Thought Exercise – Why Socialism Fails


Pretend there is no US federal government at all for a moment.

Now assume two states are side by side and equal in all respects. – same laws, same taxes, same everything.

State A decides it wants to socialize healthcare.

In order to do this, it will necessarily have to set prices and raise taxes to pay for it. Doctors will be put under control of the state and they will have their costs and prices dictated to them. Care will be free for all and its costs will be borne by the tax payer. Doctors will be paid a set wage like any other bureaucrat. Healthcare would operate like any other government owned industry.

State B decides it wants to totally deregulate medical care and eliminate all subsidies and state programs. No state involvement in healthcare at all. Insurance companies would be free to operate as they saw fit. No regulation over insurance at all. No regulation over medical care at all. Taxes would appropriately decrease and medical costs would be set by market competition.

Question, how would state A know its setting the correct prices and paying the correct wages to its doctors?

If you were a consumer that worked for a living and could afford insurance, which state would you prefer to work in and seek care in?

If you were a doctor, which state would you prefer to work in?

If state A decided to lock its doctors wages to that of state B, is this technically feasible? Remember, doctors in state B have almost no administrative overhead and lower taxes – meaning they get to keep more of that money for themselves.

Wouldn’t state A have to pay their doctors MORE than state B to make up for the money lost in additional taxes and administrative expenses to keep them from leaving?

How would state A control costs if care was free for everyone? If medical care is “free” wouldn’t more people seek care in state A than in state B? If there are more people seeking care, but the same number of doctors between states, wouldn’t state A need to pay its doctors more simply to entice more doctors to come to their state instead of state B because it needed them to cover all the patients?

Wouldn’t the ultimate outcome of this be that state A would be forced to raise taxes higher and either pay their doctors more than state B or be forced to ration the care?

Would state A have a problem with freeloaders from state B?

What effect would the higher taxes have on workers? If a person could get insurance in B for a cheaper cost than the medical taxes in A, wouldn’t a person want to work in B rather than A since they would get to keep more money for themselves? Since insurance would be deregulated in B, people could get extremely cheap catastrophic insurance plans and stuff some money into savings accounts for minor medical emergencies.

If state A decided to ration care in order to compete with the cheap cost of care in state B (meaning they could lower taxes to match the cost of B’s insurance), wouldn’t people in A get pissed that they had to wait in line?

If workers leave A for B, wouldn’t that put pressure on the tax revenue A needed to pay for its socialized medical care? Would this force more rationing of care in A?

Now, what would A’s response be to all of this?


I’m going to wager state A would either implode or wage war against B to make it socialist as well hahaha.

Here’s some facts on our current fascist model of healthcare:

In 2008, Medicare provided health care coverage for 45 million Americans, making it the largest single health care payer in the nation. Enrollment is expected to reach 78 million by 2030.

In 2008, Medicaid provided health coverage and services to approximately 49 million.

During FY2008, the VHA had an estimated total enrolled veteran population of 7.9 million and provided medical care to about 5.2 million unique veteran patients.

This of course does not include state socialist care programs such as Medi-Cal or MassHealth.

Well over 100 million people out of 300 million are currently receiving socialist care in Amerika today.

Lets look at the results compared to real free-market healthcare:

2007 Breast augmentation $3,690
2003 Breast Augmentation $3,257
2003 Adjusted for inflation: 3665.69

Almost no increase at all even though the demand for breast augmentation went up dramatically during that time period.

Massive increase in demand, massive increase in technology, yet prices remained stable.

Amazing? Miracle of God? How could this be!!!?

Its called the free-market. – Yet even plastic surgery isn’t entirely free-market. The doctors have to jump through tons of State mandated hoops before they can preform the surgeries. The number of doctors that can preform the surgery is artificially limited by State licensing boards and the medical schools. Etc.. etc.. etc..

My point being?

We don’t have free-market healthcare here in Amerika today.  Thus, any comparisons of “free market Amerika” to the fascist countries of France or the UK are bogus because our medical system is just a fascist as theirs is – probably more so.

Insurance companies are not allowed to sell low budget policies.  Tax free health savings accounts are limited.  There’s massive regulatory overhead in all the states.  Insurance companies are not allowed to sell health insurance across state lines.  The public does not even attempt to look around for the best price/quality when selecting a healthcare provider.  There is absolutely NO competition based on price at all.  etc.. etc.. etc..


