In the current discussions, a single word — “socialism” — seems to have triggered the most emotional responses, needlessly so.

As more and more of the Democrats campaigning for the Mid-Term elections tout Socialism I wonder if they have any idea of what socialism means and more importantly how it would impact health care. David Nash and Richard Jacoby, both physicians wrote in MedPage Today back in 2009 that the health care reform debate is, all too often, confusing. The subject is multifaceted and is generally not presented in a logical, orderly fashion.

One reason is that, when we approach an issue as large as health care reform, we tend to focus on the segments about which we have strong personal feelings. Emotions come into play, often vigorously, making objective discussion difficult or impossible.

Often, the basis for these strongly held beliefs is rooted in the misunderstanding of a principle, a definition, or how things work in the real world. Such understanding is fundamental to a logical debate.

In the current health care reform discussions, a single word — “socialism” — seems to have triggered the most emotional responses. It is used almost pejoratively as if it is the worst thing that could possibly happen in America.

Socialism is most commonly invoked when the healthcare reform discussion turns to whether or not we should have a government-funded public insurance option.

Simple definitions can help here. In capitalism, individuals own the means of production of goods and services. In socialism, the government owns them. Let’s look a bit more at what socialism really is. Look at Venezuela and their currency, the Bolivar, which has been devalued to 0.0000040 of the U.S, dollar! Wow!

Kimberly Amadeo stated at the beginning of the month that Socialism is an economic system where everyone in the society equally owns the factors of production. The ownership is acquired through a democratically elected government. It could also be a cooperative or a public corporation where everyone owns shares. The four factors of production are labor, entrepreneurship, capital goods, and natural resources.

Socialism’s mantra is, “From each according to his ability, to each according to his contribution.” Everyone in society receives a share of the production based on how much each has contributed.

That motivates them to work long hours if they want to receive more.

Workers receive their share after a percentage has been deducted for the common good. Examples are transportation, defense, and education. Some also define the common good as caring for those who can’t directly contribute to production. Examples include the elderly, children, and their caretakers.

Socialism assumes that the basic nature of people is cooperative. That nature hasn’t yet emerged in full because capitalism or feudalism has forced people to be competitive. Therefore, a basic tenet of socialism is that the economic system must support this basic human nature for these qualities to emerge.

These factors are valued for their usefulness to people. This includes individual needs and greater social needs. That might include preservation of natural resources, education, or health care. That requires most economic decisions to be made by central planning, as in a command economy.

Advantages:

Workers are no longer exploited since they own the means of production. All profits are spread equitably among all workers, according to his or her contribution. The cooperative system realizes that even those who can’t work must have their basic needs met, for the good of the whole.

The system eliminates poverty. Everyone has equal access to health care and education. No one is discriminated against.  Everyone works at what one is best at and what one enjoys. If society needs jobs to be done that no one wants, it offers higher compensation to make it worthwhile.

Natural resources are preserved for the good of the whole.

Disadvantages:

The biggest disadvantage of socialism is that it relies on the cooperative nature of humans to work. It negates those within society who are competitive, not cooperative. Competitive people tend to seek ways to overthrow and disrupt society for their own gain.

A secondly related criticism is that it doesn’t reward people for being entrepreneurial and competitive. As such, it won’t be as innovative as a capitalistic society.

A third possibility is that the government set up to represent the masses may abuse its position and claim power for itself.

Difference Between Socialism, Capitalism, Communism, and Fascism

Some say socialism’s advantages mean it is the next obvious step for any capitalistic society. They see income inequality as a sign of late-stage capitalism. They argue that capitalism’s flaws mean it has evolved past its usefulness to society. They don’t realize that capitalism’s flaws are endemic to the system, regardless of the phase it is in.

America’s Founding Fathers included promotion of the general welfare in the Constitution to balance these flaws. It instructed the government to protect the rights of all to pursue their idea of happiness as outlined in the American Dream. It’s the government’s role to create a level playing field to allow that to happen. That can happen without throwing out capitalism in favor of another system.

