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A Healthy Dose of Reality on Medicare for All

Sally Pipes, President and CEO of the Pacific Research Institute, has written a very useful little book. Her False Premise, False Promise: The Disastrous Reality of Medicare for All offers market-oriented health care reformers something analogous to what Strunk and White’s Elements of Style offers serious writers. The latter is also a very useful little book, worth keeping in one’s pocket to refer to when needing a quick reminder of the rules of good writing. Ms. Pipes’s book is something one might want to consult before going on stage to argue against government-controlled health care. All the intellectual ammunition one might need is packed into this slim volume.

The book might be a few months late. Medicare for All, supported by many of the Democratic presidential candidates, was the big issue in September when Sen. Elizabeth Warren rolled out her version of the plan. But people got sticker shock when they saw the price, made worse by how Sen. Warren planned on getting the money. Everyone was going to pay—not just the rich—and they’d pay a lot. People lost interest in the idea, while Sen. Warren’s poll numbers dropped. Nevertheless, Medicare for All will be back in the news when the campaign heats up.

The book has several strong points. Ms. Pipes has carefully researched the Canadian National Health Insurance system and the U.K. National Health Service (NHS) to show exactly what awaits us if Medicare for All passes. For example, we often hear about wait times in Canada, but in her book we learn exactly how long those waits are, and in what specialties. Medicare for All supporters frequently trot out Canadians who say they have never had to wait for their primary care appointments or their elective gall bladder surgeries. The conflicting personal accounts confuse Americans trying to decide whether to support Medicare for All. Ms. Pipes helps to clarify the issue.

For example, cancer patients in Canada often have the shortest wait time (just four weeks), but people with orthopedic problems can expect to wait 39 weeks on average. In addition, Ms. Pipes explains, one must take into account “total wait time,” which includes the time to see one’s primary care doctor plus the time to see a specialist if that doctor makes a referral. A short wait to see a primary care doctor means little if it is followed by a long wait to see the specialist to which you’re referred. In Canada the median total wait time is 20 weeks.

Ms. Pipes’s description of the NHS is similarly illuminating. For example, people may have heard rumors about how the NHS uses QALYs, or Quality Adjusted Life Years, to calculate whether a treatment is worth its price tag. Ms. Pipes offers a short but extremely clear explanation of how QALYs work: multiply how much longer a treatment will extend a person’s life by the quality of that person’s life, then divide by the treatment cost, and you get a number. The NHS uses that number (based on a very subjective definition of “life quality”) to routinely deny patients access to treatments thought too expensive or insufficiently cost-effective.

A Right to Health Care?

The book reads like an indictment. It begins with the Medicare for All promise, then moves to the philosophical debate surrounding that promise, such as whether health care is a right. A thorough discussion of the defects in the various Medicare for All-type plans follows. Then come the horrors of the Canadian and U.K. experiences—the long waits, the poor access to cutting-edge drugs and technology, the high financial costs, and the poor outcomes.

In the first seven chapters, only the discussion of “the right to health care” seems a bit truncated. Ms. Pipes frames the debate as one between a positive right, which is a right to get something at other people’s expense, and a negative right, which is a right to be left alone and act independently. Progressives view health care as a positive right—hence Medicare for All. Market-oriented conservatives think more in terms of negative rights.

This binary model of rights is useful but a little out of date. After all, many conservatives these days also feed at the government trough, which is why President Trump’s economic program has sometimes been called “big government conservatism.” Although conservatives may not support Medicare for All, many of them do support Medicare, Medicaid (to remove the burden of caring for their aging parents), Social Security (which, though officially not redistributive, offers low income people proportionally more benefits than high income people), unemployment insurance, and a host of other government programs. Some of these programs are official entitlements, suggesting that people have a “right” to them, but even those programs that are not have created an expectation among some conservatives that the benefits are “deserved.”

In addition, given that only the most libertarian conservative would ban the income tax, which represents, in theory, an attack on negative rights, what we have in the United States is not a binary model of rights, or even a spectrum of rights ranging from negative to positive, but a set of rights agreed upon by the electorate, which means we get those rights from government. When Americans long ago reached a consensus that government can take up to 40 percent of their incomes in taxation, but no more—a number that has remained fairly constant over the decades—the negative rights position becomes irrelevant, or relevant only after the first 40 percent in taxes, which makes invoking it seem a little ridiculous.

Negative rights have sometimes been grouped under the category of natural rights, meaning rights that exist independent of society. In After Virtue, philosopher Alasdair Macintyre called the notion of natural rights a fiction. If so, it is a useful one, and serves as a rhetorical tactic to warn audiences against the excesses of government intervention. But when all is said and done, what guides us today is not a theory of natural rights or a firm belief in negative rights, but a utilitarian calculation decided at the polling booth over how much we should re-distribute the wealth to prevent civil unrest.

