From Whose Health Care
December 2005
But health care, like education, also needs equal involvement of all citizens. So long as judges depend on the same health services as janitors, judges (and politicians and senior policy-makers) will see that they are adequately funded and well run. As soon as the powerful stop relying on it, it starts to be allowed to decline. The rich don’t use it and they don’t want to pay taxes for it.
The propagandists for the rich – the Fraser Institute and the like – use three main arguments. One is that the share of national income devoted to health care is already too high. But there is no particular proportion of the national income which should be spent on health care. The fetishism around this is due to the fact that health care in Canada and most other rich countries is financed out of taxes, and the more affluent don’t want to pay what only a few decades ago was seen as their reasonable share of the cost of services enjoyed equally by everyone.
The fact that 14 per cent of the national income in the USA – half as much again as in Canada and the UK– is spent on health care doesn’t arouse concern in the US media. Why? Because only some of this is paid for out of taxes. The rich can buy their own health care on the market, without having to pay much in taxes for anyone else’s.
The second argument advanced by the right is that private provision, driven by competition, is more efficient. Yet all the evidence points the other way. The U.S. is the best source of evidence on privately-provided health care. As pointed out above, while spending 14 per cent of one of the highest national incomes in the
world on health care, the US market system leaves between 45 million and 75 million people (depending on how you measure it) with no health coverage at all.
In addition, the administrative or ‘transaction’ costs of health care in the USA, where every procedure and swab has to be recorded and billed for, where hospitals and doctors advertise to get patients, and where legal fees and fraud make off with huge sums, are conservatively estimated to consume no less than 25 per cent of all health care spending – double the UK figure (and more than four times what the UK percentage was in the 1970s, before Mrs. Thatcher started to ‘marketise’ the National Health Service). And the health of U.S. citizens is no better than those of any other OECD country. On some indices their health is significantly worse.
The third argument is that ‘two-tier’ provision as it operates in Europe brings in additional resources – from the ‘top-up’ fees paid by the better-off for speedier service or ‘enhanced’ treatments – and gives more satisfaction. This is really a call for private access to better health care, and would hardly be worth challenging if it were not that appealing to the ‘European model’ is apt to seem persuasive. If it works in France or Britain, people may feel, why not in Canada too?
But in fact the European experience doesn’t support this argument at all. What is really going on at the moment is a world-wide drive by the private health industry to open up tax-funded (or ‘social insurance’ funded) health care as a huge source of almost risk-free revenues. Its lobbyists have captured the WTO and the OECD and to a large extent the WHO, so that European governments are under huge pressure to open up their health care systems to ‘market providers’, and they have increasingly succumbed to this pressure.
Britain is a leading example. Not content with already having a two-tier system, with expensive, mostly company-paid health insurance for the affluent, Blair’s government has committed itself to the creation of a full health care quasimarket, in which the publicly-owned National Health Service or ‘NHS’ hospitals will have to compete with supposedly more efficient private providers. But the story so far shows that the privatizers’ arguments are completely false.
NHS hospitals no longer get annual budgets, as in Canada, but are paid for each completed individual treatment, at prices set nationally by the government, and any private health care provider that wants to can bid to treat NHS patients at these prices. The idea is that competition from private providers will make the NHS hospitals more efficient. So private health care corporations were invited to begin by setting up ‘Independent Sector Treatment Centres,’ surgical clinics specializing in highly standardized, low-risk surgery – mainly cataracts and hip and knee replacements – which were seen as offering the best prospects for the
supposedly more efficient private providers to make a profit. But the government then found that none of them was willing to do this at the prices paid to the NHS.
So in desperation the government is paying them 40 per cent more than NHS prices – and guaranteeing them a supply of patients for five years; i.e., not competition, but featherbedding! The reality is that NHS hospitals, with internally well-integrated services treating all types of illness and surgical needs, can do it far more cheaply – and more safely.
Whether private health care corporations will go on getting special deals from the British government allowing them to make money, in spite of being less efficient than the public hospitals, remains to be seen. What is plain is that they offer no magic formula for being cheaper.
The other slogan used by the British government in support of its drive to bring in private providers is ‘patient choice.’ By the end of next year people are supposed to be able to choose to be treated at any hospital in the country – including any private hospital that will treat them at NHS rates. A survey by the government’s own Consumer Council showed, however, that the great majority of people don’t want to choose between hospitals, any more than they want to choose between post offices. What they want is to have a really good hospital near them.
When Prime Minister Blair had a heart problem last year he didn’t want a choice, he wanted good care, promptly, and got it in an NHS hospital in London. Very few people want anything different.
To take another European example, France is often cited as showing the advantages of a ‘two-tier’ health service, including private provision. In fact, very little in the French system is really for-profit. All hospital medical costs (as opposed to the ‘hotel costs’) are covered by insurance premiums paid to state-controlled insurers, or by the state, and paid at rates set by the state which are the same for private as for publicly-owned hospitals. The popularity of the French system seems largely due to having been better financed than most, and setting very few limits to what either patients or doctors could do.
But this has made it expensive, and the French government is currently on a campaign to cut costs by introducing restrictions, chiefly by instituting some limited ‘gate-keeping’ for access to specialist care, to stop what the French call ‘medical nomadism’ – people seeing several different doctors for the same complaint
– and also by trying to limit excessive spending on drugs and sickness benefit (income support for people certified as ill by their doctors), and false billing by doctors. But an earlier de-listing of a vast range of useless drugs already caused a strong public reaction. Now the government is aiming to cut costs through a new
system of inspection and penalties. It is not clear that this is going to save more money than it costs (in increased monitoring, a huge IT program to create a universal patients’ records system, etc), and it will certainly be resisted.
The French system thus does not support the idea that ‘two-tier’ insurance and private provision makes for cheapness or efficiency. Private provision in France is actually very limited, and shows no signs of boosting efficiency in the rest of the system. If anything, private sector pressure to keep fees high has contributed
to making the French system exceptionally expensive.
In general, what the European experience shows is that private and ‘twotier’ provision is both more expensive and socially divisive. The decisive ‘no’ votes in both France and the Netherlands on the proposed EU constitution, which endorsed the private provision of public services, show that people understand this. West European governments, at least, will encounter more and more resistance to any further attempts to privatize health care and make it less egalitarian.
Canadian governments should beware of putting the ambitions of their friends in the health care industry before the wishes of the electorate.
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