Health-Care Taxonomy

An excellent article (which is worth reading in full) from Foreign Policy magazine makes an incidental clarification of some of the terminology used in the health care debate. It’s obviously nonsense that Obama’s plan is a “single-payer” system, but I hadn’t considered the fact that even if it were, it still wouldn’t be a socialized system. Here’s the terminology:

Socialized health-care system

A government entity directly employs doctors and owns the hospitals. This allows top-down management of health care, with all attendant advantages and disadvantages, but of course any such system can be internally organized with varying levels of competition and independent management. The existence of such a system in no way rules out the possibility of competing or supplementary systems: education in the US is socialized, but there are many private schools outside that system (particularly at the university level). Britain’s NHS and the US Veteran’s Affairs Department are socialized health-care systems, and both co-exist with supplementary private systems.

Single-payer system

Doctors and hospitals are private and operate independently, often as for-profit institutions, but there is a single government entity that pays for most care. This hugely simplifies the billing process, and is the most straightforward way of supporting a “right to basic health care” for the entire population. Private insurance and payment plans can co-exist with the system to support treatments not covered by the single payer. Canada, France, and Germany have single-payer systems. Medicare is a single-payer system.

Private health-care system

Doctors and hospitals are private and operate independently, and people rely entirely on an open marketplace for medical insurance, where any government plans compete directly with private plans. All countries that operate in this way impose some kind of regulation on insurance, and many enforce a “right to basic health care” by requiring that every citizen purchase an insurance plan that meets a set of minimal standards, and by subsidizing the cost of such plans. Switzerland, the Netherlands, and Obama’s plan all follow this model (including regulation, mandatory insurance, and subsidies).

The US

The current US system is socialized for veterans, single-payer for the elderly and those with certain disabilities (Medicare) and the poor (Medicaid), and private for most other segments of the population. The private portion currently includes (piecemeal) regulation but does not mandate insurance coverage. Instead of subsidies to help the poor buy into the private system, they are pushed into the Medicaid single-payer system.