Saturday, November 26, 2011

The Toronto Star: The dangerous myths about medicare

Thomas Walkom isn't an economist. He's a “journalist” in the worst sense of the term; namely, he is a propagandist for the Toronto Star. He's written a column entitled “The dangerous myths about medicare.”

With medicare talks underway again, two pervasive health-care myths need be cleared up and one warning given.

Only two myths and one warning? Are they a) private delivery of health-care is evil, b) private delivery of health-care is inefficient and costly and the warning c) government funded health-care is unsustainable?

Not likely.

First, medicare isn’t about to be bankrupted by the elderly. That’s a common misconception, spurred by the fact that baby boomers — those born between 1946 and 1964 — are nearing retirement.

In both political and media arenas, this particular myth is treated as unshakeable truth, creating fears that doddering boomers will monopolize virtually all health-care dollars.

But as figures released this month by the Canadian Institute for Health Information (CIHI) demonstrate, such fears are grossly exaggerated.

Well I already debunked the fudged numbers of the CIHI, but concerning the “common misconception” about the baby boomers:

The older people get, the more their body fails them. Logic dictates that older people use medical services more than younger people. The mass of baby boomers will be a drain on the system, perhaps not enough to make it collapse, but certainly enough to add some weight. Any attempt to deny this, or refute it is futile and displays naivety. Even if you believe that a nationalized system is superior and worthy of fixing, one cannot ignore this fact.

There are a lot of baby boomers out there. A lot of them are becoming tax-consumers. The older they get, the more dependent on health-care they will become.

The government-funded agency calculates that the aging population has only a “modest” effect on medicare spending — in large part because, thanks to social programs like old age security, Canadians over 65 are healthier than they used to be.

Indeed, as with most people, the most expensive medical care in an elderly person’s life usually occurs just before the point of death.

The institute doesn’t dismiss out of hand the role of aging. It just points out that other things — such as wages paid doctors and overall population growth — are far more important in determining health-care costs.

Okay, let's back up. Even if the CIHI bureaucracy is right about the “modest effects” on health-care spending, this is – to quote Walkom – in large part thanks to other government-funded programs like old age security. So we're still talking about government spending; increases in one area may offset costs in another, but tax producers are still being milked to subsidize a portion of the population that isn't producing anything.

Second, medicare costs in general aren’t spinning out of control.

This is an even more pervasive media myth, spurred on by doomsayers who argue that health-care spending, if unchecked, will soon consume entire provincial budgets.

Unless governments cut health-care spending, funding will consume entire budgets. This is not a myth. This is a fact, derived from common sense. Consumers have infinite demands and governments have the ability to fund their operations without having to resort to profit and loss. Logic dictates that costs will increase. If spending is left unchecked, it will engulf entire budgets.

In part, this misconception results from the fallacy of extrapolation — the assumption that past trends must inevitably continue.

The fallacy of extrapolation: The tendency to make huge predictions about the future on the basis of a few small facts.

There are no small facts in the “doomsayers” arguments; health-care costs are increasing and so will spending if Canadians are to expect the same standard we have now. This trend doesn't have to continue. We can always privatize.

It reminds me of a prediction, made before the invention of the rotary dial phone, that by 1960 all North American women would be working as switchboard operators.

Comparing a market situation with a nationalized government industry? One cannot compare free market predictions with the sound logic of the socialist economic calculation problem.

That turned out to be false. As physician and consultant Michael Rachlis pointed out in this newspaper, so has the myth of the voracious health budget.


The CIHI report explains why. It notes that governments cut back health-care spending growth severely during the recession of the early 1990s, then — because of public pressure — reversed themselves later on.

As a result, provincial government health spending did accelerate. But by 2003 the growth rate had levelled off. In the last two years, it has slightly declined.

As I explained before:

Health spending was consistent until the 90's when in order to balance the budget, the Liberal government reduced health-transfers to the provinces. In response, the provinces increased spending to offset the loss in federal money. Of course, this was unsustainable - the provinces can't print money and borrowing and raising taxes isn't voter friendly. So provincial spending on health-care plateaued and has dropped since.

And what has been the result?

Fraser Institute: Remarkably, wait times from GP referral to treatment by a specialist were 53% longer in 2010 than they were in 1997. Wait times were also slightly longer to access critical technologies such as CT and MRI machines, and markedly longer for ultrasounds. In addition, almost 1.7 million Canadians aged 12 or older, 6% of the population, are still unable to find a regular physician.

Sure, Walkom may be right. Spending may not be out of control, provincial budgets can still devote resources to other issues - but our standard of health-care will drop. Unless spending increases or the move to privatization is accepted and encouraged, health-care costs will increase. In government finance, there is no profit and loss, no entrepreneurship, no market indicators. It's just cut or spend.

All of this is important because governments now are starting to debate — again — what to do with medicare.

The current federal-provincial deal on cost-sharing expires in 2014. A meeting of health ministers in Halifax on Friday officially marked the beginning of the next round of negotiations........If you care about medicare, this is a good time to start paying attention.


But I hate to end my post on an agreement. So here's a bit of lunacy from Walkom's article that I skipped over:

They do permit, for instance, the private delivery of publicly funded health services. Most physicians are already private entrepreneurs.

Canadian doctors... entrepreneurs!?!? What a moron!

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