SHOULD WE CHOOSE SOCIALIZED OR CAPITALIST MEDICINE?

Proper healthcare is sometimes a matter of life and death. As more has been discovered about how to cure or help health problems, different countries have tried to handle healthcare by the use of different methods.

The American Capitalist Health Care System

For an advanced country, the United States has a fairly capitalist health care system. While through federal programs like Medicare and Medicaid, the government pays a portion of the health care bills of elderly and impoverished people, and this adds up to tens of billions of dollars per year, most Americans deal with doctors and hospitals on their own, paying them out of their own pocket or through voluntary private medical insurance. Health care costs in the United States have greatly increased in recent years. Therefore a number of cost-containment measures have been taken, including the gathering together of doctors and other health care providers and hospitals in HMOs, Health Maintenance Organizations.

These measures seemed to help temporarily. But then the advance of costs resumed.

The Canadian "Socialized" Health Care System

In Canada, on the other hand, as in most of the most advanced countries, there is a single-payer health care scheme run by an agreement between the federal and provincial governments. Doctors, hospitals and other health care providers submit their bills to the local provincial government's health department. The provincial government pays what it thinks is appropriate. Health care providers are seldom if ever allowed to bill the public directly for health services.

Now like most people in North America I believe in capitalism; that is, in the private (or corporate) ownership of most property. And I believe that capitalism -- so-called private or free enterprise -- should be running most businesses and services.

Private enterprise or capitalism does a wonderful job running most businesses. True, occasional new businesses are poorly managed. (They usually go swiftly broke and disappear.) But collectively, especially in small business, free enterprise does a wonderful job. Why? Because between small businesses of every kind there is rampant, almost rabid dog-eat-dog competition. This brings about innovation. Goods and services are continually brought to consumers at lower and lower cost, with greater selection and convenience, and continually greater productivity.

But . . . is this true about capitalist health care?

The Case for Capitalist Health Care

There is clearly a case for capitalist health care. That case is simple. It goes like this:

• It is clear that private business runs most businesses and services better than government. Therefore we may confidently assume that private businesses, competing against each other, can also be counted upon to run the medical system more efficiently and much better than government.

The problem is . . . this argument is an assumption, and perhaps an unwarranted assumption. It assumes that the health provider situation works exactly as other capitalist business situations do. But is this true? What is the evidence for this? Surely, the evidence of what is known must be more convincing than a mere analogy with other businesses, and we must rely on the evidence of what is known.

So what is known about private delivery of health services in systems of healthcare?

Well, to name a positive thing, we know that private, especially American, medical and pharmaceutical companies have come up with amazing technology, machinery and drugs. We know that many, many people have been cured or had their conditions better diagnosed or alleviated by these techniques, machines and drugs. We know also that it is generally true that private enterprise (capitalism, if you like) is very good at ingeniously reducing costs and making goods and services broadly available -- much, much better than government is.

But . . . is it true that private health care forces should be allowed to run the medical system? Why -- despite all the above -- do I find myself doubting this?

The Role for Private Enterprise in a Single-Payer System

Well, it is obviously clear that there is and should always be a role in the healthcare system for capitalists. Through supermarkets, after all, capitalist organizations provide healthy food, soap, vitamins and health supplements. These products help prevent illness and soaring medical costs. Through private architects and construction companies, private enterprise builds hospitals and other facilities. And ingenious capitalist pharmaceutical companies pioneer and make available powerful new drugs. Private cleaning firms and other service firms skillfully contract to perform certain services for the health system (and should perhaps be allowed to contract for more, i.e., perhaps there should be more contracting out at hospitals, etc.). Private firms run many nursing and retirement homes.

Still, while I concede all this, like many people I'm not sure that private forces should be running health care.

Why is that?

A Book Comparing Both Systems

In 1998 an important book was published comparing the Canadian and the American health systems. The book, Universal Health Care: What the United States Can Learn from the Canadian Experience, argued that perhaps the main indicator that a health system is successful is the mean (i.e., average) length of life in a country. In Canada, which has had since 1962 what American doctors and capitalists used to disparagingly call "socialized medicine", Universal Health Care points out that Canadian men live three years longer than American men, while Canadian women live two years longer than American women.¹

So, could this be an indicator that the Canadian "socialized medicine" scheme of health care might be better than the American capitalist one?

Or, if the standard of success of a medical care system is fiscal economy, the book pointed out that Canadians spend a lower share of their GDP (Gross Domestic Product) -- 10%, as compared to 14% -- on health care than Americans.²

Good Republicans and capitalists, if they are interested in saving money, should take note of that, should they not?

