20 Pros and Cons of Centralized Health Care

Is health care a right? Or is caring for your health a personal choice?

Questions like these divide Americans and others around the world about who should receive care. The United States is the only developed country in the world which does not have a 100% answer, but even Americans have limited centralized health care in the form of Medicare and Medicaid at state and national levels.

The primary issues of centralized care involve cost. National systems provide basic services for free, which is not guaranteed in the United States. Depending on a person’s insurance situation, they may be subject to a high deductible, co-pays, full prescription costs for name-brand items, and much more. Over 60% of the bankruptcies filed in the U.S. are due to medical costs.

There are concerns about a full “Medicare for All” system in the United States as well. Americans don’t like the idea of having the government involved in their personal care decisions. Shifts could disrupt insurance markets and expand wait times for doctors.

Here are the pros and cons of centralized health care that the rest of the developed world outside the U.S. has discovered as this debate continues.

List of the Pros of Centralized Health Care

1. Centralized health care reduces the overall cost of care for everyone.
In 2016, spending in the United States for health care costs rose by 4.3%, reaching a record $3.3 trillion. This cost equates to 17.9% of the Gross Domestic Product (GDP), which is the highest in the world today. The average person in the U.S. spends over $10,000 per year on their health care needs.

When the U.S. (which does not have centralized care) is compared to the rest of the world, it spends a disproportionate amount on care. Canada spent just $4,752 per person in 2016. The United Kingdom spent $4,192 per person. Even compared to Switzerland, the next highest-spending nation, the U.S. spends 31% more.

2. It provides people with connected care and services.
Without a system of centralized care, patients are forced to seek prior approval for needed services unless they wish to pay privately. Insurance companies in the U.S. often dictate what tests are performed, including CAT scans, MRIs, and ultrasounds based on the policy coverage of each patient.

Although hospitals cannot deny care to people in emergencies, even if they cannot afford services, a centralized system allows doctors to authorize required services instead of administrators. That makes it easier for everyone to develop the treatment plans required for their good care.

3. Centralized systems do not leave anyone behind.
With a publicly-funded health care system, everyone receives access to their basic care and preventative services which promote wellness. Expanded services still require patient payment, as do upgraded services. There aren’t statistics on under-insured or uninsured people in such a system because the government guarantees coverage for everyone. Even when payments are required, qualifying exceptions include low income levels, disabilities, or military service, depending on the nation considered.

4. It improves public health when implemented.
With centralized health care, everyone shares in the cost of providing services. Because everyone has equal access, there is also equal responsibility to take care of oneself. Receiving free treatments for needed care can reduce the spread of infectious disease, create more access to vaccines, and reduce common problems people typically ignore when they struggle to afford health care services.

Canadians see it as a personal responsibility to care for themselves, as do others who live in centralized care countries. They don’t want to be seen as a drain on the system, so wellness programs and rewards are often promoted.

5. Your administrative costs are reduced with centralized care.
Can you remember the last time you visited the doctor for your annual checkup? If you had blood work completed, then there’s a good chance you received at least three bills from your one appointment: one from the doctor, one from the laboratory, and one for the blood draw. Each bill is assigned a different account number in most medical care systems in the U.S., which means every visit to the doctor creates a new account.

With centralized health care, you have an easier system to manage. Doctors focus more on their patients instead of their billing codes or file distribution. Everything is accessible throughout the system, which provides better consistency of care because doctors have complete access to what is necessary.

6. It reduces bankruptcies due to medical care.
Medical bankruptcies in Canada are below 20%. Although the Fraser Institute suggests that this is also true in the United States, it would also be fair to say that in centralized care systems, people do not generally go bankrupt for purely medical reasons as they do in the United States. Most issues occur when someone becomes seriously ill as with a heart-health issue, cancer, or another serious disease.

