Dan McLaughlin

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To Home Page Latest Newsletter Column Archives Click to get these columns for your local paper	© 2007 Daniel J. McLaughlin Universally Unhealthy I would sometimes go out to lunch with a group of people where I used to work. I am not much of a lunch eater so I would usually order something rather light and inexpensive. Other people in the group liked having big, expensive lunches. That is fine. Everyone has their own tastes. What usually occurred, however, was that the group would decide to split the bill evenly to make it easier. As it happened, I got a salad but paid for a part of everyone else’s appetizers, drinks and expensive entrées. Thus, I usually opted out of that group. It was not in my best interest to continue paying for their big lunch. When I did eat with them, I had the incentive to order more expensive items, appetizers, the whole works so that I at least got what I paid for. That situation offered perverse incentives. Rather than getting just what I wanted, the incentive was to use everyone else to get as much as I could. If you multiply the lunch situation by 300 million people and add in layers of complexity, you can get some idea of the perverse economics of government controlled health care systems. In The United States, health care is currently a mish mash of perverted incentives, supply restrictions, price controls, mandated insurance and services, and hyper-inflated demand due to massive government health care spending. Manipulations and distortions at all levels of government remove any semblance of market order from the system. What is the solution? There are many health care systems from around the world to examine. One glaring example of what not to do is our neighbor to the north. They have had years of experience with universal health care, or socialized medicine, and the people have the battle scars to prove it. A simple example will tell the story. The doctor of a 66 year old man who lived in Ontario suspected the possibility of brain tumor from symptoms the man experienced. In January, he ordered an MRI, just to be sure. The MRI could not be scheduled in Ontario before May 27^th. On February 2^nd, after suffering daily headaches and seizures, the patient went to Buffalo, NY to get the MRI and found that there was, indeed, a brain tumor. He returned to Buffalo on March 6^th for a biopsy. Finding it malignant, the doctors decided to perform immediate surgery to remove the tumor. He is now cancer free. In Ontario, private medical care is outlawed and patients must proceed through the official government channels. The operation, had he proceeded as required by Ontario law, would not have been completed for as long as 8 months. His chances of fully recovering after an 8 month wait would have been drastically reduced, if he survived at all. The Fraser Institute publishes a list of the wait times for the various medical procedures in the different provinces of Canada, and it is eye opening. On average, you can expect to wait 8 weeks to see a specialist after a general practitioner makes a recommendation, and another 9 and a half weeks before the procedure is performed. Orthopedic surgery has a typical wait time of 40 weeks from general practitioner referral until surgery. There is nothing different or mysterious about health care. It is a service industry in a particular market. Without coercion and manipulation of markets, there is an absolute tendency in every industry for prices to decrease dramatically while quality increases. The high tech sector is a great case in point. The prices of technology keep dropping, even as the capacity and usability improve. Why does the market for health care experience the opposite tendency, toward significantly higher prices? The difference is that government controls many aspects of the health care market. Luckily for Americans, as well as Canadians and others seeking quality care, American government has not yet destroyed the health care market as completely as other governments have. Quality care is at least still available. The case is being made for universal health care in this country, following other failed systems. Quality health care cannot be made affordable and readily available in any country without a market free of government manipulation. The more government gets involved, the more the economics of that market are distorted. As is demonstrated by so many experiences around the world, with the exception of the politicians and the well connected, universal health care will tend to make everyone universally unhealthy.
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Daniel Mclaughlin Copyright © 2006 [Daniel McLaughlin]. All rights reserved. Revised: 03/18/08

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Universally Unhealthy

I would sometimes go out to lunch with a group of people where I used to work. I am not much of a lunch eater so I would usually order something rather light and inexpensive. Other people in the group liked having big, expensive lunches. That is fine. Everyone has their own tastes. What usually occurred, however, was that the group would decide to split the bill evenly to make it easier. As it happened, I got a salad but paid for a part of everyone else’s appetizers, drinks and expensive entrées. Thus, I usually opted out of that group. It was not in my best interest to continue paying for their big lunch. When I did eat with them, I had the incentive to order more expensive items, appetizers, the whole works so that I at least got what I paid for. That situation offered perverse incentives. Rather than getting just what I wanted, the incentive was to use everyone else to get as much as I could.

If you multiply the lunch situation by 300 million people and add in layers of complexity, you can get some idea of the perverse economics of government controlled health care systems. In The United States, health care is currently a mish mash of perverted incentives, supply restrictions, price controls, mandated insurance and services, and hyper-inflated demand due to massive government health care spending. Manipulations and distortions at all levels of government remove any semblance of market order from the system. What is the solution?

There are many health care systems from around the world to examine. One glaring example of what not to do is our neighbor to the north. They have had years of experience with universal health care, or socialized medicine, and the people have the battle scars to prove it. A simple example will tell the story.

The doctor of a 66 year old man who lived in Ontario suspected the possibility of brain tumor from symptoms the man experienced. In January, he ordered an MRI, just to be sure. The MRI could not be scheduled in Ontario before May 27^th. On February 2^nd, after suffering daily headaches and seizures, the patient went to Buffalo, NY to get the MRI and found that there was, indeed, a brain tumor. He returned to Buffalo on March 6^th for a biopsy. Finding it malignant, the doctors decided to perform immediate surgery to remove the tumor. He is now cancer free.

In Ontario, private medical care is outlawed and patients must proceed through the official government channels. The operation, had he proceeded as required by Ontario law, would not have been completed for as long as 8 months. His chances of fully recovering after an 8 month wait would have been drastically reduced, if he survived at all.

The Fraser Institute publishes a list of the wait times for the various medical procedures in the different provinces of Canada, and it is eye opening. On average, you can expect to wait 8 weeks to see a specialist after a general practitioner makes a recommendation, and another 9 and a half weeks before the procedure is performed. Orthopedic surgery has a typical wait time of 40 weeks from general practitioner referral until surgery.

There is nothing different or mysterious about health care. It is a service industry in a particular market. Without coercion and manipulation of markets, there is an absolute tendency in every industry for prices to decrease dramatically while quality increases. The high tech sector is a great case in point. The prices of technology keep dropping, even as the capacity and usability improve. Why does the market for health care experience the opposite tendency, toward significantly higher prices? The difference is that government controls many aspects of the health care market. Luckily for Americans, as well as Canadians and others seeking quality care, American government has not yet destroyed the health care market as completely as other governments have. Quality care is at least still available.

The case is being made for universal health care in this country, following other failed systems. Quality health care cannot be made affordable and readily available in any country without a market free of government manipulation. The more government gets involved, the more the economics of that market are distorted. As is demonstrated by so many experiences around the world, with the exception of the politicians and the well connected, universal health care will tend to make everyone universally unhealthy.

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