Editing Socialized medicine (section)

===Cost of care===
Socialized medicine amongst industrialized countries tends to be more affordable than in systems where there is little government involvement. A 2003 study examined costs and outputs in the U.S. and other industrialized countries and broadly concluded that the U.S. spends so much because its health care system is more costly. It noted that "the United States spent considerably more on health care than any other country&nbsp;... [yet] most measures of aggregate utilization such as physician visits per capita and hospital days per capita were below the OECD median. Since spending is a product of both the goods and services used and their prices, this implies that much higher prices are paid in the United States than in other countries.<ref>{{cite journal |last1=Anderson |first1=Gerard F. |last2=Reinhardt |first2=Uwe E. |last3=Hussey |first3=Peter S. |last4=Petrosyan |first4=Varduhi |date=May 2003 |title=It's the prices, stupid: why the United States is so different from other countries |journal=Health Affairs |volume=22 |issue=3 |pages=89–105 |doi=10.1377/hlthaff.22.3.89 |pmid=12757275 |doi-access=}}</ref> The researchers examined possible reasons and concluded that input costs were high (salaries, cost of pharmaceutical), and that the complex payment system in the U.S. added higher administrative costs. Comparison countries in Canada and Europe were much more willing to exert [[monopsony]] power to drive down prices, whilst the highly fragmented buy side of the U.S. health system was one factor that could explain the relatively high prices in the United States of America.  The current [[fee-for-service]] payment system also stimulates expensive care by promoting procedures over visits through financially rewarding the former ($1,500 – for doing a 10-minute procedure) vs. the latter ($50 – for a 30–45 minute visit).{{Citation needed|date=October 2013}} This causes the proliferation of specialists (more expensive care) and creating, what [[Donald Berwick|Don Berwick]] refers to as, "the world's best healthcare system for rescue care".{{Citation needed|date=October 2013}}

Other studies have found no consistent and systematic relationship between the type of financing of health care and cost containment; the efficiency of operation of the health care system itself appears to depend much more on how providers are paid and how the delivery of care is organized than on the method used to raise these funds.<ref>{{cite journal |author-link1=Sherry Glied |first=Sherry A. |last=Glied |title=Health Care Financing, Efficiency, and Equity |date=March 2008 |journal=NBER Working Paper No. 13881 |doi=10.3386/w13881 |doi-access=free }}</ref>

Some supporters argue that government involvement in health care would reduce costs not just because of the exercise of monopsony power, e.g. in drug purchasing,<ref>{{cite web|url=http://www.pnhp.org/facts/singlepayer_faq.php#drug_prices|title=Single Payer FAQ |website=Physicians for a National Health Program|access-date=April 27, 2018|url-status=dead|archive-url=https://web.archive.org/web/20091026121131/http://www.pnhp.org/facts/singlepayer_faq.php#drug_prices|archive-date=October 26, 2009}}</ref> but also because it eliminates profit margins and administrative overhead associated with private insurance, and because it can make use of [[economies of scale]] in administration.  In certain circumstances, a volume purchaser may be able to guarantee sufficient volume to reduce overall prices while providing greater profitability to the seller, such as in so-called "[[Advance market commitments|purchase commitment]]" programs.<ref>{{cite journal |last1=Löfgren |first1=Hans |title=Purchase commitments: Big business bias or solution to the "neglected diseases" dilemma? |journal=Australian Review of Public Affairs |date=October 31, 2005 |url=http://www.australianreview.net/digest/2005/10/lofgren.html |access-date=April 27, 2018 |issn=1832-1526|url-status=live|archive-url=https://web.archive.org/web/20180422072411/http://www.australianreview.net/digest/2005/10/lofgren.html|archive-date=April 22, 2018}}</ref>{{Dubious|date=June 2008}} Economist [[Arnold Kling]] attributes the present cost crisis mainly to the practice of what he calls ''premium medicine'', which overuses expensive forms of technology that is of marginal or no proven benefit.<ref>{{cite journal |first=Arnold S. |last=Relman |title=Book Review: ''Crisis of Abundance: Rethinking How We Pay for Health Care'' |journal=New England Journal of Medicine |volume=355 |issue= 10|pages=1073–1074 |date=2006 |doi=10.1056/NEJMbkrev57033 }}</ref>

