The Ideal Healthcare System


Don Boudreaux writes that the Canadian healthcare system -- the rules and regulations imposed by the Canadian government on its apparently grateful peons -- is inevitably dysfunctional:

And yet, many Canadians continue to fancy themselves "lucky" to be saddled with such a system for providing their health care....

How on earth can a system that invites consumers to treat a scarce good as if it were free possibly work? Isn�t it inevitable � isn�t it utterly unavoidable � that any such system will suffer dysfunctions and troubles that make consumers worse off rather than better off?

I think this both identifies and ingores the critical point about health care/insurance in modern democracies: this dysfunctional system is exactly what people want.

I am guessing that in the common wisdom of Canadians and Americans, the very archetype of a "good" health "insurance" plan -- and hence an ideal "healthcare system" -- is one in which all the care one wants comes without delay or cost. The essential principles of this ideal are very simple; in terms of the American consumer:

1) the full premia are paid by one's employer or the government

2) there is no co-payment for any office visit

3) there is no co-payment for any prescription medication

4) all pre-existing conditions are covered in full

I'd also suggest the following criteria, but these are not as important as the first four:
5) any doctor -- especially top-notch specialists -- can be seen just by making an appointment, preferably on the same day

6) all surgical, restorative, remediable aspects of dental and vision care
are completely covered

7) whatever the patient asks for -- x-rays, antibiotics, anti-depressants,
repeated toxin screening, appendectomies -- is provided immediately without question

That these criteria are unworkable in reality is irrelevant; the healthcare system in utopia is not subject to the constraints of scarcity or opportunity cost.


There are some important corollaries, all based on the following theme:

If I cannot get what I want, when I want it, for a zero price, then you should not be allowed to pay for it and get more of it or get it sooner than I can. I have more here:

the ideal health plan is one where I have all that swell stuff but I don't have to pay for everybody else having all that swell stuff. And that's what we have! Most of the movers and shakers and fortunates have some kind of nice health coverage (I have Cross&Shield, mostly paid by my employer, minimal copays, nice access to specialists) but people lower on the food chain have less.
So I have little incentive to rock the boat, and people with less boat-rocking capability (but, more boat-rocking incentive) don't have allies.

The Canadian system I don't know much about, but I do know that teh US System is the best in the world - in the sectors where markets work, such as laser eye surgery and cosmetic dentistry.

In both those areas we see quality of service improving constantly, prices falling, and lots of new and better procedures. But why do markets work so well in these (and a few other) sectors?

The question answers itself. We all know what markets need to work - price visibility and lots of other information, lots of suppliers and providers, and the ability of all parties to keep the gains from transactions.

In both laser surgery and consmetic dentistry, you find that consumers and not third parties are paying for their own care, that consumers have lots of time to reasearch differnt providers (and thanks to the internet, lots of information from previuos patients), are paying for 'optional' and not life saving treatments and so again have lots of time to choose, and superior service providers are free to earn and keep superior profits.

Prinicpase 1 thru 4 up there will short circuit markets, not help create them. No system can give everyone all that they would want. That's why they invented the study of economics in the first place!

Bringing market competition the rest of the healthcare industry is the way forward, but it beats me how to do it. You can't go shopping for doctor when you're having a heart attack, and even if you could, how could you tell whether you needed a high or low level of services? It's the car-repair dilema times a million.


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This page contains a single entry by Kevin published on March 21, 2005 4:09 PM.

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