Neo, here's a unique perspective on health care. Thought you would find it interesting.
Presented by
Dr. John Goodman, President
National Center for Policy Analysis
Mont Pelerin Society
Vancouver, Canada
August 29, 1999 - September 1, 1999
I want to start with a question that has dominated the thinking about health care all over the world: Is health care a right?
In the Western Hemisphere, virtually every country other than the United States has said "yes." In Mexico and Argentina, a right to health care is in the constitution. Yet, ironically the United States - the one country that has not affirmed the right to health care - is the country in which people get the most health care, both in absolute terms and as a percentage of national income.
The Meaning of a "Right" to Health Care
What does it really mean to have a right to health care? Here in Canada, a citizen has an abstract right to health care, but does not have a right to anything in particular.
The Right to Health Care in Canada. If you are a Canadian you do not have a right to a CAT scan. You do not have a right to heart surgery. If you are the one-hundredth person waiting for heart surgery, you are not entitled to the one-hundredth surgery. Other people can and do get ahead of you. In fact, Americans can come to Canada and jump the queue, getting care ahead of Canadians.
The reason is because Americans can do something Canadians cannot. They can pay money to doctors and hospitals for heart surgery. It is illegal for a Canadian to do that. Canadian hospitals love to admit American patients because that is new money added to their very tight budgets. From a purely financial point of view, paying customers are more valuable than those that do not pay.
But what that means is that in a kind of perverse way, citizens in the United States have more rights in Canada than Canadians do.
It gets even worse. Several years ago I discovered that in some of the provinces, after the normal work hours are over, the hospitals were using their CAT scanners for veterinary purposes. People could bring their cats and dogs to the hospital and get a CAT scan for their pets. Since people could pay money for the service, this was another way of adding revenue to the tight hospital budgets. Yet, it was illegal for a Canadian citizen to pay money for a human CAT scan. Again, from a financial point of view, a paying pet was more valuable than a nonpaying human. You could say that in Canada a man’s dog has more rights in the health care system than he does.
Unlimited Demand at Zero Price. When the idea of health care as a right was first proposed one hundred or even fifty years ago, it was conceivable that government could actually implement such a right. You could conceive of devoting enough resources so that people could get all the health care from which they could possibly benefit.
Today, we know that this is not possible. We could spend the entire gross domestic product of this country and every other country on health care. And I don’t mean by wasting money. I mean by spending it in ways that actually create benefits for patients.
Here are just a few examples of opportunities to spend. There are at least 900 tests that we can do on blood. Conceivably, you could have all 900 every year as part of an annual checkup. Each test is of some value, because doctors might discover something and save your life. But if every citizen got 900 blood tests each year, we would probably double or triple the nation’s health care bill.
Here is a more practical example. The Cooper Clinic, very near where I live in Dallas, is the home of aerobics. Dr. Ken Cooper, who wrote the book on aerobics, offers a super checkup. It lasts five or six hours; involves a treadmill; lot of blood tests, and may even include a CAT scan. Larry King, whom many of you have seen on CNN, has done this. Ross Perot, the magnate who ran for president, has done this. And if health care were free, there would be no reason why we all shouldn’t do it. But if everybody in America got this checkup every year at a cost of $1,200 each, we would increase our total health care bill by 25 percent just on this one diagnostic test.
Now remember, we have not cured any illnesses yet; we have not treated any diseases. We are just looking for things. In fact, we could probably spend the entire GDP on diagnostic tests without ever treating an illness.
Here is another way to spend money. About 12 billion times a year Americans go out and buy non-prescription drugs. Presumably, there is something wrong with them. But what if they sought professional advice instead of engaging in self-diagnosis and self-treatment? Economist Simon Rottenberg has calculated that we would need 25 times the number of primary care physicians we have in the United States right now.
The Necessity of Rationing. The bottom line is that health care in the United States has to be rationed. We are not going to spend the entire gross national product on health care. Since other developed countries spend less on health care than the United States (see Figure I), they have an even bigger rationing problem. How do they do it? In most developed countries health care is rationed by means of global budgets.
Rationing Under Global Budgets
The idea behind a global budget is that politicians create resource constraints and doctors and hospital administrators ration health care. The political strategy is that the politicians want to create a lot of distance between themselves and the rationing decisions. When things go right, such as opening a new hospital or buying a new piece of equipment, the politician wants to be there to take credit. But when things go wrong and someone does not get health care, the politician wants to deny responsibility as much as possible.
At the National Center for Policy Analysis we have been interested in the consequences of rationing under global budgets. I will discuss a few of them.
Rationing by Waiting. I do not mean to pick on the British, but Britain and some of its former colonies do a very good job of keeping track of things. In most countries in the world you would not know how many people were waiting for hospital surgery. But in Britain, Canada, and New Zealand, they keep records and they publish the results. Even after Margaret Thatcher’s health care reforms, about 1.3 million people are waiting for hospital surgery in Britain. A comparable number are waiting in New Zealand and Canada. [See Figure II.] Since these are countries where health care is free at the point of consumption, this is rationing by waiting.
As a percent of the population, the number waiting ranges between 0.6 percent (in Canada) and 2.5 percent (in New Zealand). That does not sound like a very substantial number of people. But, in the private health care market in the United States, about 4 percent of the patients spend half of the money each year. Only a small percentage of the people really need expensive treatment. If we can extrapolate that result to other countries, we conclude that of all the patients who need expensive treatment at any one time about one in seven are waiting for those treatments in Canada, more than one in two are waiting in Britain and 6 in 10 are waiting in New Zealand.
Consider waiting times in Canada. According to the most recent estimates of the Fraser Institute, it takes the average person about five weeks to get from a general practitioner to a specialist; it takes another seven weeks or so to get treatment in some of the provinces. [See Figure III.] And these are just averages. For many patients the wait is much longer. Many people are waiting in pain. Many people are risking their lives by waiting.
Inefficiency. You would think that if you had a million people waiting to get into British hospitals, that you would not have very many empty beds. In fact, about one out of every five beds in British hospitals remains empty, and similar figures hold true in Canada and New Zealand. [See Figure IV.]
Another one-fourth of all the beds are being used by the chronically ill. These are patients who do not really need to be in a hospital and who are using it as an expensive nursing home. The reason for this is very simple, once you stop to consider the incentives of the hospital manager. Since a chronically ill patient is using the hotel services of a hospital, he or she is a relatively cheap patient. If an acute patient fills that bed, you will have more costs. So this kind of inefficiency keeps monetary costs down and helps the hospital manager stay within budget.
Another measure of efficiency is how quickly hospitals get people in the door and out. Figure V shows that the United States is using fewer hospital resources (measured by beds per capita) to give people more care. A similar story is revealed by statistics on average length of stay, another measure of efficiency. [See Figure VI.] In general the quicker you can get patients in and out of a hospital, the more efficient you are. Also, hospitals are dangerous places in which to be. You can catch infections from other people. So you do not want to linger in a hospital. Despite this fact, the incentive under global budgets is to allow patients to linger.
Discrimination Against the Elderly. When doctors ration health care, the elderly frequently come out on the short end of the stick. Take kidney dialysis. In the 1970s, Britain along with the United States invented renal dialysis, and yet they had one of the lowest dialysis rates in all of Europe. How did they handle the rationing problem?
As Figure VII shows, the rate at which they were treating patients 40 to 50 years old was substantially higher than the rate for patients age 60 to 70. Now our kidneys do not get better with age; they get worse. So treatment rates ought to be going up with age if a health system is meeting all needs, instead of dramatically falling as they were in Britain.
Continued here...
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