ZOMBIES
By Louis Erlichman
Canadian Research Director
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In my article in the IAM Journal for April – June, 2001 on health care, I referred to a number of myths about health care that have been called “zombies” by health economist Robert Evans, because they are common but inaccurate ideas that refuse to die, and just keep walking around and doing damage.
Here are some of the most common zombies:
“Health care is like any other product, and people should be able to buy it as they like”
Health care is not like any other product. Beyond an initial visit to a doctor, it is medical professionals who control our access to the medical system, particularly the highest-cost parts of the system. Whether or not we have open heart surgery is not a matter of individual choice, a product you can choose to buy or not, but a question of medical judgement, and the availability of resources.
Even if we each had the money to buy heart surgery, we couldn’t organize it on our own. It would only be available if someone had built the facilities and trained the staff. Necessary medical services should be a right, and introducing a more “market-driven” system won’t make it more effective, cheaper or fairer.
Effective markets depend on wasteful excess capacity to stimulate competition, so that the injection of more market incentives into health care are more likely to increase, rather than decrease, costs. The bloated U.S. system provides the best evidence of the failure of the market in health care. They pay much more for less, in terms of results (millions left uncovered, lower life expectancies).
In a system of “for-profit” facilities, the people owning the facilities have an incentive promote their use, whether or not it is medically-necessary. Someone owning a CAT-scan machine or a clinic doing coronary bypasses is more likely to recommend CAT scans or bypasses than someone who has no direct interest. A not-for-profit system allows for resources to be allocated based on need rather than profit.
“If we can leave other essential goods, like food and shelter, to the market, why not health care?”
There is a key difference between health care and other essential goods. A key feature of health care coverage is “catastrophic insurance”. Unlike food and shelter, where our requirements are generally consistent and predictable, we often have little need for health care services over many years, and suddenly require a huge expenditure as the result of an accident or the onset of disease. As we can see in the U.S., private insurers do their best to avoid “high risk” people and limit their liability for catastrophic coverage, dumping it on the public system, which improves their bottom line, but provides no savings to the overall system.
“Canada has a highly-bureaucratized, socialistic medicare system”
Actually, Canada ranked 19th out of 22 western industrialized countries in 1997 in the government-paid share of total health care spending. It is interesting to note that the U.S., with the lowest share of government-paid health care spending, has undoubtedly got the most bureaucratized system anywhere, swamped by restrictions and paperwork imposed by private insurers and Health Maintenance Organizations (HMOs). The U.S. model shows that private insurance means less, not more, individual choice.
In fact, because the U.S. system is so inefficient and the U.S. spends so much more on health care overall than anyone else, that government spending on health care in 1997 actually took a higher share of the Gross Domestic Product in the U.S. than in Canada.
“Introducing User Fees will cut costs by reducing unnecessary visits to the Doctor or Clinics.”
Apart from the fact that user fees are highly discriminatory, discouraging only the poorest people from making needed visits to a doctor (unless the user fees are very high, in which case they will also discourage a lot of visits by middle-income people), they probably increase overall health care costs.
Initial visits to a doctor or clinic are the cheapest parts of the system. Discouraging such visits reduces the likelihood of early detection and treatment of medical problems, and increases the need in the long run for more expensive things like surgery and hospitalization.
“For-profit facilities will free up public facilities and get rid of waiting lists”
This proposition contains a basic contradiction. The success of for-profit facilities depends on inadequate public resources. Why would anyone pay for tests or care, if good public facilities were available for free? Private providers with for-profit facilities have a strong incentive to ensure that public facilities are inadequate. If more facilities or services are needed, they can be provided more cheaply and efficiently on a not-for-profit basis.
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