Or if the standard of success is economic competitiveness, the book pointed out that Canada enjoys an economic advantage in having universal medicare. Canadian medicare has caused a more active, healthier work force. This force is thus available to potential investors and employers, who, because of medicare, can build businesses in Canada without having to complexly negotiate with unions and insurance companies to insure their employees for most surgical or medical expenses. Thus the cost of benefits to employees is significantly less to private companies in Canada than it is to private companies in the United States.³

(But taxes to pay for medicare -- especially income taxes -- are therefore higher in Canada than in the United States. I concede this, and hope to discuss this later.)

So in these crucial defining respects the American capitalist solution for health care seems to be poorer than the Canadian government's "socialized medicine" solution.

And this is not to mention the sobering fact that 39-44 million Americans have no medical or hospital insurance at all.⁴ (69% once had such insurance, but say it was too expensive.) This number is rising by one million per year.

Now it might be argued that the American system is nevertheless freer and more productive than the Canadian system, and, indeed, in some narrow respects it is. It is freer at first sight for American doctors. They are freer from governmental control. (They are still licenced by authorities in each state, of course, and to some extent controlled by bodies of doctors like state medical associations and the American Medical Association.) Among American doctors, medical specialists at least make much more money in the United States than they would in Canada. About double. And in a country with lower taxation rates. But partly the reason for this, as the book's authors point out, is that in Canada, unlike the United States, 60% of doctors are general practitioners (GPs) while -- presumably so that they may make more money -- in the United States 60% of American physicians have trained to be specialists.⁵

But note that American medicine's having so many expensive specialists has nevertheless not improved the average health of the American masses (if I may use a convenient Marxist term). The broad American middle-class just doesn't live as long as Canadians.

And isn't that what healthcare is all about?

(Incidentally, a recent study indicated that American homeless people don't live as long as Canadian homeless people. Why? I presume that the reason is that most Canadian homeless have access to medicare. 44 million -- the number keeps rising at a rate of one million per year -- Americans have no medical coverage, and so presumably have restricted access to healthcare.)

But the situation for Americans under capitalist medicine is actually worse than this.

It turns out that, as the authors of Universal Healthcare again point out, that the American masses (love that term!), living shorter lives than Canadians, also live less healthy lives. Americans have a huge problem with obesity, their health declines sooner, they aren't as mobile as Canadians of the same age after the age of 50, and on and on. Americans can count on 60 years of life without disabilities; Canadians can count on 66 years.⁶ (It is fascinating how perverse and unexpected these results are . . . .)

And yet the American people are paying a higher percentage of their income to the specialist doctors to live less long or healthily than Canadians!

So clearly American capitalist health care, the American medical system, appears to have some bizarre and unexpected shortcomings. In the words of Michael Millenson, an industry consultant, "If the present [American] system is excellent, what would be mediocre?"⁶ If one checks the numbers, the American healthcare system appears to be a Cadillac system for many (but not all) where a medical Chevrolet like the Canadian system would seem to be more effective and appropriate.

Why do I compare the American system to a Cadillac?

The official American system caters to the better-off. They can buy whatever they want. They can go to a vast number of medical specialists and purchase the best drugs, technology, and service that medical science has to offer. They buy an expensive Cadillac.

The rest of Americans get what they can afford. Over 40 million take the risk that they might get ill and have no coverage at all.

According to my rich American uncle (he has been a millionaire for over 50 years), "There's nothing wrong with the American system."

Nothing wrong for him, certainly. He can afford the Cadillac.

Perhaps, however, not so good for others. And (the statistics seem to prove) not so good by the standards so far outlined.

Defects of the Canadian System

By contrast, no one disputes that the Canadian health care system is a medical Chevy. Crowded hospitals. Long lineups at emergency facilities. Limited access to ambulances. More and more hospital closures. Few paramedics . . . Canada's healthcare system can easily be criticized (though also, as I have shown -- oddly enough -- strongly defended). It is run like American state, country and charity hospitals -- which, incidentally, have identical problems.

But let us go back and take another look at the American "capitalist" model of healthcare.

No one can dispute that the American system generates wonderful medical machinery, procedures, and drugs. Just in recent years has been the invention of (pardon my uncertain spelling) stents, CAT scans, PET (Positron Emission Topography) scans, and MRI (Magnetic Resonance Imaging) devices. And the American system distributes these very expensive devices to many hospitals --

-- where they stand unused a good deal of the time, occasionally to service a wealthy, insured medical consumer --

-- while in the Canadian health care system a far lesser number of these devices is used around the clock to test Joe and Jill Blow, but only after a lengthy wait, if the provincial government has provided funds for necessary technicians.

