Canadian Health Care - Broken or Needs a Tune-up?
I am continuously amazed at how many believe that a single payer healthcare system is too expensive and somehow destructive towards our democracy. The idea that single-payer healthcare is bad is a myth perpetrated by those who, intentionally or unintentionally, misrepresent the facts.
Our healthcare system is in trouble. The rising cost of healthcare is slowing strangling our spending power and causing the average citizen to use more savings and discretionary cash to pay for healthcare. Yet the executive officer of UnitedHealth Group Inc., one of the nation's largest health-care companies has earned $8 million a year in pay and bonuses; and according to United's proxy statement, he has unrealized gains on his company stock which total $1.6 billion. Yes, 1.6 billion dollars.
In 2004 U.S. health-care spending topped $1.9 trillion. About one-third of that is spent on administrative costs, about one-third is profit. The profit and administrative cost (which includes CEO perks, gulfstream jets, gold plated faucets, etc.) is money not spent on healthcare. In the same year, total national health expenditures rose 7.9 percent; that’s over three times the rate of inflation! Total health care spending represented 16 percent of the gross domestic product (GDP). In 2005, employer health insurance premiums increased by 9.2 percent - nearly three times the rate of inflation again!
The annual premium for an employer health plan in 2005 covering a family of four averaged is nearly $11,000 – this is usually split between the employer and employee. Incidentally these costs do not include the addition expense of co-pays and prescription drugs.
The annual premium for single coverage averaged over $4,000. U.S. health care spending is expected to increase at similar levels for the next decade reaching $4 TRILLION in 2015, or 20 percent of GDP.
In contrast, a national tax-financed system would hold down costs and avoid such excesses. In 2004, Canadians spent $131 billion - a little over $4,000 total per person. In 2003 Canadians spent $121 billion on their healthcare system. In 2005, Canada’s health care spending is expected to reach $142.0 billion. Still significantly lower than the United States. The reason for the lower cost per person is that there is no profit motive in the Canadian system. While there is certainly room for improvement in Canada’s healthcare system; surveys show that 80 per cent of Canadians are satisfied with their access to the health care system. Still many experience long waits to see a specialist. Also, many complain that the wait is too long to get diagnostic tests and undergo elective surgery. And many others find themselves facing huge bills for prescription drugs they need to survive. There is no question that the Canadian healthcare system can improve. In fact, the Canadians are addressing the long wait times and other quality of service issues that pester their citizens.
For more on this go here.
Again the system in Canada is not perfect, but all of her citizens are covered and all have basic healthcare. This is not the case in the United States. The United States has the highest amount of uninsured in all of the Industrialized Nations at 45 million uninsured citizens. That’s more citizen’s uninsured than live in all of Canada.The bottom line is simple, the profit motive in healthcare is killing us slowly. The administrative costs and profits are too high to sustain. For instance every $100 dollars spent in Medicare there is $3.00 is spent on administrative costs. In contrast, for every $100 spent for medical insurance coverage $14.oo is spent on "administration"
Just imagine how our economy will benefit if the average citizen no longer has to pay $11, 000.00 for healthcare. The money saved could improve our savings rate, empower the consumer with more spending cash and improve employee compensation. An injection of this sort will stimulate our economy better than any tax cuts ever could.If our healthcare costs were even half or our current costs per person, all of us would be better off, have more of our money to spend and create more demand for new products and new businesses. However, If the current trends continue, non of us in the United States will be able to afford healthcare insurance; except of course the CEO’s who are compensated because of our lack of foresight.
posted by Van at 7:59 AM
7 Comments:
The problems we face with health care is the same problem we face with all commodities, such as the current oil crisis - these are NOT mere "distribution problems," but Supply/Demand disruptions.
Just as we, in the U.S. embarked on an inane radical enviro agenda over the past twenty years that has reduced our domsetic supply, the world demand for oil, led by the rapid indrustrialization of India & China, has soared and that has led to a tremendous spike in oil prices.
