If America adopts Canada's health care system

[FoverF]

But why are people poorly managing the system? Because they are paid to do so and not held to account.

Agreed 100%. Which is why I think THIS is where the least change csan do the most good.

The "everyone plays along" model is nonsense; if it was true then the costs of everything from bread to diamonds would be totally incalculable, but this is clearly not the case in any market, from commodities to professional services. Ask yourself about how accountants, plumbers or RMT's charge for their services?

Before I submitted this post, I had a string of example of exactly this kind of market failure. We all see them every day. But it was too long. So instead, the example I'll use is the elephant in the room, the fully privatized system running just south of the border. If privatization is the key to lowering costs, why is the poster child of private health care never the less the most expensive system in the world? You can make all kinds of arguments in favour of a private system, don't get me wrong, but it seems pretty clear to me that lower costs is not one of them. The test case is even more expensive than what we have now.

I strongly suspect that many of the perverse mechanisms that drive up costs and drive down quality that you cite in Ireland are similar to the NHS model in the UK, where private care providers can "dump" their problems onto the government funded service and are not penalized for doing so (indeed the incentive is greater, since they no longer incur expenses but pass them on to the taxpayer).

Sometimes it's the opposite. There are basket-case patients who have a medical history at tall as you are, and these patients are guaranteed to spend a small fortune in health care costs before they die. 80% of medical costs are incurred in the last 3 months of life. If you can admit a patient to your private hospital 3 months before they die, you will see 80% of the health care dollars that will ever be spent on that person.

A fully private system does not have these perverse incentives.

But it does, that's my whole point. They are incentivized to do something for the sake of doing something, because they get paid whether it was beneficial or not. Pretty much every Canadian kid I know between the ages of about 5 and 25 has been told at some point in their life that they need braces on their teeth. Because if you tell every kid they need braces, some of them are going to pay you to get braces. And it doesn't matter that competitors are driving the price of braces down, the braces themselves are a completely superfluous cost for which you are being rewarded.

Walk into a hospital in the USA without getting a CT  scan. Go ahead and try. You will get CT'd. And you will get billed for it.

What is needed is a system which minimizes perverse incentives (any system can be gamed), while providing maximum accountability to the consumer.

This is definitely true, I agree 100%. But the devil is in more that the details here. In private health care practice, the method of accountability is legal litigation. Which is another factor that directly contributes to high costs in a private system. The biggest problem, however, is that the wrong doctors get sued. It's a complete crapshoot. Good doctors get sued for stupid reasons by patients who are angry at their illness, and bad doctors don't get sued because the patients don't know enough to realize that they've been horribly mismanaged. You get all of the costs of a system that should promote accountability, but without the benefit of incompetent doctors being held accountable.

I think the closest-to-ideal system is a fully public system, funded exclusively by the taxpayer, which is well managed and administered. The management and administration part is what we're missing in Canada, and I think we would be best served by attacking that problem, rather than rebooting the whole method of health care delivery.

This is, of course, ignoring all the ethical issues surrounding the problem ("I don't want to pay for fat people's bypasses", and "I don't want to die because the government won't let me spend my own money on a better drug") which muddy the waters a bit. I'm basing this purely on my opinion of what would provide best value for dollar towards maintaining a healthy population. It also happens to be that I think it is the most ethically preferable as well, but that is a whole different discussion.

 

[Redeye]

What is needed is a system which minimizes perverse incentives (any system can be gamed), while providing maximum accountability to the consumer.

Disregarding everything else said here, in what way does a fully privatized system provide accountability to the consumer.  Private sector actors are accountable to their shareholders, not to their customers.

While we're happy to beast the adminstration of our healthcare system, it seems to be nowhere near as bad as the American system (their overhead and administration costs are orders of magnitude higher).  Can we do better?  Probably, yes.  But by looking south as a model for anything?  No.

 

[a_majoor]

Medicare, Medicaide and the "Part D" drug plan are federal intervention in the medical system. Federal tax law also impacts the provision of employee health care plans and benefits.  Federal and state regulations impact the insurance industry; particularly the prevention of sale of insurance policies "cross border"; limiting the ability of the consumer to shop for better policies. Obamacare imposes massive new regulatory burdens on the system.

The American system is in no way "private".....

 

[Edward Campbell]

I'm afraid that both the macro (privatize or communize everything) and micro views (picking the fly shit out of the pepper of each system) leads us into futile discourses.

