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“The welfare state is not really about the welfare of the masses. It is about the egos of the elites.”     Thomas Sowell

April 7, 2008

Venezuelan Health Care System On Verge Of Collapse

by Brad Warbiany

Venezuela’s health care system, a place only Michael Moore could love:

Palacios, Venezuela’s largest public maternity hospital and once the nation’s beacon of neonatal care, has fallen on hard times. Half of the anesthesiologists and pediatricians on staff two years ago have quit. Basic equipment such as respirators, ultrasound monitors and incubators are either broken or scarce. Six of 12 birth rooms have been shut.

On one day last month, five newborns were crowded into one incubator, said Dr. Jesus Mendez Quijada, a psychiatrist and Palacios staff member who is a past president of the Venezuelan Medical Federation.

The deaths of the six infants “were not a case of bad luck, but the consequence of an accumulation of circumstances that have created this alarming situation,” Mendez said.

He and others say the problems at Concepcion Palacios are symptoms of a variety of ills that have beset the public healthcare system under leftist firebrand President Hugo Chavez. Cases of malaria nearly doubled between 1998, the year before Chavez took office, and 2007. Incidents of dengue fever more than doubled over the same period.

Poorly paid doctors regularly demonstrate at hospitals from Puerto La Cruz in the northeast to Maracay in the industrial heartland, demanding back pay and protesting the lack of equipment and supplies. Others are leaving in droves for Spain, Australia or the Middle East, where they make 10 times the $600 monthly average salary they earn in public hospitals.

Chavez has also been accused of appointing cronies to manage public health. Efforts to arrange an interview with Minister of Popular Power for Health Jesus Mantilla, who served with Chavez in the military, were unsuccessful last week.

Politics and polarization fuel the healthcare debate. Depending on who is speaking, Venezuela is either suffering from the pangs of a new dawn in socialist healthcare or from the monumental incompetence of top-level bureaucrats.

But even government officials acknowledge the public health system in recent months has been on the verge of collapse, evidenced by problems in maternity and postnatal care.

Since the mid-1990s, the death rate of women giving birth has risen 18%, to 59 in every 100,000 deliveries, according to UNICEF. That’s four times the rate in Chile. Venezuela’s infant mortality rate of 18 deaths for every 1,000 live births in 2007 was down from 20.5 in 1998, but still double the rate of Chile and higher than other Latin American countries such as Colombia, Uruguay and Costa Rica.

Gonzalez, the university professor, fears that the situation could get worse because maternity hospitals such as Concepcion Palacios are having increasing difficulty finding young pediatricians to pursue neonatal specialty training due to low pay and lack of resources.

“It’s not that before Chavez things were great,” he said. “It’s that things have deteriorated.”

It’s often pointed out that socialism creates equality, but instead of making people equally rich, it makes them equally poor. It is important to look at absolute wealth, not relative wealth, of people within a society.

America is a land with only very mild socialism, but with a vibrant private sector that “raises all boats”. Venezuela is a land awash in oil profits, and with a government that wishes to take care of its citizens from cradle to grave.

Then why is it that the infant mortality rate is 3-4 times higher in the country that is oil-rich and desires to provide healthcare for all citizens? Why is it that Venezuela’s health care system is rife with doctors quitting, a lack of basic supplies and equipment, and a general dissatisfaction and worry from young expectant mothers as quoted in the story? All this while the “evil” capitalist nation enjoys living standards so high that our poorest citizens would be considered middle class or better in a place like Venezuela.

Americans are not by nature more economically-inclined than Venezuelans. In fact, watching Americans get the wool pulled over their eyes by politicians, all the while worrying about the latest antics of Britney Spears, while our educational system is the pariah of the free world, one can claim that we’re less well suited to survival in a free market. Yet we have an institutional history towards capitalism, and the last 400 years of American history have been in a cultural tradition of economic liberalism and individual rights. And that has made all the difference.

Venezuela has a clear path towards prosperity. Unfortunately, they’re currently headed the wrong direction down that path.

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20 Comments

  1. Brad. I lived in Venezuela several years (before Chavez) and believe me it was bad then. I am distressed that you try to write when you are obviously on puff (or something).

    Spare your informed readers indignity of taking the time to read your bullshit.

    Comment by Jerry Bentley — April 8, 2008 @ 7:42 am
  2. Jerry,

    Help me out here. I’m looking for the part where Brad said that things were good before Chavez, and I can’t find it. Could you quote me the relevant snippet from his text?

    I promise you that unlike Brad, I am not hopped up on goofballs.

    Comment by tarran — April 8, 2008 @ 7:53 am
  3. [...] the Liberty Papers blog reports, this is a “healthcare system only Michael Moore could [...]

