QandO

July 21, 2004

Rationing health care
Posted by McQ

Once more into the "socialized medicine" breach, we find the inestimable Walter Williams pointing out its fallacies using our neighbor to the North as the example.

After first assuming for the sake of argument that the false premise "health care is a right" is valid, he cites a study which gives a litany of delays (also recently covered by Dale) and other problems incurred by this system to include a "doctor drain":

Adding to Canada's medical problems is the exodus of doctors. According to a March 2003 story in Canada News (www.canoe.ca), about 10,000 doctors left Canada during the 1990s. Compounding the exodus of doctors is the drop in medical school graduates. According to Houston, Ontario has chosen to turn to nurses to replace its bolting doctors. It's "creating" 369 new positions for nurse practitioners to take up the slack for the doctor shortage.

If a person can't earn the income they expect to earn where they live, while the next country over will allow them to earn that expected return, it shouldn't be a surprise then to see migration from the the place restricting income potential to a place which will meet income expectations ... ask the illegal immigrant building your house if you don't believe it. Same principle.

Additionally, to tighten its hold as the exclusive provider of health care, Canada has further clamped down on private funding of one's own health care with something that is eerily similar to that proposed in the late and unlamented "Hillary-care":

Some patients avoided long waits for medical services by paying for private treatment. In 2003, the government of British Columbia enacted Bill 82, an "Amendment to Strengthen Legislation and Protect Patients." On its face, Bill 82 is to "protect patients from inadvertent billing errors." That's on its face. But according to a January 2004 article written by Nadeem Esmail for the Fraser Institute's Forum and titled "Oh to Be a Prisoner," Bill 82 would disallow anyone from paying the clinical fees for private surgery, where previously only the patients themselves were forbidden from doing so. The bill also gives the government the power to levy fines of up to $20,000 on physicians who accept these fees or allow such a practice to occur. That means it is now against Canadian law to opt out of the Canadian health-care system and pay for your own surgery.

Welcome to 'freedom of choice', welcome to the right to trade value for value, welcome to government force. Welcome to 1984.

But the money paragraph follows:

Health care can have a zero price to the user, but that doesn't mean it's free or has a zero cost. The problem with a good or service having a zero price is that demand is going to exceed supply. When price isn't allowed to make demand equal supply, other measures must be taken. One way to distribute the demand over a given supply is through queuing -- making people wait. Another way is to have a medical czar who decides who is eligible, under what conditions, for a particular procedure -- for example, no hip replacement or renal dialysis for people over 70 or no heart transplants for smokers.

Jon recently and ably covered "price" and "cost". Williams also discusses price and cost. But he brings another aspect into the equation.

Scarcity. And with scarcity come rationing.

Health care as a service is finite. There are only so many doctors, nurses and hours in the day. Health care as a product , however, has an infinite demand which makes it a product which will be rationed. And that means that in any health care system there has to be a system of rationing. The method of rationing is primarily where the fight is.

We ration through price under our system. In Canada, there is no price to the consumer, but that doesn't change the dynamics (or the cost) of health care or the fact that health care must be rationed. Regardless of the system, service remains finite and demand remains infinite. All Canada has done is change the form of rationing health care. Instead of using price, it must now use other criteria and methods.

One method (or result depending on how you want to look at it) is waiting 14 to 24 weeks for an examination you can get in 1 in the US. Since price is no longer an object, everyone wants the service, and you simply have to wait your turn.

Another and more insidious method of rationing health care in a "zero price" system is denying health care for reasons other than price. As Williams points out, "Another way is to have a medical czar who decides who is eligible, under what conditions, for a particular procedure -- for example, no hip replacement or renal dialysis for people over 70 or no heart transplants for smokers."

Denial of service sets parameters which decide those not 'worth' the scarce service be denied that service. Again, as rationing is inevitable in any health care system, this particular form of rationing is especially likely in a "zero price" system once the queuing mechanism finally becomes to unwieldy (and delays too long to further tolerate)

The point is, regardless of the system of health care, there will always be a system of rationing because of the characteristics I've mentioned above. The question then becomes how to do so. You'll see folks like me, Dale and Jon pushing market solutions driven by individuals and their choices as the preferred method.

That's because it is a system which is more likely to be responsive to and tailor itself to the actual needs and desires of those who are demanding health care. That's not the case with a centrally planned, top-down system (i.e. a socialistic model) in which other people decide what and how much health care you should get. If you pay for a certain amount (or all) of your own health care, the rationing system is essentially built-in. You will deny yourself non-essential health-care and limit yourself to using the system only when you see a real need. That as opposed to a system where it costs you nothing to seek medical attention, even for the most trivial matter and encourages you to use it by costing you nothing out of pocket.

If we go along with the false premise (for the sake of argument) health care is a "right", shouldn't you be the one deciding how much health care you get? And if so, shouldn't the system which best provides you that ability be the system of choice?

Well why in the world, then, is anyone considering a socialist model?

UPDATE (JON): Beltway Traffic Jam

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