TigerHawk

Canada's Supreme Court has just struck down Quebec's law banning private health insurance:

According to the court, the long waits for many procedures violate Canadians' rights to "life and personal security, inviolability and freedom" as guaranteed by the Quebec charter. Private health insurance will now enable people to sidestep the government program.

More here, from the CBC:

As a result of delays in receiving tests and surgeries, patients have suffered and even died in some cases, justices Beverley McLachlin, Jack Major, Michel Bastarache and Marie Deschamps found for the majority.

American advocates of single-payor health care often point to Canada as the archtype. Critics have responded that the Canadian system only works because Canadians can bypass the system's long queues by coming to the United States and paying for procedures that they do not want to wait for out of their own pockets. Even with the American safety valve, though, the lines in Canada have become so long that they are found to violate a provincial constitution (the court split 3-3 over whether the ban on private insurance violated a similar provision in the federal constitution).

People who are most concerned with "social justice," which is usually a euphamism for bureaucratic equality regardless of ability to pay, like single-payor health care systems because the affluent cannot buy their way out of them and that (advocates claim) sustains political support. (Democrats oppose voluntary private retirement accounts because they are worried that partial privization will undermine support for Social Security in the future. Same idea here.) The only way that a single-payor health care system stays single-payor is if the government claims a monopoly for the provision of private insurance.

As Canadians know, there is no perfect system for paying for health care. If you think about it, there are only three ways to allocate health care: By auction (meaning ability to pay), bureaucratic fiat (meaning that an governmental or corporate executive decides who will receive what procedures according to some body of rules), and queuing (standing in line). Nobody much likes any of these three systems, but there is no fourth way. Virtually all countries, including the United States, mix these three methods of allocation. For example, aesthetic surgery is only available if you can pay for it. Treatment for severe trauma is allocated by queuing at the emergency room. Certain public health procedures (flu shots last year, for example) and HMO benefits are parceled out by bureaucratic fiat.

The real question, therefore, is not whether we should allocate health care by ability to pay, bureaucratic fiat, or queuing. We will use all three methods under every imaginable system. The challenge is deciding which health care should be allocated which way. Because auction is the only one of the three systems that allows for real consumer choice, any move toward queuing or bureaucratic fiat decreases the patient's influence over his own treatment (at least if that patient is able to pay through insurance or otherwise). This is bad, but perhaps not as bad as it would be in other contexts. The problem, of course, is that under traditional private systems most patients with "ability to pay" are not actually paying themselves, but are causing a third-party to pay. Because they are not paying out of their own pocket, most of these consumers do not impose the same financial discipline on their health care providers that they impose on, say, their grocery providers. This leads them to "consume" a lot more health care than they would if each procedure cost them something. People run tests against every risk, go to the doctor every time their kid has a runny nose, and demand medication against every ailment, however trivial. Doctors abet this tendancy by declaring "standards" that line their own pockets. For example, most American women would sooner blow off Thanksgiving than the ritual of their annual Pap smear, which must be one of the most wasteful "standards" in American health care.

The best system would have at least two features. First, it would define a minimal health care standard that is available to everybody, regardless of ability to pay. Contrary to popular imagination, our system does this today: if you have an accute condition and can make it to the emergency room, you will be treated whether you can pay or not. Advocates of reform are correct that this system is wasteful, and that we would be better off if we made more routine care also available regardless of ability to pay. Unfortunately, once you leave the bright boundaries of the emergency room it becomes terribly difficult to draw those lines. Should poor women get a "free" Pap smear every year, or once every five years (as is the case in the Netherlands and any number of other European countries)? Such line-drawing requires us to resolve controversies in medicine or bear massive new costs. For example, there is a huge controversy over the effectiveness of spinal fusions. Hundreds of thousands of them are performed every year at great expense, but do they really reduce pain over the long run? They do for some patients, and don't for many others. If the taxpayers are going to assume the burden of making spinal fusions available to everybody, somebody is going to have to decide whether the expense is worth it. In the United States, that person is likely to be a congressman who gets campaign contributions from orthopedic surgeons and people who work at spinal implant companies. Multiply that same dynamic over hundreds of procedures, and health care costs will explode.

Second, a reformed system would motivate consumers to make the same demands on their health care providers as they make on their grocery providers and automobile providers. Doctor, is there a cheaper drug that works almost as well? Doctor, if I bring my whole family to your practice will you give us a discount? Doctor, am I really at increased risk for cervical cancer if I get screened every three years, instead of annually? "Medical savings accounts," which essentially allow health care consumers to retain the benefit of money that they do not spend, are the preferred solution for people who believe that the real basis for increasing costs in our system is that consumers do not have any motivation to demand price competition. They are the only mechanism that anybody has thought of that harnesses the power of consumer choice to contain the cost of health care, and they represent the last, best hope of people (like me) who both want to increase benefits to the poor and who desperately want to contain the growth in aggregate health care expense.

Sadly, there very few people in American public life willing to ask and answer these questions honestly.