6 Reasons Privatization Often Ends in Disaster

By Paul Buchheit

October 20, 2013  |  Private systems are focused on making profits for a few well-positioned people. Public systems, when sufficiently supported by taxes, work for everyone in a generally equitable manner.

The following are six specific reasons why privatization simply doesn't work.

1. The Profit Motive Moves Most of the Money to the Top

The federal Medicare Administrator made $170,000 [3] in 2010. The president of MD Anderson Cancer Center in Texas made over ten times [4] as much in 2012. Stephen J. Hemsley, the CEO of United Health Group, made almost 300 times [5]as much in one year, $48 million, most of it from company stock.

In part because of such inequities in compensation, our private health care system is the most expensive system in the developed world. The price of common surgeries [6] is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany. Two of the documented [4] examples: an $8,000 special stress test [7] for which Medicare would have paid $554; and a $60,000 gall bladder operation [8], for which a private insurance company was willing to pay $2,000.