    Pingback by Venezuelan Healthcare Takes Turn for the Worse: “A System Only Michael Moore Could Love” | Economist Blog — April 8, 2008 @ 9:18 am
  4. Hayek discredited socialism sixty years ago. When will the left learn that capitalism has pulled more people out of poverty than any other system.

    This report is accurate… look at Cuba, former Soviet Union, North Korea. Shortages of healthcare supplies and staff-food, clothing etc., are the biggest human rights violation I can think of. All in he name of “equality!”

    Comment by Dempsey — April 11, 2008 @ 2:01 am
  5. I’m amused by everyones exclusion of this little detail included in the story above;”Venezuela is either suffering from the pangs of a new dawn in socialist healthcare or from the monumental incompetence of top-level bureaucrats. Chavez has also been accused of appointing cronies to manage public health.”

    Ya think…? It would be easier to blame socialized medicine if you intentionally excluded all of the other industrialized countries that have successfully run government health care systems. It’s so easy to destroy the peoples faith in their representative government when incomptetant cronies are put in control.

    I prefer single payer myself, but that’s off topic.

    Comment by John — April 11, 2008 @ 10:28 am
  6. John- the trouble with your logic is that in a truly socialist system, cronyism is inevitable, a point which Hayek makes quite brilliantly. As for “successfully run government health care systems,” the fact is that the truly successful non-US health care systems are not government run, at least not in the way that health care socialists envision. If you want government run health care, then you might want to research the British health care system, which has become a disaster in recent years.

    Comment by Mark — April 11, 2008 @ 11:47 am
  7. Mark,

    I would point out that IF America were to tread the socialized-medicine path, the model we should follow would be Switzerland. I would hate to use a term like “market socialism”, but theirs has far more beneficial market incentives than even our current US system has.

    Comment by Brad Warbiany — April 11, 2008 @ 12:00 pm
  8. Brad- I couldn’t agree more. I actually think that something like Switzerland’s system would be a significant improvement over our current system. We tend to forget just how screwed up the incentives are in our system. These screwed up incentives mean we don’t get any real free market benefits. By far the biggest cause of our high healthcare costs is our reliance on employers to provide it.
    Of course, if our system encouraged people to buy real health insurance (ie, high deductible, meant to prevent catastrophic losses only) instead of health plans, things would be better still.
    The fact is that most Americans would be better off paying for the medical expenses completely out of pocket; if that weren’t true then the insurance industry wouldn’t exist at all (since you wouldn’t be able to make a profit in health insurance).

    Comment by Mark — April 11, 2008 @ 12:53 pm
  9. nothing is going to be like switzerland. not everything in the universe boils down simply to a govt system. switz has a long, long history of nat’l unity, a homogenous population, a small land area, among many other things that make the country work the way it does.

    Comment by oilnwater — April 11, 2008 @ 1:07 pm
  10. oilnwater: Switzerland’s population is one of the more diverse populations in Europe, with different languages spoken in different parts of the country (although they do their business in German). On top of that Switzerland is one of the least socialized countries in the world, ranking equal or better than the US in just about every category of economic freedom.

    Their health care system is run almost entirely by the private sector; the main socialist element of it is their mandate. IIRC almost everything else is paid directly by the consumer to the health care company, and there are pretty easily met requirements for what constitutes adequate health care. Which means the consumer winds up with an incredible array of health care options.

    Comment by Mark — April 11, 2008 @ 1:35 pm
  11. I should also mention that a huge percentage of Switzerland’s population is foreign-born. Homogenous does not really describe the place; especially not compared to somewhere like Denmark.

    Comment by Mark — April 11, 2008 @ 1:37 pm
  12. switzerland is famously multilingual due to its placement at the interjoining of linguistic regions. it has a small population, small area, and little history of social strife. no, you’re not going to make an America a Switzerland. sorry charlie. but i guess it would be nice.

    Comment by oilnwater — April 11, 2008 @ 2:10 pm
  13. oilnwater,

    Who says we have to “make an America a Switzerland” in order to learn some lessons from their health care industry.

    As Mark pointed out, their health care industry is probably more influenced by free-market forces than our own. The main difference? They don’t link employment and health care, so insurers have to satisfy the end user (i.e. the patient) rather than a corporate HR penny-pincher.

    Comment by Brad Warbiany — April 11, 2008 @ 2:18 pm
  14. “I would point out that IF America were to tread the socialized-medicine path, the model we should follow would be Switzerland.”

    but it’s whatever Brad. this isn’t a terribly important argument here, i just think you guys were envisioning things for a second without considering other factors than govt system that make the system viable.

    Comment by oilnwater — April 11, 2008 @ 2:24 pm
  15. it’s either socialized or it’s free market.

