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Jesse Larner

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A Challenge, Taken Up

Posted: 08/16/07 01:25 PM ET

Last week I wrote about Michael Moore's ridiculous new film, Sicko, and some of the equally ridiculous right-wing reactions to it. Shortly thereafter, I received a challenge from Michael Cannon, a health care policy expert at the Cato Institute. Cannon highlighted some points for debate, and we agreed to a further discussion on our respective blog pages.

First of all, I have to admit to several errors on my part. In my piece, I lumped Cato in with right-wingers in general, and right-wing think tanks like the Heritage Foundation. Cato's not exactly a right-wing outfit; they're libertarians, and while there is a libertarian wing of the modern right, there is a difference. Libertarians are more concerned with free markets and with a minimal government mandate, whereas many on the modern right are all too happy to endorse an activist government, so long as it is activist in ways that support the right's social agenda.

I also wrote, "The free enterprise people at Cato and the Heritage Foundation are always moaning about the enormous cost of preventive medicine." Cannon quite rightly takes me to task for this; as I wrote it, it suggests that Cato's position is that preventive medicine is a poor investment. That is clearly not what anyone who seriously studies health policy believes, and Cato's health policy experts are very serious and professional. What I should have said is that, since the folks at Cato do not believe that single-payer, socialized medicine is a cost-effective way to deliver health care in general, they certainly don't believe that it would be so for preventive medicine. But I am responsible for what I wrote, not what I should have written, and this was a sloppy mistake, for which I apologize to Mr. Cannon and his colleagues.

I should say, however, that my remark did not come out of nowhere. What inspired it was an article by Cannon himself, skeptically titled "A 'Right' To Health Care?", in which he says, "Do we have a right to preventive care? If so, health care spending (and taxes) would explode." Cannon indeed is not saying that preventive care is too expensive, just that it's too expensive to be a public good. Yet it stands to reason that, once primary, secondary and tertiary effects are factored in, the cost to each of us when distributed equally would be less than the cost to most of us if borne individually. I also believe -- and here I have to say that I agree with Moore -- that we do have obligations to each other as members of a society, that human beings have evolved to function as social animals, and that we all benefit in tangible ways from doing so. Call me a socialist if you will.

Another of Cannon's criticisms of my piece is unfounded. He writes, "I challenge Larner to show where a Cato scholar... describes America's as a "free enterprise system of health care." This I can do, albeit retroactively. Check out this article by Michael Tanner, Cannon's colleague at Cato, to whose page I linked in my Moore piece. Note that the second paragraph begins, "Because I live in a country with a free-market health-care system..." I am assuming 1) Mr. Tanner lives in the United States, and 2) "free market" is close enough for our purposes to "free enterprise." I think disputing this would be splitting hairs, but it could be done.

And one more error not spotted by Cannon or anyone else; it's just a typo, but an important one. I wrote that the World Health Organization had ranked the United States 17th in overall quality of health care among 191 nations of the world. Actually, we're ranked 37th - Moore had it right in his film.

Back to Cannon and his criticisms of my piece.

Cannon writes, "[Larner] claims that people don't die on waiting lists in Canada's health care system." Actually, that's not what I claimed. I claimed that people don't often die on waiting lists. What I was saying here is that the image of Canada's system (actually systems: each province runs its own) that the health care industry in the US has propagated as one that is falling apart, and in which patients are routinely denied life-saving care, is false. On the whole it functions rather well, and no one is excluded because of inability to pay. I did say explicitly in my piece that the Canadian system has problems that Michael Moore ignored, and that it worked better before a series of conservative provincial governments began to de-fund it.

