I am just back from a visit to my home town, a smallish one in the mountains of British Columbia. The last time I was home, many residents were upset because the local hospital, including the emergency room, was being closed down. It did not make sense cost-wise, according to the health care accountants. The hospital in the next town over would have to do; 72 miles away--a concern in the winter months, when the curvy, narrow mountain roads are icy and snowbound. Some suspected that the closure was politically motivated. My home town consistently votes for parties that tend to be in the minority politically, such as the NDP (well left of center), and so is perpetually out of favor with the provincial government. There may well be nothing to this suspicion... perhaps the area's tax base is dwindling.
On this visit, however, I was interested to see that the hospital is not to be closed after all. A sign proclaimed that the emergency room was being revitalized and refurbished, as a part of an economic stimulus package. It rather baffles me, that the same expense items can be a drag on the economic system in good times, and a stimulus in bad times, but I am not a formally trained economist; I have only been studying public policy for twelve years, and no doubt some subtlety escapes me
There was more to come. In my favorite local toy store, I noted the
following sign on a glass jar for collections near the cash register:
"Contributions to CT scanner.... Help our Earth, Help our Hospital." Evidently the economic stimulus package is not generous enough to go so far as supplying the hospital with needed equipment. Now a single business taking up collections for the hospital to buy medical equipment is curiousity, at best; but there was still more. See attached photo. Other businesses had also been pressed into the campaign; one was advertising a raffle of a splendid toy fire engine, proceeds to be used towards the cost of the CT scanner.
The shortage of equipment, nurses, and other important elements in Canadian hospitals is a likely and obvious outcome of price controls. On that point much has been said. (I will make only one further remark; Because they have a system in which the government plays a major role, health care in Canada has been converted from essentially a private good into a public one. This is ironic, as one of the stated functions of government is to solve public goods problems. Not make them worse. Economist James Buchanan reportedly was once accosted by someone insisting that government solved public goods problems... he is said to have replied "Government *is* a public goods problem." But I digress).
What interests me today is the popularity of this health care system in spite of such things. Most people are healthy most of the time. And they know the health system is there, and that everyone dealing with it is in pretty much the same boat (People naturally tend to compare their lot with those around them--See Axelrod on this phenomena in game simulations). So the system feels good. It provides security. It does not result in disturbing disparities. It feels damn good.
And herein lies part of the problem. Health care in fact is a hard economic problem. The potential conflicts of interest in such a system are many. It is a valuable, expensive good where innovation and productivity gains ought to be highly valued and encouraged. But how is it to be financed? Sick people are not a good loan risk. So we have insurance. But the healthy people paying into the pool have a potentially serious conflict of interest with the sick people drawing on it. On and on. Real problems. Real trade-offs.
Here is the thesis for the day: When there is a hard economic problem to be solved, the system should not feel good. If it feels good, something is wrong. Something, somewhere, is being swept under a rug. Costs are being hidden. The buck is being passed. To who? Where? It is not clear. Human beings solve problems best when those problems are in their face, annoying them. Problems of cost, hard choices, insecurity, scarcity... The U.S. system has annoying problems, particularly problems of cost. It wacks one over the head with these problems. Institutional actors have clearly defined interests, and their conflicts of interest are clear. We run head-long into clumsy mechanisms for resolving conflicts of interest.
But while the system is deeply flawed and needs reform, the direction of reform is key. The problems of conflicts of interests and hard choices about the value of health care are *real* problems. Whatever the system, these conflicts and problems will never be effectively solved by new arrangements if real problems are swept under a generic publicly funded publicly mandated rug of everyone in the same boat. The larger the role of the undefined, general public, the less clear these interests and conflicts become. The more costs are spread around, the less any one actor is accountable, and the less likely anyone is to innovate a solution.
Competition and choice are the main mechanisms by which hard cost and choice problems get solved. Competition and choice do *not* feel good. People end up in different boats. Disparity and problems of access exist. People look around and see others similarly situated receiving different treatment. We hate that. Choice is confusing and complicated. But every patient in a pickle is an opportunity for someone to provide a new service, to take a different approach. Real improvements do result, inventions in new types of pricing, cost savings, treatment methods, treatment philosophies, the whole thing--from the ground up. This cannot happen when the system is designed from the top down. Choices must include hard choices. Ugly is opportunity.
The current direction for reform is feel-good, perpetuating the trend since World War II for government to take a larger and larger role in health care. Health care consumption when a third party pays is favored by distinct tax treatment. Subsidies are provided. Now conflicts of interest between the healthy and the sick are abolished by fiat; no more denials of coverage. Less choice: the option of not providing coverage is eliminated for employers. Less competition between plans: the plans must resemble the government standard. And so on. Disparities and conflicts of interest disappear like magic.
But there is no such thing as magic.