    Comment by oilnwater — April 11, 2008 @ 2:26 pm
  16. oilnwater,

    it’s either socialized or it’s free market.

    That’s not entirely true…there are varying degrees of managed care, where both government and the private sector take responsibility. The more government is involved, however, usually the worse the quality of care. This happens because government has to run by regulation and the more regulation is involved the less the system is able to respond to dynamic conditions…also because the closer healthcare gets to being “free” the more encouragement for people to overuse and abuse it. That’s why libertarians advocate free market solutions to health care issues…government solutions often don’t work and tend to degrade the quality of care over time.

    Also, Switzerland is not homogenous…

    http://en.wikipedia.org/wiki/Demographics_of_Switzerland

    Comment by UCrawford — April 11, 2008 @ 8:21 pm
  17. For the record, I wrote a post praising Switzerland last week more generally as the closest thing to Libertopia in existence. You may find it worth a read:
    http://publiusendures.blogspot.com/2008/04/secret-is-out.html

    Comment by Mark — April 12, 2008 @ 1:13 am
  18. Cute discussion on the Swiss system. After noticing the conservative bias on how good that system is, I did a little investigating. It’s a system under assault.

    Their local governments decide on the eventual price agreed to by the insurer and health care provider. But insurers are also able to sell any combination of plans, leaving it up to the consumer to choose what’s best for them. Problem.

    The Swiss are now getting more disatisfied because the system is more confusing and a lot less transparent. That’s the road to the U.S. health care debacle we have now. Another words, their health care system is morphing into the profit driven system America wants to change, forcing people to buy a plan with little coverage or transparency. A have and have not system.

    The inconvienant detail is that the Swiss health care system is now the most expensive plan in Europe, second in cost to the U.S.

    In the past it was 4th or 5th. Costs are going up there. That’s why free market conservatives(it really isn’t, read-”Free Lunch” David Kay Johnston) like the Swiss, because it’s an incremental change.

    Note: I didn’t mean the conservative frame of “government run” in my previous post. A single payer system, where the government provides monetary support for the private insurers and doctors. Like Norway and France.

    Comment by John — April 14, 2008 @ 7:26 am
  19. Of course, the real solution to the health care problem is to simply end incentives for employers to provide health insurance.

    Logic has long since left the health care debate, though. People don’t seem to realize that in the majority of cases, they are better off having either no insurance or only extremely high deductible insurance. Otherwise, you are paying more into the system than you’re getting back.

    Health insurance companies wouldn’t exist if there wasn’t a profit to be made (similarly, of course, there would be a lot fewer doctors if they couldn’t set their own fees). Therefore, when you are relying on your insurance to pay for all/most of your healthcare, you are essentially paying two fees: the doctor’s regular fee, and the insurance company’s service charge (which varies of course depending on how expensive your doctor’s fees are). To be sure, there are some people who get more health care than they pay into insurance, but the vast majority of people would actually spend less on health care if they did not have medical coverage.

    This doesn’t make insurance companies evil – without profits, they don’t exist at all. It just means that the concept that health insurance is a “right” is utterly foolish.

    Insurance is supposed to be a way of pooling risk in order to prevent any one person from having to pay catastrophic costs. In effect, insurance of any sort is a gamble that has a sizable house edge just like any casino game. The more you bet on the insurance, the more you are likely to lose. When you are only wagering on catastrophic medical expenses, you are only putting down a small amount of money

    Comment by Mark — April 14, 2008 @ 7:44 am
  20. D’oh! Accidentally submitted that comment before finishing it.

    Anyways, health insurance against catastrophe would involve only a small expense and a huge potential benefit. The insurance company still makes its profit, but each person risks far less money than they risk in our current system (for those who say we don’t risk much when the employer pays for it, you are ignoring the fact that wages would go up significantly without health insurance).

    By the way, there is one thing that tends to get lost in the health insurance debate, which is the issue of where we got the precedent of employers paying for health insurance. The answer to that question is that employer-based health insurance came about as a result of FDR’s wage freezes; providing health insurance as a fringe benefit was one of the ways employers provided employees with raises and bonuses, or competed with other employers for employees. So the entire health insurance debacle is yet another thing that can be placed squarely on the shoulders of the worst President in US history.

    In any event, the fact is that the government run systems that have succeeded are, in fact, more market-based than our current system. However, the single-payer systems have paid a tremendous price in terms of reduced quality of care. Indeed, the only reason why the US ever ranks low (and, for that matter, why Cuba ranks high) in the UN rankings is because of: 1. cost, and 2. the UN’s extremely subjective “fairness” ranking. The latter is an automatic bonus based on the degree of socialism present in the system.

    Comment by Mark — April 14, 2008 @ 7:56 am

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