Health care is a key component of the socialist fiscal mess that looms in all advanced states. What other market segment is so devoted to theoretical dogma and absurd levels of government intervention and mismanagement? Can anyone imagine the computer, car, food, or bubble gum markets under the heel and control of white-toothed politicians and the elite Platonic guardians that allocate resources and determine price points? If general market segments were created and managed on the health care model our economy would soon collapse. Health care expenditures and health care inflation have no limits simply because price points and supply and demand pressures are ignored in the mad rush of the mommy state to provide a warm blue security blanket and ensure votes for politicians that espouse compassionate socialism. Regardless of politically correct rhetoric and feel good socialist politics it is clear that across the West the entire health sector will crash unless it is reformed.

In EU styled countries socialised medicine and equal access are treated as a part of the national consciousness. Such attitudes militate against needed reform where private care is looked upon with suspicion and even hatred as inimical to national values and morality. Yet in many countries the morality on ever increasing expenditure, wasted monies, lengthening waiting lists, falling rates of doctors and machines per capita, and escalating taxation to support the socialised delivery of medicine is curiously never debated. Much like pensions, health care reform if not enacted will generate a massive increase in tax and debt levels for nation states.

In most countries a disproportionate amount of the health care spend is targeted at the older population. As countries experience further greying of the population the pressures to increase and reform health care spending and services will be intense. This will include political battles over health jurisdiction that in some countries is decentralised with states responsible for health spending. In other countries health care jurisdiction is more centralised. Whatever the legal jurisdiction serious reform is needed as health care consumes more and more of existing budget levels.

According to the OECD the annual increase in per capita spending on healthcare across OECD countries in the past 10 years has outpaced overall economic growth per capita by around 50% (3.3% versus 2.2%). The United States spent the highest share of GDP on health throughout the previous decade, and expenditure increased from 11.9% of GDP in 1990 to 14.0% in 2004. Following the United States was Switzerland, which spent 10.7% of GDP on health and Germany, which spent 10.6% of GDP on healthcare in 2004. The United States also continues to spend far more on a per capita basis than any other country. It spent over $4,600 per capita on healthcare in 2004 - more than twice the average of almost $2,000 across OECD countries. Public spending per capita in the U.S. is also high (it follows Iceland and Germany), even though only about one-quarter of the population is insured through public programmes.

Modern medical technologies are one of the main drivers of rising US health care expenditures. There has been rapid growth in the use of technology-intensive procedures to treat important diseases and health conditions in nearly all countries. The number of operations, such as coronary artery bypass graft (CABG) and coronary angioplasty, increased rapidly over the 1990s, particularly in countries that started with low utilisation levels of these procedures (e.g., Australia, Denmark, Hungary and New Zealand for coronary angioplasty). Nonetheless, by the end of the 1990s, the rates of CABG and coronary angioplasty in the United States were more than double those of the next highest countries. These differences in the frequency of expensive medical procedures help to explain part of the differences in overall healthcare spending between the United States and other countries.

In general the massive increase on health care spending which far exceeds that of economic growth is unsustainable in the long term. Reforms, more control over spending, better use of technology and privatisation are all needed. It is entirely open to doubt whether any vote seeking politician would advocate in the short term the sweeping reforms necessary for health care, especially as the population ages. In most countries it is far easier to increase health spending on the back of higher taxation and debt accumulation without radical changes to the provision infrastructure. Indeed off the balance health care liabilities are reaching alarming proportions in all countries and threaten to destabilise future economic growth and raise taxes to detrimentally high levels.

Such pressures are more pressing and will be more distressing for EU styled economies than the Anglo-Saxon model countries. According to a recent study the UK, USA and Australia have a ‘low vulnerability’ to future liability and financial pressures while Canada, Germany, France and Italy have medium to high ratings. This means that the EU styled nations will be under even more pressure than the more Anglo-Saxon nations to reform their pyramid schemes in pensions and health care. That being said the Americans and Aussies can hardly dismiss the financial time bomb and economic impact of failing health sectors. Health care as a market must be liberated.

In the US for instance there are 1000 regulations on average per state managing health care. Insurance companies are for some reason interjected between suppliers and consumers. If you want to reform US health care you need to limit lawsuits; improve competition and remove the insurance firms from their untenable and arbitrary positions of power. As in other market sectors you need to make the consumer King and ensure transparency in supplier and consumer interactions. This will drive prices down; improve information flows and allow for things like insurance or health coverage portability between states and jobs.

What better way to generate a massive financial benefit to society then to liberate health care through consumer driven reforms, and competition? Instead of being a cost center health care could become a profit seeking addition to economic growth as well as providing lower cost service thanks to competition; access points; and technology usage. Firms of all varieties would rush in to supply services and products that hitherto were unavailable or restricted. Educational institutions would compete to provide the next generation of workers in a burgeoning market place and entire processes would be transformed firming up both resource availability and service provisions. It is hard to argue that such an outcome of health care liberation, would be a negative.

Yet freeing up the health care market even in the US, is too scary a political prospect for the average politician to contemplate. This inability to reform 15 % of the modern economy is a major weakness in the average Western state. The ever expanding cost of health care will preclude necessary investments in the military and prevent other structural economic and infrastructure reforms. As such domestic financial issues will impact foreign and military policy as well as wealth creation, leading to an increase in rate of growth differentials between competing states. Health care reform is therefore not a minor issue but one that impacts the core functioning of the nation state and its ability to compete effectively and even defend itself in the near future.