Article published by Reuters on July 20, 2009.
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.
*Valentin Petkantchin is Director of Research of the Institut économique Molinari. Brian Lee Crowley is the founding president of Atlantic Institute for Market Studies (AIMS).