Progressives are also trapped in their own contradiction about rights. In the debate leading up to Obamacare, progressives said people had a “natural right” to health care, as opposed to simply a social right. This was troubling, as it meant government could create a natural right out of thin air and then demand (in the case of the Obamacare mandate) that everyone buy it. Without the mandate the Obamacare system does not work. What this means is that the so-called “natural right to health care” only exists when everyone in society behaves a certain way. Therefore, what is called a natural right is a right that exists only because government forces everyone to exercise that right, which means it is not a natural right at all. It is like forcing everyone to practice a particular form of religious worship in order for individuals to exercise their natural right to conscience.

Health Care Solutions

My bigger concern involves Ms. Pipes’s last chapter. To fix health care she runs through the litany of market-oriented solutions—for example, more competition between insurers, more consumer choice to lower prices, greater reliance on health savings accounts (HSAs), and fewer government mandates. Everything she advises I agreed with—twenty years ago. And while I remain sympathetic to many of her ideas, facts on the ground have changed, and therefore so have my views.

If we were building the health care system from scratch, and if economic conservatives enjoyed the trust of the American people, I would rally behind Ms. Pipes’s ideas. Too much water has passed under the bridge, however. In the form of Medicare, Medicaid, the V.A., the Children’s Health Insurance program, and other assorted health programs, government already assumes responsibility for more than half the country’s expenditures in health care. And given that “capitalism” is not a very popular term these days on the Left and even, to a lesser extent, on the Right, the American people simply do not trust the free market to fix health care (or other social problems such as daycare).

This may be why President Trump constantly reminds people in his stump speeches that any health care reform must require insurance companies to cover pre-existing conditions. In the past, the free market did not compel insurance companies to cover these conditions. The American people have long and bitter memories of how it all once was. President Trump seems to recognize this.

Ms. Pipes does too, for she emphasizes how insurance companies in any reform effort must cover pre-existing conditions, although her plan has some caveats, including the requirement that people qualifying for this benefit maintain insurance coverage from year to year. For those who fall through the cracks she recommends coverage through high-risk pools. But this is a public relations disaster in the making. Any retreat from absolute coverage for pre-existing conditions would immediately inflame public opinion. Meanwhile, any requirement put on insurance companies to cover pre-existing conditions sounds a lot like a mandate—of the kind that Ms. Pipes dislikes. By trying to find a middle ground on the issue, Ms. Pipes exposes herself to both popular and intellectual attack.

Another change rendering some of Ms. Pipes’s free market proposals doubtful is the trend toward a two-tiered system in American life—with much of this due, ironically, to free-market capitalism. After all, it was global capitalism that offshored much of American manufacturing and contributed to the decline of the American middle class. Indeed, the middle class is no longer as large as it once was relative to lower and upper income groups for this reason. Some in the middle have moved higher, while others have moved lower. It is why so many Americans no longer see the free market as their savior.

It is also why many upper middle-class Americans can live with a Medicare for All system, so long as the cost is not too great: They know they can simply escape from the system into an upper tier. They already do this in other areas of life. Although many Medicare for All plans ban private insurance, they do not ban cash payment for care, and while the plans may ban doctors from receiving cash, that ban only applies to doctors who participate in the Medicare for All system. Since most health insurance already comes with high deductibles, upper middle-class people have long grown used to paying cash for health care, while an increasing number of doctors have begun practicing so-called “concierge medicine”—in other words, they have already exited the insurance system and created an upper tier. Medicare for All puts American health care on track to follow education, restaurants, hotels, and many other areas of life where two tiers exist. High-income people can live with that.

And so can lower-income people. Obamacare expanded the lower tier by expanding Medicaid. Yet millions of Americans who now qualify for Medicaid, and who occupy this lower tier, would be furious to lose that Medicaid. Ms. Pipes’s free market reforms are a non-starter for them too.

Ms. Pipes’s reform ideas would best be directed to a small part of health care, namely the individual insurance market, which Obamacare greatly disrupted. There, free market reforms, such as greater plan flexibility, fewer mandates, and individual insurance enjoying the same tax advantage as employer-based insurance, would help millions of people. Beyond that, reform would best be focused on ameliorating the unpleasant consequences of living in a two-tier system, which has already become a reality in so much of life, as well as on the seemingly never-ending and thankless task of trying to bring health care costs under control.

