health care

When Governments Offer Empty Health Care Promises, Black Markets Deliver the Goods

From the Third World to the First World, officials can't exempt medicine from the laws of economics.

|

Many Americans of all stripes are dissatisfied with the expense and byzantine structure of health care in the United States. Handing the job over to the government is the preferred solution of that set that believes that appending ".gov" to things magically liberates them from unfairness, inefficiency, and the big-meanie laws of economics. Sen. Bernie Sanders (I-Vt.), who does a spot-on Larry David impression on the presidential campaign trail, ranks prominently among those who want "a single-payer national health care program" to set things right. Unfortunately, the history of state-provided medicine is one of grandiose promises by politicians, with entrepreneurs stepping up, often illegally, to bridge the vast gap between those empty words and reality.

When it comes to the triumph of state-provided everything, what could beat the example set by North Korea? What is officially the hardest of hard-core communist regimes remaining on the planet boasts that "All natural resources, main factories and enterprises, harbours, banks, transportation means and communication organizations are only owned by the state." When it comes to the provision of healthcare to the inhabitants of this socialist workers' paradise, "the state bears totally the expenses of medical checkups and treatment, bed and board in hospitals, medicines, and even travel costs to and from sanatoria."

When governments make economically improbable promises, the private sector is usually left to deliver what politicians can't. But the Democratic People's Republic of Korea officially has no independent entrepreneurs—they're forbidden by law. Despite that awkward hurdle, by 2008 "the average North Korean family drew some 80 percent of its income from the private economy," according to Andrei Lankov, author of The Real North Korea: Life and Politics in the Failed Stalinist Utopia.

The health care sector has been no exception. In a country where "the state bears totally the expenses" of diagnosis and treatment, the result has been as lousy as everything else North Korea's government provides. So the black market has stepped into to meet the demand for actual care. "Many doctors working in the black markets are retired from state hospitals, unable to make a living on measly wages. Some are without medical licenses and are usually self-taught Korean medicine doctors," reports Daily NK, an internationally well-regarded news source based in South Korea.

Diagnoses start at around the equivalent of $10, with the price of treatment varying as you'd expect. With the total collapse of the state system, even high party officials reportedly turn to black market providers.

Informal medical providers, like other black marketeers, may provide North Koreans with something more substantial than the state's empty promises, but they still face risks.

"The North Korean emerging entrepreneurial middle class is doing alright, they have a good life and they enjoy it," a Russian diplomat told Lankov. "The problem is that pretty much every single member of this social group can be arrested, tried and executed according to the letter of the North Korean law."

Ouch.

Of course, North Korea is the poster child for failed totalitarian states. But comparatively free-wheeling Pakistan has a similar story to tell. Unlike North Korea, Pakistan has a thriving (and legal!) private sector. Then again, it also has a massive informal sector, as entrepreneurs choose to operate outside the reach of the state, driving the shadow economy to equal as much as 91 percent of official GDP.

Most health care in Pakistan is provided independent of the state, and the quality of private medicine can be quite good. But the government runs hospitals and clinics for lower-income Pakistanis, and is experimenting with universal health care in the Punjab. The result is… not so satisfactory.

"[L]ong waits and indifferent doctors and inadequate medical supplies force many patients to resort to local quacks that offer medical care that is at best dubious," writes Syed Mansoor Hussain, former chairman of the department of cardiac surgery at King Edward Medical University in Lahore.

Hussain clarifies that "quacks" might be better referred to as "informal medical practitioners" and that the care they provide is no worse than that in government-run facilities.

In fact, many informal practitioners are medical students and pharmacists, who commonly diagnose illnesses and prescribe medicine, according to a 2008 study. That paper called for "urgent corrective measures," though it fails to address the demand that might drive patients and providers to bypass official channels.

Hussain concedes that "these informal practitioners provide a service to many people," and adds that their ranks include nurses and other types of health workers, numbering as many as 40,000 in Punjab alone. Admitting that driving such workers out of business is impossible, he suggests that their role be formalized.

