Healthier than You Might Think, Thank You
Sally C. Pipes and Benjamin Zycher are convinced Canadian medical system is failing. Beginning with economic fundamentals they stake out the free market high ground in the debate about how to allocate medical resources.
Their arguments contain a number of assumptions which should be more closely examined. Especially as the current American model spends more money per capita for a lower life expectancy in a mishmash of Byzantine payment schemes which one noted economist, Henry Arron, writing in the New England Journal of Medicine (349, no. 8 (2003): 801–303), describes,
"Like many other observers, I look at the U.S. health care system and see an administrative monstrosity, a truly bizarre melange of thousands of payers with payments systems that differ for no socially beneficial reason, as well as staggeringly complex public system with mind boggling administered prices and other rules expressing distinctions that can only be regarded as weird."
I begin with this fact, thrifty Canadians pay an average of $35.03 per year of life expectancy; our American friends pay $63.38 for that same year. (See below.)
Pipes and Zycher begin with the a priori assertion,
"But because resources are limited -- there are only so many physician hours, hospital beds, pharmaceuticals, ad infinitum available -- we cannot consume all the medical care that we would prefer."
Pipes and Zycher claim the demand for medical care is effectively unlimited. Really? This seems a bit implausible. Were this true then high net worth individuals with unlimited funds would, presumably, spend their lives enjoying such care. Bill Gates would have long since given up working to devote himself full time to being a patient. That he and Warren Buffet, apparently, prefer to play bridge rather than indulging in hourly colonoscopies suggests something a little shaky in the unlimited demand assumption.
Medical care is a funny sort of economic good. No one actually wants it. Modeling demand for a good no one wants is a bit tough. For one thing, demand for medical care is self limiting. People who want care are that percentage of the population who are, at any given time, sick. Their demand for such care radically tapers off when they are "better". (Or, of course, dead.)
Most of us would prefer to keep our demands on medical resources very close to zero. Indeed, the entire practice of preventative medicine is designed to reduce demand which seems an odd thing for medical service providers to be doing.
What Pipes and Zycher fail to recognize is that the economic good actually being sought is not medical care but rather health itself. There may very well be infinite demand for health; but the medical system's role in meeting that demand is limited. (After all, a brisk mile long walk three to four days a week is a huge determinate of a person's current and long term health. So is quitting smoking. So is avoiding obesity. But none are medical services.)
When a person is sick they are likely to want to get better as quickly as possible and damn the expense. The more potentially lethal the illness the less interested the patient and physician are in containing the costs of treatment. However, this too is self-limiting. The sick get get better and very few 90 year-olds are clamoring for highly invasive procedures or intensive chemotherapies.
Patients, their families and doctors make decisions to limit treatment usually because of "quality of life" issues. This is not a fuzzy social science concept; rather it is a very real consideration which millions of families have to deal with. Keeping grandpa "alive" as a vegetable, much less being a vegetative grandpa, holds little attraction. The popularity of living wills and the ongoing dilemmas of "Do Not Resuscitate" orders underscore the tension between an absolutist position on the need to keep every human alive as long as is technically possible and a realistic assessment of what that person's life will be like. Pipes and Zycher neatly sidestep this issue by mocking, rather than addressing, the very useful idea of "quality of life".
Pipes and Zycher argue the Canadian system allocates relatively scarce medical resources bureaucratically rather than on a cash and carry basis. The palmed card here is the loaded term "bureaucratically".
Every medical system performs triage. If a hospital has five operating rooms and seven patients needing emergency operations a decision has to be made. Who gets the operations?
The authors define any system which does not perform a wallet biopsy to allocate the operating rooms as bureaucratic. However, the art of triage is essentially medical - which patient will be best able to survive if their operation is delayed? There are no sure answers to this critical question. A bit of science, years of clinical experience and the facts on the ward are all a system can go by. The degree of bureaucratization of a medical system is largely a function of whether it is medical or administrative staff who actually make triage decisions.
Truly bureaucratic approaches need not involve medical staff at all. For example, a clerk could note the time which patient arrived and use a first come first served system regardless of medical considerations. Or a clerk might make the decision based on a meat chart, cost/benefit analysis and opt for the cheapest operations. At the other extreme, a pure market solution would auction off the operating rooms regardless of patient condition or prognosis. In practice, where physicians make allocative decisions, medical rather than bureaucratic values dominate.
