The Skeptical Liberal: It’s Sick-o, eh!

The Skeptical Liberal

How can we live together in peace, prosperity, and harmony, while retaining our liberties as autonomous individuals who can, and must, create our own values? -- J.M. Buchanan


It’s Sick-o, eh!

I’ve always enjoyed Michael Moore’s irreverent style and his humor. Canadian Bacon remains one of my favorite films, despite the fact it drags on too long, because of its witty satire and willingness to poke fun at both Americans and Canadians. But I expected to have problems with Sicko, because I don’t share Moore’s view of the private enterprise system, and I knew from earlier reviews that he treated the Canadian health care system too gently.

Moore is good at using in-your-face controversy and sick-because-it’s-too-obvious humor to provide an emotional overtone to a rather simplistic policy perspective. At bottom, his perspective is: if we really wanted it, we could have it; but we’ve been duped into not wanting it by profit-hungry giant corporations and their lackeys (usually elected Republicans, but he implicates a few Democrats as well). He views his movies as efforts at removing our “false consciousness”: once we see we’re being duped, ordinary Americans will stand up and fight back for what they really want. It’s a simplistic view because, in the end, he believes that what we want is clear and unambiguous. In this case, we want good “health care” at a low price.

As if “health care” was a single commodity, like a ripe Michigan Gala apple.

It’s not, by the way.

The basic question Moore asks in Sicko is a policy question: why can’t the average American have quality health care at a low cost? His answer reflects his perspective: back in the early 1970s a Republican President turned the health care system over to for-profit health maintenance organizations (HMOs) which now run the entire medical system to maximize their profits. His preferred solution to the problem is not directly spelled out, but it can be inferred from his comparison of the US system with that of Canada, Great Britain, France and Cuba. I drew the conclusion that Moore would like to see a single-payer, universal health care program, similar to the programs in those other countries.

I happen to agree with Moore that the American health care system has problems, and that the creation of HMOs was a poor institutional design choice. I left the US in the early 1980s, just as the effects of HMOs were beginning to be felt. I was a young adult at the time, and not particularly worried about health care. Most of my adult life has been lived under the Canadian health care system; I returned only four years ago to a US health care system that is dramatically different from what I experienced in my youth and what I experienced in Canada. Since I’ve been back, I’ve not only had my own experiences with the US system, but I have also been involved in helping my employer (Moore’s beloved Michigan State University) think through how to maintain a high quality of health care coverage for its employees while finding the means to control the rapidly-escalating costs of that coverage. But while I was in Canada, I also saw that single-payer, universal health care systems have problems; some problems that are different than the ones we have here in the US, some the same. Moore’s comparative analysis, while conceptually a good idea, is poorly carried out because he fails to understand that all institutional systems have problems, and that institutional design is a process of minimizing the risk of ending up with the worst possible outcomes. But of course, he is intent on comparing the worst of the US system with the best of others. Better hype for the movie!

In order to think about institutional choices related to health care, I’ve learned to ask two questions. First, who pays? And secondly, who makes decisions about the care provided? The first question is important because medical providers pay the most attention to the person or institution that pays them. If I pay my grocer myself, she will make sure she stocks food that I like. If she is paid by someone else (for example, the corporation that owns her store), then she’ll be sure to put what that person wants on the shelf, and pay less attention to my requests. The second question is important because different decision-makers may have different objectives to fulfill in their determination of the care you receive. Before HMOs, the American system tended to provide the same answer to both questions: I paid for decisions that I made in consultation with my doctor or other medical professional. Insurance companies reduced my risk by allowing me to pool my payments with other similar Americans. Socialized medicine was criticized because it answered both questions differently than the American system did: everyone paid through taxes, and the range of options available to doctors for diagnosis and care were controlled by bureaucrats. Defenders of national health care systems argued that payment through the tax system provided equity, and that a far greater degree of individual choice existed in the system than opponents allowed.

HMOs changed the American response to the two questions. At first, the change was simply seen as an expansion of the insurance company role in the system. I pay my premium, face a few restrictions regarding my choice of doctor and treatments, but still make decisions in conjunction with my doctor. But increasingly, HMOs replaced the individual as the payer that mattered. Sure, I or my employer still paid a premium, but it was the HMO that paid the doctor, and that is what mattered. Furthermore, the HMO decides the range of options available to doctors for diagnosis and care. I have some freedom to choose doctors and treatments, but often have to choose within a very narrow range of alternatives. The market power of the HMO encourages it to limit supply in order to maximize profits: Moore’s analysis in the movie follows the results of such adverse selection in a powerful fashion.

