Is government control beneficial in healthcare? A review Canadian example can certainly be instructive when viewing the proposed changes to the healthcare system in the United States, but such a review is also useful when judging the possibilities for government involvement in healthcare in general. I have lived in Canada for more than 20 years and have seen both the successes and failures of a government run system.
Size of Intervention as the Root Problem
First, it is important to understand that healthcare in Canada is not a federally administered program; it is covered by the provinces, state-like entities. Healthcare coverage is done on the level of the provinces although minimum coverage is mandated by the federal government by the Canada Health Act which became law in 1984. It is also important to understand that even the two largest provinces (by population) in Canada, with the majority (~60% as of 2009-09-24) of the entire Canadian population, are less populous than Illinois and Virginia respectively [1] [2]. The average population of a Canadian province is 3.4 million, smaller than Los Angeles [3]. When discussing the Proposed American system, this is an important distinction to make because the Canadian healthcare system can hardly be called a nationalized system.
Most problems associated with a government run program are the result of the size of that program. No one in a group of ten people on a camping trip mounts a free market argument against the suggestion that each person must share in the work and the food; everyone was going to help out anyway, and anyone who slacks off is easily caught. On a larger scale, problems arise [4]. Any argument for the adoption of nationalized healthcare coverage for the States must not be based on the assumption that a working system exists in the Canadian provinces each about one one hundredth the size of America. Mandating and offering coverage for 307 million people is two orders of magnitude greater in difficultly than doing the same for 3.4 million people. One must assume that the problems associated with the Canadian system would grow (likely exponentially) as the covered population grew. And the problems with the Canadian system are many.
Shortages in Canada
Canada's system is crumbling. Inevitably, when the government took control of all basic coverage, healthcare providers fees were locked in to a degree--in an attempt to prevent "obscene" profits, and thereby "reform healthcare", and reduce the cost for the consumer. Unfortunately this action was in ignorance of the purpose of profits. Profits exist in part to encourage entry into a particular field. The dollar price of living in Canada has risen since 1984 and the dollar profits of doctors has not kept up. As a result of this healthcare reform, a scarcity of doctors has ensued (the supply of doctors has been effectively rationed by a price ceiling while the demand has continued to rise). It should come as no supprise that very shortly after 1984, the ratio of physicians per capita ended its upward trend in Canada as the following graph clearly shows [8]:
In the 1970's, Canada had more doctors per captia than almost all other developed countries [6]. Since this time and the introduction of socialized medicine in Canada, Canada has slipped to 24th of 27 OCED countries, now below Hungary and Poland, both post-communist countries [6].
Currently, more than four million Canadians cannot get access to a primary care doctor (i.e., family doctor) [5]. As of September 2008, there were over eight hundred thousand Canadians on waiting lists for procedures. In 2007, the average waiting period after being referred to a specialist by a doctor was over four months. Real earnings have also fallen in other areas related to the medical field. A friend of my father's, a prosthetics fitter and manufacturer, has been driven to take a loss on his work and will leave the industry despite his backlog of work that stretches for over half a year. The regulations that inevitably come from nationalizing any industry will result in the highly predictable outcomes seen in the Canadian example just as clearly as they were seen in the Soviet example. The Soviet government tried endless quotas, controls, and central planning in order to do what the market has always done but was unable to eliminate the bread lines.
Government Regulations Misallocate Resources
The same type of regulations that created the shortage are usually suggested as the solution. The Ontario Medical Association's Ontario Medical Review February 2007 edition [9] provides an example of the confusion within the central planners' ideologies: after realizing that departures from free market principles has led to the intrinsic effects, the planners offer both free market reforms and free market abandonment in the same breath. For example, appendix A of [9] advocates more central control as part of the solution to Ontario's doctor shortage: "Establish a new, independent and permanent 'Office of Physician Workforce Policy and Planning,' which would provide a central and ongoing focus for issues related to physician workforce policy and planning in Ontario" (point 1, pg. 26), while, in the same breath, acknowledging that government control over payment caps reduce access to care: "Eliminate all coercive measures, such as payment discounts and caps, which impact negatively on patient access to care" (point 7).
And after reading point 10 of the above mentioned appendix: "Make tuition fees formedical school more affordable to prevent financial barriers to medical education and training", one must wonder how long it will be until a group with a name like "The Ontario Professor's Association" publishes a journal with the name "Ontario Education Review" in which an article discussing the professor shortage in Ontario includes an appendix with a familiar-sounding point: "Eliminate all coercive measures, such as payment discounts and caps (such as those instituted by the Ontario Medical Association to reduce tuition costs for medical students) which limit impact negatively on student access to education." Some lessons take a long time to learn; government regulation of industry almost always missalocates resources, causing shortages (waiting lines), surpluses (unneeded products), and an unbalanced market.
