Crawl Across the Ocean

Wednesday, March 01, 2006

Spell It Out For Me

So Alberta has a plan to allow doctors to both work in the public sector and also take private clients at the same time. I'm sure this won't lead to those who can't afford to pay a premium being treated like second class citizens.

I guess we'll see if Ralph Klein is willing to give up billions in health transfers in the service of ideology, or if this is just more hot air.

Something I hear a lot is that we have to allow two-tier health care or a parallel private system or whatever you want to call it, because the current system is 'unsustainable' or 'unaffordable'. For (just one) example, John Ibbitson comments in the Globe today that Stephen Harper, "knows that opening the system to parallel private care is the best solution to escalating costs and deteriorating service." Maybe somebody could explain to me in detail how this is actually supposed to work. That is, in what way does allowing private payment for health care reduce the total cost or improve the 'sustainability' of the cost of these services.

As I see it, there are 2 ways in which something becomes more affordable: 1) Your income goes up, or 2) The cost of that thing goes down

Will having a 2 tier health care system increase our total income? Maybe a little, as people are forced to work longer hours to afford quality care, but I can't see this having a significant impact, or being a desirable policy objective.

Will having a 2 tier system reduce the cost of health outcomes? Again, I can't see how. Allowing private delivery of health care is one thing, but as I understand it, the only reason to allow a system where people pay private rates would be because these people are willing to pay more than the current public rate (otherwise, who would provide such a service?) So, by definition, the private tier will cost more than the public one.

So, unless I'm missing something, the only possible reason remaining why 2 tier care is sustainable or affordable and one tier isn't, is because people are willing to spend their money to jump the queue, (causing longer wait times for poorer people who get pushed further back), but aren't willing to pay the taxes necessary to support a public system which can provide timely service to everyone.

Maybe that's why people don't like to spell it out, because when you do, you can see that the only real motivation for the change is the selfishness of the wealthy.

15 Comments:

  • What you're missing is the irony. For years the right screamed at people for saying that they were getting free healthcare.

    "How can that be when you pay for it with your taxes," they would rail.

    Now they're trying to peddle the opposite notion. That we'll be getting free healthcare on the basis that you'll no longer be paying higher taxes for it.

    It's really kind of funny, in a sad, nation-destroying way.

    By Blogger Robert McClelland, at 10:03 AM  

  • >people are willing to spend their money to jump the queue, (causing longer wait times for poorer people who get pushed further back), but aren't willing to pay the taxes necessary to support a public system which can provide timely service to everyone.

    Almost correct (except for assuming the influx of voluntary expenditures won't drive some increases in supply). It's the morally right thing to do: allow people to spend their own income in the furtherance of their own well-being. Basically, it's saying that society has agreed to take a certain amount of your income to provide a certain level of rationed care, and you are free to buy whatever else you want above that.

    By Blogger AwaWiYe, at 11:29 AM  

  • awawiye,

    Ralph is proposing two tier healthcare, where you can jump the queue if you have money. Medical treatment can be doled out and rationed based on ability to pay, not on medical need. That is niether right nor fair. In the end the poor will get longer wait times and the rich will get the services. Of course by "poor" i mean most Canadians, since even I, earning more than 70% of Canadians, could not afford the extra $50000 so I get priority knee replacement.

    I like Declan, wish to see proof that the system is unsustainable. So far I have seen none, only the pontifications of Ralph Klein, with no evidence to show otherwise. Meanwhile there is plenty of evidence to show that our system is cheaper to run and administer than private systems like the US.

    I would reccomend you look up the idea of a "collecive action problem" before you sell you silly libertarian notions.

    By Blogger Mike, at 12:36 PM  

  • >In the end the poor will get longer wait times and the rich will get the services.

    That's only your imagination. Until people with money are allowed to buy any health care any time they want, we won't know the result. If it fails in Alberta, it probably won't be adopted anywhere else. But it might work in Alberta.

    >I like Declan, wish to see proof that the system is unsustainable.

