Why Americanize Canadian healthcare?

Austan Goolsbee is an American economist, currently Chairman of the Council of Economic Advisers and the youngest member of the cabinet of President Barack Obama. Goolsbee is on leave from the University of Chicago where he is Professor of Economics. He wrote this in 2007:

“/f you set up a market-based health system, allowing insurance companies to pick and choose who and what they will cover, you give them overwhelming incentives to dump, deny, avoid and neglect the sick people.

And when you operate the system mainly through employers (as we do), you impose intense costs on U.S. industry and you ensure that the pool of people without insurance tends to include the unhealthiest, costliest cases around.

Economists call this “adverse selection” and when there is too much adverse selection—when the health of the people in the uninsured pool is extremely different from the average person in the country—the market may fail completely. Insurance companies may just deny people coverage entirely.

Without any rules against cream-skimming, the insurance companies have every incentive to keep dumping the sick people—often retroactively, after they become sick.

[Michael] Moore [in the film Sicko] shows the insurance companies literally giving bonuses to the reviewing doctors who deny the most claims. If you can pay premiums to your insurance company for 30 years and then they can just drop you when you have a stroke, the system is seriously broken…

American economist Dean Baker is co-founder of the Center for Economic and Policy Research. He had been a senior economist at the Economic Policy Institute and an assistant professor of economics at Bucknell University. He has a Ph.D. in economics from the University of Michigan. Baker wrote this in October 2010:

In fact, Medicare as an insurance system is considerably more efficient than private insurers. In 2008, its administrative costs were 5.6 percent of the money paid out in benefits each year, compared to an average of 13.3 percent for private insurers.

The reasons for Medicare’s lower costs are straightforward. The system doesn’t have an expensive marketing apparatus, it doesn’t have executives drawing millions or tens of millions in compensation each year, and it doesn’t have to pay out dividends to shareholders.

For these reasons, Medicare is the most efficient part of the (inefficient) U.S. health-care system. Indeed, most of the proposals being put forward to reduce Medicare costs are not about eliminating waste; they are targeted at the meat of the program, undermining its ability to ensure decent care to retirees and the disabled.

Joseph Stiglitz is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is also the former Senior Vice President and Chief Economist of the World Bank.

The US model of private health insurers has been proven inefficient and expensive. Rather than provide better healthcare at lower costs, insurance companies innovate at finding better ways of discrimination.

They are inefficient because they are trying to figure out how to insure people who don’t need the cover and keep out people who need it. With many companies, they also need to spend on marketing and advertising.

The incentives are all wrong and the transaction costs are very high and you have to give them a high profit. In health, social and private incentives are totally disparate. Competition does not work in healthcare especially in the health insurance market. Several countries like the UK, France and Sweden have a single payer system, differing only in the organisation of healthcare delivery.

Categories: Health

1 reply »

  1. Interesting, after listening to the CBC, the Current, there IS money for Healthcare.
    If you get someone out of ER within 10 hours and admitted to the floor where they should be, they get money. WTF??????

    Sounds like a way to break the healthcare system to welcome in the American style 'die if you can't pay system'.
    And look out how it has worked for them?

    American education pay to learn system.
    And look out how it has worked for them?

    Then take a look at how Germany operates, they have union members sitting at the table in equal volume to the corporates.
    They have a health care system that works,
    they have an education system that works,
    they have low unemployment, they have good wages for all,
    they came out of the near fatal collapse of the world economy almost unscathed.

    It is in no way insignificant that Germany survived through the regime of Adolf Hitler and learned from their history. It would seem that the current leaders in that country will never allow their people to be treated as 'insignificant' ever again.

    But alas this is Canada with the minds of Gordo and his 'team on crack', Steven Harper, the hater of all who speak against him, and the people in our society that are complicit in this deceit of 'F@&K the people who don't have money philosophy and 'Treat them like the dogs that we have trained them to be'.

    We, as a collective are complicit in the way that we are treated. I hear regularly re-quotes, such as, 'we must attract the best in politics so we must give them a huge pension after they have served 6 years in office'. 'We must attract the best so we must offer 6 figure salaries to our CEOs'.

    Laughable as it is, my questions back to the re-quote people are, 'When you apply for a job, is the employer not looking for the BEST candidate? Why then do you not ask for the 6 figure salary instead of settling for 6 bucks an hour?'

    If HItler were alive today, he could walk into any political office in this country and fit in just fine.

    The media propaganda has made us all like the peons that people like Hitler, Muammar Gaddafi, Mubarak, all blatantly mentally ill, led around by the nose.

    For those that think that still profess that the NDP ruined our province, put away the crack pipe and pay attention.


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