[[Milton Friedman]] has argued that government has weak incentives to reduce costs because "nobody spends somebody else's money as wisely or as frugally as he spends his own".<ref name="How to Cure Health Care">{{cite web |author=Milton Friedman |url=http://www.hoover.org/publications/digest/3459466.html |title=How to Cure Health Care |archive-url=https://web.archive.org/web/20080426072208/http://www.hoover.org/publications/digest/3459466.html |archive-date=April 26, 2008 |url-status=dead}}</ref> Others contend that health care consumption is not like other consumer consumption. Firstly there is a negative utility of consumption (consuming more health care does not make one better off) and secondly there is an [[information asymmetry]] between consumer and supplier.<ref>{{cite journal |last1=Blomqvist |first1=Åke |last2=Léger |first2=Pierre Thomas |year=2005 |title=Information asymmetry, insurance and the decision to hospitalize |journal=[[Journal of Health Economics]] |volume=24 |issue=4 |pages=775–93 |doi=10.1016/j.jhealeco.2004.12.001 |pmid=15939493 |url=https://www.cirano.qc.ca/pdf/publication/2002s-06.pdf }}</ref>

[[Paul Krugman]] and [[Robin Wells (economist)|Robin Wells]] argue that all of the evidence indicates that public insurance of the kind available in several European countries achieves equal or better results at much lower cost, a conclusion that also applies within the United States. In terms of actual administrative costs, Medicare spent less than 2% of its resources on administration, while private insurance companies spent more than 13%.<ref name="krugman-wells-nyrb">{{cite magazine |author1=Paul Krugman |author2=Robin Wells |url=https://www.nybooks.com/articles/2006/03/23/the-health-care-crisis-and-what-to-do-about-it/ |title=The Health Care Crisis and What to Do About It |magazine=[[The New York Review of Books]] |volume=53 |issue=5 |date=March 23, 2006}}</ref> The [[Cato Institute]] argues that the 2% Medicare cost figure ignores all costs shifted to doctors and hospitals, and alleges that Medicare is not very efficient at all when those costs are incorporated.<ref>{{Cite web | author=John Goodman | title=Five Myths of Socialized Medicine | work=[[Cato Institute]] | date=Winter 2005 | url=http://www.cato.org/pubs/catosletter/catosletterv3n1.pdf | url-status=live | archive-url=https://web.archive.org/web/20061230100531/https://www.cato.org/pubs/catosletter/catosletterv3n1.pdf | archive-date=December 30, 2006 }}</ref> Some studies have found that the U.S. wastes more on bureaucracy (compared to the Canadian level), and that this excess administrative cost would be sufficient to provide health care to the uninsured population in the U.S.<ref>{{cite web |url=http://www.medicalnewstoday.com/articles/8800.php |title=USA wastes more on health care bureaucracy than it would cost to provide health care to all of the uninsured |archive-url=https://web.archive.org/web/20080223201811/http://www.medicalnewstoday.com/articles/8800.php |archive-date=February 23, 2008 |url-status=dead |website=Medical News Today |date=May 28, 2004}} Summary of New England Journal of Medicine Study</ref>

Notwithstanding the arguments about Medicare, there is overall less bureaucracy in socialized systems than in the present mixed U.S. system. Spending on administration in Finland is 2.1% of all health care costs, and in the UK the figure is 3.3% whereas the U.S. spends 7.3% of all expenditures on administration.<ref>{{cite web |title=Figure 14. Percentage of National Health Expenditures Spent on Health Administration and Insurance |url=http://www.commonwealthfund.org/usr_doc/Collins_universal_hlt_insurance_testimony_06-26-2007_figures.ppt?section=4039#320,14 |date=2003|archive-url=https://web.archive.org/web/20110720063009/http://www.commonwealthfund.org/usr_doc/Collins_universal_hlt_insurance_testimony_06-26-2007_figures.ppt?section=4039 |archive-date=July 20, 2011 |url-status=dead}}</ref>