Reader Discussion

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on February 10, 2020 at 11:34:36 am

Ronald: Thanks for the review. I will read the book.

Fortunately, there are some plans out there that would thread the needle between Medicare for All and the alternative of a two-tier have-and-have-nots model.

My favorite, one with conservative/libertarian credentials going back to Elliot Richardson and Milton Friedman, is Universal Catastrophic Coverage. For a comprehensive discussion of that option, see here: https://www.niskanencenter.org/universal-catastrophic-coverage/

An alternative approach is to add a national reinsurance component to our existing system, thereby liberating the private insurance market from the unmanageable burden of a pre-existing condition mandate while fully protecting patients with costly chronic illnesses. The Fair Care Act from Republican Rep. Bruce Westerman is an example of how the reinsurance strategy could be implemented. See: https://www.niskanencenter.org/can-the-fair-care-act-deliver-on-gop-health-care-reform/

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Ed Dolan
on February 10, 2020 at 16:56:13 pm

I am a Canadian. At this very moment I am in the Tom Baker Cancer Center in Calgary, Alberta where my wife is receiving her first day of treatment for stage 4 Lymphoma.

This article fails to ask some key questions such as what is the cost overhead of for-profit insurance companies providing payment for services in a for-profit medical system. No doubt this overhead contributes greatly to making the American medical system the most expensive in the world. How many corporate jets are paid for by your health insurance?

Another point to consider are public expenditure priorities. Where do Americans want their tax dollars to go? America has the world’s greatest military and it consumes far more than any Medicare system could. Canadians have decided that our health is more important than our might, so our military is small.

My family won’t be financially gutted by this cancer journey. In fact, we’ve spent more on hospital parking than on drugs or anything else. When this is behind us I’ll continue to work and pay my taxes with the assurance that should any other medical monster rear it’s head, my family is completely covered.

Canadians generally observe the American healthcare system and appreciate the wonderful single-payer solution that we’ve enjoyed for more than half a century. It’s the one thing that we don’t look south with envy over.

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Ron McMahon
on February 11, 2020 at 11:06:33 am

Thank you Dr. Dworkin for your thoughtful review. Like you, I started off as a libertarian on this issue, but my experience and the evidence has changed my position, although I am far from a Medicare for All advocate. I wonder how you view the model of Medicare Advantage for All that has been proposed by some conservative/libertarian commentators. My experience with the private insurance market leads me to think this would be a better, fairer and more efficient system than any other that has been proposed. I will give some personal details because I believe they are typical of what many small business owners and self-employed people have experienced with the so-called "reform."

I have run small family business for nearly 30 years. For most of the first decade my wife worked for corporations that provided insurance. After she came to work with me in 1999 we were reliant on the open market. With two dependent children we paid between $6K and $7.5K per year on a high deductible plan. We used a HSA, although we never had enough in it to cover our full deductible. We found that we could use it as a pass-through account in the event of large medical expenses to pay them over time pre-tax. It worked, but it was far from ideal.

The ACA made our family insurance unaffordable. Within a few years the lowest cost compliant plan was running about $20K in premiums a year, with a family out-of-pocket of about $15K - hardly affordable for any family making less than $200K a year. And the ACA tax benefits phase out completely before $100K in income. On top of that, most plans were not eligible for HSAs, either.

Our children are now independent. Next month my wife becomes eligible for Medicare and has elected to go on an Advantage plan. I have an ACA "Bronze" plan that will cost me $10K in premiums this year and has an out-of-pocket of over $8K. I will be facing the same scenario or worse until I turn 65 in three years. When I compare my situation to hers, I would much rather invest my annual premium in a plan like the one my wife has. It has more benefits and lower out-of-pocket costs.

It seems to me that allowing people under 65 to buy into these plans would, if anything, strengthen the Medicare system. Instead of subsidizing the current, confused ACA marketplace (or 50 marketplaces) lower income people could be enrolled in these plans with a tax support. That might even replace the Medicaid system. The competition between advantage providers could help to hold down costs, particularly if the McCarran-Ferguson Act were struck down and a single competitive marketplace were created nationwide. Adding an HSA for all would also be helpful for controlling costs, as would mandatory publication of cost (and outcome) data for healthcare.

The result of all this would be a marketplace that was regulated and subsidized, but still a marketplace. Do you think something like this would work?

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Rob Z
on February 11, 2020 at 22:41:06 pm

I hope that your wife's treatment goes well, and that she has a good outcome.