I think we can all agree that:

1. The current Canadian model is inefficient and ineffective - it costs too much and will, soon, crowd more productive spending (education, R&D, infrastructure) out of provincial budgets;

2. The US model - which is anything but private, having HUGE public components in Medicare and Medicaid - is, if anything,l worse; and

3. So are some, (most?) European models?

But maybe that thought is only the triumph of hope over experience.

We need a system that produces:

1. Better health outcomes - meaning we life longer, 'better' lives while needing less medical care;

2. Better medical outcomes - almost all medically necessary services are provided to almost all Canadians in a timely manner; and

3. Lower costs for both health and medical care - as a percentage of GDP.

My guess is that such a system needs a mix of:

1. Funding sources, including taxes, public and private insurance and medical savings accounts; and

2. Treatment options, including government owned and operated and privately owned and operated facilities (clinics, hospitals, etc), the former being available to all, but care being rationed - as it must be, always, in a public system - and the latter being available to all who can pay, from whatever sources, including their public insurance.

The system also needs less and less political and bureaucratic control - especially from that most useless form of (sub) human life: the health care advocate.

 

[Infanteer]

As usual, I think Edward is on the money.

Point 1 - Yes

Point 2 - Yes

Point 3 - Yes

The American and Canadian systems of coverage are so similar in form and it is only the ideological crowd that blurs the issue.  You have a huge bureacracy, either an HMO or a goverment-run HMO (provinical health ministries) making all the decisions and citizens just showing cards at hospitals.  Something to take away the negative incentives of this setup while promoting the positive incentives of a citizen managing their own health care dollars is, to me, a workable solution.  From my own readings, I find Medical Savings Accounts in a fully-publically funded, privately delivered system to be a pretty good setup.  The writings of Dr David Gratzer, a Canadian critic of our system, are pretty damn good:

http://www.amazon.ca/Code-Blue-Dr-David-Gratzer/dp/1550223933/ref=sr_1_8?ie=UTF8&qid=1309446619&sr=8-8

http://www.amazon.ca/Better-Medicine-Reforming-Canadian-Health/dp/1550225057/ref=sr_1_9?ie=UTF8&qid=1309446619&sr=8-9

 

[mariomike]

"Suck it up, America:
We have become a nation of whining hypochondriacs, and the only way to fix a broken health-care system is for all of us to get a grip":
http://www.post-gazette.com/pg/09284/1004304-109.stm#ixzz0px12ePbN

"It's obvious to me that despite all the furor and rancor, what is being debated in Washington currently is not health-care reform. It's only health-care insurance reform. It addresses the undeniably important issues of who is going to pay and how, but completely misses the point of why."

"In a single night I had patients come in to our emergency department, most brought by ambulance, for the following complaints: I smoked marijuana and got dizzy; I got stung by a bee and it hurts; I got drunk and have a hangover; I sat out in the sun and got sunburn; I ate Mexican food and threw up; I picked my nose and it bled, but now it stopped; I just had sex and want to know if I'm pregnant."

It's funny, cuz it's true. 

 

[Redeye]

Federal and state regulations impact the insurance industry; particularly the prevention of sale of insurance policies "cross border"; limiting the ability of the consumer to shop for better policies.

There are a fairly good number of studies that explain in detail why "cross-border" insurance sales are a complete non-issue, though the right frequently trundles this canard out.  Insurance pricing and care delivery are innately tied to the particular markets, and to provider networks established therein.  While there's little scope for substantial improvement there, the potential impacts are significant - first - a race to the bottom with providers constantly undercutting each other for less and less quality policies, generally operating in the most permissive jurisdiction possible, or a cherrypicking effect that undercut the community rating systems used in the USA before about the 1960s, where companies sought to poach the best risks from BC/BS pools, causing the medical loss factor in those pools to increase and driving premiums up to the point they have a problem now.


Mr. Campell's post is generally good but I'd highlight that medical services - like any other scarce good or service are ALWAYS rationed, regardless of the form of delivery.  This is a term that has been introduced in the colloquial sense as a sort of wedge to steer debate into corners.

 

[Edward Campbell]

... I'd highlight that medical services - like any other scarce good or service are ALWAYS rationed, regardless of the form of delivery.  This is a term that has been introduced in the colloquial sense as a sort of wedge to steer debate into corners.

I agree that price is a form of rationing - "no gold card, no medical care" is just as effective as "no ration card, no meat this week." But I think that rationing by bureaucratic fiat is of a different order that rationing by price.