"Perhaps these people can be registered and provided some basic medical education and training on a regular basis so that they are better equipped to handle simple medical problems," he adds.

Maybe. But if the quality of care that they provide already rises to the level that the state provides, and they're more available, perhaps there's not really a problem at all.

But is the experience in two Third World dumps really relevant to Americans? How much do North Korea and Pakistan have in common with the United States anyway?

Maybe not so much. But Canada isn't that far off from the U.S. in wealth, culture, or geography—and informal medical providers have challenged the state system there and fulfilled promises that politicians couldn't keep. It turns out that prosperous nations can buy themselves a little more wiggle room than poor countries, but they can't purchase exemptions from the laws of economics.

For years, private medicine operated in something of a gray area in Canada, with provincial laws in place that made it difficult for providers and patients to negotiate payments for care outside of the state system. Even so, Dr. Brian Day opened the country's first private surgery clinic in 1995—and rose to become head of the Canadian Medical Association a bit over a decade later.

The legal barriers put in place to discourage private medicine were nothing compared to the shitty quality of care driving Canadians to hurdle those barriers. As the Supreme Court of Canada noted in the 2005 case, Chaoulli v. Quebec, "Access to a waiting list is not access to health care. As we noted above, there is unchallenged evidence that in some serious cases, patients die as a result of waiting lists for public health care."

That decision set aside only Quebec's ban on private health insurance, leaving other provincial barriers in place. But the same pressures that blew apart one province's restrictions drove an explosion in private health care elsewhere. "In British Columbia, private clinics and surgical centers are capitalizing on patients who might otherwise pay for faster treatment in the U.S.," the Los Angeles Times reported in 2009. "Private clinics continue explosive growth," the Canadian Medical Association Journal added two years later, noting that many "private clinics were openly violating" restrictions on billing private parties while contracted with government Medicare.

This year Quebec officials moved to legalize many of the fees that private providers were already charging. That makes sense, since those providers were delivering actual care when the state system could only offer "access to a waiting list."

The U.S. certainly isn't North Korea or Pakistan; it isn't even Canada. But the laws of economics apply here too. The Affordable Care Act—Obamacare—is already running afoul of the Canadian Supreme Court's warning that "access to a waiting list is not access to health care." Two years ago, news reports cautioned that top hospitals were declining to participate in the program. Last year, CNN reported that "In many areas, the largest hospitals are not participating and many doctors are not accepting the coverage."

In fact, small but growing ranks of providers are refusing all coverage. Freed from burdensome bureaucratic overhead, they offer less expensive care in return for direct payment by patients.

Those doctors aren't doing anything illegal, but the Americans who refused to pay the premiums for Obamacare-compliant coverage are breaking the law. Millions of Americans were forced this year to pony up fines to the IRS (which has been tasked with enforcement), with many millions more exempted, and an unknown number just flying under the radar. The penalties were a bargain compared to the inflated price of obedience to the complex and expensive government mandates.

Economies and cultures may differ, but the U.S. faces the same economic pressures that confront the regime in totalitarian North Korea, bureaucrats in poor Pakistan, and elected officials in prosperous Canada. The choices are the same too: They can criminalize medical care provided outside official channels. Or they can recognize and legitimize the arrangements that patients and providers make when governments can only offer Bernie Sanders' empty vow of "a single-payer national health care program" that guarantees nothing more than a spot on a very long list.

NEXT: Watch This School Cop Brutally Attack a Girl for Refusing to Leave Her Desk

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Those doctors aren’t doing anything illegal, but the Americans who refused to pay the premiums for Obamacare-compliant coverage are breaking the law.

    How is it the politicians, in their infinite wisdom, overlooked making doctors culpable too? Those statists better get busy and complete the destruction of our healthcare system!

