It's funny you should mention the USA, since what I'm about to write should be more familiar to both of us, if I'm correct in thinking we're both from a certain North-West European country of which substantial parts are below sea level?
I'm not sure how the USA does these things now, what with successive presidents have
very different plans, but as I suspect you know as well as I do, pensions and healthcare are semi-nationalised in the Netherlands. Quality is excellent, and there are a lot of rules and subsidies to keep care affordable for all, but
actual costs are very high-- and getting higher every year. No such thing as a free lunch, after all: even if costs are deliberately kept down for the patient, true costs are still just as high, and just result in a correspondingly higher tax burden. Now, I'm not here to debate whether that's good or bad or how much a government should do. My main point is that costs are driven up more than is
needed. It hardly matters for the purpose of this discussion if the raised costs are paid by the client or by the taxpayer. The same amount is gobbled up. As far as my analysis goes, the problems are as follows:
-- The insurance providers are market parties and want as much profit as possible.
-- What's capped is
not how much a service actually costs, but how much a patient is charged. The government must cough up the (often substantial) difference, which means the taxpayer gets the bill, and the bill is equally substantial.
-- Politicians have very little incentive to change that, because the vast majority of successful politicians will have multiple
nevenfuncties, serving on the boards of... well, insurance companies, pension funds, banks... You'll be hard-pressed to find a Dutch health insurance firm without a bunch of Senators on the payroll. Most retired (successful) politicians
also hold such functions. As board members, they typically enjoy profit-sharing, so cutting the ability to make those profits would be detrimental to their own (current or future) semi-private sector income.
-- To ensure that the prices aren't actually undercut by cheaper competitors, foreign insurance providers are kept off-market (as you may know, that's in violation of EU regulations, but some unclear backroom dealing has long avoided any sanctions). Domestic providers are not somehow barred, but they do need to be accredited / fit to certain standards, and those standards are set up in such a way that small firms
cannot effectively compete. This effectively keeps the "big boys" in power.
-- To get around EU anti-competition regulations, there are
officially 49 approved health insurance providers in the Netherlands. But they are all owned by just ten mother companies. Some of those mother companies are formally independent, but have the same actual owners. There are actually just seven real consortia that control the health insurance market, and of those seven, just
four control a market share that fluctuates around 90%. Their prices are all miraculously
quite similar. Any small fry seeking to enter the market can only compete by joining such a larger consortium, precisely due to deliberately (over-)stringent government standards for health insurance providers, which will then negate its ability to compete against said consortium.
-- Insurance is mandatory, so you can't say "no thanks".
-- All the same applies, in essence, for pension funds.
Thus, we have a system that is very firmly entrenched, appeals to the interests of both the corporate and the political elites, and is quietly designed to make undercutting it nigh-impossible. To be clear, and I cannot stress this enough: I'm fully aware that
quality of care in the Netherlands is great. But there's a
mountain of hidden costs, most of which are a huge drag on public finances, which is slowly suffocating the whole system by making it less and less affordable. We get new cuts and cost increases with every new government, primarily because the aforementioned costs cannot be cut under the current system-- there is no incentive to cut them, and most of the public barely has any idea of how all this even works.
I only know how this really works because I was involved in a whole medical ethics study regarding this subject a few years back.
Anyway, there are of course several ways to address such problems as I have described. One would be to take out the profit motive altogether and fully nationalise the whole shebang, socialist-style. By the way, I have not at any point argued that this is not a valid suggestion-- although I personally think that would cause its own set of problems. Another would be to take government out altogether, leaving eveything to free choice and free markets, libertarian-style. That, too, is valid but would also cause its own serious issues, I think. A third way (ha ha, literally "third way economics"!) to handle the above problems would be to work within the mixed system we know, and try to fix that. This, too, is valid, and of course countless anti-corruption propoals are possible. Some may be better than others, and many will - again - cause deficiencies of their own. I firmly believe there will never be a "perfect system", and that we can only choose what works best for us. I will not, in the context of this discussion, express my own preferences. This is not the place for that. I merely aimed to sketch out the problem that I perceive as currently existing.
If I'm right in my assumption that you are also Dutch, and if you happen to have a very vehement opinion on this subject, I ask that we take any discussion of the topic elsewhere, to avoid derailing the thread. That said, I don't think any heated is really needed, as I have merely sketched a problem, and not argued for or against any particular solution. As far as this thread is concerned, we'll leave
that to Herr Weber!
