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You Get What You Pay For

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Remember that the next time you hear someone sing the praises of single-payer, government run health care programs. Canada’s system is often cited as an ideal model for the United States to emulate. The problem with that, however, is simple: if the US adopts a Canadian style system, where will Canadians go for their health care?

Canada’s National Health Service: The Sick Man of the Great White North

Recognizing their failure to provide timely treatment through the national system, some provincial governments are sending backlogged patients to the United States rather than encouraging Canada’s private sector to pick up the slack.

Demand exceeded supply in 1999 and 2000 for 1,200 Ontario cancer patients who were forced to wait an unacceptably long time for treatment. Providers on both sides of the border acted. Cancer Care Ontario (CCO) and Princess Margaret Hospital in Ontario offered patients the option of receiving radiation therapy at Roswell Park Cancer Institute of Buffalo. “This short-term measure is helping us to ensure that everyone receives treatment within a medically acceptable period,” Ken Shumak, CCO’s president, said at the time.

Pamela Germain, vice president for managed care and outreach at Roswell Park, notes that some patients had waited 14 weeks postsurgery, with eight weeks being the satisfactory outer limit. “We negotiated case rates for breast cancer and prostate cancer and cleared up a backlog of 1,110 patients in two years,” says Germain. Hospitals in Detroit and Cleveland also picked up the slack until provinces purchased new equipment and hired health care professionals to run it.

Canada’s system may be the gold standard for government-run health care, but only if you’re looking for a system that can’t provide essential medical services in a timely manner.

As it turns out, the British aren’t doing much better:

In the late 1960s and the 1970s, the government had scraped together a few pennies, and it did manage to build a few hospitals or a few new wings on some of the Victorian institutions that they had nationalized. So the politicians began to talk about getting the private sector to invest capital to build new hospitals. For every ten years of the existence of the NHS, on average, waiting lists have gone up by about 200,000 people every decade.

Today, the National Health Service costs the taxpayers some ꍐ,000 million. Over one million people are waiting for treatment and surgery and often waiting reasonably lengthy times: months, and for some surgery, years. There are probably another 300,000 to 400,000 people waiting to get on the waiting list because, of course, there’s a definition about waiting lists. If you’re on a waiting list, when you’ve seen a consultant and you’re waiting for surgery, you’re not really on the government waiting list when you’re waiting to move from the GP to see the consultant.

This is out of a population of some 60 million people. If there are a million, maybe a million and a half people waiting, when I wander around London, most people are well. Anecdotally, I almost ask myself the question, “Where is the ꍐ,000 million going?” Today, the NHS by international comparison has a very, very poor record in all kinds of important areas such as cardiology, cancer treatment, and survival rates. Today, rather like corks bobbing on the tide of history, our political classes in Britain are trying to manage a service; but whatever they do, the sand just runs through their fingers, and they’re desperately trying to reform the system and to deal with ever higher consumer expectations.

It’s interesting to note that both countries are now beginning to experiment with private-sector reforms in order to ease the serious problems of the state-run system. Canada’s doctors have now endorsed the concept of private health insurance to complement the state’s coverage, which is clearly inadequate:

“We have to provide our patients with every possible solution,” said Robert Ouellet, of Laval, Que., who proposed the motion to delegates at the CMA’s annual meeting in Edmonton. The motion was approved by two-thirds of the delegates.

He noted candidly that while the proposal says purchasing private insurance would be contingent on the public system failing to deliver, practically speaking, patients would have to buy insurance long before they needed it, or they would likely be unable to get coverage.

Barry Erlick, a physician from Toronto, told his colleagues that buying private insurance would be a wise investment because the medicare system cannot keep pace with demand for services.

“Governments are failing my patients today,” he said during the debate. “We are saying, ‘Give our patients options to alleviate their suffering.’ “

This move comes in the wake of a Canadian Supreme Court decision that struck down a Quebec law banning private medical insurance. In an editorial on that decision, the Wall Street Journal noted:

The larger lesson here is that health care isn’t immune from the laws of economics. Politicians can’t wave a wand and provide equal coverage for all merely by declaring medical care to be a “right,” in the word that is currently popular on the American left.

There are only two ways to allocate any good or service: through prices, as is done in a market economy, or lines dictated by government, as in Canada’s system. The socialist claim is that a single-payer system is more equal than one based on prices, but last week’s court decision reveals that as an illusion. Or, to put it another way, Canadian health care is equal only in its shared scarcity.

One of the lessons to be learned from this is that “free” government services are not, in fact, free. In reality, they tend to be more expensive due to the fact that consumers are shielded from the true cost of the service, removing any incentive to be more discriminating in its use, and providers are shielded from competition, removing any market incentives to drive down costs.

To be sure, the US health care system isn’t perfect. To a certain extent, consumers are still shielded from the cost of medical services through employer sponsored health insurance plans, although this is changing as more of the rising cost of these benefit plans are shifted to employees. Although this cost-shifting is routinely decried in the media as a negative trend, it seems clear that as consumers bear more of the direct cost of medical care, they will also become more savvy health-care shoppers, spending their limited budget more wisely. The natural result of such a trend will be the enhancement of competition in the health care market as various providers work to earn the business of these more discerning consumers – and we all know the benefits of greater competition.

Hat Tip: Ed Morrissey

Marc Vander Maas


  • Great post. The health care situation in Canada is unacceptable. It is killing thousands. I don’t believe in any public health care whatsoever, but I don’t understand why the socialists object made to a two-tiered system. Those who can pay would get better healthcare, and be taken off the waiting list for public healthcare, improving the situation for those that can’t or do not wish to pay.

    Inaccurate title though. The cost we pay for Government-run programs is far higher then the price of privately-run programs.

  • Marc Vander Maas

    You’re probably right on that title. It should be something more like “You get what you (don’t) pay for (even though you end up paying double in the end).” Or something. At least the point gets across…

  • Ralph L. Morocco Jr.

    No system is perfect. Looks like the Canadians cleared up their backlog creatively. The U.S. still has 45 million (uninsured)on the waiting list and no plan to help them. Worse, tens of thousands of Americans who had coverage have found it was blown away in the winds of Katrina, as thousands of small businesses have been destroyed and many large ones have been closed. To call this a health-care financing “system” is a joke!

  • One facing a judicial red light; the other, green.Monopoly #1: I was somewhat shocked the other day when I heard a strong critique of the much-vaunted Canadian national health care system on NPR. I wasn’t dreaming – here’s the link to prove