Across the Globe, Government Health Care Systems Are Failing Us

Across the Globe, 

Government Health Care Systems Are Failing Us

By restricting private health care choices, the NHS and other beloved single-payer systems were doomed from the start.

Elise Amez-DrozFrom the March 2023 issue   Reason

(Photo: London Olympic Games opening ceremony; Martin Rickett/Alamy)

In summer 2012, about 27 million Britons tuned in to the London Olympics' opening ceremony, dreamed up by the Oscar-winning director Danny Boyle. Central to the show was an homage to the National Health Service (NHS), the United Kingdom's single-payer health care system, that featured hundreds of volunteer nurses dancing around bedridden children. Transcending political affiliation, support for the NHS may be the strongest uniting force in the United Kingdom. As the Conservative Party politician Nigel Lawson put it in a thinly veiled shot at the Church of England, the NHS is "the closest thing the British have to a religion."

Less than a decade after the London Olympics, the COVID-19 pandemic deeply strained the system's human and financial resources. The number of British doctors considering early retirement doubled over the first year of the pandemic. More than half of the NHS' doctors worked extra shifts, over a quarter of which were unpaid. Total health care spending was 24 percent higher in 2021 than in 2019. And in November 2022, NHS Resolution—the organization that handles NHS patients' claims—allocated £1.3 billion ($1.6 billion) in anticipation of an increased volume of claims related to the pandemic. In December 2022, the U.K.'s top health care leaders warned that the country faced a "prolonged period" of excess deaths due to people not having timely access to care.

Simply put, the NHS is collapsing. Physicians and nurses are leaving the profession at an unprecedented rate, and students are entering other fields. Seven million Britons—more than one in 10—are waiting for treatment. And while COVID certainly accelerated the NHS' decay, it did not cause it. The system had been showing symptoms of an underlying problem for decades. Indeed, the NHS was destined to fail from its very inception.

That's not just true of the NHS. It's true of many of the world's most vaunted government-run health care systems. They have deep flaws built into their very design, and now they're showing signs of severe strain.

Bismarck and Beveridge

Modern medicine was born in the wake of the Industrial Revolution. With technological progress came biological discoveries that made longer, healthier lives attainable. But medical access was expensive, so newly wealthy Western states devised plans to put health care services within the reach of the masses. Those new systems generally followed one of two models: Bismarck or Beveridge.

The Bismarck model originated in the 1880s in Germany, when the conservative statesman Otto von Bismarck envisioned a system where people crowdfund for their health care expenses and receive services from entities that can be privately or publicly owned. Over time, governments began subsidizing low-income citizens' care. Countries with Bismarck-style systems today include Germany, Switzerland, and South Korea. Those countries' health care systems have been experiencing significant cost growth, but they tend to deliver timelier, higher-quality care than the Beveridge countries. That's because, even if they are highly regulated and subsidized, they were designed to use privately owned and operated health care operations rather than stamp them out.

The Beveridge systems came later, and they were predicated on a government-centric model in which private systems were either banned outright or heavily restricted.

In the late 1940s, the progressive economist Lord William Beveridge designed the National Health System in the United Kingdom. Under the Beveridge model, the government is the primary payer and provider of health care services. Citizens finance care through taxes and are entitled to free or heavily subsidized care at the point of delivery. To keep prices down and manage supply, the government was positioned as the central financier of health care. This system would come to be known as "single-payer."

This model's promise of free service relies on coercing medical professionals into providing care on government's terms. What happens when those professionals do not accept the terms? They exit the system, or find ways around it, and so access to services becomes scarce.

Short of brute force, governments have limited options to deal with the inevitable mismatch between supply and demand. Beveridge-style systems can ration care, increase spending and taxation, or simply accept low-quality services. This is the dilemma facing Beveridge systems in the U.K., Sweden, and Canada today, all of which are struggling with some combination of shortages, delays, fiscal shortfalls, and quality-of-service issues that are undermining both the health of their citizens and the egalitarian ideals the systems were built on.

These countries built health care systems under the presumption that the laws of economics simply don't apply to health care—that physicians and nurses have nothing but their patients' well-being in mind and are not interested in making money, that patients aren't smart enough to be able to make choices about their health, and that systems that hide costs from patients won't result in resource-draining, unnecessary care. But reality has been catching up, and citizens of these countries are suffering and even dying as a result.

