07.27
The next problem with the French health care system are the crushing deficits. When Barack Obama stands up and tells us that he won’t sign a healthcare reform bill that adds to the deficit, it’s the worst kind of demagogic lying. Any health system run by the government will have deficits. Big ones. In fact, name me one government program that has a surplus. Ever. They’re all over budget, because of the inherent problems with central planning. We’ve talked about this before. When central planners divorce themselves from the price mechanism, and when price doesn’t operate like it should there is no way to know how to allocate resources appropriately. In a centrally planned system decisions are made on intangibles like “need” without the tempering power of cost to help balance the need with ability to pay. There is simply no way to run a massive government program without going over budget. It can’t be done.
And this applies to the French as well. Every liberal politician’s favorite example of great government run health care is no exception to huge budget deficits. I found this article from 2004:
France must make big changes to its health system in order to cut waste and increase efficiency, a government-commissioned report is warning.
The report says citizens must pay more and doctors must alter their behaviour.
The report says an ageing population and the high cost of advanced treatments will help push health spending past 9% of gross domestic product – one of the highest levels in the world.
Experts have already warned that a projected healthcare deficit of 10.9 billion euros this year could rise to 29 billion euros by 2010, unless action is taken.
Looking further ahead, the report says the deficit could rise to 66 billion euros by 2020.
So, in 2004 France already had an 11 billion euro budget deficit in the health care system. I’d say it was probably a lot more than that if we take into account typical government math. But nonetheless, it was in trouble. They predicted it would grow to 29 billion by 2010. The first thing I thought was that it’d probably be double that. That’s the way government projections work. Whenever they project deficits or cost, the larger the number, the larger the factor they will miss it by. Well, it turns out I was right. Here’s an AP article from a few days ago:
A World Health Organization survey in 2000 found that France had the world’s best health system. But that has come at a high price; health budgets have been in the red since 1988.
In 1996, France introduced targets for health insurance spending. But a decade later, the deficit had doubled to 49 billion euros ($69 billion).
“I would warn Americans that once the government gets its nose into health care, it’s hard to stop the dangerous effects later,” said Valentin Petkantchin, of the Institut Economique Molinari in France. He said many private providers have been pushed out, forcing a dependence on an overstretched public system.
I couldn’t have said it better myself. There’s nothing wrong with private healthcare. In fact, it’s the only option that works on a permanent basis. All government run systems eventually collapse under their own financial mismanagement. And it really has very little to do with corruption or anything like that. It’s just simply economic law. When you remove the price metric from a certain market it will fall into disarray.
