Rep. Ryan Gets a Sobering Lesson From the Netherlands

Rep. Paul Ryan, R-WI, is a conservative philosopher of the first rank. He doesn't really have to pay attention to anything that happens in the Netherlands when deducing policy recommendations from the postulates of privatization (the Netherlands, really, they smoke pot legally in coffee shops).

Unfortunately, whether it's from smoking too much weed or drinking too much neoconservative Kool-Aid, the Dutch decided to take Mr. Ryan's advice and privatize their mixed health insurance system in 2006. The rationale was that competition would reduce health care spending, enhance consumer choice and improve quality of care. In 2011, the Dutch now know that privatization was a failure.

A recent study in the New England Journal of Medicine (here) found that (1) competition has not slowed the growth of health care spending (national health expenditure is increasing faster than the rate of inflation and total costs of health insurance have increased 40% due to increases in administrative costs), (2) the number of uninsured have increased as have the number of "defaulters"--people who haven't payed their mandatory health insurance premiums for more than 6 months, (3) competition has not provided more choice (four insurance conglomerates control 90% of the insurance market, only about 4% of people change plans and 65% are dissatisfied with their coverage), and (4) the Netherlands still relies heavily on regulation (the government must still enforce global budgets, price controls and patient cost sharing).

Quoting from the study:

The myth that competition has been key to cost containment in the Netherlands has obscured a crucial reality. Health care systems in Europe, Canada, Japan, and beyond, all of which spend much less than the United States on medical services, rely on regulation of prices, coordinated payment, budgets, and in some cases limits on selected expensive medical technologies, to contain health care spending. Systemwide regulation of spending, rather than competition among insurers, is the key to controlling health care costs.

What the authors of the study don't acknowledge is that scientific data has nothing to do with policy deductions made from philosophical first principles.