Real Health-Care Reform
In health care, Canada and Europe provide great models of what not to do.


‘I am not the first president to take up this cause [health-care reform], but I am determined to be the last.” You’ve got to give President Obama credit for his boundless self-confidence: He has never met a problem that he wasn’t destined to fix. It might come across as charming naïveté, however, to the leaders of Canada, the U.K., France, and Germany, where health-care spending remains a sticky and expensive problem despite “solutions” that date back to Bismarck.

A glance at our wealthy competitors reveals not a benighted America ignoring the commonsense solution (i.e., single-payer health care) embraced by our “civilized” cousins, but rather very similar systems struggling to match limited resources to aging populations and rapidly advancing medical technologies.

Third-party payment systems (translation: “Somebody else pays the bill”) in the U.S. and other affluent nations create the illusion that health care is free or nearly free to the patient when he walks into the doctor’s office or needs a hospital bed. But nothing is more expensive than “free” health care.

In the U.S., thanks to a tax rule dating from World War II, employers typically pay most of the cost of private health insurance for their employees — a disguised form of compensation. This increases health-care inflation, as workers opt for health-insurance plans with high pre-tax premiums and low post-tax deductibles. Private-health-insurance premiums have nearly doubled since 2000. And remember: Every dollar that goes into your employer-sponsored health insurance is a dollar that comes out of your take-home pay or 401(k).

Government safety-net programs for the poor (Medicaid) and the elderly (Medicare) aren’t in any better shape. There is no Medicare “lock box” that pays for seniors’ coverage: Current workers pay the medical bills for today’s seniors, and as the balance between workers and retirees tips into the baby-boomer abyss, the program faces a long-term deficit of some $38 trillion. Medicaid spending is split between the federal and state governments, meaning that no one really controls spending. In 2008, the Office of the Actuary for Medicaid estimated that Medicaid spending would increase by nearly 8 percent annually over the next ten years, reaching a staggering $670 billion by 2017.

Well, what about handing over the entire health-care budget to Uncle Sam? Sure, Medicare and Medicaid aren’t paragons of fiscal virtue now, but maybe if we doubled down, things would improve.

Government-dictated health-care budgets can undoubtedly hold down costs in the short run by squeezing doctors, hospitals, and drug companies, who have no choice but to sell to their one and only customer. But in the long run, rationing takes its toll, as doctors retire or refuse to take on new patients, waiting lists lengthen for scarce hospital beds, and medical innovation stagnates as investment capital for new drugs shifts to other, more lucrative sectors. In short, single-payer systems can starve health-care providers of funding for only so long before facing the inevitable consequences.

What are those consequences? Consider some recent news from Canada and Europe:

In 2005, in response to a challenge by a physician operating a private (and therefore technically illegal) clinic, the Canadian supreme court ruled that, under the Quebec Charter, access to a waiting list was not the same as access to health care. Emboldened by the Quebec example, more than 70 private clinics now operate in British Columbia, offering MRIs and surgeries in days or weeks; by contrast, it can take public hospitals months to provide these same procedures. Brian Day, former director of the Canadian Medical Association, recently told the Los Angeles Times: “What we have in Canada is access to a government, state-mandated wait list. . . . You cannot force a citizen in a free and democratic society to simply wait for health care, and simply outlaw their ability to extricate themselves from a wait list.” The supreme court of British Columbia may soon rule on whether these services are legal, which could further splinter the government’s monopoly on health-care spending.

Despite massive increases in government spending on the National Health Service (NHS) over the last several years (the NHS budget has tripled since 1997), the U.K. still lags behind Europe and the U.S. when it comes to the treatment of chronic disease. In 2007, The Lancet Oncology reported that England’s cancer-survival rates were among the worst in Europe: They were equal to Poland’s, despite the fact that England spends at least three times as much on health care as Poland does. For women, England was sixth worst out of 22 countries surveyed. (The U.S. led in overall cancer-survival rates for both men and women.) In June, NHS officials released a report warning of a “huge budget shortfall” starting in just two years.