Take this story about a Canadian being hospitalized in the U.S. for cellulitis. The hospital billed their insurance company $85,000. There was a request of $5,000 before being admitted to the hospital. Then another $2,000 in antibiotics was required before release. If the roles were reversed, with a U.S. citizen treated for the same condition in Canada, the cost without any insurance would be around $20,000.

7. Centralized health care promotes innovation and entrepreneurship.
People in the United States work in traditional employment settings because it provides them access to the health care they need. If you are self-employed, freelancing, or an entrepreneur starting your own business, the only access to care that you have is through an exchange, an individual policy, or certain group policies which may exist.

An example of such a group policy is the eBay PowerSellers offer for health care through Marsh Advantage America. If a centralized system of health care were provided, anyone could have access to their basic care needs, whether their business earned a profit or not. Workers in centralized systems often received private insurance coverage as a benefit through their employer for upgraded care.

8. It would reduce the cost of health insurance benefits provided by employers.
About 60% of Americans receive health insurance access from their private-sector employer. That means the cost of the policy is shared between the employee and the business. Most employers spend at least $6,000 per year on a policy, with many more spending $10,000. Those costs don’t make it to the take-home pay, but in some situations, can still be billed as income, which affects the worker’s tax situation.

With improved access to care in centralized systems, employer labor costs could reduce by at least 10%. Public-sector health benefits could decline by 20% or more, depending on the state of residence. That means more money becomes available to hire workers, offer raises, try new benefits, or invest in new research and development opportunities.

9. Centralized health care systems encourage more doctors to practice.
There were over 75,000 doctors practicing in Canada in 2012, which was a record year for the nation. Although there are shortages in remote, rural, and northern communities in the country, there are more doctors entering the field than leaving it. The same cannot be said about free-market systems.

Even when there is a shortage, if a patient requires care, the provincial systems in Canada transport the individual to their closest care system. All transportation costs are managed, including flights if necessary. A free-market system would not do that at all.

10. It provides a boost to the economy.
There are admittedly several new costs to consider with a centralized health care system compared to free-market systems. You will find there are financial benefits to think about as well. When people have more access to care options, they generally lead lives which are healthier. With better health comes more productivity, which means a greater contribution to society occurs.

Centralized health care often raises the standard of living for each person in society. That does mean some people pay more for services than others while receiving equal care. It also means there will be additional opportunities for career advancement, job innovation, and wealth earning over time.

11. Centralized health care meets the idea of health care being a right.
In December 1948, the United Nations made a declaration that every person on our planet has the right to a standard of living which is proper for the health and wellbeing of themselves and their families. That includes access to medical care.

In 2005, under a Republican administration, the U.S. joined with the World Health Organization in a resolution stating that every moment of a society should have access to the health care services they require without being subjected to financial hardship because they’re seeking care options.

12. Care providers in centralized care are reimbursed at similar rates.
When Americans visit the doctor, their medical office charges the maximum permitted by the insurance agreements in place. If you visit a specialist, that price could be near $1,000 per hour for a simple appointment. Free-market systems operate on scarcity and need too, which is why there have been some outrageous medical bills made public in recent years.

Vice asked people about their medical bills, which included “emergency room fees” of $1,900 or more, CAT scans costing $2,600, or $1,500 for a simple interview. Only in the U.S. can your co-pay on a $200,000 back surgery with full deductible met cost $800, yet a visit to the dentist is $1,200 for two root canals.

List of the Cons of Centralized Health Care

1. Wait times are often long in centralized health care systems.
Canada’s health care system is provincially centralized more than nationally governed, but even they struggle with wait times in most regions. It may require 40+ weeks in some areas to receive specialized care after a referral. In Wales, patients often wait 25+ weeks for surgeries or specialist care if they do not have a life-threatening condition.

The National Health Service in the UK said that it was overwhelmed with the requests for services it received in early 2018, leading doctors to complain about practicing “battlefield medicine” and “third-world conditions” while trying to provide care.