Likewise, healthcare is a commodity provided by some ("health care profesionals") and sold to the consuming public.
Like most industrialized nations, America has an aging population of folks born in the two decades post-WW II. This has meant an increasing demand for health services amidst a constant supply of health care professionals.
Government CANNOT provide health care or ANY other commodity (food, clothing, shelter, etc) for FREE.
Government has no magic wand unavailable to the rest of us.
What government CAN do is offer "state sponsored" or subsidized health care to consumers, adding in their own administrative costs into the final price we all must pay in taxes.
And no, the spreading the costs out among everyone is NOT the most inequitable aspect of this scheme.
When ANY commodity is given FREE of charge to the public by government, it creates what is generally called "the tragedy of the commons." That is, while most of us conserve what we pay for, as we are motivated to reduce our own personal cost, we never conserve in the case of a commodity is offered for FREE, as our motivation is reversed, instead of seeking to reduce our own personal costs, we are now motivated to "get our money's worth," in short to get as much FREE STUFF as possible, so that we don't end up among those paying the same amount into the system and getting the least out.
Every version of a State run health system, or "Socialized Medicine" has rationing built in...it has to, in order to deal with "The Tragedy of the Commons" problem.
So, how can we deal with the problem of access to health care?
NOT by treating it as a "Distribution problem," the way advocates of Socialized Medicine do, but by seeking ways to increase the Supply relative to the demand.
As it tuns out, health care is a commodity, that is almost entirely dependent on human skills and knowledge (LABOR) and, as a result, the AMA, has long been one of the most effective Labor Unions in the country.
It is in the AMA's best interest to restrict access to Medical schools, decreasing class size, creating incredibly high and arbitrary standards of admission, etc., as all of that decreases the SUPPLY of lead health care providers, raising costs amidst increasing demand as a population ages.
One way to increase SUPPLY would be to simply make more doctors and nurses...open the doors to education in those fields and make low cost student loans accessible and the rewards attractive to prospective entrants.
We don't have a "Free Market" health care system in the U.S.
We haven;'t in a very long time.
The great Nobel Laureate in Economics, Milton Friedman, supported a "real free market health care system decades ago,championing the eradication of medical insurance as we know, the abolition of Medicare and Medicaid and a return to a real "pay as you go" system.
This would require the opening up of Medicine to holistic and homeopathic practioners and the eradication of the current AMA controlled licensing procedures, opening the field to a much broader form of health care rpovider.
It would also force doctors to pool their resources in order to offer the most bang for the buck to their patients, for if patients couldn't afford their services they'd go out of business as quickly as an overpiced plumber.
The problem we face is that most Americans only know ONE system, the current quasi-statist insurance-run health care infrastructure, and thus, misguidedly believe that MORE government involvement might just "get it right," while the reverse is far more likely true - breaking the AMA's stranglehold over both the supply of physicians and the licensing process, increasing the supply of health care providers and letting doctors and other health care providers to deliver their services unencumbered by the additional bureaucratic costs of insurances, and by pooling their resources to offer btter care, at lower prices, might well offer a more senisble approach.
Unfortunately, I doubt it'll be one we consider, at least until all other venues have been exhausted.
JMK - you've made a very good argument here about the lack of resources.
I agree that a strict socialized medicine model would likely not serve our long term interests.
I think that there is value in the "ownership society" world view in that is forces a person to be responsible for his or her future, in this case health and healthcare spending.
But this world view often goes too far.
When Milton Friedman made his observations about a return to a pay as you go system, healthcare was virtually non-profit in America.
Now, I doubt that a pay as you go system would be possible, even if we have more healthcare professionals. The profit motive is more important than healing the sick.
You raise a very good point about including a more holistic approach to medicine, especially in prevention.
I would like to say more, but as fate would have it I'm sick today -- bad chest cold and sinus infection.
Maybe I'll feel up to saying more later.