As to some other issues raised by your comment, I would suggest that the current Canadian Healthcare system is intertwined with the United States's current healthcare system. A healthcare system involves more than mechanisms to deliver and pay for physician and hospital services. A suggestion of the larger issue can be found in your comment that Canadians have decided that health is more important than military might. Canadians have the luxury of doing so because their military security is greatly enhanced by the relationship with the United States. Canada's front-line fighter jet is the CF-18 Hornet, a variation of a plane developed in the United States. The other contender to replace Canada's CF-101, CF-104 and CF-116 was the F-16, also developed in the United States. A similar situation applies to medical care, and in particular medical innovation.

Here is a thought experiment: Pick a relevant date, such as 1984 when Canada passed the Canada Health Act. If you had to choose, would you rather have access only to medical treatments and innovations that arose after 1984 that were developed in Canada, or only such interventions that were developed in the United States? The specification of development is intentional. In fact many medical interventions and treatments were originally discovered in other countries, such as Japan, France, Israel, Russia and even Canada, but were developed in the United States. The reason for this is that the United States has an entrepreneurial medical innovation infrastructure, and a great many medical breakthroughs are financed by private capital. Specifically, pharmaceutical and biotechnology firms are able to raise capital in securities markets to finance technology development, and investors risk their capital in these markets with the expectation that new drugs and interventions will be profitable once commercialized. This assumption is heavily dependent on the quirks and characteristics of the market-based healthcare system of the United States. Watch what happens to the stock prices of biotechnology and pharmaceutical companies when American politicians start talking about "reining in drug prices." As an aside, this system is not foolproof. The biopharmaceutical company Achaogen spent around 250 million dollars developing a broad spectrum antibiotic (with some contribution for the government, Bill and Melinda Gates and others), but the development of the drug was primarily investor-financed, with the expectation that it would find a market in treating resistant blood stream infections. The company had a hard time finding patients with the specific infection however and the FDA only approved the drug to treat urinary tract infections. This decision likely ended investor-financed antibiotic development, and also had the result of Achaogen declaring bankruptcy and liquidating. The reality remains however, that a significant amount of medical innovation and technology is financed by private capital with an expectation that the United States healthcare market will make these investments profitable. Countries like Canada, England, Cuba, and everywhere else then benefit.

A Canadian saying that the United states should adopt a system like Canada's because Canada's works relatively well, is like someone saying that he doesn't see the need for the powerplant at the edge of town because he gets his electricity from the outlet in the wall. If the United States had Canada's healthcare system, Canada would not be able to have Canada's Healthcare system.

Again, best wishes for you and your wife.

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z9z99
on February 12, 2020 at 02:22:23 am

Thank you for your kind wishes - my wife is resting and hopefully progresses well over her next 18 weeks of treatment.

Your examples are interesting and invite interaction.

Canadians with even a passing interest in military history will recall our development of the CF-105 Avro Arrow in the 1950s. A Mach 2+ interceptor that would have made Canada a global leader in modern military aircraft development and sales had it not been cancelled and the plans destroyed by the Conservative government in 1957. Like Britain's similar experience with its TSR jet, the best and brightest minds behind these planes were snapped up by American companies building out the hot hardware needed for the race to the moon. America continues to benefit from the mind power extracted from its closest friends.

To your point "Canadians have the luxury of doing so (not focusing on its military) because their military security is greatly enhanced by the relationship with the United States." I would counter with the truth that >90% of Canada is a sparsely populated winter land mass that few humans choose to live in. We have no invaders at the ready wanting to live on our land. Our country is mostly a buffer for the United States, be it a drop zone for intercepted or abandoned nuclear ICBMs, or as a battleground for forces seeking a land-based attack on America. Canada isn't the prize and never will be. We don't have the population to defend this territory, and in many cases not even enough population to notice invasion. The only nation that's ever attacked us is America in 1812...and we won that one.

In the field of medical research and pharmaceutical development, the case for private investment is far less compelling, both in the long and more immediate term. Certainly you will agree that most of the significant developments in pharmaceuticals over the last two centuries have been primarily funded by and supported through public organizations like universities and legal and tax structures designed to facilitate uptake by private corporations. A prime example would be Fleming's discovery of penicillin in a university lab and it's creation into a global health champion by the US and UK governments.

A current example of the absolute failure of private capital in the pharmaceutical realm would be the 560% price increase of Daraprim in 2015. The Shkreli scandal is but perhaps the most widely known example of a countless list of private capital utilizing the structures of free enterprise to profound and often fatal ends where people are harmed in the naked pursuit of maximized profits. Your assertion "If the United States had Canada’s healthcare system, Canada would not be able to have Canada’s Healthcare system." is undone by the above example - if anything, it is the existence of the Canadian model and the average American's familiarity with our public healthcare success and stability that is forcing American public bodies and lawmakers to respond to the threat of unbridled capitalism.

