Canada Health Care History
Solving the Health Care Dilemma
How many people do you know who think their Congressperson has the answers to providing health care in America? Or, their Senator? George W. Bush? Barack Obama or Hillary Clinton? Or, for that matter, any politician? Do they really have the answers?
If they can’t do it, then how about the politicians in Canada, or Great Britain? Have they solved the problem in their societies? Some people believe they have. However, in England, where the private practice of medicine was outlawed when socialized medicine was first established there, they were eventually forced to reverse their policy and permit the public to go outside the government’s system to obtain health care from private physicians.
In Canada today, the story is much the same. Many Canadians come to the U.S. for emergent needs, such as bypass surgery, because the waiting time in Canada is interminable, often many months before their citizens can get life-saving treatment when they need it.
State-Run Health Care
All state-run health care systems have one thing in common: rationing. Not necessarily involving the use of ration cards, but rationing nonetheless. Rationing of resources. The cause is a devilishly simple principle that’s present in all nationalized health care programs. That is, it’s free, or so low cost that it’s almost free. Basic economics clearly demonstrates that whenever something is free, the demand quickly becomes unlimited. The lower the price, the greater the demand. Give something away and you can “sell” everything you have and more.
However, the flip side of unlimited demand is a shortage of supply. And, not having enough doctors, nurses, or expensive equipment, such as CAT Scans and MRIs, eventually leads to rationing. Without enough health care to go around, rationing becomes a necessity. That has been the failing with nationalized health care in England, Canada, Germany, Japan, the former USSR, everywhere it has been tried.
So, if there are no politicians who really know what should be done to solve our health care problems why do we keep expecting them to come up with the answers?
Just exactly what are the problems? Too many uninsured? Too high cost? Poor quality? Lack of availability? All of the above? Do you know or think you know?
What have been the government’s (read politicians’) solutions to date?
Health Care Policy
National health care (socialized medicine) in one form or another is the primary health care policy that is gradually being adopted in America. And it is slowly but surely lowering the quality of the health care we are getting. Talk to any doctor you trust and see if they don’t agree. They will tell you that they are working much longer hours for far less money, that many physicians are retiring early or converting to “concierge” practices because they are fed up with the government and insurance company bureaucrats telling them how to practice medicine. Consequently, there is a growing shortage of doctors and nurses.
But, you may say, we don’t have socialized medicine in America! Perhaps not yet, but we’ve been moving in that direction for some time, and we seem to be going further down that path as the years progress. It’s a slippery slope. For example, consider Medicare.
But, Medicare is not socialized medicine, you may insist.
Unfortunately, it is, or is headed that way. Why? For one thing, it’s a system that’s based on price controls.
Price Controls
Price controls have never worked, ever, in any society at any time in history. They were tried as early as 301 A.D. by a Roman emperor, Diocletian (243-316 A.D.) who implemented price controls under penalty of death. But, even that didn’t work, and it hasn’t worked since. What price controls do is cause shortages, increased costs and disrupted markets.
Look at what has happened to the Medicare program since 1984, the year the government changed its method of paying for hospital services from a “cost plus” to a system called DRGs (Diagnostic Related Groupings). DRGs are a method of classifying illnesses and assigning a comparative value and a specific authorized payment to each. At that point, many hospitals began to lose money because the government started dictating the prices that are paid for inpatient care.
As much as 70% of many hospitals’ patients are seniors, whose bills are paid by Medicare. The Federal Health Care Financing Administration (HCFA) determines, in its sole discretion, the prices that can be charged for seniors’ inpatient hospital care, and then pays only 80% of those amounts. The differences between a hospital’s standard fees for service and the amounts that Medicare pays must be written off. They cannot be collected from the patient. That’s price control.
Furthermore, because Medicare payments are determined solely by the government, annual cost of living increases are limited, generally to between 1-1/2% and 2-1/2%, in spite of the fact that hospital costs have been rising for years at an annual rate of anywhere from 6% to 14%.
Another little known fact about Medicare is that seniors are prevented from seeking care outside the Medicare system, even if they are willing to pay the bill themselves. Any doctor who accepts payment directly from a senior who is covered by Medicare is automatically disqualified from providing care to all Medicare patients for a period of two years. This is especially important in situations where a patient wants a second opinion and would like to see another doctor. That type of regulation is certainly an element of socialized medicine.
Many Hospitals Lose Money
Between health insurance contracts (HMOs) and Medicare limits on their charges, hospitals generally collect only about 50% of their total billings. The rest is written off. The result of all this is predictable: many of them are losing money. About one-third of all hospitals in California are currently operating at a loss. With a national health care plan, at some point, many hospitals would either be closed or services curtailed. That’s been the pattern in every country that has nationalized its health care. Nonetheless, that seems to be where we are headed, in spite of compelling evidence that it doesn’t work.
Like the proverbial frog being cooked in a pot of cold water, Americans are gradually becoming aware that the quality of their health care is declining, even as costs continue to rise. It just hasn’t sunk in yet. When it does, they will undoubtedly be led into believing the government has the answers and demand more government control, regulation and oversight. And, our politicians will be only too willing to oblige.
Nationalized Health Care
Nationalized health care in America is gradually overtaking the free market, and we are all being slowly cooked in the pot of government intervention. So, don’t be surprised at the type of health care program we get as time progresses. Whatever your own conclusions, remember one thing: that our politicians won’t have to rely on whatever health care plan they establish for everyone else. As usual, they will have their own, superior plan. And, it will not be a part of the nationalized health care system that the rest of us will be required to use. If you doubt that assertion, just look at the health care plan that our Federal legislators and government employees have now.
In the interest of full disclosure, I’m one of those seniors who has Medicare health insurance coverage and I ran a hospital for about seven years.
© 2008 Harris R. Sherline, All Rights Reserved
About the Author
Harris Sherline is a retired Certified Public Accountant and executive. His diverse business background includes experience as a partner in a public accounting firm, as a principal in a number of business ventures and as CEO of a hospital. His conservative commentaries appear weekly in two Santa Barbara newspapers. In addition, his op-ed articles currently appear regularly on three widely read web sites and his own weblog,
Opinionfest.com.
Making Medicare: The History of Health Care in Canada
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