is "medicare"? Medicare is a common yet inaccurate term, for it doesn't
refer to an easily identifiable government program. A description of it
might note that medicare covers many health services, that it is
provincially administered and that the federal government contributes
to its financing. A health analyst would probably define the term using
language such as, "Medicare is a state-financed health insurance plan".
This is a straightforward definition that is often repeated.
is medicare health "insurance"? It may seem so at first. Medicare,
after all, means that the cost of health services isn't directly borne
by the patient. People sometimes say that health services are "free".
Such a claim is untrue. A visit to the doctor isn't free. The doctor
gets paid by a third party (the government). Medicare thus seems like
insurance: a certain amount of money is paid to the state, which covers
But the idea of insurance
has been distorted in health care. Insurance is meant to protect people
in times of unforeseen or catastrophic events: automobile insurance
(for car accidents), life insurance (for death) and disability
insurance (for physical injury).
medicare does more than just protect us against the cost of health care
after a serious accident or a bout with cancer. Medicare covers the
costs associated with checkups, X-rays and even frivolous visits to an
Such coverage comes at a steep
price. Imagine if a homeowner has insurance that covers all home
expenses. Fire damage would be covered, but so would house painting,
window washing, recarpeting, wallpapering and cleaning. Under such
circumstances, how often would the homeowner get the house cleaned?
Often. How frequently would he or she redecorate? Frequently.
same is true of our health "insurance" - because it covers nearly all
health care expenses, taxpayers must shell out billions of dollars each
year. The average working Canadian pays roughly 21¢ of every dollar
earned for this all-inclusive insurance. This means that Canadians
earning $35,000 a year pay $7,350 for medicare. Of course, part of this
amount goes toward paying for the elderly and the chronically ill, but
a large share goes toward paying for an inefficient system. Here again,
there's a perverse incentive to overconsume: because we know we're
paying handsomely for medicare, we like to feel we're getting our
The problem occurs because
medicare covers both catastrophic health expenses and discretionary
spending. The "free" nature of health care in Canada means that the
doctor-patient relationship is corrupted and that institutional
providers are allowed to remain uncompetitive. The only way to address
these problems is to allow patients more control over their health
expenses. In short, discretionary spending must be divorced from
catastrophic expenses: people should be covered in extreme situations
but left to pay for minor problems, so long as they can afford to do
Economists speak of the "rationing" of
health care. Given that people's demands far outstrip supply, even in
the wealthiest nations, health services must somehow be rationed. In
Canada, rationing is achieved through restricting supply. Do people
stay too long in hospitals? Then reduce the number of hospital beds. Do
people get too many MRI scans? Then don't buy MRI machines. In many
ways, rationing is achieved through waiting lists.
approach may seem satisfactory, but it isn't. Government reforms aren't
- indeed, can not possibly be - designed for the individual case. It
may make sense, say, to restrict the number of frivolous cases at an
emergency room. Good luck trying to work that idea into policy. If
emergency room use is expensive and many of the cases are deemed
frivolous, then the policy maker's response is to reduce the number of
emergency rooms. This is an arbitrary and unsatisfactory method of
rationing care. In the long run, the outcomes are far from clear. Cost
control may be achieved, but many unintended consequences may develop -
chronic over-crowding of emergency rooms being a case in point.
reform would be very different. People would be empowered to make their
own decisions about diagnostic tests, treatments, hospital stays and
visits to the emergency room - and face, to some degree, the financial
consequences. If you want another X-ray, fine, but you are going to
have to pay for it.
references are to the full-length edition of Code Blue: Reviving
Canada's Health Care System published by ECW Press, Montreal. To order
Code Blue, call 514-499-8173, visit ECW's web site at http://www.ecwpress.com www.ecwpress.com or ask for it at your local book store. (Distributed by General Distribution Services: 416-213-1919)