Dr. Hurd is a psychologist/author residing in Maryland.
The Canadian health-care system of single-payer, socialized insurance is in trouble. Yet Congress and the president continue to push the American system in the same direction.
As Canada’s national government slashes spending on medical care in order to reduce the deficit, local provinces are reducing medical staff. In Ontario, pregnant women are being sent to Detroit because no obstetricians are available. Specialists of all kinds are in short supply. Patients have to wait eight weeks for an MRI, ten weeks for referral to a specialist, and four months for heart bypass surgery.
Does this sound like the utopian care Canadian politicians promised their constituents? The hard truth is that socialized medicine is destroying health care in Canada.
Most Americans do not understand that we are headed down a similar path in this country. The same mistaken economic and philosophical ideas that created socialized medicine in Canada are leading to semi-socialized medicine in the United States. The increase in managed care, bureaucracy, waiting lists, and expense is largely the fault of the government. In its zeal to “compassionately” meet all of our health-care demands, the government is loving us to death.
How? First, the government pays, through Medicare and Medicaid, over 40 percent of all health-care expenditures. This massive infusion of cash into what were originally unregulated fee-for-service programs fueled demand for medical services, and thus inflated prices. Second, Washington allows tax write-offs to businesses for health insurance, but does not tax workers for the benefits. Consequently, employers have tended to provide comprehensive insurance.
Thus the vast majority of health care is paid for by a third party. Doctors do not have to worry if they are charging too much; the health insurance company (or the government, in the case of the elderly and poor) will pick up the tab. Patients do not have to shop carefully based on prices. Imagine if a third party picked up the tab for any other commodity—such as groceries, rent, television sets, or automobiles. Prices would skyrocket because the consumer would feel no pressure to spend carefully.
While the insurance companies and government, which are paying the bill, cannot shop for the consumer, they can place controls on the patient’s freedom of choice. In the 1980s, Medicare officials began to set price controls (“Diagnostic Related Groups,” or DRGs) on treatments for the elderly. In the 1990s private health insurance companies followed suit, by expanding Health Maintenance Organizations (HMOs) and other forms of managed care that often arbitrarily decide who may and may not receive treatment. Yet there was no alternative to such cost-saving steps, since without some kind of controls the price of medicine would rise ever higher. In that case there would have been pressure on the government to take over altogether, yielding something akin to the Canadian system: monopolistic, post office-style medical care.
Yet the growth of managed care has resulted in American patients encountering problems similar to those faced by Canadians—waiting lists for appointments, arbitrary treatment decisions made by bureaucrats rather than by physicians, and new price and treatment controls in government programs such as Medicare. Today the United States teeters on the brink of a Canadian-like system.
A Free Market in Medicine: The Unknown Ideal
How did we get to this point? And, more importantly, how can we reverse course and prevent a plunge into the disaster that Canada now faces? The answer is real capitalism.
Patients would be free to pursue any treatment they wanted. They would also be responsible for payment, encouraging them to select the best price available among competing medical providers and hospital insurance carriers.
Doctors and hospitals would be free to charge what they believed their services were worth; but they would also have to compete in a marketplace where they risked losses if they charged significantly more than their competitors or more than what most people were willing to pay. Patients, shopping as informed consumers in the marketplace, would do the cost-cutting that the HMOs and government bureaucrats currently do far less efficiently. Just as capitalism (or, more specifically, the law of supply and demand) succeeds in making food, computers, and other goods widely available at prices everyone can afford, so too with medicine and hospitalization insurance—if only the government would get out of the way and let the marketplace work.
The basic principles of economics would work no differently in the medical marketplace than in any other. The fact that medical treatment can be a matter of life or death does not prevent economic principles from operating. On the contrary, the life-or-death nature of medical treatment makes it all the more urgent that the government allow the marketplace to function rationally.
Restoring the marketplace requires aggressive free-market reforms. This means adjusting the tax law to end the subsidy for expensive comprehensive insurance. Moreover, Medicare should be privatized. One possibility would be to maintain the program for the current elderly, offer a phase-out option utilizing medical savings accounts (akin to IRAs) for the middle-aged, and inform young people that they will be responsible for saving for old- age medical care.
