Have you ever heard the name Semashko? It is good to read about it today – when the government for the first time in history published information about payments to doctors through Medicare program. Yes, it is time to read about Nikolai Semashko – Stalin’s minister (commissioner) of health that established may be the only proven as working health-care model in history.
Current dominating in west world model is a hybrid of free market and government intervention. The main result of it is as a whole – extracting public funds to private pockets. The latest case with doctors that earned millions per year from Medicare, with a record of $21 million, just illustrated the thinking in the system. A system where the government pays to private subcontractors for medical services. In this system everyone has interest of increasing the expenses. Doctors want more money for them, and share part of it with government officers that have to control this. This system can lead to nothing else than to a bankruptcy of the public fund.
USA is not the alone. Everywhere is this way. For instance in my country there is a state fund called NZOK that has monopoly power in financing the health care. Every year with passing the government budget through parliament explodes a scandal with health care expenses. For the last 10 years the expenses have increased 4 times, and still almost nobody is satisfied with the system. NZOK is something very similar with Medicare with the only difference that it covers all the population and not only retirees. Current Obama plans for his health care reforms in fact are driving the US system in this direction.
But this semi-market healthcare in fact is not working well enough. The finance source is state-owned, while hospitals can be private and chose what to heal and what not to heal. Hospitals decide when someone needs healing, and no one can say NO. So for a country with 7,5 million people we have officially 1,5 million hospitalizations. 1 of every 5 went to hospital according to hospital accountants… Specialists have calculated that pouring the same money in Semashko-system will lead to better results. Semashko system is a state owned total monopoly of hospitals, funded by government and providing free medical services to everyone.
As in every such system there is a corruption there too. There is no state-ruled structure that can not be corrupted. But the abuse in Semashko is much lower than in hybrid semi-market systems. Obviously no one can explain what a doctor can do to earn $20 million per year. Or even $1 million.
The big loss with these systems is converting them in a cash cow, publicly presented as a care for people’s health. Politicians are going out and saying: “We are giving $100 billion for healthcare.” In fact they are giving $90 billion for their friends and for corruption combinations and just $10 billion for healthcare.” Investing in people’s health is a good mask for doing any swindle behind.
There is one big problem with free market in healthcare. It is called “infinite price”. No market, no economic formula or principle can work when you put in an infinite price of something. So as the life and the health have infinite price so this allows extracting any money from any system. Medical corporations have interest of developing expensive procedures, because they know funds and governments cannot refuse to pay them. Otherwise they will be blamed of leaving people without medical care. So they are paying, and this is resulting in more and more expensive medical insurance premiums. Obviously even the private sector cannot solve this problem.
The truth is that the only controllable system is pure Semashko. Yes it is socialist, but it is much less socialist than the current pseudo-market system of inventing and pumping up every sort of medical expenses and sending the bill to taxpayers.
April 9th 2014