    What do you mean by sustainable? If you mean, can we continue to deliver the current level of service, the system is sustainable. If you mean, can we meet the expectations of people, the system is demonstrably unsustainable. There is a limit to how much income levelling the earners will tolerate. Otherwise, the government could take all earnings and pay everyone the same salary. This is obviously not the case, so there is a limit to how much health care a public system can provide, and thus a limit to how well it can meet expectations.

    If you're worried about people deserting the public system (providers and consumers), it must mean you think the public system is failing to meet expectations. You, and everyone else in your boat, are basically arguing that yes, the system is poor but it's the one we want to keep because at least we are almost all equally dissatisfied. "If I can't have it, neither can you" is the worst sort of selfishness.

    By Blogger AwaWiYe, at 2:06 PM  

  • Robert - I wouldn't say I've been missing it...

    Actually, I find the right-wingers pointing to the European model as a guide (more on this next post) to be the most humourous aspect. It's funny how that logic never seems to carry over into the child care debate!

    awawiye - For what I said to be incorrect, not only would there have to be some increase in supply, there would have to be an increase in supply large enough to completely offset the impact of having someone jump the queue.

    Given that the supply is constrained by the availability of doctors and nurses and that this supply is not increased by a two tier system, this runs counter to common sense. Furthermore, it runs counter to the empirical evidence in countries which have allowed a two tier system, where wait times have increased for those in the public tier.

    I'm willing to take on common sense or empirical evidence on occasion, but not both at the same time.

    "It's the morally right thing to do: allow people to spend their own income in the furtherance of their own well-being."

    Sure, everybody agrees with that, but you somehow forgot the second, more controverisal, half of that sentence.

    Fully stated, the argument is, "It's the morally right thing to do: allow people to spend their own income in the furtherance of their own well-being - even when society as a whole is made worse off as a result"

    For example, you might argue that it is the morally right thing to do to allow wealthy people to buy the rights to, say, St. Clair Avenue to further their own well-being (shorter travel times across Toronto). But I think few would agree.

    The truth is, society places any number of restrictions on what people can do with their money, the only difference in this case is that the harm to society which is being prevented is more abstract.

    By Blogger Declan, at 2:30 PM  

  • But society as a whole isn't made worse off. In both cases one person receives care. Society isn't any better off just because a queue is FIFO.

    By Blogger AwaWiYe, at 7:05 PM  

  • Well I would say that society is worse off, but that is a long discussion on the relative merits of the two systems, and we'd have to talk about efficiency in the context of different types of insurance markets as well as questions of fairness and personal security and probably a whole bunch of other things.

    But my point in this particular post was that many people want to bypass that whole debate by arguing that it doesn't matter which system is better for society, we *have* to switch to a two tier model because the current system is unaffordable/unsustainable - and this is not true.

    In your first comment, you also seemed to want to bypass this debate by positing some universal right of people to spend their money as they see fit - again, not true.

    At this point I'm just trying to clear away some of the arguments which distract from the main question which is, what system would work best. I don't feel up to trying to answer that one at the moment, but Mike takes it on in this excellent post.

    By Blogger Declan, at 7:28 PM  

  • AwaWiYe

    Why do to Alberta what already happened to Australia? It almost happened in the UK, until Tony Blair put a stop to it.

    Sorry, we already have examples where this has happened, apart from the USA.

    And society is worse off, becaue some people are unable to get proper care in a timely fashion, they may not be able to work, or may give up. They could then spread disease or cost more in the long run when they have greater issues.

    Sorry Canada was like that before 1963 . It didn't work then and it won't work now.

    By Blogger Mike, at 7:29 PM  

  • http://rationalreasons.blogspot.com/2006/01/private-healthcare-and-market-failure.html

    This is the one I think Declan refers to. But searhc my Blog, I have many others.

    By Blogger Mike, at 7:31 PM  

  • Indeed, that is the link I meant (I obviously cut and pasted the url from the wrong window). Details, details...

