TCS Daily


Nationalizing Compassion: The Canadian Free Lunch

By Sally C. Pipes - December 6, 2004 12:00 AM

There are, sadly, no free lunches. That eternal truth is the beginning of wisdom with respect to the view of some that a Canadian-style system of national (read: bureaucratized) health insurance is the answer for the problems and growing costs of the U.S. health care market.

Let us get back to analytic basics. We live in a world in which human wants always and everywhere exceed the capacities of the limited resources available. If everyone could consume all the health care that they would prefer, few resources would be left to satisfy all of the other myriad human needs. 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. Instead, we are forced to make often-hard choices, as is the case with nutrition, housing, education, and all the rest.

And so all economic systems, whatever they are called and however organized, must find ways to allocate resources among competing uses. In a word, rationing in some form is the common characteristic of all such systems and the eternal misfortune of mankind ever since the debacle in the Garden of Eden. We can ration by price, favoring the nonpoor over the poor. We can let people fight it out: Violence, the oldest rationing mechanism known to man, favors the young and the strong. We can resort to queuing, favoring those whose value of time is relatively low. We can choose to favor beauty, which is timeless, supposedly, but what is incontrovertible are the advantages of the beautiful over the rest of us in the eternal struggle for resources. And so on.

Say what you will about the evils of price rationing in the context of the health care market, but it does offer two huge advantages: It imposes discipline on the consumption of health care and it yields incentives for providers to continue providing in the long run. We do, after all, care about the children, do we not?

Actually, a close look at the hard reality of the bureaucratized health care system in Canada (and the UK and elsewhere) reveals that they care about the kiddies a good deal more than they might care to admit. Resources are limited. Ditto for government budgets. And so choices have to be made, notwithstanding the dual fictions that health care is "free" and that those who need it will not be denied. Someone has to be denied, and guess who that is increasingly: the elderly. Why "waste" expensive procedures and devices and medicines on someone who is going to some eternal reward relatively soon when a far more deserving (read: politically defensible) patient also is on the waiting list?

Alas, it does not, it will not, it cannot stop with the elderly. "Free" health care in Canada means that waiting lists are long, patients deteriorate while waiting, such "cheaper" devices as plastic artificial knees are used in place of aluminum ones, and those who can travel and pay for medical care go to the U.S. And those who cannot? Well, they suffer. As day follows night, health care will be denied the mentally ill, the desperately tiny prematurely born, those whose prospective "quality of life" in someone's politicized view will be inadequate. That is the tragic road toward which nationalized compassion inexorably will lead. This is not because the system is afflicted with correctible inefficiencies or because budgets are not fully funded or because doctors/hospitals/pharmaceutical producers/insurers/bureaucrats/name your goblin are greedy/corrupt/uncaring.

It is because "free" health care cannot overcome the basic and eternal condition of mankind: Wants exceed resources. And that in a nutshell is why a Canadian-style system is not the answer for the U.S. health care problem, notwithstanding the romanticized illusions now prominent in many discussions.

Nor is improvement to be found in a continuation of the creeping bureaucratization of U.S. health care. Instead, ways must be found to discipline demand. The Medical Savings Accounts incorporated in the recent Medicare reform bill are a step forward; they move somewhat toward a system in which people purchase health care services not with Other People's Money, but with their own. More such movement toward market mechanisms is the path toward true reform, which will serve the broad long-term interests of consumers, in that a "cheap" but huge medical sector leaves fewer resources and thus higher prices for everything else.

Sally C. Pipes and Benjamin Zycher are, respectively, President/CEO and senior fellow at the Pacific Research Institute for Public Policy. Emails: spipes@pacificresearch.org and benzycher@bzecon.com.


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