    1. It will be for your own good !

      -Proggie

    2. What better way to implement population control?

    3. Actually I refused to pay the premiums, and found a perfectly legal alternative to conventional health insurance, by joining a health care sharing ministry. In addition to saving about 75% off of what I’d pay for an Obamacare policy, I’m exempt from having to pay the fine/penalty/tax, as it’s specifically written into the law that members of these ministries are exempt (even thought we’re technically considered to be uninsured). I wrote them up on my blog, here: http://selfpaypatient.com/2014…..inistries/

      But yeah, eventually they’ll figure out that an alternative to state-directed health care needs to be shut down, and they’ll come after it the same way they go after homeschoolers.

    4. The Obama Justice Department, with their army of federal asshole prosecutors, have vowed to send people to prison and fining them a fortune, if they do not get the Obama mandated expensive health insurance coverage. My insurance costs went up three fold under that assholes healthcare mandate. What a smooth talking bullshitter our president Obama is. However, if he could run for president again, he would win in a landslide. That’s how stupid the American voter is. Yet our retired federal employees get free dental, vision, and medical with no deductible and no cost to them at all. It is 100% tax payer funded.

  2. Pssst. Hey comrade. Over here. The long waiting lines for antibiotics getting you down ? Come to where the antibiotics wait for you. =)

  3. Comrade Sanders says we have a right to a penis enlargement. This is not true?

    1. Not only that, but a sexual surrogate who will teach you how to use that thing. It’s part of the treatment.

      1. Only on downside… It’s Hillary.

        1. You mean, Hillary-Bob will teach me how get fucked by Billary-Bob?

          Well shucky-darn me, I’d rather not, I already got fucked by Billary-Bob in the 1990s…

    2. Obama ,will mandate that you get the enlargement and that you pay for it yourself. Or he will send you to prison!

  4. I don’t care who finally gets elected, or which doesn’t, nor what the Fed does/does not do, nor whether, according to Mr “investment advisor with a claimed “near perfect prediction record” [insert advisor name of choice] , we are supposedly in for recession, depression, deflation, hyper inflation, a stock market boom, or whatever .

    Why?

    Because whatever happens, my entirely self-managed, fully diversified, once per year adjusted long term savings plan will be safely protected and will , 9 times out of 10, grow at an average of 8% per annum over and above the prevailing inflation [or deflation], rate, year in, year out, as it has since 1986 when I started using it.

    Savings plan results 1972-201:

    http://onebornfreesfinancialsa…..gspot.com/

    Regards,onebornfree?

    1. I am going to entrust you with all my doubloons. And triploons. And quadruploons.

      1. I’ll just send him all my loons.

        1. And I will send him my loins and my 1st-born…

          . . . -Oneborn Enslaved to Government Almighty, and charlatans to boot!

  5. A common refrain among collectivists is that state involvement in general and socialism in particular is needed for a “safety net”. They never think one step further: what is the safety net FOR socialism? What always, and without fail (even, as in the case of North Korea, under threat of death) emerges from the wreckage when socialism collides with the laws of economic reality? Some refer to it as an “underground economy” or a “black market”, ominous-sounding terms that were very probably coined by statist control freaks to disparage something that they cannot control. What actually occurs is that an unfettered FREE market emerges that can finally deliver what people want and need.

    If one system invariably emerges as the failsafe for another, it’s clear which is the better system.

    1. Yeah man, gotcha…

      The EVIL bahstahds of the “black market” serve as the “safety net” to the utterly and completely empty promises of socialistic “safety nets”, gotcha…

      But WHO is it, that gets to go to JAIL?????????? When they do NOT suck the dictator’s dick quite the right way? WHERE is justice, my friend?

  6. Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go? to tech tab for work detail,,,,,,,

    …………………. http://www.4cyberworks.com

    1. Yes, but do you offer medical?

  7. Amazing… an entire article about the failure of state-run health care systems, and Tuccille never mentions the one we have in the United States; the VA.