Socialist Principles Remain
The problem is not just getting people to understand economics, however. Despite the collapse of communism throughout the world, and the failure of welfare-state democracies in Western Europe, American politicians of all stripes still insist that more government control over health care is needed.
How can this be? In a recent Canadian survey, the majority of respondents stated that their socialized system, for all its problems, reflected their collective “generosity and compassion,” and gave them at least one clear claim to being “morally superior” to the United States. Imagine! A socialist system that provides—indeed, even mandates—pain, suffering, inefficiency, and stagnation is considered to be morally superior to a capitalistic system which (when allowed to function without interference) promotes competition, technological superiority, affordability, and individual respect. In other words, it is better for everyone to have mediocre (or worse) medical care, as is the case in Canada, than it is for there to be any variation in care. Unfortunately, Americans, too, are increasingly choosing this same ethical perspective.
The “Right” to Health Care
This attitude is reflected in the belief that health care is a “right.” Dr. Ted Rumble, an orthopedic surgeon in Toronto who is cooperating with the doctors’ protest movement in Canada, summed up the issue: “The public doesn’t want a high quality medical system, it wants a free system.” My own experience suggests that Rumble’s statement applies as much to the United States as to Canada. Many people resent the fact that they cannot have something for nothing, particularly medical care. In a way, who can blame them? Government health policies already make nearly everyone dependent on a third party. So many American adults feel that their medical care should just be available—somehow—as if health care grew on trees.
The result is a refusal to deal with reality. The mere fact that health care, or whatever else, for that matter, does not grow on trees is irrelevant. “There ought to be a law” to make the desired good or service grow on trees. Of course, politicians are always delighted to participate in the charade, if it means advancing their short-term interests.
This is evident in Canada, where frustrated citizens don’t want to replace the socialized system with a free market, but rather, to increase government’s power to limit “unnecessary” medical visits. In a word: rationing. The childish attachment to the idea of government medicine, in Canada and elsewhere, appears at times almost mystical. A New York Times reporter has described the “sacred place in the shrine of Canadian values” its citizens seem to hold for its disastrous medical system. Similar sentiments are obvious in Great Britain, where former Prime Minister Margaret Thatcher could implement no real reforms in the socialized medical system, despite its obvious failures.
Incredibly, the Canadian survey actually found people divided over whether doctors should tell patients that their treatment may not be the best available. (A similar debate is currently underway in the United States over whether HMO doctors should tell their patients when they are being denied superior treatment.) A significant number said they would have more peace of mind simply not knowing. Psychologists call this “denial.”
Doctors Fight Back: Medicine’s Last Chance
In the midst of the Canadian health-care crisis (and the growing American one) there exists one hopeful development: the protest of Canadian doctors against the socialized system. More and more doctors are refusing to accept new referrals. They are pressuring the government to reduce what it takes from them for alleged “administrative costs.” They have also fought the government’s attempt to force urban Toronto doctors out of their practices into more rural areas farther north. Some 700 doctors fled Canada for the United States last year, more than twice the number who emigrated ten years ago. If Canadian physicians can find the courage to fight irrational and unjust government mandates, then perhaps American doctors—who still enjoy more freedom than their Canadian counterparts—can muster the same courage.
Doctors must not be afraid to point out that capitalism delivers the goods. Because it respects the rights of the individual, it is the only proper, humane, and moral social system. Moreover, great medical care would never have been possible in a society that did not respect the rights of doctors. When told about a patient’s refusal to pay for his services, Dr. Aaron Shutt, a fictitious surgeon in the CBS television series “Chicago Hope,” stated: “It’s not about money. It is about respect. Surgery is my art. It’s my craft. It’s mine to sell; it’s mine to give away. People . . . think it’s free for the taking. Well, it’s not. And I’m going to do something about it.”
It’s time for all doctors to do something about it.