Hurry Up and Wait

In the wake of World War II, Labour Party M.P. Aneurin Bevan set out to convince his colleagues that the U.K. needed a permanent national health service that would be free at the point of service, accessible to everyone, and funded through general taxation. He quickly realized that the biggest hurdle was provider opposition. The British Medical Association warned that the push for a national health service was national socialism in disguise, and that Bevan was about to take on the role of "medical Führer."

Bevan's solution to providers' complaints? In his own words: "I stuffed their mouths with gold." And it worked. As of 2019, the NHS employed roughly 1.5 million people, making it one of the largest employers in the world, and interacted with 1.5 million patients every day.

But top-down governance comes with tradeoffs. Bureaucrats can't foresee the problems that might arise from even minor errors in design. And once issues materialize, fixing them can take years. This has serious consequences for patients—and it leads to a work force that's so disgruntled it might just quit.

The NHS' problems are perhaps best illustrated by its ongoing "bed-blocking" crisis. As of July 2022, almost 13,000 hospital beds—about one in seven—were used by patients who were well enough to be discharged. Some had been there for nine months. Why? They had nowhere to go.

They're supposed to receive follow-up treatment at home, but there aren't enough personnel for that. That's no surprise considering there are about 165,000 open positions for adult social care in England. One in 10 positions is unfilled.

Consequently, other patients get stranded in ambulances waiting outside hospitals for beds to free up. An October 2022 analysis by the British Heart Foundation found that 230 heart disease patients a week were dying due to ambulance delays and bed blocking—30,000 excess deaths among such patients since the beginning of the pandemic. In August, calls had an response time of 59 minutes. In one region, the average was 72 minutes, four times the 18-minute target set in the NHS' constitution. This has lethal consequences: Last summer, an estimated 500 British citizens died every week because of the extended wait time to receive emergency services.

Medical professionals already struggle with their workloads. Bed blocking means they receive more patients in dire condition due to the delays. Physicians and nurses are retiring en masse because they aren't able to take proper care of patients; they live in constant fear that they will make the wrong call when prioritizing patients and thus will precipitate a death. One crisis feeds another.

It's not just patients in ambulances who are waiting. Last June, more than 333,000 people were on cardiac waiting lists. That's 8,300 more than the previous month, and the number had been increasing for 24 consecutive months. More than 30 percent of those people had been waiting for over 18 weeks, the NHS' target for treatment.

The NHS is increasingly understaffed. In 2022, less than a third of general practitioners in training were planning to work full-time upon entering the work force. In a survey conducted the previous year, just 6 percent of trainees planned to work full-time for their entire career. One key reason: The work is just too much. Trainees expect four-hour shifts to turn into six or seven hours of work once they account for the time spent on follow-up administrative tasks.

All this comes on top of a perennial problem with single-payer systems: rationed care.

In the 1990s, the Labour Party established the National Institute for Health and Care Excellence (quaintly abbreviated to NICE), which was tasked with creating clinical guidelines and public health guidance. But NICE also decides what drugs Britons can access through the NHS by conducting cost-benefit analyses for new drugs and health care technologies. One of NICE's core functions is, in effect, to ration care.

In single-payer systems, clinical decisions are made by a centralized government agency that determines whether a given new drug is worth taxpayers' money. Citizens whose values don't align are out of luck, unless they're wealthy enough to pay out of pocket for private care, as one in 10 did last year. Britons may cherish the NHS, but many are taking leave of the system for private options.

Photo: Performance celebrating the NHS during the opening ceremony of the London 2012 Summer Olympic Games; UPI/Ron Sachs

Private and Parallel

Sweden and its Scandinavian neighbors are often portrayed as paragons of progress and equality. Integral to that dream is universal access to health care through a Beveridge-style system. In theory, these are universal; no other system is supposed to be necessary.

Yet over the past 20 years, Sweden has seen a robust private market for health care grow alongside the public system. It's a clear sign the country's public insurance system has failed to live up to its ideals.

Parallel private markets for health care aren't uncommon in developed countries with nationalized health care systems. But given the amount Swedes pay into their system, Sweden's growing private market may be surprising. On average, Swedes pay more than half of their income in taxes. When the government takes such a big slice of residents' money, it had better deliver great services. Yet Swedes are so desperate for better care that they're willing to tap into their scarce post-tax earnings to seek out private options.

The number of Swedes with private insurance has been exploding. In 2000, just 1 percent of Swedish residents had private health insurance. Today, 7 percent do. Sweden's public health care system simply isn't able to provide for everyone. Beveridge systems by definition can't rely on private payment for care; the fact that such a large number of Swedes are going private is a strong indication the system won't survive in its current form.