Your medical example denigrates or at best ignores the key and foundational role of government and the public sector in the establishment of societal structures that are absolutely necessary for the blossoming and protection of private enterprise. It has become the mantra of far too many pundits to wax on gloriously of the essential nature of free enterprise and private capital while remaining silent on or blind to the environment in which this is fostered. Public funds pay for the creation and sustainment of our government. This government establishes the legitimacy of the nation internally to its citizens and internationally in interaction with our global neighbours.

Internally the government exists with the responsibility of providing a framework within its citizens can have a great life through the provision of a stable and safe environment. This environment is established on laws, built on a Constitution, from which all legitimacy and obligation is set and flows. Governments provide us with the basic structures of public goods like education, security, infrastructure and governance - set within a legal framework that provides stability and surety that protects and promotes the flourishing of its citizens to live freely within this milieu.

Externally, the government works with its global neighbours to ensure that the greatest possible protection and privilege can be kept for its citizens. This is accomplished through the establishment of international relations, protocols, treaties, cooperation and generosity.
Unfortunately, humanity also has a long history of using force, be it economic pressure, social violence or naked war as a tool to achieve desired ends.

Private enterprise and capital has thrived in the modern Western World because the citizenry has accepted it as a good thing. This good thing has been an important part of our achievement of the greatest standard of living in human history, but it isn't perfect and it can only continue if it is correctly managed to return fair results for all parties. The 21st Century is full of troubling signs that key aspects of the balance between the role of the public realm and the power of private wealth have tipped out of stability and unless positive corrective action is taken - all will suffer this avoidable catastrophe.

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Ron McMahon
on February 12, 2020 at 13:51:57 pm

Ron,

Your argument has drifted a bit from your original comment and now includes areas where we both agree and others where we continue to differ. I will address the latter first.

You state "America continues to benefit from the mind power extracted from its closest friends." That is true, but why do you think that is? What does the United States have that attracts intellectual capital from Canada, India, Pakistan, Japan, etc? They presumably don't come here for the health care.

Your defense (defence) comments have you arguing against yourself. First you say that Canadians choose health over military might, then say that defense spending is determined by geographic and external threat factors rather than social priorities. Let the moose defend themselves. That's why they have antlers. But your observation is instructive. You indicate that the government pulled public funding from the development of a technological program. What prevents the same thing happening if that program is say, a treatment for Alzheimer's disease, or Dravet syndrome, or any of a number of "orphan" conditions? This in fact is a strength of private enterprise. Capital for unmet needs does not have to be filtered through a political process. A disease does not have to have political sympathy as a pre-requisite to attention. This illustrates a claim that I have made before on this site; that competition is an optimizing mechanism for processes (in this case allocation of capital) that socialism lacks.

You state:

" Certainly you will agree that most of the significant developments in pharmaceuticals over the last two centuries have been primarily funded by and supported through public organizations like universities and legal and tax structures designed to facilitate uptake by private corporations."

With respect, no. I do note the hedge at the end of the sentence "legal and tax structures designed to facilitate uptake by private corporations." There apparently is a compelling benefit of "private corporations" that explain legal and tax structures designed to benefit them, and one is left to speculate what the state of technology would be in the absence of private corporations. The broader point though ignores my explicit explanation for why I used the word "developed" rather than "discovered." The fact is that a great many medical breakthroughs were discovered serendipitously. (I take care to tell my children that knowing things is important, but noticing things is more important). Fleming was not looking for antibiotics when he noticed contamination of a bacterial culture by penicillium mold. Giuseppe Brotzu was not unraveling bacterial vulnerabilities for new antibiotics when he noticed a frog swimming in sewage with an open wound and wondered why it did not just keel over. Medieval physicians were not dependent on physiologic knowledge when they discovered that extracts of foxglove improved symptoms in patients with heart failure, or that extracts of french lilac decreased urine frequency in patients with diabetes. Discoveries are often happenstance, and happenstance uncomfortably accompanies warfare. The Coulter counter, used in medical laboratories around the world descended from a method developed for measuring the size of contaminants in paint, which for some reason was of interest to the Navy. Chemotherapy resulted from the observation in the first World War that soldiers exposed to mustard gas had reduced white blood cell counts. The point is that discovery is largely independent of political or economic systems (Another point is that I am prone to pedantic excess). The same cannot be said for the structures that permit development of those discoveries into useful medical interventions. As to penicillin, it may be noted that the penicillin discovered by Fleming is seldom used due to bacterial resistance, and subsequent and ongoing developments such as beta lactamase inhibitors are necessary to keep Fleming's discovery relevant. Also, I will note that the participation of Universities does not indicate the redundance of private corporations. Recall that Canadian MP Belinda Stronach received breast cancer care at UCLA, where herceptin was developed, but that the development was largely financed by private funds, including a significant share from Revlon.