Well, not so fast Van, before 1965 and the explosion of HMOs, Medicare and Medicaid, healthcare in America was far from NONPROFIT, in fact, it was much closer to free market medicine, the further back one goes.
In that more market based system, doctors made house calls, charged $20 to $25 per visit (probably between $150 & $200 per visit adjusted for inflation today) and American health care was considered "the best in the world."
THAT system WAS the best, what it's been replaced with is anything but.
The biggest problem with healthcare today is a lack of SUPPLY relative to increasing demand.
An increase SUPPLY (more doctors) would certainly increase SUPPLY and drive down the price, relative to demand.
Another thing that would drive down demand would be the opening up of the healthcare field to alternative healthcare providers, like homeopathic and holisitic healthcare professionals who look to prevent illness rather than merely treat the results.
The ONE positive thing I see coming out of Canada is the burgeoning pay-as-you go market for those who can afford it.
It's a basic human right of exchange - a physician willing to exchange his valuable assett (healthcare skills) to the highest bidders. There's nothing wrong with that, nothing wrong with the most valuable members of a society being able to get additional healthcare at a cost.
The TRULY "RICH," the Trumps, Kennedy's and Buffett's will always be able to get the very best health care at a price, because they have both the means and mobility to access that healthcare wherever it's available worldwide.
I think it's sweetly naive to believe that the homeless bag-lady should have acccess to doctors every bit as good as the ones Warren Buffett and Bill Gates use, but that'll never be the case - the latter can always access the very best medical mercenaries (and we're all mercenaries, ANYONE who provides labor/knowledge for a fee) available on the planet.
The bag-lady, even the successful stock broker...probably not, at least not in today's rather restrictive healthcare market.
I hope you're feeling better soon.
I've enjoyed exchanging views and opinions with you...it has been an honor and a pleasure.
I guess that the difference on healthcare between you and I is a matter of perception once again. However, we're not that far apart.
I see healthcare as a comodity in the sense that it is not free, someone must be paid for their services at fair market price. The basic human right of exchange is apt here.
But that's were it stops.
On many levels, since healthcare is so essential, it is more of a right -- a right to live -- than it is a commodity. There must be a balance here between profit and principle.
However, regardless of perception, there is not going to be an easy answer to any these problems.
Here is an interesting article about a Pay As You Go clinic in Jersey City (http://www.detnews.com/2005/business/0505/11/C01-177938.htm)
Pay As You Go is certainly a step in the right direction, but a clinic such as the one in the story is only good for check-ups. Catastrophic illnesses are still too high to pay for out of pocket. There must be a way to deliver healthcare to those who cannot afford it; and not simply because of compassion for our fellow man, but for economics reasons. The rising cost of healthcare is going to hurt our spending power, which as you know has a domino effect on the overall economy.
It's not a coincidence that nearly 50% of the bankruptcy claims in the U.S. are driven by healthcare costs, and many who file have insurance. The peripheral costs with insurance are very high too -- enough to drain you finances. In short, for most a catastrophic illness means financial ruin.
In 2003, we spent over $1.7 trillion on healthcare. That's more than food, housing, and national defense. By the year 2012 the number will be closer to $3.1 trillion. I don't see how we can sustain these numbers without radical changes.
Your points about moving to a more holistic approach and training more healthcare professionals is well taken here.
Something has to be done. Pay as you go is a great idea; it certainly will work in some healthcare categories. Perhaps we should allow nurse practitioners and physician’s assistants to open clinics - perform basic services. This would have the two-fold benefit of adding supply to the supply chain of healthcare services while lowering price.
You wrote:
"In that more market based system, doctors made house calls, charged $20 to $25 per visit (probably between $150 & $200 per visit adjusted for inflation today) and American health care was considered "the best in the world."
When I was a kid our doctor made house-calls often, we weren't rich so it must not have been that expensive. That was only about 30 years ago.
It some ways they really were the good old days.
