One key thing to remember is that there's a big difference between a situation where the government is a sizeable buyer/producer, and one where the government is essentially the only buyer/producer. In the latter case, the market still works, even if the government presence distorts it--prices are set by supply and demand, research is done, and so forth. Indeed, it is not well appreciated on the left how dependent Medicare is on private insurers to tell them what the competitive price is for the treatments and products it pays for--if the private sector went away, Medicare would have to develop some sort of pricing system, and so would all the health care systems abroad. Once the government becomes the dominant player, however, everything changes.
Look at defense spending. Are F-22 raptors worth $138 million? It's a pretty meaningless question. Congress is willing to pay $138 million. But this bears only the haziest relationship to what the Americans who pay the bill want, or are willing to pay, for such a plane. And the procurement system pays at least as much attention to what congressional district things are built in as what makes the most effective military. That's why virtually everyone thinks defense procurement is an overpriced disaster, which gets innovation only at drastic cost. Unfortunately, there's no other way to go about it.
Right now, the US has a market--no matter how screwed up--for medical goods. It is not a good market. But no one in the market, except Medicare, has enough pricing power to totally undermine the market mechanism, so it grinds out an equilibrium that bears some resemblance to consumer demand. In turn, Europe can buy those market-produced products. But if you kill the last market, everything suddenly looks very different. What's the right price for innovation? What should we research? Those questions stop being decided on the basis of the number of consumers served, and start being decided on the basis of who has the best lobby.
There's one more difference, which is that health care is not transportable. When British coal was overpriced and delivered erratically, this was obvious, because other countries had a steady supply of the commodity at a lower price. Healthcare is hard to measure and impossible to transship, and almost no one consumes health care internationally (though I'll note that as the internet has facilitated comparisons, Europeans have become disenchanted with their rationing boards).
A lot of blogs recently have been talking up this quote from Jon Cohn:
Last year, I had the opportunity to
spend time researching two of these countries: France and the
Netherlands. Neither country gets the attention that Canada and England
do. That might be because English isn't their language. Or it might be
because they don't fit the negative stereotypes of life in countries
where government is more directly involved in medical care.
in the course of a few dozen lengthy interviews, not once did I
encounter an interview subject who wanted to trade places with an
the course of a month, I spoke to just about everybody I could find who
might know something about these healthcare systems: Elected officials,
industry leaders, scholars - plus, of course, doctors and patients. And
sure enough, I heard some complaints. Dutch doctors, for example,
thought they had too much paperwork. French public health experts
thought patients with chronic disease weren't getting the kind of
sustained, coordinated medical care that they needed.
But as anyone who has lived in Europe can attest, the beliefs about what happens in America are ludicrous. And I'm not talking about "the man on the street"; I'm talking about journalists, politicians, doctors. It's not uncommon for Americans getting treatment in Europe to be asked "You'd never be able to afford this in America, right?" by their doctors and nurses, when "this" is stitches or antibiotics. I'd be terrified of switching places with an American too, if American health care were actually one eighth as bad as most Europeans seem to believe. Yet despite that, as far as I know the net migration is actually the other way.
But the main point is not that one system is better than the other. The main point is that these are very bad arguments which have been trying, and failing, to save nationalization for well over a hundred years. If indeed Europe's systems are superior, it is not because they have managed to eliminate wasteful competition and centrally rationalize decision making. It is in spite of those things.