 

[a_majoor]

Preventing consumers from being able to access all available markets drives up costs, since the amount of competition is artificially limited. In the case of insurance, the advent of on line quotes and price comparison dropped my car, house and medical insurance premium costs because I was able to find who would provide the service (coverage) I desired at the lowest cost. Wal-Mar does the same in the physical world by providing consumers with a wide array of consumer goods at low costs, which causes competators to either try to match prices or migrate to niches where they don't face competition, saving consumers huge amounts of money. (For another example of niche marketing, look at how Starbucks is different from Tim Horton's).

Since Americans cannot buy health care coverage from a company located outside their state, they cannot quote shop and buy the coverage at the cost they want if no company in their State does not offer this. Since every State has this restriction (so far as I know), all American consumers are limited in this reguard. Imagine if you were physically prevented from buying coffee from a Tim Horton's on the other side of the city limits; would the coffee shops in town have any incentive to lower prices or raise service to draw your business away from the unavailable Tim's?

Really, trying to claim the principles of Economic's 101 (most of which were discovered by Adam Smith in the 1700's and David Ricardo in the 1800's) somehow don't apply to health care even though they apply in every other single human enterprise is totally disingenious and prevents the discovery and application of real reform in this area.

 

[Redeye]

Preventing consumers from being able to access all available markets drives up costs, since the amount of competition is artificially limited. In the case of insurance, the advent of on line quotes and price comparison dropped my car, house and medical insurance premium costs because I was able to find who would provide the service (coverage) I desired at the lowest cost. Wal-Mar does the same in the physical world by providing consumers with a wide array of consumer goods at low costs, which causes competators to either try to match prices or migrate to niches where they don't face competition, saving consumers huge amounts of money. (For another example of niche marketing, look at how Starbucks is different from Tim Horton's).

Unfortunately, the market for health insurance isn't at all like the market for widgets (consumer goods of any description).

Since Americans cannot buy health care coverage from a company located outside their state, they cannot quote shop and buy the coverage at the cost they want if no company in their State does not offer this. Since every State has this restriction (so far as I know), all American consumers are limited in this reguard. Imagine if you were physically prevented from buying coffee from a Tim Horton's on the other side of the city limits; would the coffee shops in town have any incentive to lower prices or raise service to draw your business away from the unavailable Tim's?

A complete inept comparison, to say the least.  Why would I go across town (at some cost) for a coffee?  The cost and hassle of doing so wouldn't really justify the supposed savings, just as would be the case in such an insurance market  If I lived in, let's say, Maine, what good would an insurance policy from Mississippi be to me if its network providers are all in Mississippi.  Why would underwriters apply their cost estimates and pricing models for a Mississippian to me in Maine if there was a difference?  Even if such regulations were removed, it would do little to solve the problem, and could mean that people wound up with even worse insurance policies than before.

Really, trying to claim the principles of Economic's 101 (most of which were discovered by Adam Smith in the 1700's and David Ricardo in the 1800's) somehow don't apply to health care even though they apply in every other single human enterprise is totally disingenious and prevents the discovery and application of real reform in this area.

Actually, any economist who works in the field of healthcare economics - or anything to do with insurance really - will tell you the opposite.  That's why it's a distinct field in economics, and one that fascinated me when I was a student.  Insurance markets have a number of complexities to them which make them nothing like a market for a regular good - specifically the fact that the cost of providing the service is not clear at the time of purchase.  Tim Hortons has a pretty good model for its costs, an insurer doesn't really, they have to develop much more specialized models, and then, as private insurers are apt to do in the US, find as many ways as possible to get out of paying on claims, including retroactively rescinding policies.  There's also the two most common problems of insurance markets, moral hazard & adverse selection, which don't exist in goods markets and play havoc with pricing and equilibria.

 

[Brad Sallows]

And I've never heard of a government agency trying to weasel out of paying compensation for something either.  True story.

 

[toyotatundra]

http://www.calgaryherald.com/business/Canada%2Bhealth%2Bspending%2Bamong%2Bworld%2Bleaders/5034376/story.html

Canada's health-care spending as a percentage of the nation's wealth stabilized in 2010, though spending remains among the highest for western industrialized countries, according to statistics released here Thursday.

The Organization for Economic Co-operation and Development (OECD) said spending as a percentage of gross domestic product fell slightly to 11.3 per cent, down from 11.4 per cent in 2009.

While per capita spending continued to grow in Canada between 2009 and 2010 -to $4,478 from $4,362 US -spending as a share of the economy slipped slightly due to Canada's economic rebound.

Read more: http://www.calgaryherald.com/business/Canada%2Bhealth%2Bspending%2Bamong%2Bworld%2Bleaders/5034376/story.html#ixzz1Qs5THT8z

Free health care isn't proving very cheap.