The present state of the Quebec system, about which I have no direct knowledge (I grew up in Ontario) was recently addressed by a major Quebec Supreme Court decision, Chaoulli v. Quebec, which Cannon referred to in his challenge to me as evidence that the Canadian system is failing (Cannon provided a link to commentary on the decision; here's the decision itself). The Quebec Supreme Court decided -- quite rightly -- that since doctors had testified that patients do sometimes die on waiting lists in that province, therefore the system was unacceptable and, unless and until it could be fixed, patients should have the right to seek care elsewhere. The decision quite explicitly recognizes that a public health care plan is a public good; it disputes, however, the idea that private means threaten public means:

The general objective of the HOIA and the HEIA is to promote health care of the highest possible quality for all Quebeckers regardless of their ability to pay. The purpose of the prohibition on private insurance in s. 11 HOIA and s. 15 HEIA is to preserve the integrity of the public health care system. Preservation of the public plan is a pressing and substantial objective, but there is no proportionality between the measure adopted to attain the objective and the objective itself. While an absolute prohibition on private insurance does have a rational connection with the objective of preserving the public plan, the Attorney General of Quebec has not demonstrated that this measure meets the minimal impairment test...

It seems to me that a bare majority of the court (three of the seven justices dissented, because they did not agree that judges could rule on the means that the province chose to provide the greatest health care good for the greatest number at optimal cost, as it is mandated to do) remained agnostic on the best way to deliver health care; the court merely responded to a particular situation. If it were a legislature seeking a legislative solution, rather than a court seeking a judicial solution, it might well have chosen to fully fund the system rather than to open it up. Certainly all the judges seemed quite sympathetic to the concept, if not the present practice in Quebec, of a single-payer system.

I can say anecdotally that during the ten years I lived in Canada, 1973 to 1983, my experience with the single-payer system was wholly positive. There was complete freedom of choice as to one's family physician, I never waited to see a doctor (generalist or specialist), always received top-quality care from humane and caring practitioners, and never heard anyone else (patient or doctor) complain about the system. Of course, I was young, in good health, and did not require any complicated procedures. But as I said in my piece, a good friend of mine had a life-threatening disease that required very complex and expensive treatment. His assessment, at the time and now, is that he received excellent care. Toronto's hospitals are among the best in the world. And his family was not bankrupted, nor could they be arbitrarily pushed out of health care coverage. It will be hard for Cannon to convince me that single-payer must always be a disaster.

The Quebec case gets to the heart of the idea of rationing. Cannon writes that I "[speak] of the bureaucratization and rationing in Canadian and British versions of socialized medicine as if these were unfortunate choices rather than inevitabilities." Actually, I believe that rationing can be ameliorated, but in the absence of unlimited resources -- a condition that no model of health care can deliver -- it will be with us in one form or another. When based on purely medical decisions, it is simply triage. A former neighbor of mine is a pediatric oncologist who has practiced in the UK and in the US. He once told me a tragic story about a little girl being treated for cancer in the UK system. The medical review board of the national health service concluded that her case was terminal; there was nothing any doctor could do, hence the resources of an operation that might help in less extreme cases would be best used for another patient. The girl's parents did what any parents would do: they took her to the US and raised $200,000 for the operation. She had the surgery. She died anyway, because she was in fact terminal.

Sad as this case is, I can't see that the British doctors made the wrong decision. The danger, of course, is that such decisions, in a public system, would be made on a basis of cost, rather than of good medicine. That's why we need a fully funded system in which doctors and patients, not bureaucrats, make the decisions.

But is Cannon saying that we do not have rationing in the US? In our present system -- which Cannon and his colleagues will, with all its acknowledged faults, defend against the Canadian and European model -- do people not die every day because of inability to pay? Sure, no one can legally be turned away at an emergency room because he or she can't pay (although in practice it happens all the time.) But you can't get chemotherapy or open-heart surgery or dialysis at the emergency room.

In a free-market system, what mechanisms would prevent insurers from cherry-picking their customers, and denying coverage to those who are likely to require expensive treatment? In our present system, they are even allowed - I don't know how they get away with this - to terminate agreed coverage once a condition arises. What method would Cannon suggest that would ensure guaranteed coverage for everyone, regardless of ability to pay, that would be compatible with a market-based, entrepreneurial system? And if it doesn't cover everyone, or if it covers those who can pay on a prioritized basis compared with those can't pay as much, in what sense is that not rationing?

At least a single-payer system has fairer rationing. So here's my challenge to Cannon: show me a way that a true free-market system can provide decent coverage to everyone, regardless of ability to pay, without rationing. If he can do that, he's won the debate.