    By Blogger Declan, at 7:40 PM  

  • If you believe the system we have can be improved, you'll have to do it rather quickly before there are more challenges and decisions along the lines of the Chaoulli case.

    I agree single-payer public insurance is economically superior for the obvious reasons. Despite that we seem to be having difficulty providing services in a timely fashion.

    If you can get past your abhorrence that a wealthier person has resources to buy all sorts of goods and services which might make life more comfortable, healthier, and prolong it, you'd see that even allowing queue jumping (for a fee) in the public system would serve the same number of people ultimately, and would result in more money being injected into the system. If envy makes that hard to digest, consider offering care for life-threatening conditions on a strict triage basis.

    By Blogger AwaWiYe, at 10:42 AM  

  • My supposed abhorrence and envy is only in your own mind.

    There is no doubt that allowing people to buy their way to the front of the queue would inject more money into the system in the short term.

    So would raising taxes. Given that the problem with the current system is the unwillingness of people to pay the taxes to support it, it seems to me that allowing those who can afford to, to not use the system at all would only make this problem worse.

    By Blogger Declan, at 12:15 PM  

  • Let's say that the amount of government money flowing towards public health care remains constant. And then let's say that (rich) people are allowed to pay to get non-life-threatening surgeries and procedures in private clinics. The rich person would get treatment first and, because the rich person is no longer in the public line, the public line also gets one person shorter. So, ideally, average Joe gets his treatment earlier than he would have, rich person gets her treatment earlier, and the cost to the government is one-treatment less.

    In our current system, rich person goes down to the United States. I mean, we shouldn't fool ourselves that there aren't already two tiers in this country -- the difference is that the money and medical staff stays in the country.

    Now, like I said, this is *ideally* how it would save us money and, though be more inequitable, make things better for both poor and rich.

    Obviously, the concern is that in the real world the pool of doctors and nurses will stay constant and they will choose to work in the (presumably) better-paying private sector. Then, the lines will get longer in the public system -- not shorter -- and the quality will go down. There's also the possibility that governments will start cutting their health budgets at the demands of rich people who "pay twice." These are real possibilities and why, while I'm not opposed to experimenting with more European models, I'd rather it happen in a different province than mine.

    By Blogger J. Kelly, at 2:24 PM  

  • "Let's say that the amount of government money flowing towards public health care remains constant. And then let's say that (rich) people are allowed to pay to get non-life-threatening surgeries and procedures in private clinics. The rich person would get treatment first and, because the rich person is no longer in the public line, the public line also gets one person shorter. So, ideally, average Joe gets his treatment earlier than he would have, rich person gets her treatment earlier, and the cost to the government is one-treatment less."

    The point is not the cost to government, the point is the cost to society.

    Don't you see the shell game here? Instead of increasing the amount of money under the 'taxation' shell, put *more* money under the 'out-of-pocket shell' to get a smaller, less equitable, and more poorly targeted benefit and claim we are saving money or that the cost of health care to society has become more sustainable all of a sudden - because we haven't increased the amount being spent under the 'taxation' shell. Money spent on health care is money spent on health care that can't be spent on anything else, regardless of the mechanism by which that money gets spent.

    ---

    "I'd rather it happen in a different province than mine."

    Of course, it might work like cuts to corporate taxes do - a benefit to whoever does it first (because it lures corporations / doctors there), but ultimately a net negative for all as everyone else is forced to retaliate in kind to avoid having all their corporations /doctors leave. Classic collective action problem going into motion.

    Arguably, it could make conditions worse in the province that tries it, while at the same time forcing everyone else to follow suit. Not pretty.

    By Blogger Declan, at 5:16 PM  

  • >Given that the problem with the current system is the unwillingness of people to pay the taxes to support it

    Yep. People already figure they pay enough to support others. They are willing to spend more to support themselves. There's nothing wrong with that. I suspect that if supporters of a widespread public system don't come to an accommodation with the people who want to spend money on themselves, the change will happen anyways and the public system will be even smaller than it might otherwise have been.

    By Blogger AwaWiYe, at 11:13 AM  

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