The Basic Economics of National Health Insurance

I want to talk briefly about the basic economics of national health insurance the United States is one of the very few advanced industrial countries it does not provide as a matter of right to all of its citizens a national governmental run health insurance system one that is available to you whether you're employed or not whether you have a job don't have a job or changing jobs one that gives you the guarantee that just like you have the right to vote and the right to go into a public park and the right to call for police or fire people to help you when you have a need you also have the right to seek and find professional medical care as and when you your body and your mind need it why does the United States not do it well one answer is often given that it is somehow too expensive that it is somehow a privilege that will be abused by people who visit the doctor too often or seek frivolous medical care and so on it's also claimed that our old people are somehow too numerous or too needy or too sick none of those things are true we do have the most expensive medical care system in the United States but it's not because our medical care is the best far from it the United States does not rank high on for example the average age of death how old are you when you die Americans don't live as long as other people in these countries that have national health the number of children that make it to the first birthday it's not so great in United States we're way from far below number one so we don't have a medical care system that justifies the enormous ly higher amount of money we spend in this country compared to other countries whose medical results are as good or better than our own I think the problem lies in the medical cost side of the equation it's not that we have too many old people and it's not that we give them too much care it's that we pay too much let me go through that with you first in many countries the government goes to the drug companies and medical companies companies that make med and medical equipment and it buys in bulk from them and then it turns over the savings it passes them on from buying in bulk and you know if you buy medical equipment you get the same discount if you buy a lot of it if you do if you go to a discount store and buy a lot of rolls of toilet paper it's cheaper per roll than if you did it one by one the government comes in buys on mass drug companies make a modest profit but not the one they can if they sell each individual roll or each individual bottle of pills if we did that in the United States which we don't do the cost of medicines and the cost of medical equipment would drop drastically that's an important thing we ought to do number two we ought to rationalize the system of hospitals we have in many communities competing hospitals you might want competing stores for certain kinds of things but a competing hospital a situation in which two three four hospitals in an area all have the same equipment very expensive that they each use one quarter of the time imagine the savings if we had a rational system in which a key machine a scanner or any one of the major kinds of machines were available in a rational basis huge saving in cost number three doctors are the highest paid professionals in the United States they earn much more than lawyers and all kinds of other professional people whose training is just as important takes just as long there's no reason for that pay the doctor as well if you want but there's no reason for the outlandish salaries and payments many of them get that would save us an awful lot of money and finally insurance it is crazy to have five six seven ten twenty medical insurance companies each with their bureaucracy each with their headquarters each with their landscape corporate headquarters what is this this ought to be rationalized in the way for example that the Veterans Administration has long ago handled the care for the veterans and so on we should have a national health insurance it would make the cost of insurance much much less than we now pay with competing private come Panisse you put all those together and we could have a medical insurance system that could do at least as well as the one we have and cost us a great deal less and that would mean that all the current discussion about solving our national financial problems by cutting Medicaid the program to help the poor and cutting Medicare the program to help those over 65 that is to damage their health to solve our economic problems we wouldn't be in that situation we wouldn't have to do such drastic things that are so cool to the neediest amongst us so these are good reasons to address the long deferred real problems of the excessive cost of our health insurance and our health care in the United States


  1. The US has problems with life expectancy not because of our lack of health care. The us has some of the most advanced technology in the medical field. it's due to our society scarfing down food and not caring about there body, we have a cultural problem.

  2. Regarding our healthcare system: It would be easier to automate medicine, reduce hospitalizations by half, provide the appropriate diagnosis on the first visit through a nurse with a doctor a phone call away and for less than what we spend today thus providing universal health care with better longevity. For instance, in a 24-year-old female that is not pregnant but has not had a period for three months, the most likely diagnosis is hypothalamic amenorrhea, lack of period due to stress or depression. A nurse and an application should handle this case at minimal cost. The other two most common causes of a lack of period would be the polycystic ovaries-syndrome associated with stress, hypothyroidism and an elevated prolactin level that can be tested by the nurse. That’s it but the gynecologist will make this case expensive big time but deny this patient psychotherapy. If she’s married and depressed, it will be likely she has painful intercourse. A gynecologist would readily attribute the pain to fibroids or endometriosis, incidental findings. Half of all hysterectomies are not necessary. If we can automate a working person’s job, why not doctor jobs? If we consolidate three health care systems into one, VA, county system, private care, we can save a trillion dollars. We have ideas how to change our health care system but we are stifled by an industry that controls our Congress. Read me on Facebook! I enjoy your lectures. I too stand for the working person.

