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Back to Obama y la sanidad

Luis Cabral, Professor, IESE, University of Navarra

Obama and healthcare

Wed, 27 Jan 2010 10:20:19 +0000 Published in La Vanguardia

The public discussion on the reform of the US healthcare system has been received with interest on the other side of the Atlantic, partly because of the enormity of the country and partly because the reforms and experiments being carried out in the US system tend to have repercussions for the European system as well (as in the US, European systems are also subject to great financial pressures, albeit to a lesser extent Degree).

After four months in Barcelona, I have found that the most common European perspective on what is happening in Europe and North America is not always correct. I will try to show this in three points.

First, we have the idea that the American system is a system in which the government does not have any role. But while it is true that the market plays a more important role in the U.S. than in Europe, the differences in the role of government are not as radical as is sometimes portrayed. For example, in the U.S. about half of expense healthcare is public (through Medicaid and other government programs), while in Catalonia, to name one European example, 70% of hospital beds are private.

Second, in the U.S. there are more than forty million citizens without health insurance. This is an undeniable fact, and it is truly scandalous that in a developed country there are so many people in this situation status. But, having said that, we must point out that most of the uninsured are not poor or people without resources (who can opt to join the Medicare program), but young men, perhaps unemployed, but with an economic stability that would allow them to pay for health insurance and yet they prefer not to do so (many because they believe they are immortal as young people).

Third, many argue that the facts prove that, although the market works in many areas, when it comes to healthcare there is nothing like a centralized system. But in large part, the crisis in the U.S. system is rooted in a distorted market system. Patients pay a small share of the cost of non-essential procedures, and doctors and hospitals, in turn, often charge on a fee-for-service basis. This means that the system offers too many non-essential attendance services.

In other words, the problem is that a distorted market system implies wrong incentives. But the crux of the matter is the distortion, not the market, and to abolish it would be to make the just pay for the sinners.