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Monday, April 09, 2012

Healthcare Monopoly 5: Canada

Before my discussion, a backtrack of what I wrote last August 28, 2010:

Canada's Healthcare Monopoly

Canada's "free healthcare" system is often envied here in the Philippines and many other developing countries. However, there are also a number of Canadians who fly to Manila and other cities in the developing world to seek quick medical treatment. So one may wonder why such things happen.

There is a good article recently, Why We’re Paying More For Health Care and Getting Less, by Mark Rovere and Brett Skinner, August 16, 2010, on Canada's healthcare system. Portions of the report here.

The Canadian Medical Association (CMA) recently published a paper about the worrisome condition of Canada’s health-care system. Its report concluded that the growth in government spending on health care is unsustainable, and that medicare is failing to provide adequate access to high-quality medical goods and services.... Yet a glaring omission in the CMA report was the lack of discussion about the root causes.... Canada’s health system failures are caused by the government’s monopoly over medical insurance, the centrally planned allocation of medical goods and services, and the lack of consumer exposure to the cost of using health care....

An annual Fraser Institute survey of Canadian physicians shows that in 2009, patients waited approximately 16.1 weeks from the time they obtained a referral from a general practitioner to the time they received treatment from a specialist.

Ultimately Canada should look to the Netherlands and Switzerland, two countries that have taken market-oriented health reforms even further. The Dutch and Swiss have universal coverage without government delivery of health insurance. Both countries combine a universal mandate to purchase private health insurance with public subsidies for low-income people so that all can afford to obtain coverage.

In a wikipedia discussion on Healthcare in Canada, one table showed the following:

1. Percent of health costs paid by Canada government, 70 percent.
2. Versus 81-82 percent by the governments of Japan, Sweden and UK, and
3. And only 45.4 percent paid by the US government.

Those figures are high, like 70 percent. This means that patients and/or their companies shell out only 30 percent (or less) for their health costs. For monopolists, the natural tendency is to jack up the price of their goods and services. The public, the patients, have nowhere else to turn to anyway.

Free market groups in Canada, like the Fraser Insitute, propose that they go to more market-oriented health reforms. Yes, they should.
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This story is repeated at the local governments level. Here's an article from The Globe and Mail,
http://www.theglobeandmail.com/news/opinions/jeffrey-simpson/the-fiscal-tyranny-of-health-care-ber-alles/article2348187/

Headshot of Jeffrey Simpson. - Headshot of Jeffrey Simpson. | Brigitte Bouvier/For The Globe and Mail

JEFFREY SIMPSON

The fiscal tyranny of health care über alles

JEFFREY SIMPSON | Columnist profile | E-mail
From Friday's Globe and Mail
Published 

... Sixty per cent of B.C.’s new spending over the next three years ($1.5-billion of $2.5-billion) will be for health care. As such, this budget is a template for what’s happening across Canada: health-care über alles.
What happens to every other department when health care takes so much? Budgets are either cut in absolute terms or in real terms – that is, after inflation. Those cuts are made even though the B.C. government is raising health-care premiums (a form of tax) so that they will bring in $360-million more in three years, and raising the corporate tax rate.
The drip-drip of health care spending über alles can be seen another way.
In the B.C. budget, a document shows government expenses since 2005-2006, then projected to 2014-2015, a period of nine fiscal years. During that period, health care spending will have risen at 4.9 per cent yearly (after inflation) compared to 3.3 per cent for education and 3.4 per cent for social services. That gap doesn’t seem like much in a year, but multiply that gap over nine years, and it yawns.
Nine years ago, health care was 38 per cent of B.C.’s operating expenses. At the end of the period, it will be 42.2 per cent, assuming the herculean restraint projected for the next three years. And while health care rises to 42.2 per cent, everything else falls as a share of provincial spending (except transportation). Per capita, health care rises from $2,950 to $4,106, whereas education rises from $2,124 to $2,510.
B.C. is lucky in one sense: It will have a budgetary surplus next year, in contrast to Ontario and Quebec. In those provinces, a much worse fiscal position intensifies pressure on spending – especially in Ontario, where the deficit is large and Premier Dalton McGuinty has ruled out tax increases.
B.C. does share Ontario’s goal of holding health care increases to 3 per cent a year, although Ontario commissioner Don Drummond recommends 2.5 per cent. Both provinces will have their hands full, because curbing public spending where providers defend their turf is exceptionally difficult.
Consider B.C.’s K-12 education budget: Enrolment of students is down, but costs are not.
Or consider its justice budget: There has been a 33-per-cent decline in provincial criminal court cases over the past six years. (Is the Harper government, with its “tough on crime” agenda, listening?) And yet, according to the budget, adult criminal justice costs have increased by 35 per cent despite “improvements and the implementation of a number of reform initiatives to increase efficiencies and alleviate pressures.”
Court cases down by a third; costs up by a third. Go figure.
One reason, the government says, is “the entrenched culture and the traditions of the system.” The same words could be used to describe the health care, K-12 and university systems, which explain in part why these are so hard to change and why efficiency gains, the panacea of reformers everywhere, are so difficult to achieve.
These B.C. trends were below the headlines, but they are apparent across the country. Health care eats up a larger share of budgets at the expense of other programs. Efficiency gains are sought everywhere but achieved with difficulty. Everywhere but Alberta, taxes have to pay for health care while balancing budgets.
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Uhh-ohh, note that tern, "entrenched culture and traditions of the system" of the bureaucracy. The cost to taxpayers is rising although the number of agency clients is declining. There is a natural tendency for the bureaucracy and a monopoly provider, in healthcare for instance, to keep costs high. And the public will have no choice but keep paying for the system via taxation and mandatory health contributions.

Healthcare monopolization is wrong. People should go for more choices, more options, more freedom, in healthcare.
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See also:
Healthcare Monopoly 1: France and Canada September 05, 2010
Healhcare Monopoly 2: United Kingdom, February 17, 2011
Healthcare Monopoly 3: China, July 20, 2011
Healthcare Monopoly 4: Taiwan's NHI, December 05, 2011


Healthcare competition 1: Switzerland, August 28, 2010
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