Another Failure For Single-Payer Care

The New York Times has a piece on the state of the Canadian healthcare system, held by many in America as a model for how a national healthcare system should be run:

The country’s publicly financed health insurance system — frequently described as the third rail of its political system and a core value of its national identity — is gradually breaking down. Private clinics are opening around the country by an estimated one a week, and private insurance companies are about to find a gold mine…

Canada remains the only industrialized country that outlaws privately financed purchases of core medical services. Prime Minister Stephen Harper and other politicians remain reluctant to openly propose sweeping changes even though costs for the national and provincial governments are exploding and some cancer patients are waiting months for diagnostic tests and treatment.

But a Supreme Court ruling last June — it found that a Quebec provincial ban on private health insurance was unconstitutional when patients were suffering and even dying on waiting lists — appears to have become a turning point for the entire country.

“The prohibition on obtaining private health insurance is not constitutional where the public system fails to deliver reasonable services,” the court ruled.

The reality is that many of the problems with American healthcare are problems that have to do with too much bureaucratic centralization rather than not enough. Single-payer, government-run healthcare doesn’t scale well. Canada has just over a tenth of the population of the United States. A system that can’t provide quality care for 30 million people would collapse even faster when having to provide care for 300 million. As the Canadian Supreme Court found, the public system was not able to deliver a reasonable level of services. Getting cancer in Canada means waiting for months for treatments – if you’re able to get them at all. It’s now become a virtual truism in economics that governments are simply not as efficient in provisioning goods and services. A market has the nervous system of prices that help regulate supply and demand in a way that governments simply can’t match. Trying to build a centralized system is like trying to build a mainframe that can outperform the Internet – an ultimately futile effort.

The way to fix the problems in American healthcare don’t involve emulating the models that are failing everywhere else. Healthcare needs to be allowed to respond to market forces to drive costs down and continue to provide access to care. That means decoupling employment from insurance coverage – there’s no reason why the system should discriminate against the 50% of the American workforce who are employed by small businesses. The idea that your employer should provide you with services outside of work is an idea that should have died off with the company store. If you lose your job, move to a different job, or start your own small business, your healthcare coverage should remain yours. Programs such as Healthcare Savings Accounts (HSAs) move the system in that direction, but they still don’t address all the problems. A system where individuals can have an HSA for basic care and a supplemental catastrophic care plan would help fill the gaps left by the current system.

Canada’s slow collapse of single-payer care should be warning to the US about the perils of such a system. Healthcare will always be expensive – it takes years of training for someone to become a doctor or nurse, and medical equipment must be made to incredibly exacting standards. Government cannot wave a magic wand over the healthcare system and lower prices – it inevitably must ration healthcare to make up for its own inefficiencies – which is exactly what the Canadian system does. That kind of model simply doesn’t provide the best level of care. Markets can do better, which is why US policymakers need to reform the US system to allow individuals to own their own healthcare and make their own healthcare choices regardless of employment situation.

6 thoughts on “Another Failure For Single-Payer Care

  1. How much money do want to bed that America’s existing health care system falls long before Canada’s? Whatever the downfalls of single-payer, a more effective system has yet to be discovered….which is exactly why every society eventually trends that direction after exhausting futile market-driven approaches that prove ineffective for distributing a service like health care.

  2. Medical savings accounts Mark, get use to them. We become consumers again of our healthcare and put some competition back into that areana.
    Again the government cannot provide for all the people all the time and if you give away something it will be abused to the point of destruction. We need a new way of thinking of the problem or face, like Canada, the same problems that the socialists face.

  3. Ray M, medical savings accounts basically amount to a mirage of health care coverage that lasts until the moment you get sick and require actual medical services that exceed your balance. The only people getting any use out of them are the wealthy who will use them as yet another tax shelter. So not only will medical savings account diminish the quality of coverage for American health care consumers, they will further rob the Treasury of revenues. It’s an arrangement only conservatives could love.

  4. A medical savings account? How is this supposed to work?

    A) I’m a grad student with a shitty little stipend. Where is this money going to come from for my medical savings account?

    B) Assuming I start to put $100/month in my account (which is generous) today, what happens if I get sick tomorrow? I would only have $100. What happens if I get cancer next year and have to pay $10,000 for treatment? I would only have $1200 + interest.

    These savings accounts would have to function differently from normal savings accounts to make any sense.

  5. These savings accounts would have to function differently from normal savings accounts to make any sense.

    Which they do.

    B) Assuming I start to put $100/month in my account (which is generous) today, what happens if I get sick tomorrow? I would only have $100. What happens if I get cancer next year and have to pay $10,000 for treatment? I would only have $1200 + interest.

    That’s why you supplment your MSA with some form of catastrophic coverage.

    MSA’s do two really important things – first they make sure that if you quit your job, become self-employed, or what have you, you don’t lose your health care coverage. Coupling health care to employment is just a silly idea – and it doesn’t work much better than coupling it to government.

    Secondly, it makes things cheaper. Paying cash on hand for things like routine physicals means less paperwork for doctors, less hastles for consumers, and lowers costs for everyone. Medical bureaucracy is a significant factor in healthcare costs, especially for routine treatments.

  6. Another dysfunction of medical savings accounts unlikely to generate many headlines is that they promote healthy lifestyles….which results in longer lives….which results in a lifetime of health care bills foisted on Medicare to care for a geriatric population of Alzheimer’s patients and Lipitor poppers. “Unhealthy lifestyle choices” such as smoking and obesity are wildly profitable to governnment, if not to private insurers, despite the false rhetoric to the contrary. Given that medical savings accounts would defer more health care costs post-retirement, they will undermine at many levels the profit governments make from “unhealthy lifestyles”, meaning they’ll probably be met with fierce bipartisan resistance by lawmakers who have a clue about health care financing.

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