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When Tommy Douglas, architect of Canada's government-run health care system, (and head of North America's first socialist government) nursed his pet project to fruition in the early 1960s, he envisioned a medical utopia, where contented citizens, freed from the ravages of market forces, heartless insurance companies, and greedy doctors (sound familiar?) would receive timely, quality medical care on demand, provided by an army of cheery yet determined practitioners whose only concern in the world was to advance the general welfare of their fellow man. Paradise in a lab coat.
Some 40 years later, the reality bears little semblance to the idealistic vision of Kiefer Sutherland's grandpa. Skyrocketing costs, crippling tax rates, chronic doctor shortages, months-long waits for routine tests, (years for many specialized services), and oftentimes outright denial of procedures are the norm. Governments, desperate to control costs and prevent a total collapse of the system, are continuously de-listing previously covered procedures, and seeking new taxes or even, (heaven forbid) user fees.
As a Canadian, I can testify to the elongated waits for tests that often result in additional and more costly treatment, when you do finally get around to being treated. Those who can afford it flock south for their medical care.
So what went wrong? Simply put, economics. Canada's beleaguered single-payer health care system, like the health reform bill currently before Congress, is essentially a price control — the government dictating, by fiat, what it will pay for health care, independent of the pesky laws of supply and demand (for instance, the house bill's “public option” is based on the same provider payment scheme as Medicare — meaning the government insurance plan only pays providers anywhere from 60-80 percent what private insurance companies do). With the up front costs now concealed, demand is artificially created, as people line up to take advantage of “free” health care. In the meantime, production of those same services is discouraged, since their full value is not being paid. Increased demand, coupled with decreased production means a shortage, ergo waiting six to eight months for a CAT scan, ultrasound, MRI, or sleep apnea test.
So what does this Great White Northern example have to do with the current free-for-all over health reform in this country? After all, the currently contested House bill, as it stands, isn't “single payer” — it allows for open competition between private and public options, right?
Ignoring for the moment the fact that nearly every liberal Democrat for the past 40 years has publicly salivated over the prospect of a single payer health system, economics (the inconvenient science) again demonstrates how this happy confluence of the public and private would quickly melt into a government monopoly. It is estimated that the premiums for the public option would be around 25 percent cheaper than the market average of private insurance companies (a function of being able to pay providers considerably less than your rivals).
As virtually all individuals and businesses would become eligible to participate in the proposed health care exchange within three years of implementation, any business owner worth his or her financial salt would naturally be inclined to opt for the cheaper rate. Meanwhile private insurance companies, faced with higher costs from increased regulation (brought about, conveniently, from their main “competitor”) and having to absorb the slack from what the government plan won't pay, are presented with a Hobson's Choice — raise premiums, rendering them even less attractive to consumers, or take up another line of work (not to worry though, the taxpayer will be there to pick up the slack.) The end result is a de facto single payer, Canadian style, health system. (See above for the consequences.)
As a person who has lived on both sides of the border, I can attest to the superior quality of American medicine. Services that took six months or longer to receive in Canada are delivered within hours here. Doctors treat you as a paying customer worthy of their time, rather than an inconvenience; and after you factor in direct and indirect tax savings, I'm not paying much more for this higher level of service.
This is not to say that improvements can't be made. America has been in the business of improving things since its inception more than 200 years ago. Few would deny there are costs associated with the system that can be controlled. Tort reform (it is somewhat ironic that under President Obama's plan, the only segment of the health care industry who would not be making great financial sacrifices are the trial lawyers), addressing the issue of portability, easing mandates on insurance companies, and Health Savings Accounts would all go a long way toward creating real competition, lowering costs, and helping solve the problem of dropped coverage associated with job loss and pre-existing conditions, as individuals took ownership of their insurance. Many of these common sense reforms were, incidentally, voted down by previous Congresses, which included then-senator Obama in the ”nay” column.
Lost so lamentably often in the current heated climate of the health care debate, is any examination of the long-term consequences of government policy (what economist Thomas Sowell refers to as “thinking beyond stage one”), and investigation into why those consequences come about. Tommy Douglas's experiment just to our north provides a more than adequate laboratory for this vital inquiry. Health care in Canada is, indeed, at the point of service, “free”, but you get what you pay for.