 

[Redeye]

http://www.calgaryherald.com/business/Canada%2Bhealth%2Bspending%2Bamong%2Bworld%2Bleaders/5034376/story.html

Free health care isn't proving very cheap.

Well, no one really ever claimed it was free.  It is one of the most expensive universal systems around though, and that's something that certainly makes it worth discussing improvements.

 

[Redeye]

And I've never heard of a government agency trying to weasel out of paying compensation for something either.  True story.

Of course.

But at the same time, I've never worried that an army of claims investigators would tear through my records to find a way to rescind my insurance, for example.

 

[muskrat89]

But at the same time, I've never worried that an army of claims investigators would tear through my records to find a way to rescind my insurance, for example.

And you call the right alarmist..

I have worked in the United States for over 15 years, in 2 states and have had probably at least a dozen different insurance companies. That has never happened to me, or anyone I know.

 

[Redeye]

And you call the right alarmist..

I have worked in the United States for over 15 years, in 2 states and have had probably at least a dozen different insurance companies. That has never happened to me, or anyone I know.

There are numerous documented cases of rescissions, including cases where rescissions have caused the death of people who could not afford medical care they needed to survive.  There's plenty of stories out there of people dying while insurance companies deliberated on whether to pay for surgeries.  Is that exclusive to the USA? Probably not.  However, only there is it basically an institutionalized process.  Just because it's never happened to you or anyone you know (which is a tiny proportion of the population) doesn't mean it's never happened.

 

[Edward Campbell]

There are numerous documented cases of rescissions, including cases where rescissions have caused the death of people who could not afford medical care they needed to survive.  There's plenty of stories out there of people dying while insurance companies deliberated on whether to pay for surgeries.  Is that exclusive to the USA? Probably not.  However, only there is it basically an institutionalized process.  Just because it's never happened to you or anyone you know (which is a tiny proportion of the population) doesn't mean it's never happened.

Whereas here, in Canada, some bureaucrats decide that "we" cannot afford this, that or the other treatment so many ill people must travel to the USA to buy the drugs and/or treatments they need to save their lives or, at least, make their lives worth living.

Don't get me wrong: I believe we should all be insured for "medically necessary" treatments, only, but I reject the notion that a bureaucrat, without an MD, or a minister, also without an MD, can make a decision about anything being or not being "medically necessary." They can decide that it's unaffordable but then they need to come out and say so - they need to stop hiding behind the medical community's skirts and admit to Canadians that we cannot provide anything like the standards of care found in e.g. France or Sweden, even though we spend a greater percentage of GDP on health care than they do.

It is the dishonesty which infects about 95% of the health care 'establishment' that sickens me - that and the stupidity that infects about 90% of the general public.

Our Canada Health Act has created a monster that costs way too much and does far too little. It is time to:

1. Repeal the Canada Health Act - and don;t bother replacing it with anything;

2. Reduce federal transfer payments for health care back to the bare minimum required (Constitutionally) under the equalization formula; and, thereby

3. Force the provinces to redesign their medical insurance systems, top to bottom and make them efficient and effective. That will, I am 100% certain, require a mix of private and public insurance schemes, as are found in almost all of the many successful (better outcomes/lower costs) systems in e.g. Europe and Asia - two (actually multi) tiered health care, gold card health care and so on. So sad, too bad, it's time we all grew up and learned to live in the real world.

 

[muskrat89]

Just because it's never happened to you or anyone you know (which is a tiny proportion of the population) doesn't mean it's never happened.

And just because there are "numerous cases" doesn't mean it's reasonable to worry that "an army of claims investigators would tear through my records to find a way to rescind my insurance, for example."

There are numerous documented cases of hurricane deaths too. That doesn't mean it's a routine occurance.

 

[Redeye]

And just because there are "numerous cases" doesn't mean it's reasonable to worry that "an army of claims investigators would tear through my records to find a way to rescind my insurance, for example."

There are numerous documented cases of hurricane deaths too. That doesn't mean it's a routine occurance.

Hurricanes are natural occurrences.  Medical losses and claims investigators are how the insurance injury works.  Paying out any benefits cuts into their profits, and any way they can reasonably find to reduce the amount they have to pay, they will avail themselves of.  That's the problem - the interests of insurers are necessarily, diametrically opposed to those of consumers.

 

[Edward Campbell]

The fear mongering about American medical care, which is just about the only system in the OECD with higher costs and worse outcomes than ours, doesn't help anything. No one in their right mind is suggesting that Canada adopt the US model: we need to look at some European and some Asian countries for guidance. But first we have to understand that the Canadian, single payer, medical 'insurance' system is senseless.