TCS Daily

Border Crossings

By Sally C. Pipes - October 17, 2003 12:00 AM

Editor's note: This is the last of a four-part series.


A lot has been made by some U.S. politicians about elderly Americans crossing the border into Canada to buy medications because they are cheaper there. Little attention, though, is given to the fact that thousands of Canadians are coming to the United States for vital diagnostic tests, new treatments, and better medicines.


The fact critics of U.S. health care miss in this cross border trade is that while Americans travel to the drug Costco of the north to hunt for bargains, Canadians travel here not because it costs more in Canada but because the government there -- with its drug price controls and restrictions on access to new technology -- won't let them get the tests, treatments and medications they need to make their lives worth living.


Indeed, Canadians' months-long waits for diagnostic tests and yearlong waits for approval of new medications and surgeries demonstrate that health care woes cannot be solved by government takeover, especially one that prohibits private alternatives.


Yet, some American politicians want to import Canada's single-payer system, either all or in part, in order to make health care in the United States more "affordable" -- not merely to elderly consumers of drugs but to the third parties, government and insurance companies, that pay the bulk of medical bills.


No doubt, affordable health care for all citizens ought to be a primary goal of any health care system. But access to the latest and best technologies is vital, too, as is a system that promotes their creation must be high on the list, too.


Medical advances, after all, are vital to improving people's quality of life. They can contribute directly to improving not only an individual's condition but also the economic well-being of a nation.


The new pharmaceuticals that critics of the industry complain cost too much usually are cheaper than the treatments that they replace. Science writer Ronald Bailey in Reason magazine reported how Humana Hospitals cut the death rate for congestive heart patients from 25 percent to 10 percent through a year-long disease management program. The program increased the use of pharmaceuticals, raising costs for its pharmacy by 60 percent. But hospital costs dropped 78 percent, saving Humana $10 million net. Drug therapy thus was both life saving and cost saving.


In a kind of unintended reverse experiment, proving the same thing, the New Hampshire Medicaid program in 2000 limited the number of prescriptions it would pay in order to save some money. They did for drug costs -- but not for nursing homes. The rate of admission to them doubled.


Indeed, according to research by Columbia University professor Frank Lichtenberg, every $1 of increased spending on new pharmaceuticals reduces other health care expenditures by an average of $7.17.


And the gains of new drugs occur both inside and outside the health care system. New drugs such as Enbrel and Remicade are effective in halting the progress of severe arthritis, allowing people who use them to get off of disability and into the work force. New drug treatments for migraine headaches that cost insurance companies about $1 billion a year save employers about 13 times as much in lost work time.


Other medical advances do the same. MRIs can guide treatment in ways that reduce the need for knee surgeries, help forestall multiple sclerosis and ensure the most effective treatment for breast and other cancers. They can shorten hospital stays and help people get back to work more quickly in the process.


Canada's system of price controls and restrictions simply doesn't promote those things. As a nation, it free rides on American innovation and the willingness -- up to now -- of Americans to pay higher prices for medicines, in particular, but all treatments generally to ensure investment in their continued development. Canadians do contribute to this innovative activity, but only by crossing the border and paying money out of their own pocket to get the life saving medications and treatments they need.


In that way, Canada's universal health care is anything but truly free. By controlling the costs of investment in new medicines and technology in order to make health care "affordable," Canada denies Canadians ready and rapid access to innovations that make health care more worthwhile.


That's because to third party payers, "affordability" actually amounts to what they have available within their budgets to make a payment. And their budgets don't encompass all health care costs or all economic gains attributable to new medicines and technologies. From that narrow perspective, less spending on any component almost always equates with better medicine.


Not so from a patient's perspective. A person suffering from cancer, or AIDS, or aggressive rheumatoid arthritis, or some other debilitating disease might consider a drug's or treatment's life-enhancing quality more important. They might even mortgage their house or sell a car to deal with their pain if they had to.


That's why to accomplish all the goals a health care system has, it is important to strengthen the role of the consumer, restore the doctor-patient relationship, and reduce the role of government in the health care areas.


Today, people come to the United States from all over the world, including Canada, for their health care because it is still the leader with the most recent innovations, best medical treatments, and cutting-edge pharmaceuticals. That is something that policy makers ought to want to preserve.


If we continue on the present path of giving more and more power to the state, this country will suffer the same problems facing the citizens of Canada, the United Kingdom, and Europe.


The core problem in those places is that government control has deprived consumers of control over their health-care dollars and health-care decisions, which is where some American politicians would take the United States if they get their way with such things as drug reimportation and other measures to make health care affordable.


What are needed instead are measures that empower individuals to have control over their own health care. This means abolishing state regulations and mandates that dictate health care policies, giving seniors prescription drug benefits by restructuring Medicare into a system of privately run insurance arrangements on the model of the Federal Employee Health Benefits Program, halting the federal government's march into health insurance regulation, making medical savings accounts available to all, and helping the uninsured by enacting refundable tax credits for health insurance.


Such measures would make prescriptions "affordable," though not free, to seniors who need them. They would encourage health care beneficiaries to work with their doctors to find the best price and truly best course of treatment for them. And they would avoid turning the Canadian model into an American health care disaster.


Americans could then stay home, while Canadians could still come to visit to meet their needs.


Sally C. Pipes, a Canadian, is president & CEO of the California-based Pacific Research Institute.

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