Examples of Socialist Countries:

There are no countries that are 100 percent socialist, according to the Socialist Party of the United Kingdom. Most have mixed economies that incorporate socialism with capitalism, communism, or both.

The following countries have a strong socialist system.

Norway, Sweden, and Denmark: The state provides health care, education, and pensions. But these countries also have successful capitalists. The top 10 percent of each nation’s people hold more than 65 percent of the wealth. That’s because most people don’t feel the need to accumulate wealth since the government provides a great quality of life.

Cuba, China, Vietnam, Russia, and North Korea: These countries incorporate characteristics of both socialism and communism.

Algeria, Angola, Bangladesh, Guyana, India, Mozambique, Portugal, Sri Lanka, and Tanzania: These countries all expressly state they are socialist in their constitutions. Their governments run their economies. All have democratically elected governments.

Belarus, Laos, Syria, Turkmenistan, Venezuela, and Zambia: These countries all have very strong aspects of governance, ranging from healthcare, the media, or social programs run by the government.

Many other countries, such as Ireland, France, Great Britain, Netherlands, New Zealand, and Belgium, have strong socialist parties and a high level of social support provided by the government. But most businesses are privately owned. This makes them essentially capitalist.

Many traditional economies use socialism, although many still use private ownership. There are eight types of socialism. They differ on how capitalism can best be turned into socialism. They also emphasize different aspects of socialism. Here are a few of the major branches, according to “Socialism by Branch,” in The Basics of Philosophy.

Democratic Socialism: a democratically elected government manages the factors of production. Central planning distributes common goods, such as mass transit, housing, and energy, while the free market is allowed to distribute consumer goods.

Curiously, socialism is rarely used to describe Medicare, Medicaid, and the various other government-sponsored plans that account for roughly half of the healthcare dollars spent in this country and that are bona fide examples of socialist services.

It should be clear to any objective observer that the U.S. is not a purely capitalist country. We have many government-run services — the military, highways, public education, the Postal Service, Social Security, and Medicare to name a few.

Thus, the U.S. exhibits elements of both capitalism and socialism — a so-called mixed economy.

As has become abundantly clear through the recent financial crisis and subsequent government-sponsored rescue of the financial system, government spending shortened what otherwise would have been an extended economic downturn — when the private sector could not or would not do so.

So, a little government (read “socialism”) mixed in with our capitalism can be a good thing. Students of economics embrace “capitalism” because it has proven unparalleled in raising living standards for vast numbers of people and for fostering innovation. But, the conventional wisdom about capitalism is rooted in flawed logic that assumes free markets are inherently self-correcting. They are not. A capitalist system does not guarantee a good outcome.

What are the prospects for “market forces” to reshape our current health care system in a fashion that decreases cost and increases quality? For a market to work its magic, transparency about costs (which allows comparison shopping by patients) and information about quality (public reporting of quality measures in a standardized format) need to be widely available so that value can be assessed and delivered.

Clearly, these elements are not present in our current system and are not likely to be present for some time. Further, our current payment structures give patients little incentive to engage in “comparison shopping” or for providers to be efficient in delivering services. Indeed, providers are rewarded on the basis of quantity rather than quality or value of the services they provide.

The U.S. occupies the 37th place in the World Health Organization’s ranking of health care quality in industrialized nations. This, coupled with the fact that we pay almost twice as much as other countries for that level of care, suggests that our “capitalistic” healthcare system could use some “socialistic” guidance.

Who will provide guidance toward better outcomes in healthcare?

Historically, the government (in the form of the Centers for Medicare and Medicaid Services) has led the way to cost and quality reform through various demonstration projects and programs involving “Value-Based Purchasing.” Private insurers have followed the government’s lead.

The premise of health insurance is that a risk pool with a large number of people reduces the cost of protecting any one individual from the consequences of a serious health problem. The larger the pool, the broader the risk is spread, and the lower the cost.

