Sunday, September 05, 2010

Healthcare Monopoly 1: France and Canada

In late July 2009, I wrote this:

The best health care system in the world, just don't get sick

Mandatory health insurance and increased government financing of health care, are among the "key policy interventions" that many governments, rich and poor alike, are undertaking. Such policies are also being peddled by the UN, WHO, and various multilateral institutions.

Competition, not monopolization, of various aspects of health care -- physician consultation, diagnostic tests, hospitals, medicines, etc. -- remains the better, if not the best, way to allow health care providers to cater to various patients with varying health needs and with varying budget. Market segmentation with price segmentation will allow different people to meet their respective supplier of health care, especially medical insurance.

When government steps in to further regulate, consolidate and later centralize and monopolize, health costs would not necessarily go down. On the contrary, it will increase as more bureaucracies will be created to impose and monitor the various regulations and restrictions. Also, the socialized health care system will soon be abused by both patients and health care providers (physicians, clinics and hospitals, drug suppliers, etc.).

My Filipino friend working in Japan told me how some Japanese patients would abuse the socialized and government-managed health care system. Patients pay only around 5 percent of the total hospitalization bill in case of confinement. Some patients who can be discharged from the hospital within 2 or 3 days, are staying 2 weeks or more. Such patients pay only very small, they get excuses from their employers not to report for work, while physicians and hospitals are assured of bigger revenues from prolonged stay of some patients as government payment for hospitalization is assured.

Below is a good article by a Canadian and European authors, describing the adverse effect of State monopolization of health care, citing the Canadian and French system.

Healthcare reforms warnings from France and Canada

healthcare-combo– Brian Lee Crowley is the founding president of Atlantic Institute for Market Studies (AIMS), a public policy think tank in Canada (pictured left) and Valentin Petkantchin is director of research at the Paris-and Brussels-based Institut économique Molinari. The views expressed are their own. –
President Barack Obama’s package of heathcare reforms – mandatory health insurance, public health option and increased federal government financing – is being sold as preserving independent high quality care and choice for patients while keeping down costs. Taxpayers and patients in both Canada and France know better.
Unfortunately, our experience is that once the government gets its nose in the healthcare tent, not only is spending not contained, but health care professionals lose their freedom to practice. Left with few choices, patients face shortages and waiting lists.
Washington’s proposed new public health insurance option, while not imposing Canadian-style single-payer monopolistic public health insurance immediately, will almost certainly lead to that result in the end.
One of two things will happen. If doctors prove reluctant to accept patients covered by the public option and it is thus unable to compete successfully with private insurers, the politicians will not stand idly by.
Physicians’ freedom to practice outside the public option will become increasingly hedged with restrictions, perhaps ultimately ending up, as in Canada, with doctors in the public system being prohibited from taking private patients.
Or, more plausibly, in the short term at least, private insurers will gradually withdraw from the business, incapable of winning against a government-subsidized “competitor.”
In both cases, competition in the health insurance sector will progressively vanish and the U.S. will wake up with a monopolistic-style health insurance system, à la France or Canada.
Consider yourself warned.
Our respective health care systems have proven incapable of reining in rising costs. Health spending in France, while lower than the U.S., is among the highest in the world, whatever the indicator, despite decades of mandatory, subsidized health insurance. After 1988, the public health care system has regularly been in the red, with deficits numbered in the billions of euros. The forecast deficit for 2009 alone: 9.4 billion euros (over US$13 billion).
French officials are scrambling to take more control of the system to bring these costs down, but Canada, where government controls all “medically necessary care,” shows that this is no solution at all. A growing share of Canadian provincial budgets is also swallowed by the health care system, going in 20 years (1983-2003) from 32% to 41% and on the way to 50% in a few short years. As a portion of GDP, and adjusting for population age, Canadian health care spending even ranked ahead of France’s in 2005.
But the oxymoron of government cost containment is not the only problem. In the name of restraining costs – so fashionable currently in Washington – governments are adding further inefficiencies by piling on more bureaucracy.
Since 1996, there is a cap on national health care spending in France and growing pressure on health care professionals in the public system to cut costs. In 2004, patients’ choice of physician and specialist was also severely limited.
Independent private medicine – once one of the main pillars guaranteeing quality and timely care in the French system – is being slowly strangled. At the end of 2008, nurses lost their freedom to practice where they please, while a new law will do the same for physicians by imposing an annual financial penalty if they refuse to practice where the government tells them to. Specialists’ fees are increasingly regulated. The last pillars of competition among providers, and choice for French patients, are thus undermined.
Canada again is a good example of where the logic of such policies will lead the French and the Americans in the future.
North of the border, decades of total government control over health care have led to chronic doctor shortages and waiting lists. Roughly 1.7 million Canadians were unable to find a family doctor in 2007 and have to queue in impersonal clinics where they exist. Yet only a physician can order tests or get a patient in to see a specialist.
Despite continual infusions of fresh tax dollars, waiting times for hospital treatment went from an average of 7.3 weeks in 1993 to 17.3 weeks in 2008, although there was a minuscule decline last year as a result of massive political pressure. The problem is so severe that the Supreme Court of Canada acknowledged in a historical 2005 ruling that patients die as a result of waiting lists for public health care.
Finally, coverage of new drugs is delayed by a year or more for patients relying on the public system. Even with this delay, by October 2007 less than half of new drugs launched between 2004 and 2006 had been listed for payment.
Based on experience in both our countries, government health insurance and government financing inescapably lead to a crackdown on health care providers and bureaucratization of the entire health care system. Americans should look carefully at our experiences before going any further down the slippery slope of state-controlled health care.


A certain "Dan" commented to my note above, said:
Since health care is a service, A better comparison of health care systems around the world would be to poll consumers from various nations as to what they like and dislike about their systems. This has already been done by various polling companies.
A google search for "heath care poll, Harris" should yield some interesting insights.
The results are surprising for those of us who have always believed that the US system was second to none.

I have a former officemate at CPBO, House of Representatives, Quezon City, who migrated to Vancouver, Canada. She told me that one time she suffered itchy hair/head scalp, she got it after a brief mountain hiking. She went to a government hospital or clinic, the staff and doctor there noted that her condition was not serious, she was told to wait for several months as doctor services have a long queue, and was told to take some medications, gave her prescriptions.

Days and weeks have passed, her itchy hair or head scalp was getting worse, she went back to the doctor but was told that her condition was not serious, told her to come back on the specified date which was several weeks away. Her dandruff was growing thick then plus other maladies in her hair, she could not sleep well in the evening and her work was already affected. Desperate to get treatment, she went to a private physician and paid big amount just to get treated. That action solved her problem.

When things are made free or highly subsidized, expect the demand to be higher than the supply, which will later result in rationing of such goods or services.

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