Health care economists or propagandists?

By Andrei Kreptul
web posted February 19, 2001

Health care economists in Canada are unique in that their research on health care matters does not seem to be guided by basic economic laws and principles. To illustrate this point more clearly, one only has to look at the most recent report released by the Tommy Douglas Institute, a health care policy research organization named after the founder of Canadian socialized medicine and former leader of the socialist Co-operative Commonwealth Federation (now known as the New Democratic Party). The authors of this paper, Dr. Michael Rachlis, Robert Evans, Morris Barer, and Patrick Lewis, are among Canada's leading experts on health care economics.

The report, entitled Revitalizing Medicare: Shared Problems, Public Solutions, argues that the Medicare system is functionally reasonably well. Opponents of Medicare who argue in favor of private health care options are nothing but self-serving, right-wing ideologues and special interests who want to destroy universal health care by creating the myth of a health care crisis. Furthermore, any problems that do exist within the system require only internal structural reforms to correct the existing problems.

What makes this report interesting is how the health economists define what is or is not a problem with the government-run health care system. Hospital overcrowding is not a problem and when it is a problem, it occurs because of freaks of nature such as flu epidemics. Long waiting lists for medical treatment are not a problem since they cannot be substantiated by hard statistical evidence. The shortage of doctors is of only minor concern because the net outflow of doctors out of Canada is down to 0.4 per cent of the physician workforce from a high of 3.5 per cent in 1978. The increasing costs of prescription drugs can be rectified by better physician prescription choices. And finally, the future financial sustainability of Medicare due to an aging population is not a problem because the empirical evidence shows that this demographic will only increase health budgets by 1 per cent per capita.

The authors concede that some problems do exist within Medicare but none that justify overhauling the entire system. The focal point of the problems are misbehaving primary care physicians, who have been the scapegoats of the Canadian health care system since it became a nationwide program in the early 1960s. The thinking goes like this: since physicians are paid on a fee-for-service basis, this gives them a perverse incentive to order more tests, prescribe more expensive drugs, and see patients more often than is necessary. Therefore, a salary cap on doctors is the obvious solution along with a more efficient delegation of patient services to nurses and other health care professionals. And of course, increased funding by both federal and provincial governments is simply a given.

The major flaw in this study on Canadian health care is that the authors totally ignore the economic forces at work within Medicare. They are completely blinded by their inherent belief that health care services are a sacred public good that stand above and beyond what free markets can provide. The "non-problems" of long waiting lists, hospital overcrowding, etc., are symptomatic of what happens when the costs to Canadian citizens of a trip to the doctor or the hospital is virtually zero. The economic law of demand demonstrates that as the price of a good falls, more of that good will be demanded by consumers, all things being equal. Simply because the health care economists have downplayed the statistical significance of the "non-problems" does not make them go away.

In effect, the health care economists are by their own logic willing to accept a certain degree of economic shortages that inevitably result from a single-payer government health care monopoly. Some sacrifice on their part. Too bad they do not give a single thought to the individual preferences of millions of citizens whose incomes are extracted by the government to pay for the health care system, thereby severing the direct financial relationship (and the leverage it allows) between the doctor and the patient.

If Canada's health care economists are truly economists, they have a funny way of showing it. It is one thing for them to accuse opponents of Medicare of wanting to push for health care privatization for reasons of self-interest, be they economic or political. But it is quite another thing for these health care economists to not give Canadians even a half-decent, dispassionate economic analysis of the inner workings of a government health care monopoly. This makes them just as guilty of making excuses and apologizing for a health care system that they themselves seem to have an interest in preserving. Perhaps the authors of this study should be referred to as health care propagandists, rather than health care economists.

Andrei Kreptul is a student and freelance writer living in Montreal. © 2001, Andrei Kreptul, all rights reserved.

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