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Canadian Health Care

August 30, 2000

Socialized medicine in Canada continues to enjoy wide public support. The conventional wisdom asks: why not? Patients can go to their physician or to the hospital when they need to. They can arrange to see a specialist or make an appointment for whatever kind of hospital surgery they require. And they have access to all of these services without having to pay out of pocket.

Waiting for a few hours to see the doctor or just a few measly weeks for surgery seems a small price to pay in return for free medical services on demand. Even if there are growing waiting lists for medical services, governments across the country can always be pressured to fill in the gaps with increased funding.

This popular superficial view of Canada’s health care system as the national "sacred trust" and the envy of the rest of the world does not reveal how poorly informed people really are about how health care is funded and delivered. In fact, if Canadians knew as much as they think they do about the economic and moral workings of Medicare, they might not be as enthusiastic as they are about their cherished right to "free" health care.

Instead, most citizens remain supportive of the government health care monopoly because of decades of relentless propaganda by politicians and interest groups extolling the virtues of health care socialism. Many Canadians strongly feel that equal access to medical services is and should continue to be the moral guiding force for a successful health care system. They also hold firm to the notion that a free market health care system would result in American-style health care characterized by profit-hungry physicians and hospitals out to rip-off their patients. These myths are completely false and must be decisively refuted if private health care reforms ever receive the full support of the Canadian public.

In an unhampered free market, patients have to take full financial responsibility for medical payments, usually through a combination of out of pocket payments and catastrophic health insurance. According to their individual needs and preferences, the patient voluntarily engages in a mutual exchange with their health care provider. Of course, there will always be a few patients without enough money to pay for their health care needs on the market, which suggests that there are inequalities that the market has failed to rectify.

Public health care supporters firmly believe that if every Canadian does not have the ability to pay for their own health care, then no Canadian should, even if they have the money. A decade ago, Quebec economist and libertarian activist Pierre Lemieux aptly described the morality behind the Medicare system:

Opponents of private health care…morally oppose the idea that some individuals may use money to purchase better health care. They prefer that everybody has less, provided it is equal.

 

Equal access to medical services regardless of one’s ability to pay requires the state to use its coercive power to create the equality of conditions that voluntary exchange fails to provide. The private property rights of patients, doctors, nurses and other health care providers are replaced with government monopoly control over the means of production. For patients, this means they lose the right to pay their provider for prompt medical treatment when they truly need it. Physicians, as the primary health care provider, lose their right to charge what patients would be willing to pay them for their services and must bill the government for patient visits based on fixed fee schedules with little regard for the depth of service provided.

Making equal access the highest moral standard of a health care system may sound like a worthwhile pursuit, but to make it a reality requires the sacrifice of individual liberty and private property rights. These rights are lost with the involuntary taxation of one person to provide health care for another. The money taxed away from citizens through government coercion is money that cannot be freely spent by the person being taxed. Such is the price all Canadians are forced to pay for their "free" access to physicians’ offices and hospital rooms. The late Austrian economist Ludwig von Mises understood full well the dire consequences of this kind of government control:

The substitution of economic planning for the market economy removes all freedom and leaves to the individual merely the right to obey. The authority directing all economic matters controls all aspects of a man's life and activities. It is the only employer. All labor becomes compulsory labor because the employee must accept what the chief deigns to offer him. The economic tsar determines what and how much of each the consumer may consume. There is no sector of human life in which a decision is left to the individual's value judgments.

 

Aside from the popular moral arguments in favor of equal health care access, Canadians are constantly told that health care for profit can only mean higher costs and poorer quality of care. As part of their opposition to Bill 11, the newest health care reform legislation passed in the province of Alberta allowing for the existence of government-regulated private surgical facilities, the lobby group Friends of Medicare state that "patients rarely say "no" to services recommended by their doctors. Under Bill 11, doctors working in private facilities will have a clear incentive to pressure patients to purchase services that are not medically necessary."

What the self-appointed "friends" of health care seem to be saying is that patients are so dependent on their physician’s advice that there is no way to judge if they are getting the best quality care or being ripped off. The underlying assumption here is that the government must step in to ensure that doctors are not exploiting their ignorant patients (sounds a little Marxist doesn’t it?).

But who is the sick party that needs a physician’s attention: the individual patient or the collective Canadian population? The nation of Canada does not suffer from good or bad health, individuals do. Individuals are the entities that get the symptoms, get sick, need surgery, and eventually die. If this is undeniably the case, then why does the government insist on regulating and controlling what patients can buy from their doctors? The patient must take the ultimate responsibility to ensure that the doctor does not charge them for frivolous medical goods. However, if the government decides that the patient does not bear the ultimate responsibility the patient’s role is still one of slave to the public health care system.

Of course the patients are not the only slaves in this matter, their physicians are too. According to the Canada Health Act, the federal legislation that governs the way health care is delivered, the government does not allow physicians to charge patients the market price for their services. Since doctors are restricted in what they can charge, they will naturally take advantage of other ways to boost their incomes. The reality is that doctors work out of self-interest just like everyone else. If health care in Canada operated in a free market environment, the doctor would have every incentive to give accurate medical information because the patient is the direct payer. Since the patient would be responsible for payment, they would be able to freely to shop among competing physicians and clinics to find the best deal available.

The alternative to the current Canadian emphasis on an egalitarian theory of justice would be a political ethic based on individual liberty and property rights. The right of every person to liberty emerges as a protection of their freedom to use their minds toward purposive action. Individuals must make use of the resources around them and labor in order to live and to be productive. This means they necessarily have a right to own themselves, the product of their labor, and ultimately, to own and use their property as they see fit.