I could quibble with Moore’s analysis of the HMO system: adverse selection is not as big a problem as he portrays it to be; the existence of fifty regulatory environments and restrictions of insurance companies marketing products across all states is a big problem (I’ve never seen a Moore movie that took the American federal form of government seriously as part of both the solution and the problem!); and the unwillingness of employed or self-employed individuals without employer-provided insurance plans to self-insure may be the biggest problem of all. But in point of fact, I don’t really want to defend the HMO system: it has many of the problems that anti-socialist critics thought socialized medicine would have. Somebody other than me pays and controls the decisions about my care.

The commonality between HMOs and single-payer national health care systems should have made Michael Moore more skeptical about the European, Cuban and Canadian systems. You see, each of these countries has a health care system that is, in effect, a single, national HMO.

Because I know Canada the best, I’ll use it as an example, but the point applies to all the rest. The questions are: who pays? And who decides? Moore makes the same mistake that most of us make regarding national health care systems when he says that “everyone” pays in such a system (remember the golfer scene?). The better answer to the first question is that the provincial health ministry pays, because it controls the revenue that doctors, diagnosticians, and medical service providers receive. The answer to the second question is the same: each provincial health ministry in Canada decides what medical goods and services will be available in any given year. A budget is set for the year, and the health care system has to stay within that budget. A bureaucracy is rewarded with more funds when it stays within its budget, hence the goal in any given year is to minimize costs: exactly the charge Moore brings against the “greedy” for-profit HMOs. A national health care system is simply a single HMO for everyone.

If I’m right, then we should expect the incentives in such a system to be at least as bad, if not worse, than the perverse incentives in the American HMO system. In Sicko, doctors in national health care systems are portrayed as solely focused on the care their patients receive; with almost no consideration for how much money they make. I expect that an interview with American doctors about their care would actually reveal a similar attitude. But the reality is that doctors, diagnosticians and other medical service providers in Canada look as much toward the hand that feeds them, which is the provincial health ministry, as American doctors do to the HMOs. Doctors’ salaries depend upon how many patients they see: the ministry sets the rate per visit, so more visits equals more money. In the clinic I used (which held a monopoly over the provision of health care in town), office visits were scheduled as frequently as every 5 minutes. My annual physical pushed the limit by lasting 10 minutes. There were too few doctors for the size of the community, which of course maximized the revenue of the doctors who owned the clinic. Because over-use of diagnostics and operating rooms was penalized (too much use would require capital outlays for additional equipment and space which would jeopardize the budget), doctors depended upon older, cheaper diagnostic tools (the only radiological diagnostics available for general use in my town were x-ray machines). Invariably, the result of a visit for a health concern was the suggestion that we wait a couple of months to see if anything had changed. Of course, once a major problem was diagnosed, one could expect a long wait for non-emergency operations. (By the way, the wait for an appointment was no shorter or longer than the waits I’ve experienced in Michigan. But emergency room waits ranged from 2 to 7 hours: the longest wait occurred when a family member was the only patient in the ER and the doctor sat outside the room in plain view reading the newspaper.)

I expect Mr. Moore will want to challenge my assertion that national health care systems are simply HMOs in another form. He would, I expect, make two arguments. First, he might say that at least in a national HMO no one can be excluded. Secondly, he would probably say that at least in a national HMO profit-making is not the incentive for decisions about the care one receives. Many of the current problems of the Canadian health care system are related to Moore’s misconceptions about these two arguments. Non-exclusion is a powerful argument for national health care systems, because it echoes one of the classic definitions of a “public good” and because it sounds so equitable. But exclusion comes in many forms, and single-payer systems are good at using forms that do not violate the principle as stated. Canadian provinces have reconsidered and reduced the range of basic services provided limited diagnostic services, increased wait times for surgery, etc. In short, adherence to an arbitrary definition of non-exclusion has killed the Canadian health care system. But Moore’s use of the French system is particularly ironic here, because the benefits he raved about are only available to those who are in the elite group: those with jobs “in” the national system. A large portion of the population is excluded. I couldn’t believe he used the footage from 2006 of young members of the elite (and labor union leaders) protesting efforts to bring others into the system that gave them the kind of benefits Moore’s American friends in Paris described. Moore described it as democracy at work. “The people” spoke all right: the elite and the unions won and ordinary people outside major centers and immigrants were excluded once again. Believe me, few people in Paris have their laundry done by government service.