Single-Payer System Nearing an End in Canada
In a recent (July 2009) documentary video titled ObamaCare Yay Or Nay? The Truth About Canada!, Steven Crowder documents case examples of government cost reducing measures in the Canadian system. As it turns out, even Canadian government employees will recommend paying at a private (not legally tested in most parts of Canada) clinic for speedy referral to a specialist because waiting to get a family doctor could take two to three years. A physician friend of mine in Vancouver predicts that Canada's system will crumble until it starts returning to being a proper market-oriented industry. As private clinics start up, pressure mounts to determain their legality. Quebec has already removed the ban on private health clinics [10], and British Columbia may soon follow [11], likely leading to a Canada-wide colapse of the single-tear healthcare system and a return to the freedoms Canadian's used to enjoy to purchase whatever healthcare they wanted.
An Issue of Freedom
The central issue surrounding nationalized health insurance is that of freedom. Does government have the right to take away the freedom of the individual to choose whether or not to be insured? Should government engage in cost cutting measures in healthcare to the inevitable effect of banning certain practices? Even if one assumes that government could skirt the knowledge problem in economics (it never has nor ever will), even if government valued the individuals life as much as he does (it cannot), and even if government could outcompete the private market (it will not), one has not established that government should nationalize healthcare coverage. I believe that people should be free to spend (or not to spend) their money on the healthcare of their own choosing. My primary reason for this belief is not the poor governmental record at administering healthcare (even at a small scale as in the case of Canada)--such a record gives me hope that freedom will return to my home country, Canada--rather, my primary reason for my stance on this issue, as it is for many other issues in economics, is that one man, despite his best intentions and rhetoric, does not have the right to take away another man's freedom of choice in the market.
References
[1] Provinces and territories of Canada. (2009, September 24). In Wikipedia, The Free Encyclopedia. Retrieved 16:03, September 24, 2009, from http://en.wikipedia.org/w/index.php?title=Provinces_and_territories_of_Canada&oldid=315939531
[2] List of U.S. states and territories by population. (2009, August 16). In Wikipedia, The Free Encyclopedia. Retrieved 19:46, August 16, 2009, from http://en.wikipedia.org/w/index.php?title=List_of_U.S._states_and_territories_by_population&oldid=308346277
[3] List of United States cities by population. (2009, September 24). In Wikipedia, The Free Encyclopedia. Retrieved 05:07, September 24, 2009, from http://en.wikipedia.org/w/index.php?title=List_of_United_States_cities_by_population&oldid=315856602
[4] The Black Book of Communism. (2009, September 23). In Wikipedia, The Free Encyclopedia. Retrieved 19:54, September 23, 2009, from http://en.wikipedia.org/w/index.php?title=The_Black_Book_of_Communism&oldid=315770470
[5] CBC News. (2008, June 18). YOUR VIEW: How has Canada's doctor shortage affected your life? Retrieved October 10, 2009, from Canadian Broadcast Corporation: http://www.cbc.ca/canada/story/2008/06/18/yv-doctorshortage-questions.html
[6] Esmail, N. (2006, August 28). Canada's Physician Shortage: Effects, Projections, and Solutions. Retrieved October 1, 2009, from Fraser Institute: http://www.fraserinstitute.org/Commerce.Web/product_files/Canadas_Physician_Shortage.pdf
[7] Krauss, C. (2004, September 12). Canada Looks for Ways to Fix Its Health Care System. Retrieved October 1, 2009, from New York Times: http://www.nytimes.com/2004/09/12/international/americas/12canada.html?pagewanted=print&position=
[8] Organisation for Economic Cooperation and Development [OECD] (2004). OECD Health Data
2004: A Comparative Analysis of 30 Countries, 3rd ed. CD-ROM. Paris.
[9] OMA Human Resources Committee. (2007, February). OMA Position on Physician Workforce Policy: recommendations to address Ontario’s doctor shortage. Retrieved October 1, 2009, from Ontario Medical Association: http://www.oma.org/pcomm/OMR/feb/07PhysicianHumanResources.pdf
[10] CBC News. (2005, June 9). Top court strikes down Quebec private health-care ban. Retrieved October 2, 2009, from Canadian Broadcast Corporation: http://www.cbc.ca/canada/story/2005/06/09/newscoc-health050609.html
[11] Sandborn, T. (2009, September 7). Supreme Court Showdown for Private Clinics: How two BC lawsuits could change health care in Canada. Retrieved October 2, 2009, from The Tyee: http://thetyee.ca/News/2009/09/07/PrivateClinicShowdown/print.html
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/02/22/financial/f141940S03.DTL
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