So yes, I concede that there are lineups for access to doctors, hospitals, and medical devices in Canada. (This is one of the horror stories that American Medical Association eternally trumpets: "If you adopt Canadian medicare, you will have Canadian lineups and no real access to healthcare!" But the true situation is much exaggerated, even by Dr. Koop, the respected former surgeon-general of the United States under President Reagan.) Yes, people have to queue for non-essential tests and machinery in Canada, and occasionally for essential tests and operations. Yes, occasionally these lineups are much too long, especially, just at the moment, for breast cancer patients.

So I am not arguing that the Canadian government's single-payer healthcare system is perfect. (Universal Healthcare's authors argue that Canadian queues are not damaging to the health of Canadian patients.) I am suggesting that, on balance, even though it is a government-run healthcare system, and has defects, the Canadian healthcare system may be better for most people than the American system. I am suggesting that there appears to be evidence that this is so.

But the Canadian universal health care system is not better for all people than the American system. Medical specialists, for example, earn less money in Canada than in the United States. So what? We don't seem to need so many specialists to live longer and healthily.

True, the affluent may do better in the American system. They enjoy lower taxes, and, by employing their wealth, get equal or better care than they would in Canada. Evidence indicates that the wealthy in both countries live longer than the poor.

I am also not arguing that the Canadian health system is the best health system, single-payer or not, that there is or can be. Europe has other, differently-organized national health systems which combine overall public control with private input of factors. For example, the British health care system uses an even smaller percentage of Britain's GDP than does Canada's. The British government appears to own all hospitals. And in Germany most people seem to be insured, not through the government directly but through their place of employment (though I am sure that the unemployed are also covered).

So perhaps one or more of the European health systems is better than Canada's, and ours and the American health system should evolve in one or another European direction.

But, what I do not see is that the American health system is better than Canada's. By what standard? Because it's freer for doctors?

Yet, looked at closely, the American system may not be freer for doctors (except, of course, for their having larger incomes).

Instead of being ultimately controlled by the national government or the provincial governments, as in Canada, the American doctor is often under the thumb of insurance companies or health maintenance organizations (HMOs). The average doctor in the United States has to call or have his staff call insurance companies repeatedly to beg for or demand that they pay for drugs and treatments for his patients. Canadians will find this difficult to believe (I swear it is true), but the average hospital in the United States has whole buildings of clerks calling insurance companies and HMOs over and over again begging for approvals for this and that clearly specified in health insurance contracts. I asked my niece, a nurse in Columbia, South Carolina, to confirm this. She did. Yet this situation of mammoth "private" medical bureaucracies doesn't exist in Canada.

In Canada, each of the ten provinces has one modest bureaucracy to run its one-payer healthcare system; and that's all. Canadian hospitals spend almost 30% less on administration than American hospitals.⁷ Administrative costs in the United States are almost 35% of the whole system's costs!

By comparison to the Canadian system, the American system is comparatively massively redundant and wasteful.

One thing I concede. The American capitalist partial healthcare system is a valuable supplement to Canada's health system, and makes it more efficient. People who do not wish to queue in Canada for (usually non-essential) health services simply take their money (a lot of money) and go to the States. There they buy what they want with little waiting.

The question has therefore arisen whether these people are being ripped off by the Canadian system. After all, if you skip the Canadian system and go to the States, why should you have to pay taxes to support Canada's system? Shouldn't you be allowed to opt out of medical taxes? Or, at least, shouldn't you get some kind of tax credit or deduction?

This is a recurring topic of debate in Canada. Some maintain that Canada must have a single health system (several studies by distinguished judges and health experts have maintained this). According to these experts, allowing the affluent to opt out of the Canadian system would cause a declining standard of care in the government system.

This debate about opting-out of medical taxes has a parallel in the continuing debate in the United States and Canada about allowing parents to opt out of government-run education and therefore education taxes. Many advocates of public schools claim that if the affluent were allowed to withdraw their children and their taxes, the American public school system would suffer. Others advocate voucher systems whereby the public could pick schools to which to send their children.

It is clear to me that those Canadians who wish to avail themselves of American medical services should not be stopped. But it is not clear to me that we should give them tax deductions or exemption from medical taxes. Perhaps we should; but we should not if it means we take the chance of damaging a system that seems by all practical standards to be working better for most than any alternative.

Interestingly, recent figures indicate that Canadians are overwhelmingly satisfied with their medical treatment. They realize their healthcare system has problems; they want the problems fixed. But they do not want universal healthcare ended or privatized, or to return to the private, capitalist medical system we had prior to the adoption of universal medicare in 1962.

Incidentally ... polls in Britain have always indicated the same.