You would not be surprised to find that I am less anxious about the consequences of profit-seeking than Mr. Moore is, especially when that profit-seeking is set in a market context. But I want to make a different point about competition and national health care systems. I have already commented on the problems attendant upon a bureaucratic medical system, whether it is an HMO or a national health plan. But the other aspect of this argument that Mr. Moore misses is that health care is only one of many national priorities. Hence, in the process of setting the budget, other social values and programs restrict the ability of the national health care program to function. If more money is needed for roads, or social services, or universities and schools, less may well be available for the health care budget. Thus, the budget for health services is not dependent primarily upon the health services that Canadian demand. Rather, it is set in the context of how much the government thinks it can afford to provide, given its other priorities and the limited revenue available. If Canada increases its funding for national defense and peacekeeping, increased border and airport security, or other social services, funding to sustain the health care system may be threatened. And because health care is a provincial responsibility, reduced federal support for health care (which has happened) creates havoc on provincial budgets already strapped by competing responsibilities like maintaining roads, education, etc. Even though there may not be private competition in health care, health care itself competes for public funds with other “public goods.” In an era of rising costs for medical services, and less revenue for all government programs, Canadians are facing a health care crisis not that different from the American one. They need and want more services, but those services are not available because the government cannot provide them and also give them a reasonable amount of the other public goods they demand.

Bottom line: Michael Moore yearns for a world in which something (health care, in this case) can be had for nothing. But there are costs to every institutional choice regarding who pays and who decides. America could improve its choices, and so could Canada. In both cases, the choices should be made with an awareness of what the costs really are. Sicko tries to fool us into thinking we can have better health care at almost no cost. Our response should be: no way, eh!

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At 6:12 PM, Blogger Janet said...

This post is utter genius.

At 7:06 AM, Anonymous Isaac said...

Good stuff Ross!

At 1:12 PM, Anonymous Gray said...

Well thought out response, but here's your problem:

"If more money is needed for roads, or social services, or universities and schools, less may well be available for the health care budget. Thus, the budget for health services is not dependent primarily upon the health services that Canadian demand."

This statement suggests that:

(a) the budget for health services can be fixed at any given time. Anyone could reach their hand into the pot and take some money.

Wrong: There would be a fixed budget for health care. This budget would not be adjusted in any way other than by vote. The essence of democracy.

(b) YOU would not pay that extra amount of money in taxes to help someone other than yourself?

I would be willing to pay that extra $10 a month in tax for health care. Our problems lie with the people who don't want to look after others. Our problems lie with the people who say the poor are lazy and they don't work as hard so "why should they deserve the same benefits and tax breaks".

Our system is broken. Yes, Canada's has problems too, but the fact that someone making $20,000 a year would have to pay a medical bill of $100,000+ doesn't make any sense. If you add up the total amount of taxes you would pay during your entire life for public health care it would not even come close to $100,000.

The fact that you could help someone by paying $10 a month makes a lot more sense.

At 1:29 PM, Blogger Ross B. Emmett said...

Gray: You misunderstand my argument here.

When you say that the health budget would be fixed, I can agree with you, FOR ANY ONE YEAR. But the point is that health care competes with other social goods for government budget space, and can be cut. AS WE HAVE SEEN, fighting a massive war reducing spending on social services (or reducing the rate of increase in spending).

You see a fixed budget as a way to ensure that Americans spend less in total than we currently do on healthcare. Fine, but healthcare is just one among many public goods, and the budget can only grow so big.

Second: I actually would pay more to help someone else improve their health care, and I do -- through private charities. Paying through the tax system, however, does not ensure that other people get better health care -- it simply ensures the government has more money to spend.

I don't know how much you make per year, but tax increases to fund a single-payer health care system over the remainder of my life time would certainly total more than $100,000.


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