  3. Didn't hear much in the way of data supporting arguments. He basically spouts off selected data on items he "declares" ridiculous and says "we can do better". The fact he wants to restrict access to choice is a problem. For example, he does not believe in four different hospitals having the same machine and competing for patients in the same geographical area. Meaning he wants you to wait in a line based on government availability of care deemed appropriate.

    Does this mean the government can then force me to exercise, as a preventative measure, to keep cost down and ensure the proper allocation of the peoples resources?

  4. I don't agree with the physician salary item. hospital fees are 7x what provider fees are

  5. Interesting to see health insurance folks on here trying to convince us there is "no free lunch". Apparently, sociopath's cannot feel irony either.

  6. This is very practical solution for us our health!

  7. Thank you too much the honorable and ethical American patriot Professor Wolff

  8. It can take a doctor 12 years from undergrad through residency to be able to get "through schooling"…counting residency, & This is not true of every doctor, but I am unaware of any other profession that takes that much schooling before a person can practice; & some specialties it takes 15 years. And many American trained physicians go into a lot of debt doing this, and stick with it for the promise of a good salary. Our education system will have to be fixed before doctors are willing to sacrifice 10-15 years of their life & debt for shitty/average pay. It wont happen.

  9. Prof. Wolff forgot to mention what I believe is the main cause for health care in the US to be so expensive: the US has the sickest population because of the obesity epidemic. Obesity causes metabolic syndrome, cardiovascular disease, and diabetes, to name a few, and diabetes pretty much causes everything else (including cancer).

  10. You understand, government fully funded and debt free, and charge interest to corporations only… This would be a peoples gov, then gov would do what it promised to do, is to protect life, liberty and property. Also, you can have full rights protected. Also, if a corporation does not serve the people in some positive way, dont borrow it money. END THE FED…..

  11. We have to end the federal reserve, print debt free interest free money to the nation. Borrow this new money to corporations only, and that interest would go in trust for the people. Its the only way, print debt free money. If we can print bond dollars, then we can print dollars. We need to kill the private bank. Cut the middle man, then expand or contract the money supply according, and only charge interest to corporations. Problem solved.. OK… Think about this.. Full social programs funded.

  12. Too many Americans believe that their health care is the best in the world, How can a country brag about their health care when 50 million people in their country have no health care insurance. Americans must understand that everything that is privatize doesn't make it better.

  13. Wow, talk about misdiagnosis! I am glad this guy is an economist and not a doctor.

  14. Healthcare in Ameica is second to none, until you get a chronic illness. Forget the uninsured, its the underinsured that are the bigger problem. If you have a good poliy via an employer and no bad luck in health you might be fine, but it remains ineffective. If the solutions you critcize are not right suggest some that are. Have you actually experienced healthcare in Europe or are you just relying on the scare stories that get reported?

  15. I'm so grateful my healthcare has been successfully commoditized!

  16. Why cant all Americans be more rational like this man

  17. READ THREAD FROM BOTTOM TO TOP PLEASE… Government price fixing would have destroyed the economic incentive to commoditize the product for the masses – opposite the intended effect (as is typically the case with government solutions). In short, there is no "free lunch" as statists would have you believe. Do your homework before embracing such ideas.

  18. Do you know you can buy a generic drug directly from Wal Mart for less cost than the so called "discounted" co-pay on your government or insurance company health plan (plus, you're paying a monthly premium for this "privilege"). Imagine if the government had usurped the computer industry in its infancy in the name of "fairness for all"? We'd still be paying thousands for those old Apple word processors and the computer revolution would have never become affordable for the middle class.

  19. The true solution is not more centralization (either through the government or bigger insurance companies), but less. Only truly catastrophic risks that could bankrupt a family should be insured. Does your auto insurance cover your oil changes? The rest of healthcare should be subject to market forces. Then you'll truly see long-term healthcare price drops a la the cell phone and computer industries. Direct-to-consumer generic drug sales is a great example of this.

  20. …may mean department downsizing and the potential loss of his job? And let's not even get into the crony capitalism that results when government has great power within an industry. Do we really want more gobbledygook regulation, more lobbyists, more lawyers, and more "too big to fail" companies?

