Sicko: Socialized Medicine Myths aka Opportunity Costs

I finally got around to watching Michael Moore's Sicko. I must admit, it pulls at the heart strings. And that's part of my problem with the film. By choosing his scenes and case studies, Moore gives a false impression: that all we have to do is implement socialized medicine and that would fix all our health care problems. It would, as he claims, reduce the number of individuals who receive below average care, but I argue here that the cost of getting everyone to average is too high.

I'm not one to say that the US health care system cannot be improved. But I do want to point out the hidden cost of socialized medicine. Socialized medicine (like any socialized program) over supplies a service (or product) via artificial demand, resulting in market inefficiencies and suboptimal global production through the opportunity cost of its implementation. Lemme 'splain.

In the film, Moore compares the cases of two individuals who have lost fingers in an accident. The American must pay a fee to reattach his fingers (if he chooses), while the other individual's socialist government program picks up the tab (and when the government is paying, of course you have your fingers reattached). The film heaps scorn on the American system for forcing the American to pay for the medical services, especially since he decides to only have one of two fingers reattached.

But the cost of the doctor in the socialist system has not disappeared, nor even been reduced. In fact, Moore goes to great lengths to document how well a doctor under a socialist system lives. The tab for his service is picked up by the government and relayed and distributed to the people. But that's basically what insurance companies do. The socialist government acts as one big insurance company, who's premiums and deductibles are paid for through taxes. But unlike in the United States, you don't get to choose your insurance plan: everyone must get complete coverage. When everyone gets complete coverage, everyone has fingers reattached. With more fingers being reattached, you have to have more doctors to reattach them (and more hospitals for the doctors to work at, and more Audis for the doctors to drive - as the one in the movie did).

If we have more doctors, we must, concomitantly, have less individuals in some other career. To make my point obvious, let's say that one of the doctors, had s/he not become a doctor; would have become a mechanical engineer, who built a better saw, which led to a sharp decline in finger cutting accidents. How many people would; instead of paying a doctor to sew their fingers back on; instead pay the same fee to not have their fingers cut off in the first place? That's the opportunity cost. And also a good plot line for the Sopranos.

I've simplified the argument, and there's more to this problem - including common corruption problems in both socialist and capitalist systems, arbitrage examples, freedom of choice, etc. But you get the idea: socialism sucks, capitalism rocks!