    Which, of course, works with such high levels of proficiency.
    Sarc mode/off

    1. The VA being National Health Care, and Medicare being Single Payer.

  8. True free market health care (no drug laws, no licensing, freedom to purchase goods and services from anyone anywhere) will give lower costs than any other possible system. Any sort of involvement by government (or any “special interest organization”) will increase costs.

    Note that “certification” is used in some occupations instead of licensing. Certification merely means that the individual concerned has established that he or she possesses certain skills or abilities. And unlike licensing, which is always performed by governments, certification can be done by private agencies both on a national basis or an international basis for that matter.

    It should also be noted that “professional organizations” are “labor unions” under a different “name”.

  9. Obviously, North Korea, Pakistan and Canada are doing it wrong. The United States will get it right, especially with the enlightened wisdom of Barak Obama and Hillary Clinton!

    I’m still upset about about the blatant rights violation of the individual mandate. Are they deliberately *trying* to turn America into a nation of lawbreakers?

  10. Of Conservative and Libertarians most notably based in the elite of the world’s economies there are few that I can mention for the most part they fail lacking explanations for the the poor state of capitalism simply because as intellects like they selectively pick the most developed countries to foist their arguments rather call it what it is namely PROPAGANDA.

    The west is a political bankruptcy falsely this above article states ” “the average North Korean family drew some 80 percent of its income from the private economy,” when the nature of a black market is that it is secret illegal most difficult if not impossible to calculate in what often is portrayed by lies as those stated ” according to Andrei Lankov, author of The Real North Korea: Life and Politics in the Failed Stalinist Utopia” whom I would bet is some sort of dupe or agent for western intelligence.

    Pat Buchanan and William Buckley come to mind they too had strong basis in propaganda for though they drew interesting conclusions such as “A republic Not an Empire” but never fully explained to strong ties of capitalism to it creations.

    As they offer capitalism as a panacea solution for the ugly state of the world
    which they claim produced by the robust nature of a capitalist economy full of crime, corruption, poverty, illiteracy, hunger which like Buddha they will one day have to face when they finally leave their palaces to which glosses over and hides the truth.

    1. srjmsbnd, you mean capitalism that helped create the computer your currently typing on? If socialism is so great why has it failed everywhere its tried, let me name a few places, Russia, Eastern Europe, East Germany etc. You talk about “crime, corruption, poverty, illiteracy, hunger” are freakin’ serious?! Communism was full of those and that was the reason why it collapsed and semi capitalist countries still exist. Its not propaganda, its truth, socialism and communism left piles of dead bodies across the world, Cambodia, parts of Africa, the Ukraine etc. So seriously, give me a break, you wouldn’t be driving the car your driving, using the computer your using etc. if capitalism hadn’t helped build it. Hate to break it to you, your fucking joke. Get a life.

  11. The article notes the growing number of doctors opting out of third-party payment, and there are multiple other options for people who want out of the state-directed system. Medical tourism, online bidding for medical services, alternatives to conventional health insurance – there’s actually a functioning free market in health care today, outside of Obamacare and third-party payers. I wrote a book about it (The Self-Pay Patient) and run a blog about it for anybody that’s interested.

    http://www.amazon.com/s/ref=nb…..ay+patient

    http://selfpaypatient.com/

    Not only is the care often better in the self-pay market, but it’s less expensive too because all of the third-party billing and administrative overhead is eliminated.

  12. Heh heh and this just proves the state is a huge fail clown. I love it when stuff like this blows up in their egotistical, megalomaniacal faces. The market is a force of nature that can’t be cheated, its a natural law none of these scumbag statists can ever get around and that gives me hope, and I am one of the biggest hardened cynics around.

  13. Either you get the coverage the government expects you to get; or, you go to prison for decades! No excuses. It does not matter to the government assholes if you are being ripped off by our greedy healthcare system. You have no rights, period.

Please to post comments

Comments are closed.