A federally provided public insurance option covering all Americans would spread the risk as broadly as possible. In fact, many Medicare services are administered currently by Blue Shield and other private insurance companies.

Combining a single large insurance pool with the private administration is a nice mixed economic insurance solution. Certainly, this is not as crazy a scheme as the status quo.

Why is Socialized Health Care Is Unjust?

Hadley Heath Manning looked more critically and healthcare in a socialized system. As she states, when the government runs hospitals, clinics, and other healthcare institutions, people get worse care for more money. Sen. Bernie Sanders’s presidential campaign is exceeding expectations and drawing large support from young and blue-collar voters. At the center of his policy platform is a plan to completely socialize the U.S. healthcare system, turning it into a “single-payer” program, or a single government fund that pays for all citizens’ health costs.

The argument for this kind of system is simple. Supporters say it will enable everyone to access health care and cost less than our current mix of private and public health expenditures. Most of all, they argue this system would be morally superior to others.

All of those claims are dubious, but the last is the biggest whopper. In fact, socialized medicine is immoral. It relies on coercion and results in shortages and long wait times, which means worse care. It is rife with inequality and inefficiency, leading to serious harms.

This Would Ratchet Up the Doctor Squeeze!                                                                 Consider how a socialized system would cut costs. Single-payer advocates brag that having one, the national fund for health costs would allow the government to “negotiate” health-care prices down because it would essentially have prevented everyone else from bidding to pay for them. In other words, the government would have control of an entire industry and be able to dictate the terms of work and trade for everyone within it. How is this morally superior to allowing free people to negotiate arrangements on their own?

We already see the bullying of providers in the single-payer systems that exist in the United States.

Unfortunately, America hasn’t had a truly free, market-based health system for decades. Many people feel the outsized power of insurance companies has allowed them to dominate and unfairly control doctors and hospitals. This is true: Insurance companies, thanks in large part to regulations from the Affordable Care Act, are consolidating and using their growing market shares to bargain, and perhaps bully, health-care providers and dictate the terms for everyone.

We already see the bullying of providers in the single-payer systems that exist in the United States, including Medicare. Doctors consistently complain about the ways Medicare makes practicing medicine hard, from bureaucratic paperwork and compliance burdens to low pay.

Socialism Means Force and Force Are Wrong!

In fact, each year more and more physicians opt out of the Medicare program altogether. It’s become so bad in Hawaii that legislators have proposed a bill that would force providers to accept Medicare or else lose their medical licenses! This is always the end of government-controlled health care: coercion.

As Dr. Jim Geddes, a trauma surgeon near Denver, CO, recently told Medscape.com, “The only way physicians can afford to participate in Medicare is that they get higher payment from commercial insurers. Single-payer advocates talk about ‘Medicare for all,’ but if Medicare were standing alone, it would fall flat.”

But at least some choice remains: Doctors today can still choose not to participate in certain plans or programs.

But at least some choice remains: Doctors today can still choose not to participate in certain plans or programs. If single-payer were the law of the land, no health-care provider could engage in his profession without having to bill the government, as the government would be the only payer for these services in most cases.

Health-care providers would be forced to accept a government-set price for their services. This would inevitably harm the quality of care we receive by locking in current ways of doing things instead of allowing people to try new ones and discourage people from pursuing grueling expensively learned work in the medical field because of low pay and bad working conditions.

We’ve seen how a similar standardized compensation system has worked for public-school teachers. It effectively punishes excellent teachers and rewards mediocre ones. It’s helped create a bifurcated education system, with private schools delivering higher quality to families that can afford to pay tuition on top of taxes, while too many families are left to attend low-quality public schools.

The same phenomena would take place in medicine. Under a government-dominated system, excellent health-care providers wouldn’t be rewarded and would suffer new burdens, while mediocre and even poor providers would receive the same payments as those that provide high-quality care.

Socialized Style Health Care Means Rationing and Shortages.

