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Monday, March 15, 2010

The Compassionate State - Part 1

We're from the government...

Suffering from brain cancer, Kent Pankow was literally forced to go to the Mayo Clinic in Rochester, Minn. for lifesaving surgery — at a cost to family and friends of $106,000 — after the health-care system in Alberta left him hanging in bureaucratic limbo for 16 crucial days, his tumour meanwhile migrating to an unreachable part of the brain, while it dithered over his case file, ultimately deciding he was not surgery worthy.

As most of you, I was solemnly taught in school that Canada's Medicare system meant that, unlike in the United States, no one would go broke because they were sick, and no one would go without treatment for lack of funds. For decades the Canadian media has broadcast stories about Americans going broke trying to pay exorbitant health care bills, or those denied care due to poverty. Those cases are exceptional, just as Kent Pankow's case. As the article goes onto explain, the medication Kent needed to survive is covered by AHIP (Alberta Health Insurance Plan) for most forms of cancer, just not his. He simply slipped through the cracks. As many Americans do when their private coverage is cancelled, or a condition falls within a policy's exemptions. Extremes, however, do not define a system. The existence of slums do not demonstrate the failure of capitalism any more than mansions its success. A health care system, simply put, allocates resources for the provision of health care. Any system requires a bureaucracy (or bureaucracies) in order to function, however large or small. Bureaucracies allocate resources through directive and the enforcement of procedures, so much spent here and for these purposes alone. Private sector ones, in this sense, are no different from public ones. The difference between the two is the mechanism of accountability between its end users and the actors within the system: Democratic accountability versus market accountability. In effect, who rules the rulers of the system.

Very few people can afford to pay large sums out of pocket for medical treatment. For routine examinations this is less of a concern, most can afford these charges and those who cannot are covered by wealth transfers schemes (private or state financed). For catastrophic conditions they must rely on a third party to meet their needs, for the overwhelming majority this will be insurance. In America the health insurance system is mostly private, albeit highly regulated. In Canada the health insurance system is mostly state controlled, albeit with a growing private element. Some will bristle at the description of Canadian Medicare, the state socialized system, as "insurance." Strictly speaking that is correct, the Medicare system would fail to meet any actuarial standard as an insurance policy, despite the fact that its provincial administration is described as insurance i.e. Ontario Hospital Insurance Plan (OHIP). The system, however, is understood by the general public as a sort of insurance. 

Taxpayers pay higher taxes and in return they get "free" health care. This has been described as a sort of "social contract" between the electorate and the state. The tax system being progressive, some pay into the system more than others, but the basic principle is of a sort of quid pro quo. You pay what you can, and in turn get what you "need." Case in point, OHIP covers only those resident in Ontario for three months who are Canadian citizens, or qualified immigrants. It even encourages those moving into the province to get temporary private insurance (which is not illegal for those not covered by OHIP, or for uncovered services). In other words it is not a charity open to all, it has restrictions placed on access based on residency. Since it is virtually impossible to reside into Ontario without paying into the provincial coffers, there is quid pro quo, albeit with the notable qualification that one is forced to participate at both ends. It's not really insurance and it's not really a trade, but it is seen and accepted as such by most.

Why should the state be tasked with the insurance function, i.e. the financing of health care? The following is my summation of the intellectual position of socialized health care's defenders. Debates over health care focus mostly on technical minutiae or crude stereotypes. Empirical data is obviously vital, all data however is evaluated within an intellectual framework - from whence that framework emerges is beyond the purview of this post. The fate of Kent Pankow is a tragedy. Evaluated out of context it is meaningless beyond that of a personal tragedy. The defenders of the system will excuse it as a rare exception to an otherwise well functioning system. The broader phenomenon of long wait times for certain procedures as either a sign of underfunding, or a necessary trade-off for a system which strives for universal access. Critics will use the Pankow case as an example of government bungling, suggestive of a deeper crisis within the system.