But in fact, Cannon is not in favor of universal coverage as a social right, as you will see if you read the piece I referenced above, "A 'Right' To Health Care?". As a libertarian, he doesn't even recognize the concept of social rights. This is where we part company philosophically. All I can do is agree to disagree -- and remark parenthetically that I can rebut every one of the points he makes in that article. This piece is long enough, however.

Cannon has other criticisms. "[Larner] claims that America's relatively high infant mortality rates make our system obviously worse than other nations. That claim is dubious, since we tend to try to save premature infants that other nations don't."

Again, I didn't actually say that relatively high infant mortality makes our system "obviously worse than other nations." I'm somewhat cautious about statistics like infant mortality and life expectancy, since there are so many variables to be controlled for -- from politics to geography -- that it's almost impossible to do a straight international comparison (for example, one of the reasons that Cuba does rather well in life expectancy is that so many people are fleeing that totalitarian prison. Thus births there are recorded while many deaths are not, skewing the stats.) It was for precisely this reason that I qualified my comments by saying "These statistics and their interpretations can be disputed," which is far from saying that they tell us anything "obvious."

That said, I honestly don't understand the point that Cannon is making here about infant mortality. High-tech intervention to save premature infants at risk should improve our infant mortality stats, not worsen them; and infants who die even with the benefits of high-tech intervention would almost certainly have died without it, so there's no potential loss over a system that does not have our resources, only gain. If I've misunderstood something here, I hope that Cannon will let me know.

Cannon goes on to say, "once one controls for fatal injuries and homicides, our life expectancy stats come out better than all other advanced nations'. (If life expectancy really is a 'measur[e] of international health care quality,' then does that mean our health care system is the best? I'm not sure, but Larner must think so.)"

Now, life expectancy is indeed one measure of international health care quality; I don't think Cannon would disagree with that. But unless he can point out where I wrote that it is the only measure, or that one can rank health care systems by looking only at this measure, I think he's attributing something to me unfairly. Again, what did I in fact write? "These statistics and their interpretations can be disputed."

And that's even assuming that we accept his argument that we in fact have the best life expectancy stats, once we control for fatal accidents and homicides. I'd be interested to see some sources on this. The link Cannon provided goes not to any data, but to a description of a book on health care policy. I guess I'll have to go to the library... But I'd be willing to bet that the statistics it provides, no doubt in good faith and according to rigorous standards, are also open to interpretation.

But I can challenge the assertion on at least two grounds. First of all, comparing only the US and Canada, homicides and accidents are not the primary causes of difference in average longevity. Circulatory diseases - which relate to obesity, smoking, and hypertension -- are. By far. These are all things that respond to preventive medicine and can be spotted by physicians in regular checkups -- which all Canadians have access to.

Second, I did some checking of my own to attempt to verify Cannon's claim. Here is some raw data on deaths by country and cause, from the W.H.O. [Note: in the Excel doc that opens, you must click on the tab marked "Death Rates" to see this.] Here is the CIA's ranking of life expectancy by country. I extracted the twenty-one most developed nations from both lists (so as to make as fair a comparison as possible between their health care systems, while attempting to hold environmental variables constant.) I then compared them in terms of their relative numbers of deaths from all forms of violence (including accidents, homicides, war, etc.) and in terms of their life expectancy ranking. Here's what I found.

You will note that the US comes in sixteenth in terms of our rate of death by violence (that is, of the twenty-one countries considered, we have the sixteenth highest rate, so we're sixteenth best.) And we come in eighteenth in terms of our life expectancy. That's pretty close - which suggests to me that our relative rate of homicides and accidents isn't skewing our relative ranking in terms of life expectancy all that much.

By the way -- and this is a different debate -- why should we control for homicides? I'm of the opinion that, as the New England Journal of Medicine suggested several years ago, high American homicide rates (due in no small part to an insane interpretation of the Second Amendment that defines gun ownership as a personal right rather than a collective right of militias) are a public health issue. But I digress.

The final point that Cannon makes is that I have repeated myths about the relatively low administrative cost of Canada's single-payer system as compared to that of US private insurers. As evidence, he links to this article. I must admit that it was hard for me to follow. But I did notice several things.

