How Can the Market Increase Freedom of
Choice in Health Care?

By Jason Brooks, Journalism and History, Carleton University

Imagine the federal government outlawed private grocery stores, and passed a law that said you could only buy your food from government-owned stores. You wouldn’t exactly have to “buy” your food, either; it would be “free.” Skeptical? Our food system would be the “envy of the world,” according to officials from Food Canada. No one would go hungry. There would be no two-tiered food system in this country.

No half-witted Canadian would buy a pitch like this. We know what happens when you socialize the food system. We’ve seen pictures of it on television: lines of weary Soviets waiting hours for a loaf of bread. We know a socialized food system brings shortages, corruption, backwardness and inefficiency, as incentives and the pricing system are thrown out.

So why in Canada, do we put up with—almost unquestioningly—socialized health care? What seems obviously ludicrous when we consider socialized food, is hard for many Canadians to recognize when it comes to health care: socialism doesn’t work.

Our health care system is a predictable mess. In 1996, Canadians waited 10.9 weeks for treatment from the time they were referred to a specialist from a general practitioner—up by nearly a week from 1995—according to the Fraser Institute’s annual report on hospital waiting lists.1 Statistics don’t portray the barbarism: the people waiting months in pain, helpless to make their own choices in a government-run system; the cancer patient in Ottawa, who felt “like a convict sitting on death row,” when her surgery was postponed due to bed shortages, leaving her to wonder if she would die waiting.2 Some do die waiting. Nurses across the country tell stories of patients whose lives have been endangered, or who have died, waiting for care in crowded emergency rooms. In February, a 66-year old Montreal woman died on a stretcher in an emergency room, her death unnoticed for over an hour by overworked nurses and a doctor on duty. Across the country, people routinely die on waiting lists for critical heart bypass surgery. How many die because of the line-ups, nobody knows.

... when it comes to health care, socialism doesn’t work.

The Canadian patient, helpless, hopeless, has few choices. The costs the patient bears are often enormous. There is the physical pain, the psychological agony of waiting months on “death row” for treatment, or diagnoses. There is lost income and other lost opportunities as line-ups for treatment force people to take extended leave from work.

Many would gladly spend extra money from their own pockets to speed up treatment, but this is prevented by the Canada Health Act, which in essence forbids most private medicine in Canada. In Canada, you can pay out-of-pocket to get a root canal, but you can’t buy heart surgery—unless it’s for your pet. Those looking for extra health coverage must leave the country to buy it, thus eliminating this possibility from the budgets of much of the middle class.

One reason most people can’t afford to travel to the US for treatment is that we already pay so much, through taxes, for the system we have. Despite crowded hospitals, and long lines, Canadians pay more for their health care system than every country in the world, save the US and Switzerland. Hospital restructuring commissions point to hundreds of millions of dollars in waste: too many hospitals, hospital stays that are too long, diagnostic services such as MRI machines that are poorly managed. But wasn’t it obvious from the outset the system would be inefficient? Unlike most areas of our economy, there’s virtually no competition in the health care sector to ensure value for dollars. The system is designed to be inefficient.

Why is the system like this? Why does our health care system take choice away from patients, provide inadequate care, and at the same time cost so much money—roughly 10 percent of our GDP? The system, like any socialist system, does not by nature cater to the needs of customers, in this case, patients. It caters to political needs. When government spending was heavy, in the first three decades after WWII, governments built more hospitals than we could possibly need. Today, deficit-fighting is the preoccupation of governments, so health-care funding is being cut, even though an aging population will need more care in the future. Neither building hospitals nor closing them has anything to do with patient demand. It is purely the product of political agendas.

Most Canadians favour an increase in health care spending. But by how much? What is the “right” amount? Nobody knows. The pricing system—the determinant of resource allocation in most areas of the economy—is absent.

As a solution to the current “crisis,” it is instructive to consider another commodity mentioned at the beginning of this article—food. Governments provide a framework within which every Canadian can be fed. Yet the government doesn’t own grocery stores. We all buy food, we face no shortages, nobody starves to death in line, we have selection and competitive prices. Why not for health care?

True, health care is vital for sustaining life. But food is more so. Health care is expensive, but so is food: the per capita expenditure on food is almost as much as on health care.1 The importance of health care is more reason, not less, to privatize it.

In Canada, free markets don’t mean poor people starve: governments provide welfare. The health care system would be much more responsive to the needs of patients if the government simply ensured everyone had enough money for basic health coverage—a level of coverage, say, equal to what is offered now—rather than control the entire health care system.

Private health care has been successful in other countries. In the UK, for example, a mixed system is accepted by all sides of the political spectrum. In that nation, even advocates for the poor accept private health care, because it doesn’t mean worse service for anyone, it means better service for all, because a free market increases efficiency through competition, and gives patients choices. A free market doesn’t prevent government from subsidizing individuals; it just provides a more efficient system for the delivery of care.

To open the health care market, the Canada Health Act needs to be amended. Beyond providing a health subsidy to those who need it, it seems logical the government should require all Canadians to carry a basic level of health insurance to provide for “catastrophic” illnesses. Beyond that, consumers deserve choice. If people want to spend more on their health care, let them.

Will private medicine mean inequality? Yes. Inequality exists even now: waiting times for treatment differ across the country, those who personally know doctors jump queues, and the rich routinely seek medical care in private US hospitals. But unless our goal is to create another Soviet state, our focus should be on quality for everyone, not equality, which was a myth even in that country.

[Editor’s note: This entry won Jason Brooks the first prize in the Fraser Institute’s 1998 Student Essay Competition sponsored by the Henry & Berenice Kaufmann Foundation. Jason spent the summer in Washington, DC, as an intern with Reason Magazine as part of a Koch Fellowship.]

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Last Modified: Wednesday, October 20, 1999.