:: A Skeptic’s View: Removing The Ideological Obstacles To Health Care Reform

Health care, as currently funded and delivered, is unsustainable. It is taking up an ever-increasing share of our financial resources, while its outcomes consistently show room for improvement when compared with other developed countries . . .

Another dismal report on the U.S. healthcare system one might surmise at first glance.

Actually that is a quote from Glen Roberts, Director of Health Programs, in a 2004 press release, “Canadian Health Care is Unsustainable as Currently Organized”, published by the Conference Board of Canada, concerning the report Understanding Health Care Cost Drivers and Escalators published for Alberta Health and Wellness. The report, available on the Conference Board website, benchmarks Canada’s performance to that of 23 other Organisation for Economic Co-operation and Development (OECD) countries, using a range of 24 health-related indicators.

How did Canada fare?

Canada ranks 13th overall, well behind elite performers Switzerland, Sweden and Germany. Yet Canada is the sixth-highest public spender on health care and the third-highest total spender among the OECD countries.

According to the report, health care expenditures were forecast to increase by 5.3 per cent annually ($5 billion) “just to deal with structural factors over which the system has minimal control.” Canada also faces the problem of an aging population and inflation factors:

Labour’s bargaining priorities will be largely driven by its aging membership—45 per cent of union members are 45 years or older. As a result, unions are giving defined benefit pensions and health benefit plans their full attention in negotiations in 2007.

Aging Workforce and Looming Labour Shortages Begin to Shape Bargaining in 2007 (February 1, 2007)

As in the U.S., prescription drugs form a major part of expenditures, which according to the report, were rising annually by 9.3 per cent, or $500 million. Thus, the observation from the 2004 benchmarking study: “[g]overnments may need to examine options to control drug costs in the future, such as cost sharing, co-payments and provider incentives on the demand side, and volume purchasing as an alternative on the supply side.”

The provinces have their challenges under the system as reflected in the 2005 Conference Board report “Forecasting Transformational Change in the Ontario Health Care System to 2025:

Ontario’s health care costs are increasing at a rate that will likely keep the provincial government in deficit through 2025, unless steps are taken to improve the performance of the health system . . . Health care expenditures will grow faster than both the provincial economy and the targets set in the government’s health transformation plan . . . The Ontario government recognizes the need to rein in health care costs and its plan is on the right path, but a more comprehensive approach is needed, addressing all aspects of health care. In particular, the government must focus on improving the productivity of the health care system.

Health Care Costs Will Keep Ontario In Deficit (Conference Board news release (November 2, 2005)

The point here is not to denigrate the Canadian health care system or suggest the superiority of the U.S. system. No doubt, Americans would bridle under some of the restrictions in that system, such as the illegality of private care procedures that duplicate those offered in the public system and other restraints on choice. But that is not the issue here.

Instead, the point is that preconceived notions of reform do nothing to really solve the problems with the U.S. health care system. In fact, articles such as “Private Insurance Is Not the Answer” appearing on the Physicians For a National Health Program site, exemplifies little more than ideological thinking that, if anything, actually forms an obstacle to getting at the real issues.

After alluding to (but not citing) “the overwhelming evidence from other industrial countries” that demonstrate the superior efficiency of publicly-financed health care systems, the author undertakes a rambling history of the growth of the health insurance industry in the U.S., attacks the profiteering of the industry giants such as UnitedHealth and Wellpoint, and concludes that private insurance is incompatible with good patient care.

The author states:

Public officials should abandon the mission of saving commercial insurance and devote themselves instead to creating a healthcare system that substitutes the public interest for private profit.

The presupposition that improving the U.S. health care system can be accomplished through a simple shift in the financing medium is naive. As in Canada, the U.S. system has some serious cost control problems which the financing medium alone cannot resolve.

For example, statistics suggest that the prescription drug pricing and distribution system suffers fundamental flaws, not least of which include conflicts of interest, lack of transparency and oligopolistic behavior by the major PBM’s. That problem, coupled with an aging population, constitutes a huge cost driver in both the Canadian and the U.S. health care systems. One would never gather that such issues exist outside the U.S. from the PNHP article.

Moreover, while the Canadians finance their health care largely through public funding, by and large the physicians are not public servants but engage in private practice, and often in large practice groups such as in the U.S. They just get to bill the government instead of insurance companies. From the PNHP website:

Doctors are in private practice and are paid on a fee-for-service basis from government funds. The government does not own or manage their medical practices or hospitals.

A troubling inconsistency arises, however, in the argument. The PNHP article would presumably have one believe that profit incentives are inconsistent with good patient care except in the case of physicians. Physicians would not perform unnecessary procedures, run unnecessary tests, self-refer, or anything like that? Unfortunately, that assumption does not square with the findings of the McKinsey Global Institute study cited previously on this site.

In short, the frustration with the UnitedHealth and Wellpoint juggernauts is understandable – but implementation of a single payer program will not likely preclude them from entry in some form into the new world order, nor eliminate the fact that, profit or non-profit, patient outcomes will always be limited by fiscal constraints. Canada’s program, darling of the PNHP, has the same challenges in terms of cost control (3rd highest spender) that we do in the U.S, and it is feeling the weight of that burden.

The point is, a profit incentive, whether that of physicians, pharmaceutical companies or insurance companies, is no more pernicious than the profit incentive of the restaurateur, accountant or grocer. The actual problem lies in controlling the costs through efficiencies, not through the funding medium. Ideological debates only delay the task of identifying the economic drivers of costly inefficiencies and creating an environment that can verifiably mitigate them.

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