Thanks for your kind words, feeling much better and I share your sentiments about our exchanges.
Yes, the HUGE numbers are in catastrophic healthcare costs and those numbers generally skyrocket during the end years of one's life.
Insurance plans can spread those costs around, but the question is, "Who pays?"
More and more employers are balking at picking up health insurance costs and the reason is understandable when you look at what GM & Ford just went through.
Still, you may well agree with me that up to now, healthcare costs have been included in the average employee's compensation package and if employer's are going to try and get out from under by setting up various "Healthcare Savings Plans," then at least some of those savings should be passed along in the form of more compensatio (ie. higher salaries for employees).
Although, there again, we're moving toward an information based, service economy and beyond the old styled "industrial economy."
Many of today's service workers, especially those in the service sector (financial services, real estate, consulting, etc) work as, in effect, "independent contractors," resposnible for their own insurances, 457s, 401K's, etc.
In some ways this is even more lucrative for such workers, as they can deduct more of their business expenses from their taxes and can defer income into tax-deferred accounts like IRA's, 401K's etc.
Catastrophic and long-term healthcare is incredibly expensive and bureaucratic costs only add to the expense. A huge cooperative kind of insurance program might be fine for those who can pay, which is probably at least 80% of the population, but how we pay for the healthcare of the other 20%, who are often poorer because they are also more reckless and impulsive, thus prone to major medical problems at earlier ages is the challenge...and it's a big one.
I'm not so sure that being poor is equal to being "wreckless and impulsive". Poverty is a cycle that can be extremely difficult to break. One must work often to make ends meet, therefore, has little time enhance their skills.
That said, I like you, advocate taking responsibilty for your own healthcare. Knowing what your care costs is likely to deter a person from using the emergency room for a fever, but the poor have little or no option - if that's reckless and impulsive then we should address access to healthcare.
"I'm not so sure that being poor is equal to being "wreckless and impulsive". (Van)
An interesting viewpoint, Van, though I'd say that poverty, like wealth are generally caused by behaviors and the poor tend to be more reckless and impulsive than those more well off.
Certainly it's also true that "poverty is a cycle that can be extremely difficult to break," but that's often because poor children are, far more often thqan not, raised in households where they generally see reckless and impulsive behaviors as the norm.
That's not to say that every poor person is reckless and irresponsible and every successful one, more disciplined and motivated, but certain behaviors lead to specific realities - reckless and impulsive people tend to be more prone to alcohol and other substance abuse, violence, unwarranted absenteeism, etc and all those things tend to put one's health at extreme risk and cost a person much needed time and opportunities.
Surely, it can be argued that some people have to do almost everything right to get ahead and others have a lot more "slack," because they are born "better-off."
My wife was of the latter. She was born into grinding poverty in Jamaica, with an alcoholic father who'd lost his job early in her life. The deck was very much stacked against my wife.
Thankfully, for her (and for me) she was a bright child, her Mom was able to get her into a Catholic School and she did well (skipped twice) and today she holds a Chartered Accountancy in the English system and a CPA, because her Mom believed in her and because of her own dogged hard work, competitive spirit and gifted intellect.
Does that mean that all those born poor, but less bright and less disciplined and addicted to hard work SHOULD be consigned to grinding poverty?
Of course not, BUT, there is little that society can do except offer opportunities, as pulling people from poverty would require a massive amount of wealth distribution that I'd claim would NOT be worth the ultimate outcome.
We certainly have a society that offers many opportunities.
Sure I'd support more student loans and such, but I'd vehemently oppose a massive wealth redistribution program designed to pull people from poverty," as that ultimately involves punishing productivity, while rewarding profligacy and sloth.
I DO AGREE with you over the increased personal responsibility AND up-front information that would make making healthcare decisions a lot easier for all of us.
I'd also support large scale health insurance cooperatives that might be able to offer catastrophic and major healthcare options a lot easier for everyone to afford.
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