Dissatisfaction with the American System

It is in the United States where polls indicate the public is dissatisfied with the medical system. In the early 1990s, when then-president Clinton was proposing a fix of the system proposed by his wife Hillary, polls indicated that the American public preferred the Canadian system to its own! (The public's views were ignored. Instead, the powerful pharmaceutical and medical and insurance lobbies got together to launch an insidious series of ads attacking the president's reforms. In the ads a typical "average couple" was depicted disparaging Clinton's reforms as too expensive, too impractical, and destructive of their free choice. The ads were superlatively effective, though I think unfair. Public opinion turned to opposing Clinton's reforms, and he dropped them in haste.)

In my opinion, one of the major reasons the Canadian healthcare system works so well is that we are next door to the United States. As I mentioned earlier, those dissatisfied with the Canadian system skip across the border and buy what they want (if they can afford it). This takes pressure off the Canadian system. The provinces also send some patients across the border to get care which, for various reasons, is not available or is delayed in Canada.

So it must be conceded that one reason the Canadian system works so well is the nearby existence of its American brother.

One reason why the Canadian system is so popular is that the patient receives no bill for his or her treatment. Another is that the occasional Canadian who becomes ill without medical insurance while travelling in the States is presented by the American system with an enormous bill; this news spreads rapidly in Canada and helps make the "free" Canadian system popular. Further, tales of Americans ruined by catastrophic illness and resulting impossible medical bills also result in Canadians' loving their system.

So the Canadian system is beloved at home. Fully 97% of Canadians prefer their own system to the American one.⁸ Many Canadians regard their health care system as one of the defining features of the Canadian national identity.

Disadvantages of Socialized Medicine

Now, in fairness, I must talk about further disadvantages with socialized medicine such as Canada's healthcare system.

First, the Canadian universal healthcare system isn't, of course, free of cost. We pay for it in taxes. We have a medium-sized welfare state in Canada and this costs money. It has been said by economists that if one provides a service for free one will have an increasing demand for that service. This is true, and it is especially true for healthcare.

Over time in Canada there is more and more demand that certain health services be added to the plan. Dental services are not currently part of the plan. There is some pressure to add them. Drugs (pharmacare) are not part of the plan except for older patients. There is a certain pressure to add them. Paramedics are gradually being added to ambulance service. Medical helicopters are being added in a small way. And so on.

So this means that costs are going up and the system is under pressure. Changes in medical care have meant that more and more medical problems are being treated at home with drugs, not in hospitals by surgery. So more and more acute-care hospitals (just as in the United States) are being closed and consolidated, and pharmacare is becoming critically important.

With the aging of the baby boomer generation into a period of their lives where they will begin to require expensive healthcare it is easily forseeable that a new lot of chronic-care facilities must be quickly created and funded. So some of the closing acute-care facilities are being transmogrified into chronic-care facilities. Expensive drug cocktails for AIDS and other diseases have to be funded. Drugs are more and more expensive, and more and more prescribed by doctors. So some of these must be provided.

So, just as in the United States, the Canadian system is under severe cost pressure. The premier of Ontario, Mike Harris, Canada's most populous province, has just announced that some kinds of privatization must be considered because the Ontario health care system is spinning out of control and eating up the province's revenues. (He is, incidentally, exaggerating. Harris has drastically cut taxes in recent years, thus cutting Ontario's revenue. And the Canadian bill for health care has not increased relative to GDP.)

So a new study has just been announced by the federal government of the present and future prospects of Canada's healthcare system. This will be conducted by the just-retired premier of Saskatchewan Roy Romanow, and will recommend changes to the system. Will the system be sustainable? I am not sure. Despite its present seeming success, there is great political pressure on Canada's system from the American multinational drug, HMO, and insurance companies. Canada sets the price at which it will buy drugs for its one-payer medicare system by means of a complex formula. This means that Canadians on average pay much less than Americans for pharmaceuticals. You can imagine how much the American pharmaceutical companies like that. They have already pressed the Canadian government (by means of the American government) successfully for greater patent protection for their drugs in return for some research in Canada. This was under the North American Free Trade Agreement (NAFTA) agreed to a few years ago. If allowed the drug companies would raise their prices to an American level, which would make the Canadian system less sustainable.

There are other pressures too.

Canada has a neo-conservative movement much influenced by its larger brother in the United States. Heavily backed by business ( and much, even most, of Canada's business sector is owned and controlled by American companies) Canada's neocons are agitating for lower taxes. Lower taxes means spending cuts. The medicare system is a major factor in government spending. Guess what will be under pressure to be cut to achieve lower taxes?