At a system wide level medical resources could be allocated on a pure market basis. But - leaving aside any fuzzy ethical issues - it is unlikely this system will produce efficient outcomes.
Mr. Gates and Mr. Buffet at their bridge table illustrate the point: with enough money a really rich person can have their own, personal, operating room fully staffed, teched up and standing by at all times. But this would be extremely wasteful. It would waste their money and it would waste the lives of the thousands of people who actually need that operating room. Economically, it is difficult to imagine a less efficient outcome.
Which goes some way to explaining why the United States spent $4887 per capita on health care in 2001 as compared to Canada's $2792. (Source: "U.S. Health Care Spending in an International Context," by Uwe Reinhardt, Peter S. Hussey, and Gerard F. Anderson) and why Canadian life expectancy at 79.7 years is almost three years longer than US life expectancy at 77.1 years (Source: OECD, Health Data 2004.).
But what about those waiting lists? Has thrift gone too far? Waiting lists for some procedures and treatments in Canada are too long. Which reflects a couple of facts about the Canadian system: we do not leave between 13-20% of our population without medical insurance and possibly without care. Were we to do so the wait lists would be cut by, well, 13-20%. We also provide roughly the same level of care to all of our citizens.
There is no question that in certain areas, Canadian investment in healthcare has been badly targeted and too low. To take the standard example, at one point in the early 1990's we had one eighth as many MRI machines per capita as the US. Now that number is closer to one quarter and rising quickly but it is still too low.
Worse, because medical care is too often seen as "free" too many of our higher cost resources, particularly hospital emergency rooms, are overused by people who are simply not that sick.
Fixing these problems is about management fine tuning the system. Making smarter medical investments, adopting new technologies faster, investing more in preventative measures makes a lot of sense for the Canadian system. So, frankly, do small deterrent fees for both emergency and physician visits. Some progress is being made in these areas in some Canadian provinces.
There is also a need for a parallel, fee for service, stream in the Canadian medical care system. There are simply too many instances of allocative failure in the present system leading to the problem of rationing by waiting list.
The classic example is an orthopedic surgeon in Vancouver who has started his own clinic to treat "exempt persons" - non-Canadian citizens, federal convicts, Workman's Compensation Board cases, members of the RCMP. Dr. Brian Day started his clinic because the hospital he was affiliated with could only afford to let him operate two and a half days a week. So, although his personal waiting list stretched several months into the future and he was eager to get on with the knees and hips which needed replacing, he was artificially restricted to working half time.
This sort of allocative failure reflects the budget realities in the Canadian system and the system's lack of agility in the face of fluctuating demand for services. A failure which a more flexible, parallel market in medical services could directly address.
The problems with the Canadian medical system are not about enforced benevolence - they are about money. While the demand for medical service is not, pace Pipes and Zycher, infinite, it is beyond the willingness of Canadians to pay for. At the margins, it makes sense to permit ordinary Canadians to pay directly for services which the government cannot pay for or cannot pay for quickly enough.
Within Canada there is an ongoing debate about how far to go in introducing a "two tier" system. (In England there has always been such a system.) Up until the last decade, proponents of a single tier system were in the overwhelming majority. Now the idea of encouraging some private medical care is gaining traction on economic and efficiency grounds.
In the ongoing debate in American politics about health care Canada is often held up as a model of what not to do. However, the current American hodgepodge of government funded low tech, low skill, "safety net", medical care, the various programs to aid the poor under the general rubric of Medicare, the rapidly escalating cost of private medical insurance and bureaucratic meddling of cost conscious HMOs are hardly models of medical effectiveness or economic efficiency.
Slagging the Canadian system makes good copy; but it ignores the thriftiness, inclusiveness and success of that system. It takes a particular sort of rhetorical skill to suggest the Canadian system may, at some point in the future, snub the needs of "desperately tiny prematurely born", while ignoring the fact the current Canadian system has an infant mortality rate of 4.88/1000 live births as compared to America's 6.75. A skill which glosses over the needless administrative expense, exclusions and unimpressive overall health outcomes of the current American model.
You don't have to be Hillary Clinton to want better outcomes at half the price - you just have to be a thrifty Canadian.