And finally to the nay-sayers that pretend my little example is a bunch of hogwash, lets look at the real facts:

Why are physicians leaving?…

As with nurses, the number of physician emigrants was highest in the mid-1990s, when anger over cuts in provincial health care expenditures was at its peak. In 1996, for example, 731 physicians left Canada. Although another 218 doctors returned, the net loss was 513 physicians – a number roughly equivalent to 30% of the annual output from Canada’s 16 medical schools. Those numbers have dropped recently, but even though the net loss fell to only 248 doctors in 1998, that is still equal to the output of several medical schools and it comes in the midst of a worsening physician shortage.

Why are these physicians leaving? Dr. Lorne Tyrrell, dean of medicine and dentistry at the University of Alberta, says lower tax levels in the US are only one reason for the exodus. “This came home to me the other day when I spoke to a young ENT surgeon who is moving to North Dakota. When I asked him why he would leave Canada when we have such an acute need for specialists like him, he told me that opportunities to do surgery here were too restricted. His waiting room is always full here, but he only has access to an operating room in his Edmonton hospital for 2 hours every 2 weeks. In North Dakota, he gets 2 afternoons a week in the OR.” Economists may argue that too much surgery is being done, but Tyrrell says that “we can’t afford to lose our specialists.”

more recent:…

Forced to compete for operating room time with other surgeons, he said that he and his colleague could complete only one or two operations on some days, meaning that patients whose cases were not emergencies could go months or even years before completing necessary treatment.
“Scarce resources are simply not being spent properly,” Dr. Sriharan concluded, citing a shortage of nurses and anesthesiologists in the hospital where the single microscope available is old and breaking down.

The two surgeons are sharply critical of Canada’s health care system, which is driven by government-financed insurance for all but increasingly rations service because of various technological and personnel shortages. Both doctors said they were fed up with a two-tier medical system in which those with connections go to the head of the line for surgery.

Here is another:

There was a net migration of 49 neurosurgeons from Canada from 1996 to 2002, according to the Canadian Institute for Health Information, a large loss given that there are only 241 neurosurgeons in the country.

Now, the statists will claim this is a myth – but rest assured it is not.  The 30 year physical depletion of doctors in Canada started to reverse in 2005, but what caused this reversal?

Third world doctors looking to escape the even greater tyrannies of their crappy hellholes.

The NEJM reports:

Results International medical graduates constitute between 23 and 28 percent of physicians in the United States, the United Kingdom, Canada, and Australia, and lower-income countries supply between 40 and 75 percent of these international medical graduates. India, the Philippines, and Pakistan are the leading sources of international medical graduates. The United Kingdom, Canada, and Australia draw a substantial number of physicians from South Africa, and the United States draws very heavily from the Philippines. Nine of the 20 countries with the highest emigration factors are in sub-Saharan Africa or the Caribbean.

Conclusions Reliance on international medical graduates in the United States, the United Kingdom, Canada, and Australia is reducing the supply of physicians in many lower-income countries…

The reliance of the United States, the United Kingdom, Canada, and Australia on physicians from other nations does not preclude them from drawing on each other. Physicians from the United Kingdom constitute the largest group of international medical graduates in Canada and Australia, and physicians from Canada are the fifth largest group of international medical graduates in the United States. The patterns of emigration and immigration of physicians among these countries constitute a form of workforce “cycling,” which is summarized in Figure 1. The net beneficiaries of this cycling are the United States and Australia, with net gains of 12,902 and 2539 physicians, respectively, whereas the net donors are the United Kingdom and Canada, with net losses of 9837 and 5604 physicians, respectively. Canada actually enjoys a net positive position with regard to the United Kingdom and Australia but has lost 8990 physicians to the United States while gaining 519.

You see, brain drain is real.  It happens between third world and first world countries, as well as first world to first world depending on the level of statist tyranny involved.

And why wouldn’t it?  If you were a doctor, why would you continue to practice in a location where you weren’t getting paid the maximum amount possible?

And for the clincher:

Published in the New England Journal of Medicine, the Medicus Firm recently conducted a survey showing that one third of all practicing physicians will stop practicing medicine if President Obama signs the current “healthcare reform” legislation into law. The inclusion of the public option in the legislation will raise that number to approximately 45 percent.



For those that think socialism doesn’t distort medical prices, check out the cost of cancer care surgery for dogs!



This shows you how grossly distorted prices are in medical care BECAUSE OF GOVERNMENT!