By: Mel Watkins
Amidst all the political hype about the health care crisis in this country, there's a surprising fact that we're not hearing about in the mainstream press. The shocking truth is that the dismal science of economics gives the Canadian health care system an overall clean bill of health! Contrary to what you've been hearing, the problems that do exist can be attributed to bad politics, of which there is an abundance, not to economics.
That's the message of the meticulously researched new book out of Alberta by Kevin Taft and Gillian Steward. Clear Answers: The Economics and Politics of For-Profit Medicine boasts excellent analysis and a bibliography that cites a myriad of supporting studies.
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The market works OK when it comes to wants but it's likely to fail us when it comes to needs. There's no more basic need than good health. |
The same economic orthodoxy generally - brought down to a micro level - thought to be so adverse to the public sector actually gives a thumbs down to Alberta's Bill 11 which opens the door to two-tier Medicare by adding private-care to the present public system.
This is not to say that the market doesn't often, even mostly, work, at least well enough. But it doesn't work when it comes to health care. If in doubt, you need only look south of the border to the United States, which has more market-driven health care than any other developed country. It is also the most expensive, in terms of percent of gross domestic product (GDP), and the most inefficient, since more than 40 million Americans end up with no health coverage at all.
A soon-to-be published American study finds ruinous medical bills to be the main cause of personal bankruptcy in the US. Add it all up and in economics it's called market failure.
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The administrative costs of Canada's public system amount to less than one quarter of all the private insurers in the American system combined |
Too rarely noted is the fundamental fact of life that we remove from the market those things we value most such as health care and education for our children. For good reason. These are things we believe we're entitled to, not as consumers but as citizens. Access should be universal, not means-tested by the market. The market works OK when it comes to wants but it's likely to fail us when it comes to needs. There's no more basic need than good health.
It's not efficient to have hospitals and insurance companies competing with each other, spending on advertising and in the case of hospitals, duplicating expensive and rarely used equipment. The administrative costs of Canada's public system amount to less than one quarter of all the private insurers in the American system combined.
The market works best when consumers are knowledgeable, and able to be sovereign. Then, the pursuit of profit-maximization by suppliers makes sense. But when it comes to health care this just doesn't wash. As patients we are highly reliant on health care providers. We have trouble making informed decisions BY ourselves. Health care decisions are usually made when people are sick and their families are distraught. Shopping around is difficult, if not impossible. The last thing we want is for health care providers to make decisions for us based on maximizing their profits. In a private system, there will be a temptation on the part of providers to increase revenues by charging us more and pushing extras onto us. Much easier than decreasing costs, which would create efficiency. Even still, it's unlikely that decreased costs would be passed on to the patient.
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A higher-priced private system could be allowed to extra-bill the public system, so that the public system ends up subsidizing the private one. This perverse result is precisely what Bill 11 is designed to deliver in Alberta. |
So what about the two-tier system being pushed by the likes of Alberta Premier Ralph Klein as well as Tom Long, Mike Harris's guru now seeking the leadership of the Canadian Alliance Party? If people want to pay for a private system, why not, so long as the public system stays in place?
Why not? Because when it comes down to it, private and public systems will not complement each other. The existence of a private system, even though less efficient, will swing the door wide open for powerful health care companies able to lobby politicians to expand private care. And once they gain a foothold in Alberta, they'll be able to argue that the North American Free Trade Agreement (NAFTA) entitles them to operate anywhere in Canada or be compensated for business denied them.
The higher-priced private system could be allowed to extra-bill the public system, so that the public system ends up subsidizing the private. This perverse result is precisely what Bill 11 is designed to deliver in Alberta.
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Clear Answers: The Economics and Politics of For-Profit Medicine by Kevin Taft and Gillian Steward |
Overall, economics comes down so strongly on the side of the public sector in health care that it begs the question how should public health care be expanded to spread its virtues?
A report just released by the Canadian Institute for Health Information tells us that Canadians, pay for 30% of our health care out of our own pockets, - a level of private spending second only to the United States (among rich countries). Inefficient for-profit medicine is already too great a force in this country.
Thus it is that the logic of economics - that awful phrase that is customarily invoked on behalf of corporations rather than people - argues not to dismantle Medicare, but, conversely, to extend the present system to include a national pharmacare program and a national home care program.
Get More/Do More
How do you feel about private health care?
Tell Straight Goods
Find out more by reading Clear Answers: The Economics and Politics of For-Profit Medicine by Gillian Steward and Kevin Taft.
On Bill 11: A new and excellent study by a group of health care experts headed by UBC's renowned economist Dr. Robert Evans at www.chspr.ubc.ca.
Read more on Medicare in Straight Goods:
- Rx for Medicare
- Defiant former health minister blows the whistle
- Bill 11 under the microscope
- Ralph Klein's Last Stand?
- The hidden costs of home care
- Harris caves in to doctors of health care reform
- Leadership vacuum: abandoning Canadians on health care
- Bafflegab battleground heats up as Chretien, Harris exchange attack ads
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