Individual rights to life, liberty and property enable people to pursue their interests using whatever means at their disposal so long as they do not interfere (through violence or the threat of it) with the ability of others to do the same. According to this interpretation of individual rights, someone who pays a doctor or a hospital for immediate medical treatment is not violating the equal rights of others in society to act in the same way, even if they cannot afford to pay.

Both patients and health care providers clearly ought to have the liberty to use their private property in their own best interests. Not only should they possess these rights, they should not feel guilty about exercising them. American philosopher David Kelley elaborates on this point further when he states the following:

The rights of liberty are paramount because individuals are ends in themselves. We are not instruments of society, or possessions of society. And if we are ends in ourselves, we have the right to be ends for ourselves: to hold our own lives and happiness as our highest values, not to be sacrificed for anything else.

I think many people are afraid to assert their rights and interests as individuals, afraid to assert these rights and interests as moral absolutes, because they are afraid of being labelled selfish. So it is vital that we draw certain distinctions. What I am advocating is not selfishness in the conventional sense: the vain, self-centered, grasping pursuit of pleasure, riches, prestige, or power. Genuine happiness results from a life of productive achievement, of stable relationships with friends and family, of peaceful exchange with others. The pursuit of our self-interest in this sense requires that we act in accordance with moral standards of rationality, responsibility, honesty, and fairness. If we understand the self and its interests in terms of these values, then I am happy to acknowledge that I am advocating selfishness.

 

Medicare lobbyists are often quick to point out that if private, for-profit medicine ever reared its ugly head north of the border, it would mean the "Americanization" of Canada’s health care system. The truth of the matter is that the American health care system is hardly a shining example of free market capitalism at work. In fact, the American and Canadian health care systems both have something in common: the majority of a patient’s health care expenses and a doctor’s fees for service are covered by a third party, not by the patient.

In the US, private health insurance companies are subjected to many federal and state regulations requiring them to cover risks and health expenses normally covered by patients out of pocket. Austrian economist Hans-Hermann Hoppe offers a cogent explanation of the deep-seated problems with private health insurance in America today:

Because of legal restrictions on the health insurers' right of refusal--to exclude any individual risk as uninsurable--the present health-insurance system is only partly concerned with insurance. The industry cannot discriminate freely among different groups' risks.

As a result, health insurers cover a multitude of uninsurable risks, alongside, and pooled with, genuine insurance risks. They do not discriminate among various groups of people which pose significantly different insurance risks. The industry thus runs a system of income redistribution--benefiting irresponsible actors and high-risk groups at the expense of responsible individuals and low risk groups. Accordingly the industry's prices are high and ballooning.

 

Third-party coverage of a patient’s health care expenses and a physician’s fees has resulted in skyrocketing health care costs in the United States. Instead of being limited to covering major hospital and surgical expenses, health insurance is improperly used as prepayment for all of a patient’s medical expenses. Since patients covered by health insurance pay less for health care out of pocket, they have less incentive to spend wisely and shop for health providers offering the best deal. In order to control costs, health insurers and health maintenance organizations have had to cut back on the level of medical services. It resembles the way Canadian provinces are forced to place funding limits on their health care budgets in the face of excess patient demand for physician and hospital services.

It seems clear to Canadians on both sides of this debate that an American system of private health insurance is nothing to strive for. Yet despite the high costs of medical treatment in the US, some Canadians are still willing to travel to clinics there and pay for immediate medical attention. Not all Canadians are willing to wait their turn anymore. When a person is suffering terribly or dying and is willing to pay for surgery or a diagnostic test, worrying about their fellow patients’ inability to pay is the last thing on their mind.

Canadians are now starting to ask themselves the hard questions, if they haven’t already. What will happen to me if I get seriously ill? Will I receive the operation I need as soon as possible or will I have to wait weeks, even months for it? Am I willing to go to the United States and pay for immediate treatment? If so, why am I not allowed to pay for it in Canada?

With the high level of waiting lists for major surgeries caused by the rationing of government provided health care services, socialized health care in Canada is in deep trouble and has been for many years. This is because it is illegal for health care providers and patients to contract in a free market that respects their individual property rights. It is also the result of a long-standing attitude that government should provide every Canadian citizen the right to demand and receive health care services without fully compensating the providers of that care.

Most Canadians assume that health care is a good that can only be efficiently provided by the government. They have no real idea what a genuine free market in health care would look like. The only information people receive about the prospects of private, for-profit health care is from their politicians and the Friends of Medicare. These groups have falsely indoctrinated Canadians to believe that private health care is immoral, unfair to the poor, in violation of the Canada Health Act, and synonymous with the American health care system.

Radical steps must be taken by governments at all levels to solve the problems in Canadian health care today. But before radical health care reform ever happens, Canadians need to change their attitudes about free market health care. They need to understand that health care for profit means that doctors and hospitals acting in their self-interest only profit when they satisfy the needs of their patients, not when they rip them off. They must also realize that the US health care system is not what true private, for-profit health care is all about.

If individual liberty became the overriding political value in Canadian society, the debate over health care would see a monumental shift in focus. Instead of debating about how governments can best ensure equal access to health care, the individual rights of Canadians to use their property (i.e. their money) to provide for their own health needs would become the primary concern of policymakers and the general public.

The vast majority of people may not be ready for or even want a purely private system of health care. Whether Canadians like it or not, their individual right to buy health care directly from doctors, hospitals, and other health care providers is the true key to their future health.

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Andrei Kreptul has graduated from the University of Alberta and is now entering graduate school to study economics. Send him MAIL.

Copyright c 2000 Andrei Kreptul All rights reserved.


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