MediCanada No Rx in US

REP. Marty Russo (D) of Illinois has introduced legislation to establish a Canadian-style national health-care system in the United States. In articles promoting his plan Congressman Russo offers paeans to socialized medicine - although, given the unpopularity of socialism these days, Russo prefers the term "single-payer medicine."Russo's thesis starts from three premises: (1) "Everyone agrees that this country needs to reform its health-care system"; (2) "Everyone also agrees" that the new system should "guarantee high-quality health care to all Americans" without costing any more than the present system; (3) the "single-payer" system as practiced in Canada accomplishes this. But Russo's case for socialized health care is baseless. It is simply not true, as the congressman suggests, that the US's "multi-payer" system is alone responsible for escalating health-care costs. As the National Center for Policy Analysis has demonstrated, Americans spent 30 percent more per capita on health care than Canadians did before Canada nationalized health care. We still spend 30 percent more per capita on health than do our northern neighbors. Socialism simply has not contained health-care expenditures: Since 1970 real annual increases in health-care spending per capita have been 4.38 percent in the US and 4.58 percent in Canada. Canadian figures would be even higher if they included (as ours do) capital spending and administrative costs, including the cost of collecting and distributing the huge tax revenues needed to finance the Canadian system. The US has a higher crime rate, heavier drug use, a higher rate of urban teenage sexual activity, and a greater incidence of AIDS than Canada. These problems have nothing to do with our health-care delivery system, but a lot to do with the cost of health care. Taking these factors into account, American health spending is arguably lower than in Canada. Canada's health-care system costs too much. Even if one puts costs aside, though, Canada's is not a program whose track record we should want to emulate. As is usually the case for goods that become "free" (Canadian health care, paid with tax dollars, is "free" for patients), demand for medical care has increased rapidly in Canada, and this has resulted in rationing through non-price mechanisms. Horror stories predictably abound: * Doctors in British Columbia buy newspaper ads warning that their patients' lives are in danger because the government has refused to purchase medical technology. * More MRI scanners are installed in Washington state than in all of Canada. * Heart patients in Ontario (Canada's most populous province) are "smuggled" through an "underground railroad" to Detroit for treatment. * In January 1989, waiting lists forced Toronto's prestigious Hospital for Sick Children to discharge 40 youngsters needing heart surgery. * In northern Alberta, patients wait a year for cardiovascular operations at the only hospital authorized to provide this service. When it comes to managerial efficiency, hospitals under bureaucratic control just can't match institutions run by the likes of Humana or Hospital Corporation of America. The Alan Guttmacher Institute has calculated that Health Maintenance Organizations (HMOs) like Kaiser Permanente deliver health care at 65 percent of the cost of Canada's bloated bureaucracy. health-care economists do agree that widespread inefficiencies exist in the US health-care system: But this is because of too much government regul ation - in Medicare and Medicaid, in the tax treatment of health insurance, and in expensive state insurance requirements - not too little. In Canada, the long wait for operations continues to grow, even though 17 percent of hospital beds are always empty. In addition, about one in four occupied beds is used by a chronically ill patient seeking a "free" nursing home (at several times the social cost of alternative facilities). A health insurance program like Canada's would require $300 billion in new taxes. If the program were funded by a payroll tax, FICA rates would rise from 15 percent to at least 30 percent. If funded by an income tax, marginal tax rates would increase by 16 percentage points. A "national health insurance" would make our tax burden as high as Britain's. Are working Americans prepared for marginal tax rates above 50 percent to fund an inefficient health-care system? US government intervention is not needed to mimic foreign "global budgeting" methods. Under "global budgeting," hospitals, physicians, and other providers are told how much money they may spend: then they ration health care within this budget. This methodology could be emulated by Congressman Russo. For example, he and other likeminded advocates on Capitol Hill could form Stingy HMO (SHMO). The amount of money given to SHMO each year would be 75 percent, or 50 percent, or some other percentage of what was previously spent. Anyone disliking SHMO's cost-cutting schemes could choose to pay for a different health-care option. This "multi-payer" scheme is substantially what we have today. Two types of people would not want to join SHMO: (1) those whose health-care preferences don't coincide with SHMO policies; and (2) those whose true goal is to spend more (not less) on health care and to impose these higher costs on unwilling individuals. The former would exercise consumer sovereignty in health-care decisions as they do for other vital goods like food and housing. The latter must of course reject all market options. Their mission requires the coercion that only "single-payer" health care can provide.