You claim:

"Your medical example denigrates or at best ignores the key and foundational role of government and the public sector in the establishment of societal structures that are absolutely necessary for the blossoming and protection of private enterprise."

This is a straw man argument. My example does no such thing. I point out the benefits private enterprise to medical innovation; nowhere do I claim that government and "the public sector" are irrelevant. In fact, this is an area where we are somewhat in agreement. Government has an indispensible role in ensuring the functioning of enterprises that produce technological innovations. This is most obvious in the protection of intellectual property, and maintaining securities laws that permit enterprises raising capital from investors. This is not to mention the vital role of government agencies such as the FDA, European Medicines Agency, state health departments, Centers for Disease Control, etc. in protecting the people from the sham treatments and dangerous fads that free enterprise may sometimes produce without conscience.

This brings up an interesting dilemma. Were Mr. Shkreli's excesses a failure of free enterprise, or an exploitation of government structures? Recall that the end result of Mr. Shkreli's efforts was a felony conviction. You may, as well, point to Elizabeth Holmes and the Theranos scam, or for that matter, Bernie Madoff. I would submit that the malady is not a defect of the healthcare system, but of the inherent faults that arise from trade-offs between (often inept) government regulation and (often predatory) free enterprise. A non-medical example is the relationship between the FAA and Boeing in development of the 737-Max. A non-capitalist example is the contamination by carcinogens of pharmaceuticals made in China.

We are pretty much in agreement as to the last two paragraphs of your comment. You will not find me arguing that the U.S. healthcare system does not need to be improved, or that the government has no role in doing so. I simply point out the field is littered with hidden rakes, and overly idealistic and enthusiastic reform is sure to step on them on the march to Utopia.

Best to you.

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z9z99
on February 13, 2020 at 12:06:48 pm

For a physician, the author makes a terrible economist, worse philosopher.

Besides falling for the sunk-cost fallacy aka the fallacy of the appeal to tradition, he seems to view rights as squishy things that come and go as the political winds blow. Thus he seems a bird-of-a-feather with the living constitution crowd.

No, the solution as always is a free market shorn of government interventions beyond enforcing valid contracts and prosecuting frauds. The undying myth is that there are some products/services demanded by consumers yet unable to be provided by producers other than the state

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OH Anarcho-Capitalist
on February 13, 2020 at 12:07:53 pm

More government is not an economic solution...

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OH Anarcho-Capitalist
on February 13, 2020 at 12:09:42 pm

Why do so many of them come here for treatment then?

Your picture indicates you and presumably your wife are young, in your 30s? I wonder how the treatment would be available if you and your wife were instead in your 70s?

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OH Anarcho-Capitalist
on February 13, 2020 at 18:19:58 pm

I, too, am glad that our Canadian friend and his family are recovering and hope that there is no remission.

I would add that if America had the Canadian pharmaceutical system, then Canada would not have its pharmaceutical system as Canada, like Europe, refuses to honor US Patents on medicine; instead insisting that US pharma sell their patented medicines at a price set by the Canadian Government or risk the Canadian government producing its own version without any compensation to the developer for its considerable efforts and intellectual property. How soon before the Pharma company simply stops developing and eventually producing these medicines?
No, to applaud the Canadian pharma practices / pricing is akin to applauding the sellers on amazon who are bootlegging brand name products and to simultaneously criticize he who has developed, branded and brought to market the original design / product.
Now, were our Canadian friend to decry the US practices of "pharmacy benefit managers", he and I would be in agreement. But that is not particularly germane to "this" discussion of pharma pricing.

This is no different than the "free rider" problem he raised (unintentionally, one presumes) with his discussion of Canadian military outlays vs health outlays. Clearly, this is a choice to be made by the Canadian people - not US Citizens. However, it is specious to then argue that this is the sole reason why Canadian healthcare is less expensive. One need also consider other factors when determining how expensive any service is?

As an example, if one must wait 60 days for an ultrasound exam - what is the expense of that?
If a Canadian Hospital facility is not entitled to possess an ultrasound machine, due to bureaucratic classification schemes of hospitals and the services they are permitted to offer (BTW, not unlike what ObamaCare attempted), what is the expense associated with that.

