Under a single-payer system, patients’ needs are overshadowed by the priorities of government officials.
To illustrate how deeply some people have embraced a universal, state-directed health system as a nearly sacred belief, I don’t have to search far beyond the emails I received after my previous column. In that piece, I argued that government meddling in health care is driving up costs, draining the federal budget, and fueling American discontent with the quality of care. Yet my readers insist that expanding government control with a Medicare-for-All approach would fix the very problems caused by that interference.
They aren’t alone: Left-leaning candidates, such as Abdul El-Sayed, who sought the U.S. Senate seat in Michigan, have made this policy a central plank of their campaigns.
Well, if America’s experience with government meddling in the patient–provider relationship doesn’t persuade, perhaps Canada’s example will carry more weight.
Earlier this month, the Fraser Institute in Vancouver, British Columbia, released a study detailing the shortcomings of Canada’s single-payer health system.
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A Healthcare System That Serves Government Bureaucrats
An assessment of how money is spent throughout the health-care system concludes that the needs and preferences of patients play a small and indirect role in the allocation of health-care resources, having only limited input through the political process, according to authors Nadeem Esmail and Steven Globerman. The system appears to be oriented toward the priorities of government decision-makers and bureaucrats, while health-care providers do not compete to serve patients but instead compete for government funding and their slice of the health-care budget.
Curiously, Canada’s single-payer, tax-supported framework is commonly labeled “Medicare.” It mirrors much of what proponents of Medicare for All advocate, and it’s the kind of system some progressives urge to import nationwide, while criticizing mainstream Democrats like House Speaker Hakeem Jeffries for resisting a full state takeover of medicine. Jeffries championed Medicare-for-All proposals during much of his career, but he gradually distanced himself as his seniority grew. Perhaps experience in office offered him a clearer view of the quality of state-controlled services.
Long Waits and Canadians Moving to the U.S. for Health Care
“That Canada’s health-care system is failing patients is evident to most Canadians,” Esmail and Globerman observe. “Visible flaws include extraordinarily long queues for procedures and treatments, millions lacking a family physician, and obstacles to obtaining timely emergency care.”
Last month, Reason contributor Reem Ibrahim reported that in Canada the median interval from a GP referral to actual treatment has swelled to 28.6 weeks, a difference of roughly 208 percent compared with what patients would have expected in 1993…. In 2020, 62 percent of Canadians needing specialist care waited at least a month, versus 31 percent in the United States.
Consequently, a July study from the University of Calgary’s School of Public Policy noted that health care has become a significant mover in people’s decisions to relocate to the United States across all age groups, with health-related reasons (access and quality) accounting for about a quarter of moves, second only to job opportunities.
But how can that be if Canada’s health system is supposedly free—prepaid, funded by taxes? The answer lies in a hallmark of single-payer arrangements: challenges in the quality and availability of medicines.
A Lack of Prices and Emphasis on Bureaucratic Planning
“In nearly all other sectors, suppliers rely on pricing to reveal consumer preferences and to drive improvements in quality and reductions in cost through innovation,” note Esmail and Globerman. “Prices also help consumers decide by showing the trade-offs between different ways to spend their money.”
“Because legislation and government policy obscure price signals,” they continue, “the information and incentives that prices provide to private-market participants—patients, providers, and decision-makers—are unavailable. As a result, governments, lacking price information, allocate health-care resources using top-down planning.”
Put differently, those who need check-ups, tests, or treatment aren’t the ones paying for them, so they neither weigh the costs of what they demand nor, indeed, are they even the customers. The payers are government officials who issue payments, and their preferences shape the system. This third-party payer dilemma isn’t exclusive to government schemes; prepaid insurance that isn’t true insurance for unexpected illness faces the same impediment.
“The health-care market faces many barriers, but the central structural issue is straightforward: the recipient of care is almost never the one who pays for it. About ninety cents of every dollar is financed by a third party—an insurer or the government,” wrote economist Veronique de Rugy for the Cato Institute in March. “When another party covers the bill, people don’t shop around, don’t compare prices, and don’t question whether a service is worthwhile.”
We Need Markets To Improve Health Care
The problem intensifies in a single-payer arrangement where competition is absent and the state can raise taxes to cover rising costs or enforce rationing—at least for a time. Ultimately, the Fraser study notes, “bureaucrats lack any profit incentive or other mechanism to directly improve the health-care system’s performance, including shortening patient wait times.”
Indeed, Esmail and Globerman contend that the growing waits for tests and treatments in Canada are an inevitable outcome of a system in which patients do not pay for care: they illustrate how non-price rationing substitutes for price-based allocation of scarce resources.
The takeaway for Americans is not that our system is flawless—far from it—but that many of the frictions that drive discontent with health care stem from the current intrusion of government into the doctor–patient relationship. A Medicare-for-All approach would aggravate these problems by further removing patients’ say in their own care. The solution lies in making individuals financially responsible for their own bills, using insurance chiefly for unpredictable costs, and reintroducing market pricing and discipline into the delivery of medical services.