The defender's argument goes that state provision of insurance will, at least roughly, be conducted along moral lines i.e. genuine medical need will largely trump mere financial incentives in its operations. As primary financier, and confronted with alternative demands on its funds, the government is also necessarily tasked with the role of rationing health resources. Any economic system, whatever its philosophical basis, confronts the same problem of scarcity of resources; human desires outstrip available resources. It is argued by the defenders of state run health care, including the advocates of Medicare, that confronted with this universal dilemma, the state will ration in a compassionate manner. Comparatively, according to the defenders, a market based system would ration based on profit seeking. It would follow the money, rather than following the heart. Furthermore, the state run systems would by necessity be compassionate because its mechanism of accountability is democratic.

The presumption, and it is a very large one, is that the state is more compassionate than the market. The market is ruled by its own version of the golden rule, he who has the gold makes the rules. The state, at least the Canadian state, is democratic. Each individual is as important in getting a politician elected as any other. The rich man's ballot is no more valuable to the politician than the poor man's ballot. Even if a politician is purely selfish, in the conventional sense, his interests lead him to serve the interests of his constituents, or at least a working majority. To gain and stay in power, and collect his generous salary, he must keep his electorate happy. The politician, in the specific case the Premier and Minister of Health, supervises the bureaucracy which rations care. Using their executive authority they can ensure that the bureaucracy rations health care in a manner pleasing to the electorate. The self same electorate, or at least a working majority thereof, which voted in a socialized system (or at the very least has not voted politicians into office to dismantle it), did so on the basis of it being more compassionate than the likely alternative (a more market based approach). In brief, the people have demanded a compassionate system, and will demand that it be governed along compassionate lines. The definition of compassion being drawn from a rough approximation of conventional opinion. 

Conversely, according to this theory, the market mechanism of accountability cannot be compassionate by definition. The participants in the market are driven by narrow economic self interest. The profit motive does not reward compassion, if anything it punishes it. The whole system is tainted. It might be allowed an auxillary function, such as the provision of equipment or even delivery of services, but the purse strings must be ultimately kept in political hands. The politician is democratically accountable, and actors within a democratic framework are not necessarily motivated by narrow self-interest. They may so act, but the system is flexible enough to allow broader and higher sentiments to be exercised. Perhaps the electorate will vote for the porkbarrel politicos, but perhaps the electorate will also vote for the bold visionary of higher sentiments and values. The two might even be combined, as in the career of Lyndon Baines Johnson. 

In short, government insurance is compassionate by definition (being a creature of a compassionate electorate), whereas by definition a market based system of insurance is not compassionate (being a creature of greed rather than need). The standard of value is compassion, roughly defined as ensuring that all have access to needed medical treatment regardless of financial ability to pay. Needed medical treatment in turn defined as being necessary to sustain a reasonable quality of life. 

At this point I might be accused of having created a series of strawmen arguments. In my defense I believe that I have fairly represented the arguments and beliefs of the advocates of socialized health care, in that a government system of insurance is morally superior to a private system, whatever its attendant practical flaws. 

Posted by Richard Anderson on March 15, 2010 | Permalink


Excellent post Publius.

Posted by: Charles | 2010-03-15 10:44:26 AM

If the state restricted itself to acting as a health insurance, we would not have the failing system we have. The biggest problem is the state through a top heavy bureaucracy has taken over the role of running the health care system, which in good socialism means rationing health care. So in BC screening for prostate cancer is not covered while screening for breast cancer is, even though prostate cancer is a much bigger killer. We see hospital and hospital bed closures and the elimination of services, while the bloated top bureaucracy, those who make these decisions, is well looked after.

Posted by: Alain | 2010-03-15 11:50:03 AM

Is morality the trump card? The morality argument could apply to many things. For instance, one could say that the government should provide housing for everyone because that's the moral thing to do. Perhaps private health insurance for those who can afford it, and charity for those who cannot. Moral people can donate to charities.

Posted by: Agha Ali Arkhan | 2010-03-15 1:47:38 PM

Agha, why not restrict the government's role to being an insurer and also allowing people the option of private insurance coverage. That is how ICBC works in BC and you may opt for private coverage which I did for lower rates and better coverage. I am not saying that ICBC is perfect, but it works much better than our health care system.

Unfortunately in Canada one gets only a token tax break for charity donations, as donations to political parties are considered much more important. I still support certain charities due to the good work they do and that most of my donation goes to those in need instead of the administration of the charity.

Posted by: Alain | 2010-03-15 2:14:42 PM

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