It's not just patients. Thanks to recent deregulatory efforts aimed at promoting health care competition, providers too have been going private. In the wake of a 2009 law promoting competition, the country saw an 80 percent increase in the number of private health care institutions, such that more than four in 10 providers are now private. In the Stockholm metropolitan area, two-thirds are. Those entities make handsome profits off the taxpayer in addition to collecting payments from privately insured patients, who are able to secure priority access to care.

As with the NHS, long waits plague Sweden's health care system. The taxes that fund Sweden's system, which are primarily collected at the local level, are so high that they're driving businesses out of the country, leaving municipalities in straits. Even still, funding shortfalls have resulted in too few providers to meet demand. That proved to be a challenge during the COVID-19 pandemic. In December 2020, Stockholm's intensive care units (ICUs) were at 99 percent capacity, but an even greater concern was the lack of ICU staff. Worker shortages that predated the pandemic were exacerbated by rising rates of resignation. Emergency personnel started demanding pay increases so unusually large that economists feared they'd spark inflation.

Swedes are supposed to have equitable access to care without breaking the bank. In 2005, the "Vårdgaranti"—National Guaranteed Access to Healthcare—imposed legal maximums for wait times through a number series known as 0-7-90-90. That meant zero delay when contacting the health system for advice, seeing a general practitioner within seven days, seeing a specialist within 90 days, and waiting no more than 90 days to receive treatment after being diagnosed.

But bureaucrats couldn't simply mandate improvements into existence.

More than a decade after the wait-time rules were installed, Agence France-Presse reported that a third of patients still waited longer than 90 days to see a specialist or receive treatment. The median wait for prostate cancer surgery lasted 120 days—in some parts of the country, more than 270 days. "Swedes have little confidence that politicians will solve this," a policy analyst at the left-leaning think tank Arena Idé told the wire service in 2018. "There is a risk their faith in the welfare state will be eroded."

When Sick People Become a Public Burden

In 2004, relying on 1.2 million votes from the public, the Canadian Broadcasting Corp. (CBC) awarded the title of "Greatest Canadian" to Tommy Douglas, the politician credited with designing the country's health system. Like the U.K., Canada employs a single-payer system that enjoys near-unconditional support from its citizens.

That system is supposed to rest on two pillars: fairness, and access to care no matter one's ability to pay. In reality, the system ensures neither. Indeed, it actively undermines attempts at improving access, with devastating effects both for patients and for health care professionals. It does this by exercising a monopoly on the coverage of core services, eliminating the ability to temper demand through cost-sharing, and rationing the supply of medical professionals and devices, just as a pure Beveridge model demands.

Canada's system has long been premised on the idea that the only way to ensure equal and affordable access is for the government to control the health system. Three federal acts all but eliminated private options. The first two, in 1957 and 1966, established federal transfers to the provinces for the provision of care. The third came in 1984, when Prime Minister Pierre Trudeau (father of current Prime Minister Justin Trudeau) signed the Canada Health Act, which banned private coverage and told the provinces they would lose federal funding if they did not provide universal coverage to all citizens and legal residents.

Meanwhile, the practice of billing patients for the difference between what the provider charges and what the insurer is willing to pay was made illegal. From that point on, providers had little choice but to accept the provincial government's reimbursement rates.

Today, supplemental insurance is allowed in Canada only for services that aren't subject to mandatory coverage, such as private rooms in hospitals. Doctors are allowed to serve cash-paying patients, but only if they opt out of serving the public system. Strict government controls and restrictions over physician training and reimbursement deter many doctors from practicing.

As in the NHS, provider shortages led to delays in accessing care. Canada's ailing system fares worse than other industrialized countries with universal coverage. Among 26 such countries, Canada ranked second to last in 2019 for acute care beds per capita, with only two for every 1,000 citizens. It was among the worst for physicians, MRI scans, and C.T. scans per capita. Over a third of Canadians wait more than four months for surgery. And 30 percent of people who show up to the emergency room wait more than four hours to be seen by a medical team. Over 60 percent of Canadians who are referred to a specialist can't schedule an appointment with them within four weeks.

The private sector remains heavily restricted. In September 2020, at the height of the COVID pandemic, when provinces were canceling surgeries due to staffing shortages and overwhelmed hospitals, the Supreme Court of British Columbia ruled that there's no constitutional right to purchase medically necessary private health care services when wait times are too long. The 880-page decision, issued after four years of trial, will be challenged before the national Supreme Court, with ramifications for the entire country.