I have been out of a certain industry for a number of years BUT...
A friend of mine, a salesman for an ultrasound company literally made millions by selling ultrasound machines to a large number of US facilities just SOUTH of the Washington - Canadian border in order to meet the ever growing demand of Canadian citizens to obtain an ultrasound scan in a timely manner as such was unavailable NORTH of the border.
How expensive was this?

The same is true of the UK and its NHS program.

I can, and have, obtained such imaging services, even MRI's, in one to two days.
THAT had a real value.

Once again, best wishes for continued good health!

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gabe
on February 13, 2020 at 23:20:52 pm

Greetings. Perhaps I should refer to you as Z as to not offer a personal salutation feels rude. Thank you for continuing this vigorous conversation - it's good to see points of agreement emerging.

The motivation behind the cancellation of the Avro Arrow and Britain's TSR have been ascribed to the successful sales pitch from American influencers of our leadership that the need for such planes was no longer necessary in the era of Sputnik. It is not lost on aircraft fans in both nations to note that our countries then went on to purchase American planes of inferior performance. The cancellation of the Avro Arrow was not a pulling of funding, as Canada ended up buying Bomarc missiles and various sundry aircraft (F-86, F-5, F-101, F-104, etc.) instead.

Successful capitalism relies on a strong public sector and legal environment to thrive. There are numerous examples where this balance does not exist, and the nation fails to economically thrive or be socially stable. My examples are all based upon the belief that capitalism is a good system, but not a perfect system as it is populated by humans, and our sin results in harm to ourselves and others. Perfecting the balance is a never-ending pursuit as the 737-MAX, Shkreli and Theranos events attest.

I will quote your wise words "...knowing things is important, but noticing things is more important." to my sons, as your points on the happenstance of discovery are right on the mark.

Wealthy Canadians like Ms. Stronach frequently seek out private options outside of Canada for a wide range of things, including healthcare, investments, summer / winter homes and enterprises to own. I rarely hear complaints when a wealthy Canadian buys a place in Phoenix to get away from winter...20°C is far nicer than -20°C. Purchasing private healthcare is very common and completely legal in Canada, so there should be nothing to note if a Canadian chooses to visit the Mayo Clinic in Minnesota or Fran's Fanny and Face Fixers in Florida.

Your point: "...competition is an optimizing mechanism for processes (in this case allocation of capital) that socialism lacks." is most curious. As a Canadian, I am in socialism like a fish is in water, so perhaps I'm too close to it to notice...but my experience shows that socialism is still confined by and responsive to competition. Both in the competition of the allocation of limited resources (money, time, people, etc.) and a competition for priorities...socialism operates in a similar manner to capitalism except decisions are far more public and publicly responsive. All citizens have a vested interest and equal say in socialist-backed actions, which is a good thing. That said, not all things should be under a socialist model. The balance of deciding what a society / nation should socialize and what should be free-enterprise is a matter of self-determination. What works in one community / culture may not work in another.

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Ron McMahon
on February 13, 2020 at 23:33:41 pm

Canadians are free to choose what they want in life. Canadian wine, or Chilean wine. Canadian literature or American popular culture. Canadian Cheddar or British Cheddar. You get the point. There's no legal restriction on Canadians purchasing private goods like healthcare either in or outside Canada. If a Canadian feels like a procedure in France is worth the cost, our society and laws won't get in the way.

I am 53, my wife is 52. My father had oral cancer (don't smoke!) and received excellent treatment until his death last June when he was in his late 70s...my mom died of lung cancer (don't smoke!) in 2004 and had no treatment withheld due to her age. Neither one was financially ruined by this treatment, in fact financial aspects were never even part of conversations.

I can't imagine the harm that money worries would add when battling cancer.

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Ron McMahon
on February 14, 2020 at 02:45:13 am

This is a response to Gabe, as there's no Reply link on those comments:

First, Thank you for your well wishes - my wife continues her recovery from her first treatment round...so far, all looks good.

Canada significantly updated its drug patent legislation in 1987 to comply with American demands as a term for acceptance of the Free Trade Agreement with the USA. There was great debate, fear and consternation over what was seen as a capitulation to American drug companies demands. Our prices went up, and healthcare got more expensive as a result in Canada. The legislation was again updated in 1993, 1995 and 1998 - each time expanding and extending patent protection rights and benefits. Your comment makes the impression that Canadians are stealing American drug products...perhaps it would help if you would be more specific?

Canada's healthcare system isn't less expensive (than in the US) because of lower military spending. Our system is less expensive because;

- The system is publicly owned, so there are no corporations involved (ie. owning hospitals) that must turn a profit above costs. All of our costs are exactly that - no corporate jets were funded by healthcare spending.