  21. Conversely, the estimated $60 billion in annual Medicare fraud would sustain our healthcare system much longer than insurance company profits would, as would the billions lost through government waste and inefficiency. FYI, when an insurance company's costs exceed its revenues, it goes out of business. When a government department faces the same scenario, it is rewarded with more money. What incentive is there for a bureaucrat to be efficient if such behavior…

  22. Of course, Wolff could say that this is partly because the system relies on private, greedy insurers to administer government mandated benefits. But, if the government took all those insurance company profits and put them back into the system, they would only sustain it for a few days (incidentally, insurance company profit margins are on the low end of industry comparisons. Thus, using Wolff's reasoning we should nationalize every industry for greater efficiency, a la the Soviet Union).

  23. Finally, Wolff fails to mention that America's current healthcare system is already over 50% government run (soon to be a much greater percentage with the full implementation of Obamacare in 2014). So what is the record of Medicare and Medicaid? Dismal. Both boast annual costs many times greater than original projections. In 1967, the government estimated that by 1990 Medicare would cost $12 billion annually. It cost $98 billion (inflation adjusted). Today it costs $500 billion.

  24. for what became the Federal Energy Administration involved some 200,000 respondents from industry, committing an estimated five million man-hours annually."

  25. "The oil-price-control system established several tiers of oil prices. The prices for domestic production were also held down, in effect forcing domestic producers to subsidize imported oil and providing additional incentives to import oil into the United States. The whole enterprise was an elaborate and confusing system of price controls, entitlements, and allocations. It was estimated that just the standard reporting requirements…

  26. The more common name for it is "price fixing" and it always fails. While price fixing may create short-term benefits, in inevitably creates long-term market distortions and perverse incentives that require ever more centralized control until the whole system caves in on itself. For a great article on the subject, Google "PBS, Nixon Tries Price Controls." Here is a quote from the last paragraph:

  27. Next, Wolff offers all these alleged bargaining advantages derived from a monopoly government healthcare payer as if they are novel, groundbreaking economic solutions. The choice to substitute top-down, centralized economic "planning" for bottom-up, grass roots competition has been tried again and again for thousands of years – from Emperor Diocletion in Ancient Rome to Joseph Stalin in Communist Russia to President Richard Nixon in the U.S.

  28. The bottom line is statistics can be easily manipulated. A more honest measure of quality of care is how people vote with their feet. Where do people from other countries who have choices (i.e. money to spend) go for care of complex, serious problems? Invariably to the U.S (e.g. The Sultan of Brunei, Silvio Berlusconi, Italy's former prime minister, etc). Why would these celebs choose to spend top dollar here if the U.S.' reputation wasn't phenomenal?

  29. If you subtract just this one variable, the U.S. rockets from 37th into the top 15. Furthermore, he doesn't mention that other countries' costs are lower because they piggy back on costly U.S. pharmaceutical and technological innovation which are the product of free markets. To invent all this stuff takes money. To copy it takes far less.

  30. Then he says we spend much more than other countries, but don't get better results. He uses WHO statistics like the "number of children who make it to their first birthday" to substantiate this. But this statistic is very misleading as other countries don't count stillbirths while the U.S. does. It's an apples to oranges, faux comparison and just one of many used by the WHO. Also, the WHO weights "spending" far higher than other factors in determining rankings.

  31. To this point, how would offering people "free" medical care curb unhealthy personal behaviors? If anything, it would exacerbate them. With no skin in the game, people would worry less about the financial consequences of their eating habits, etc and taxpayers would fund their lifestyles.

  32. And if you look at true "healthcare" metrics, we blow other countries away. We have the lowest death rates related to cancer, high blood pressure, and high cholesterol in the world. Plus, Americans over the age of 75 live longer than people in other countries. We could certainly do a better job of disease prevention, but when it comes to curing people, we are second to none.

  33. This is one of the most slanted and distorted portrayals of our healthcare system I've ever heard – almost pure statist ideology. His life expectancy stats don't take into account the fact that we have higher homicide/obesity/diabetes related death rates in the U.S. than other countries. These factors have nothing to do with "healthcare" per se. They are related to social violence and personal behavior (nutrition, diet, etc). If you remove these factors, our life expectancy is higher.

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