Today, private clinics in Canada are allowed to offer cosmetic procedures and dental surgery—and nothing else. In some provinces, doctors can be fined thousands of dollars if they are ever caught selling a private service to a patient, something that no other country does. Yet markets inevitably produce workarounds: Wealthier patients shell out tens of thousands of dollars on treatment in the United States.

Canada's health care overlords have responded by looking for ways to rein in costs. And since prolonged end-of-life care is one of the biggest drivers of health spending, it's not too surprising they've settled on a system that cuts some of those inconveniently expensive lives short.

In recent years, Canada began offering medically assisted suicide to patients across the country. With few exceptions, Canadian doctors who disagree with the practice aren't allowed to tell their patients no. Most provinces mandate that doctors who won't help patients kill themselves must at least give them a referral to a physician who will.

This isn't simply a matter of respecting freedom of choice; it's a form of rationing. The Canadian Medical Association issued a report in 2017 that said giving adults—and soon perhaps minors—a quick way out could save the country up to $136 million annually. "In a resource-limited health care system, anytime we roll out a large intervention…cost has to be a part of that discussion," an author of the study told the CBC.

Countries like Canada have embraced socialized health care in the name of equality. That means the financial burden of expensive care is socialized as well. People with expensive medical conditions become problems for taxpayers and bureaucrats. Faced with unsustainable cost growth, there is a clear incentive to simply make the problem go away. But in this case, the "problem" is human life.

Even still, costs are growing fast. Independent researchers estimate that, in non-COVID times, Canada spends more on its residents than most developed nations if you adjust by age. Canadian health care authorities might temporarily reduce wait times with even greater spending, but an ever-growing budget for health care spending is plainly unsustainable.

Aging Beveridge systems like Canada's aren't just creaking under financial strain. They're showing the deadly misconception at the heart of government-centric systems that purport to give everyone an equal right to health care. In practice, those systems treat human beings as disposable burdens on society.

The American Exception

The United States doesn't have a totalizing government-run health care system like the ones in Canada and the United Kingdom. But Washington has built several smaller-scale Beveridge-like systems within our borders: Medicare, Medicaid, the Veterans Health Administration (VHA), TRICARE, and the Indian Health Service (IHS). And those systems have helped produce a health care cost crisis like no other country's.

These fractured, overlapping systems aren't as comprehensive as the NHS. But Medicaid is the largest single-payer system in the Organization for Economic Cooperation and Development, with 90 million Americans enrolled as of fall 2022. During the pandemic, the federal government forbade states from removing people from Medicaid rolls even if they were no longer eligible. This increase in the number of beneficiaries wasn't matched with an increase in medical providers—quite the opposite, since one in five health care workers quit their job during the pandemic. Medicaid beneficiaries typically face much longer waits than people covered by private insurance, because low reimbursement rates discourage doctors from accepting patients. And just as in the U.K., some Americans spend months in the hospital because they have nowhere to be discharged to. Post-COVID health care access is bound to be even more constrained for Medicaid beneficiaries.

Likewise, the VHA is infamous for long waits, inadequate care, and decrepit facilities. IHS dysfunction is among the reasons the pandemic had a disproportionate impact on Native Americans, with Natives' life expectancy falling by more than six years from 2019 to 2021.

Medicare doesn't suffer from the same problems. That's partly thanks to its status as the default health care option for seniors, who vote in large numbers. And it's partly due to the fact that almost half of Medicare beneficiaries are on privately run plans that have a semblance of market function.

People often think of American health care as a free market system, but those government programs have blocked market forces. So even though more than half of Americans have private insurance, our single-payer systems end up influencing prices, clinical decisions, and innovation in the private market as well.

One area where public systems' pitfalls are felt acutely is state-of-the-art therapies. The addition of Aduhelm, an expensive new drug against Alzheimer's disease, to Medicare's formulary in 2021 led to a big increase in Medicare premiums. What if multiple top-dollar drugs hit the market the same year? In the U.S., Medicare and Medicaid patients may not be able to use insurance to buy them.

There is a silver lining, though: Patients can choose to spend their own money out of pocket to try them. And they can do that for every health care good and service in America. In Canada, they would have to physically exit the country to be allowed to use their own dollars for such care.

Private health care providers may not inspire Broadway-style Olympic tributes, but squelching them has been disastrous for the citizens of countries stuck with ailing single-payer systems. Extra government spending, rationing, and grisly decisions about end-of-life care can delay the inevitable for such systems, but not forever.