- Salaries are negotiated on a set basis or a fee-for service level. Our doctors probably don't make as much.

- Single-payer discounts. Bulk purchases of medical supplies offers high volume discounts to a system running at cost.

- No private insurance infrastructure means no need to feed the profit beast, which means 100% of fees are directed to services.

Canada does all of this in an environment where there are enormous public costs, such as the all-too-common emergency medical flights from lightly populated, remote communities to our major centres. I doubt that this is what you had in mind when you cited the "free Rider" problem however.

Interesting where you came up with the 60 day ultrasound exam wait time. Patients are triaged in our system, so services like MRIs, CT scans and ultrasounds are available 24x7 and can be accessed immediately if medically necessary. Its true that small remote communities don't have MRI systems, and probably many lack trained ultrasound operators, but this is a global reality of population vs. need. There's no NHL hockey team in Whitehorse Yukon either for just the same reason.

Your comment about there being a rush of Canadians flooding over the border to access ultrasound systems they can't have in Canada doesn't resemble my experience in Calgary, Alberta. Here I can choose to go to many places, like the Mayfair Clinic and directly purchase services like an ultrasound or an MRI scan and skip any public wait time that may be in place. Perhaps things have evolved in Canada, or (since healthcare is mostly controlled by provincial governments) your friend was referring to some restrictions in another province.

Thanks again for your warm wishes - my hope for you is a long, healthy future!

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Ron McMahon
on February 14, 2020 at 19:02:26 pm

Ron,

I think that you are using the term "socialism" somewhat promiscuously. What you are describing is a robust social safety net that can coexist quite comfortably with a free market economy and in fact capitialism, as is done in Scandinavia.

I have made these arguments before on this site, but will briefly restate them for purposes of reference:

1. All economic systems require capital; the United States, Canada, China, South Africa, North Korea, Venezuela--all of them. The difference is who controls the capital, and whoever that is gets rich. Stalin, Castro, Rothschild, Rockefeller, Chavez, Mugabe, Morgan...who controls the capital gets rich.

2. Competition is an optimizing mechanism for processes. The result is, in general, more efficient processes, because more efficient processes over time are more competitive. As a consequence, competition is an optimizing mechanism for innovation. Competition tends to uncover the latent obstacles, the annoying hidden realities that obstruct best intentions, and therefore tends to produce more robust outcomes. Market economies have the advantage of using competition to select out those who make the most efficient uses of capital, all other things being equal.

3.) Socialism has no optimizing mechanism for selecting out the most efficient uses of capital. The process of choosing who controls the (socialized) capital favors those who are most politically adept, not those who are most skilled at economic management. In fact, those in power favor processes that keep them in power (Hey! Let's change the Venezuelan Constitution!), rather than those that subject them to the possibility of replacement. Actual socialism relies on (unreliable) planning, the submission to sketchy, politically useful "experts" and wishful thinking to propel economic activity. When these inevitably fail, the first resort is in the direction of force: mandating things, banning things, capping this and dictating a minimum that. This inevitably results in diktats that are contrary to established economic principles and even human nature. The result is Venezuela and Zimbabwe.

4.) Socialism can exist in small communities that otherwise may be subsidized by more rational economic systems, but even these tend toward changes more in line with human nature. A good example is the evolution of the Israeli kibbutz.

5.) Socialism as an economic systems tends toward corruption in politics, for the reason stated above. Shortcomings in economic performance are addressed with resort to coercion and eventually force. I think it is Glenn Reynolds who frequently states that in capitalist systems the rich grow powerful but in socialist systems the powerful grow rich.

6.) The appeal of socialism requires unjustified faith in the future to overcome the socialist disasters of the past. Even thoughtful polemics in favor of socialism, such as George Orwell's The Lion and the Unicorn contain assertions that do not pass the laugh test now, and probably did not at the time it was written. The claim that capitalists preferred Hitler? The assertion that the only way England could prevail in the Second World war was by nationalizing industry and suppressing private education? One suspects that perhaps Orwell was being parodic when he wrote "State ownership implies, therefore, that nobody shall live without working." Curious that this is not Bernie Sanders's campaign slogan.

A social safety net is not socialism. Agreeing to pay taxes for maintenance of roads and schools is not socialism. I suspect that what you experience in Canada is social consciousness within an economy that functions because of "capitalist" institutions (such as private property and juducial enforcement of contracts). This also is not socialism, and socialism should not be dignified by the confusion. Socialism is a flawed doctrine driven as much by envy as empathy, and is responsible for much more misery and atrocity than can be borne by respectable ideals.

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z9z99

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