Right. The healthcare system. The conservative Canadian Alliance party would like to introduce user fees and a great deal of privatization into the healthcare system (or abolish it, if they could). They know that they can't get elected on a platform of abolition of medicare. So, confusingly, in the recent federal election their leader Stockwell Day held aloft a sign indicating he wanted "No Two-tier Healthcare".

No one believed him. The Alliance failed to get elected in Ontario, the most populous province, and so failed to become the government. Now the party is in disarray.

Canada's universal healthcare system may or may not survive. It will change. It probably will have more and more privatization around the edges. Much of this may be good.

If it becomes more private, I hope these changes actually help the system provide more efficient healthcare. I wouldn't mind if capitalism made the system more efficient. If capitalism provided better healthcare I would want capitalism to run healthcare.

But it would be appalling if Canadians were forced by international, corporate pressure and the American government to adopt a system which worked mainly for the benefit of a few medical providers and transnational companies while shortening the length or quality of Canadian's lives.

But I do not -- exactly -- think this will happen.

For in many ways Canada's universal healthcare system seems to work better than the American system. The American system is under some pressure to work better. Many Americans have realized that the capitalist medical companies in the United States have their own interests that occasionally work against those of the citizenry, and the public wants improvement. The mammoth profits of the drug companies are under attack. It has recently been shown that some of the HMOs and insurance companies stonewall claims as a matter of policy. Doctors in the United States often have to write and bill HMOs and insurance companies 3 times to get procedures or payments clearly spelled out in their or patients' contracts.

In the scandal of all this expense and obstruction the cries for change in the United States are not being ignored, despite the medical industry's attempts to stifle or limit it. There will be reform, and in the attempts at it Canada's universal healthcare system may emerge as a useful model.

If we can keep it.

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Acknowledgment

I would like to express my gratitude for a Frontline documentary some years ago on PBS hosted by Walter Cronkite. This documentary usefully compared the Canadian and American health care systems, and raised my consciousness on these matters.

UPDATE on September 12, 2003. In the fall of 2002 a Senate commission headed by Senator Kirby, a Liberal colleague of the late Canadian prime minister Pierre Elliott Trudeau, reported on the Canadian health care system and made recommendations. I believe the commission suggested a certain small amount of privatization of hospitals and testing clinics.

The commission headed by former Saskatchewan premier Roy Romanow went further. Its report, Building on Values: The Future of Health Care in Canada, was released in November 2002. It suggested that the health care system was felt by Canadians to be an important part of their national identity and difference. Romanow suggested that the system be extended to cover drugs. He proposed specific amounts of money that should be transferred from the federal government to the provinces to fix the system. He recommended the establishment of a board to evaluate how wisely moneys transferred to the provinces for health care was being spent.

In addition Mr. Romanow "recommended special progams for homecare, catastrophic drug coverage, rural health care and the creation of multi-disciplinary teams in family doctors' offices. He also suggested bolstering the Canada Health Act, and new, more stable financing for the system. The report also called for more money for high-tech diagnostic care and rejected calls for increased private care within the system." (Globe and Mail, November 7, 2003.)

The federal and provincial governments met in February 2003 to discuss the two reports. The federal government agreed to provide more money -- 27 billion dollars over five years -- to the provinces. The federal government also insisted on a board or panel to evaluate how well the provinces spent federally provided money. The provinces seemed to reluctantly agree to the panel. (Romanow calls it the Health Council of Canada.)

Now, about seven months later, the provinces seem to have reneged on their agreement to the overseeing board. Knowing that the federal Prime Minister is to retire by April 2004, they refuse even to discuss the matter of the overseeing board until the new PM is in place.

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Notes

¹Universal Health Care, pg. 104.

²Ibid., pg. 104.

³Ibid., pg. 82.

⁴Ibid., pg. 82.

⁵Ibid., pg. 82.

⁶Ibid., pg. 80.

⁷Russell Watson, "HMOs Go Under the Knife," Newsweek, November 8, 1999, pg. 64.

⁸Universal Health Care, pg. 1.

Books to Read

Pat Armstrong and Hugh Armstrong (with Claudia Fegan, M.D.). Universal Health Care: What the United States Can Learn from the Canadian Experience. New York, The New Press, 1998, pg. 104.

Crichton, Anne, and Hsu, David; with the assistance of Stella Tsang. Canada's Health Care System: Its Funding and Organization. Ottawa: Canadian Hospital Association Press. 1990.

Rachlis, Michael, and Kushner, Carol. Second Opinion: What's Wrong with Canada's Health-Care System and How to Fix It. Toronto: Collins. 1989.

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Last slightly modified: 11:17 AM 26/10/2003