-------------------------------------
Kelly Sloan is director of the Mesa County chapter of Americans For Prosperity, and chair of the Policy Watch group for Western Slope Conservative Alliance.
Some 40 years later, the reality bears little semblance to the idealistic vision of Kiefer Sutherland's grandpa. Skyrocketing costs, crippling tax rates, chronic doctor shortages, months-long waits for routine tests, (years for many specialized services), and oftentimes outright denial of procedures are the norm. Governments, desperate to control costs and prevent a total collapse of the system, are continuously de-listing previously covered procedures, and seeking new taxes or even, (heaven forbid) user fees.
As a Canadian, I can testify to the elongated waits for tests that often result in additional and more costly treatment, when you do finally get around to being treated. Those who can afford it flock south for their medical care.
So what went wrong? Simply put, economics. Canada's beleaguered single-payer health care system, like the health reform bill currently before Congress, is essentially a price control — the government dictating, by fiat, what it will pay for health care, independent of the pesky laws of supply and demand (for instance, the house bill's “public option” is based on the same provider payment scheme as Medicare — meaning the government insurance plan only pays providers anywhere from 60-80 percent what private insurance companies do). With the up front costs now concealed, demand is artificially created, as people line up to take advantage of “free” health care. In the meantime, production of those same services is discouraged, since their full value is not being paid. Increased demand, coupled with decreased production means a shortage, ergo waiting six to eight months for a CAT scan, ultrasound, MRI, or sleep apnea test.
So what does this Great White Northern example have to do with the current free-for-all over health reform in this country? After all, the currently contested House bill, as it stands, isn't “single payer” — it allows for open competition between private and public options, right?
Ignoring for the moment the fact that nearly every liberal Democrat for the past 40 years has publicly salivated over the prospect of a single payer health system, economics (the inconvenient science) again demonstrates how this happy confluence of the public and private would quickly melt into a government monopoly. It is estimated that the premiums for the public option would be around 25 percent cheaper than the market average of private insurance companies (a function of being able to pay providers considerably less than your rivals).
As virtually all individuals and businesses would become eligible to participate in the proposed health care exchange within three years of implementation, any business owner worth his or her financial salt would naturally be inclined to opt for the cheaper rate. Meanwhile private insurance companies, faced with higher costs from increased regulation (brought about, conveniently, from their main “competitor”) and having to absorb the slack from what the government plan won't pay, are presented with a Hobson's Choice — raise premiums, rendering them even less attractive to consumers, or take up another line of work (not to worry though, the taxpayer will be there to pick up the slack.) The end result is a de facto single payer, Canadian style, health system. (See above for the consequences.)
As a person who has lived on both sides of the border, I can attest to the superior quality of American medicine. Services that took six months or longer to receive in Canada are delivered within hours here. Doctors treat you as a paying customer worthy of their time, rather than an inconvenience; and after you factor in direct and indirect tax savings, I'm not paying much more for this higher level of service.
This is not to say that improvements can't be made. America has been in the business of improving things since its inception more than 200 years ago. Few would deny there are costs associated with the system that can be controlled. Tort reform (it is somewhat ironic that under President Obama's plan, the only segment of the health care industry who would not be making great financial sacrifices are the trial lawyers), addressing the issue of portability, easing mandates on insurance companies, and Health Savings Accounts would all go a long way toward creating real competition, lowering costs, and helping solve the problem of dropped coverage associated with job loss and pre-existing conditions, as individuals took ownership of their insurance. Many of these common sense reforms were, incidentally, voted down by previous Congresses, which included then-senator Obama in the ”nay” column.
Lost so lamentably often in the current heated climate of the health care debate, is any examination of the long-term consequences of government policy (what economist Thomas Sowell refers to as “thinking beyond stage one”), and investigation into why those consequences come about. Tommy Douglas's experiment just to our north provides a more than adequate laboratory for this vital inquiry. Health care in Canada is, indeed, at the point of service, “free”, but you get what you pay for.
-------------------------------------
Kelly Sloan is director of the Mesa County chapter of Americans For Prosperity, and chair of the Policy Watch group for Western Slope Conservative Alliance.
