British Health Service mr. Gannon in a rather amusing way developed what he called a theory of bureaucratic displacement he argued that whenever you have any organization taken over by a bureaucracy like a government what tends to happen is that input goes up an output goes down that useless work tends to displace useful work in a further extension of Parkinson's laws and he Illustrated it with hospital service in the United Kingdom he took the eight-year period from 1965 to 1973 in that eight-year period the hospital staff the number of people went up 28% incidentally administrative and clerical help went up 41% but what about output what about what they were producing input was up well he measured output by the average number of beds occupied daily it turned out that the average number of beds occupied daily went down by 11 percent and he hastened to go on to explain that the decline in the average number of beds occupied was not for a lot of patients that at all times there was a waiting list in the neighborhood of 600,000 people waiting for hospital beds I don't know how many of you know the scandals in Britain about the waiting period for what is regarded as optional or postponed able surgeries including for example bypass operations for heart problems there are stories of people who waited three years to have a bypass operation because that could be postponed indeed some of them managed to die before the operation was performed but 600,000 people waiting on the waiting list and four rather more readily more obviously both vulnerable operations the wait may be much longer than three years let me turn to Sweden I quote from a report by doctor Guney ganar Bjork in Minnesota I should be able to pronounce the Swedish name but it takes more than physical connection he was he's a professor of medicine at the Karolinska Institute he's a head of the Department of Medicine at a major hospital in Stockholm he formerly was and maybe still is a physician to the king of Sweden he gave a repaper in 1976 at the University of Chicago on quote how to be a clinician in a socialist country and I quote from his papers it is obvious that the existence of a competing free-market constitutes a continuous threat to the operation of a socialist public service however heavily subsidized by taxpayers money the element of quality that derives from patients personal preference for and confidence in certain doctors cannot easily be done away with so long as people are willing to pay for a free choice of physician to do away with such opportunities therefore has become a new goal of Swedish healthcare politicians the introduction of these various regulatory processes has resulted in a cancerous growth in the numbers of medical administrators at all levels of incompetence the board of welfare I go on quoting has recently issued a 60 page book trying to describe how to calculate the number of physicians needed to cover the necessary staff of any one clinical department the book is a fascinating monument over the total absurdity into which legislators administrators and trade union representatives have finally brought a previously simple and efficient machinery thus is a setting in which medicine has been practiced during thousands of years has been one in which the patient has been the client and employer of the physician today the state in one manifestation or the other claims to be the employer and thus the one to prescribe the conditions under which the physician has to carry out his work these conditions may not and will eventually not be restricted to working hours salaries and certified drugs they may invade the whole territory of the patient's physician relationship if the battle of today is not fought and not won there will be no battle to fight tomorrow


  1. Obamacare should have been this: "Insurance comapnies shall not deny coverage to pre-existing conditions".
    Obamacare should not have been the multivolume book that it is today.

  2. Out of curiosity and ignore my ignorant but if National Healthcare does not work then why are so many advanced countries like Japan, Taiwan, Switzerland, etc have them and it works so well for them? Not all systems are perfect but I think the long term benefits outweigh the risk.

  3. In western countries with the possible exception of the USA the battle alluded to by the Swedish physician at the end has been lost for a very long time

  4. In 1999, when I finished med school, I spent 55 minutes doing therapy and 5 documenting. Today, the inverse is true: I document 55 minutes and treat 5 (for start and end of care sessions).

    Walk into any hospital and see who makes more money: the neuro-surgeon who you need or the top administrator of the hospital who justifies their existence with bureaucracy?

  5. The problem is that in capitalism you need money to survive, so a mixed system where one is able to «choose»(be more wealthy) better healthcare and still have socialization for the lower class is superior to the american system. Thats what Skandinavia has today

  6. I love how smiley he is about people dying on waiting lists for care. I wonder if he gets as much joy from the deaths of Americans unable to access care at all.

  7. He's just plain wrong, and reality proves that..just compare developed countries healthcare systems with the US, its undeniable.

  8. This is ABSOLUTE BUNK. NO ONE in Europe is looking to a U.S. model in any serious way to create UNIVERSAL health care. The entire EU benefits from a single payer system that has overwhelming approval rates and seems like absolute common sense especially when compared to the savagery of the US system that left to Friedmanesqe style private insurance premiums results in MASSIVE profit taking by the Insurance Industry, entire uninsured populations, and insurance companies that contest – by the very logic of their profit seeking mandate – to DICTATE what kind of care they will cover. Taiwan switched to eliminating its free market system with health care dollars going in ridiculously high percentages to paying insurance companies and look what happened: no more bullying by pharmaceutical companies to artificially inflate the price of drugs, the cost of health care has gone significantly down, and the country is overwhelmingly in favor of the transisition.

  9. The funny this is this is true for America. However, for Europe it proves him totally wrong. European socialized healthcare is DECADES ahead of American counterparts.

    It's why nordic countries are the happiest and live the longest and why Americans die in droves and vast majority of bankruptcies are old people who can't pay their medical bills.

    Culture not economics.

  10. There is not a field where government intervention has NOT lead to massive waste and higher cost. Health care is no different.

  11. Japan has 2% lower corporate tax than usa, a little lower "max income tax" than most of states than usa, 3% lower vat. Total health expenditure per capita in US dollars (PPP) ins USA is 9451 usd and in Japan is 4150 usd. Also Health expenditure, total (% of GDP) in USA is 17.1% and in Japan is 10.2%. After all this Japan still has better health system than usa, cover almost all their citizens and its waaaaay cheaper tha usa.
    There is something rotten in usa and his name is big government and corporatism. The Government collude through lobbying with pharma companies and artificially rise the prices for the people. You can do the same exactly surgery (plus travel plus vacation) in other countries in better hospitals and still it will be cheaper than the average hospital in usa.
    Even Japan or Spain has more economic freedom than america today…

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