Patients too would suffer at the hands of a single payer, due to the rationing and shortages that always result when a government sets prices. That is, of course, unless you are wealthy and can find a concierge medical practice to sell you some special service. Single-payer systems always unravel, giving the rich a chance to buy superior care, and thus creating tremendous economic inequities in the system.

Single-payer results in implicit rationing, which manifests in long waiting lists for the desired service or treatment.

In fact, it may shock some single-payer advocates to hear, but the National Bureau of Economic Research has found that health outcomes are more strongly tied to income in Canada (already a single-payer system) than in the United States.

Single-payer would also lead to waste and great inefficiency, which can have serious health consequences. If the government sets a price for a certain service that is too high, providers may over-prescribe it and patients may over-consume it. If the government sets a price for a certain service that is too low, then too few providers will offer it, and there will be a shortage.

In a market system, higher prices signal shortages and give providers an incentive to adapt to meet people’s actual needs. In a government-based system like single-payer, patients always face the same price—zero—so the government has to limit what services are available to whom based on data. This is straight-up rationing.

But single-payer also results in implicit rationing, which manifests in long waiting lists for the desired service or treatment. Long waits, common in other countries with government-controlled health-care systems, can lead to inferior health outcomes. To be blunt, this means more pain and suffering. In some cases, this even means more death.

That was the case for Laura Hiller, an 18-year-old Canadian with leukemia who died in January for lack of a hospital bed. Numerous bone marrow donors were ready and willing to assist her, but because her hospital could only perform about five transplants per month, Laura died while waiting for her turn. Stories like this are not uncommon in countries with single-payer health-care systems.

So, a Better Idea: A Medical Free Market!

Surely there is nothing moral about this. Americans shouldn’t accept that either insurers or government must dominate the health-care market or set the prices and payments for everyone. Rather, we should reform our health-care system to give individuals more power and choice. Market competition would drive prices down without the need for coercion.

Patients should pay providers directly for any services that are routine and not catastrophic, and patients could carry low-cost insurance policies to protect them in the event of catastrophic health-care costs. This is how it works for house and auto insurance, which almost everyone can afford even though cars and houses are frequently as expensive as many medical services.

A direct-pay model would create an incentive for providers to offer more pricing information, and to compete with one another on price. Market competition would drive prices down without the need for coercion. Quality would go up, prices would go down, and, just as importantly, this would be a morally superior system free of the coercion and domination implicit in a government-run socialized system.                                                The level of freedom in research and medical commercialization matters greatly. It is a very large determinant of the speed with which future medicine arrives – and especially medical technologies capable of reversing the age-related cellular damage that lies at the root of frailty, degeneration, and death. At the moment, right this instant, the system is broken. The very fact that we have “a system” is a breakage; that entrepreneurs are held back from investment by rules and political whims that are now held to be of greater importance than any number of lives. Those decisions about your health and ability to obtain medicine are made in a centralized manner, by people with neither the incentives nor the ability to do well.

As is always the case, the greatest cost of socialism in medicine lies in what we do not see. It lies in the many billions of dollars presently not invested in medical research and development, or invested wastefully, because regulations – and the people behind them, supporting and manipulating a political system for their own short-term gain – make it unprofitable to invest well. Investment is the fuel of progress, and it is driven away by self-interested political cartels.

The situation is grim; the greatest engines of progress in medicine – the research communities of the US and other Western-style countries – are moving forward very much despite the ball and chain of regulation that drags them down. In the fight against the age-related disease, and aging itself, how much further ahead would we be if we cut those chains and restored freedom to research, manufacture, review and quality assurance of medicine?

Sadly, I do not see this happening in the near future; a long, but a hard battle lies ahead for advocates of freedom and faster progress in any field. We live in an era of creeping socialism, economic ignorance, and blind acceptance thereof. It’s almost as though no lesson was learned from the megadeaths, poverty, and suffering of the Soviet experience, and now as I pointed out what is happening in other countries like Greece and now Venezuela as we step a little at a time in that direction once more.