The author, Patricia M. Danzon, introduces her study with a great deal of qualifiers:

... The relevant comparison for the national health insurance debate in the United States is between a monopoly public system and a private insurance system with government intervention only where necessary to achieve goals of efficiency and equity. Such a system would eliminate wasteful distortions present in the current U.S. system but would assure that coverage is universal and affordable. My colleagues and I have described such a system elsewhere, but to estimate its overhead costs would be speculative. The conceptual discussion here compares overhead costs under monopoly public insurance and competitive private insurance markets in general but draws on actual experience in Canada and the United States for empirical evidence.


Since my focus is on overhead costs, I do not attempt to measure all inefficiencies that result from U.S. tax and regulatory policies that are neither essential nor desirable features of a well-designed private insurance system. In particular, I do not address the hidden costs of the tax subsidy to employer contributions, as it affects the price, quantity, and quality of medical care. I also do not attempt to measure losses from less-than-optimal coverage of the uninsured.

It's hard for me to make out here whether she is comparing real-world systems or comparing Canada's system with her ideal private insurance system. She seems to be skewing her study in various ways to achieve the desired result.

She also writes,

Eliminating medical underwriting implies cross-subsidies from people who use little medical care to those who use much care, not all of whom are in poor health or have low incomes. If the social objective is greater equality of income after expenditures for health insurance, this can be achieved more fairly by subsidizing the cost of health insurance for high risks through general revenues than by arbitrary cross-subsidies to high risks from low risks who happen to be in a community-rated insurance pool.


Thus, objections to underwriting under the status quo result from the failure of other policies to make coverage affordable to the poor and high risks, rather than from a waste that is intrinsic to private insurance.

Isn't this an argument for a single-payer system?

Much of the rest of this article is taken up with reasoning that attempts to show that what looks like waste in the private insurance system really isn't - that doing things like controlling "moral hazard" (the tendency of people to use more of a resource than they need if it is provided as a benefit) through corporate watchdogs, and through "price and information based strategies" (read: denial of coverage) is cost-effective. Danzon also addresses the ability of each system to sustain itself by building up a resource buffer against economic downtowns, and the inefficiencies of strategies employed by health care providers when assessed payments are not realistic. None of these issues is insurmountable in a single-payer system.

So what might an efficient, single-payer system look like? I would not want to see doctors made employees of the state, and I would not want the state to get involved in medical decision-making. I think a national system could be handled through a system of social insurance, in which premiums would be covered through tax revenue - which would obviously eliminate a great deal of overhead expense, regardless of whether the figures on Canada's relative efficiency have been exaggerated. Imagine doctors and hospitals without billing departments. Imagine all those people at private insurers whose only duty is to review claims in order to deny coverage being laid off (yes, I suppose a single-payer system would contribute to the unemployment rate in this regard.) Imagine not having to fill out all those claim forms, or having to wait at the pharmacy while the overworked staff verifies your prescription coverage.

Yes, there would have to be controls for "moral hazard." This could be handled by reasonable co-payments - Canada's lack of such is probably very bad policy - and by medical (not accounting) review and oversight. There could be financial incentives for good doctors. Cannon has warned of creeping totalitarianism - and inefficiency - in letting the state decide who is a good doctor. But the state doesn't have to decide. How about deciding this on the basis of how many patients a doctor can attract, while allowing total patient freedom of choice in selecting a doctor? Or by asking patients to assess their doctor after each visit, or following the doctor's patient stats as compared to those of other doctors in the same specialty? The system could be made much more efficient simply by good tort reform - I'm with the conservatives on this one - that would eliminate excessive punitive malpractice suits (while allowing suits for reasonable actual damages.)

In the end, the best I argument I can make is to urge Americans to experience the best single-payer health care systems: France, Denmark, the Canada of twenty years ago (if that were possible.) Yes, I do know people who've had bad experiences in these systems, but I know many more who've had good ones, and many more Americans who've had bad ones at home. If one compares the treatment received on a class basis, I think the difference would become even more striking. How does the ability to pay affect treatment? Well, in the socialized medicine states, it doesn't (although one can pay extra for pleasant luxuries in Canada, like a private hospital room.) I've noticed that most of those who attack the single-payer systems of the developed democracies mostly have excellent coverage themselves.

All right then. I await Mr. Cannon's response.