2. Centralized systems raise taxes on people.
The U.S. uses a free-market system for health care services right now. That means people elect to receive care based on their own decisions and how much they’re willing to spend. Each market determines availability and cost, so there is limited government control in the private sector. To shift the private market to a centralized system would require an increase in taxes, effectively doubling how much some families would pay.

Some of the tax increases would be offset by a reduction in health insurance premiums being paid. There would be families making more money each year in this system instead of less. It would require those who are wealthier to support those who are poorer and sicker, which some people see as a state of socialism.

3. It reduces the salaries that medical professionals make.
Reducing the salaries of doctors could lead to a shortage of providers, especially in the U.S. as it looks at a Medicare for All system. The OECD put together a comparison of physician earnings across the developed world and found that only the Netherlands paid doctors more than the United States ($286,000 vs. $230,000) for services rendered.

In countries associated with centralized health care systems, doctors make about 60% of what they would in the United States. The United Kingdom pays an average of $129,000, Canada pays about $161,000 per year, while France pays around $131,000 per year. Doctors in Norway, Sweden, and Portugal don’t even average $80,000 per year.

4. There are concerns about abusing the system, which would slow care.
The greatest fear that Americans have (beyond cost) is that people might abuse the new health care system when it becomes centralized. There are some issues which don’t require a visit to the doctor, like a basic cough, so scheduling appointments when they’re not needed could create an unnecessary burden for everyone else.

Should such a situation occur, the likely response by the centralized system of care would be to begin rationing medical services. Various methods are used to limit care options, from service restriction, to controlled distribution, to price-setting schemes.

5. Centralized health care systems limit competition.
If a centralized system of care becomes the first line of defense, then the free-market system of innovation no longer holds an influence. Competition is viewed as the primary driver of innovative services, treatment techniques, and pricing limitations. There would no longer be an incentive to pursue new medicines, offer efficient services, or pursue thorough care. Everyone would receive the same thing.

That also means some people who might pursue becoming a doctor could go into different professions, exacerbating the shortages for care already seen around the world.

6. This care system increases government debt.
According to reporting offered by CBS News, the Medicare for All system proposed by Bernie Sanders during the 2016 primary election would cost over $32 trillion over 10 years to implement. Total health spending for the Canadian system of centralized care is estimated to reach more than $250 billion annually by the end of 2018. Total health expenditures in the UK are estimated at GBP 185 billion.

There are increases to government debt during the creation phase of a centralized health care system. That debt may reduce over time, depending upon the structures of the system and how many people use it. Most nations are in debt at levels which are not manageable over the long-term already, so adding more to it could create financial problems for future generations.

7. Spending increases for health care have been similar in free-market and centralized systems in recent years.
Most of the cost differences found between the U.S. health care system and the centralized systems of Canada, the UK, and others occurred in the 1980s. Since the late 1990s, the pricing increases built into the care systems have been similar in all 30+ OECD nations. That means centralized care is just as expensive as free-market care when all modern factors are considered.

Although that doesn’t make up for the price gap, it does show that the potential for cost savings when transitioning away from a free-market system could be minimal. For most patients in the U.S., wait times are not an issue. If you want to go see a doctor, then you schedule an appointment. It might cost more, but the system provides instant access to the care wanted.

8. Medical providers are not required to take centralized care patients.
Unless legislation is passed requiring otherwise, doctors in centralized systems still practice the free-market system by limiting their government-sponsored patients. By focusing on private-pay scenarios, they can increase their profits while providing care to people who can afford more than the basic services. That can cause some communities to see limited care access for the free entitled services because each provider still seeks to maximize the price they charge to provide needed care.

The pros and cons of centralized health care suggest that there are good and bad components of the system, just as there are with any other system. What must be decided is if the pros outweigh the cons when shifting from one system to a centralized form of care. Proponents like the idea of having greater access to care with lower costs, while opponents fear longer wait times, higher costs, and government intervention in personal decisions.

It is a debate which is likely to continue for some time to come.

Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.