Two-Tier Healthcare Revisited
On The Agenda they had a show re-examining privatized health care. There was some fellow from Britain who said that privatized health care might have reduced wait times for the public system, but it was impossible to tell, so I guess we should have private healthcare in Canada too?
Our healthcare system is in a pickle, and COVID (as usual) made everything worse. The government spent like drunken sailors on CERB and other ridiculously expensive programs, and sooner or later it will be looking to austerity. Our health care already couldn't deal with demand, and now there are a bunch of surgeries and treatment that were deferred for two years. Also, there is long COVID, which I fear is going to mean a lot of people who did not die from COVID are going to face health challenges for years to come. This is about the time that the privatization vultures start circling, arguing that Canada cannot afford its single-tier healthcare system, and privatization will ease the pain.
Rich people want private health care so they can get better faster. Meanwhile, people worry about two-tier health care because they worry the public system will become impoverished in a number of ways:
- All the good doctors will work in the private sector where they can make more money
- Middle-class and upper-middle-class people will see private healthcare as a status symbol, and will abandon the public system to the poor
- The private system will innovate and come up with treatments the public system will not be able to match
- People will go through medical bankruptcies just like in the United States
- The private system will do all the easy profitable treatments (eg knee surgeries) and then hand patients over to the public system when there are problems (eg complications from knee surgeries).
I think there is a way to resolve this situation, but I doubt we will (as governments or as a whole) have the backbone to make it work. Rich people want private healthcare. I say lean into this. Allow private health care to exist. Allow it to compete with the public sector for patients. Anybody who wants to get health care fast is welcome to do so. But there is a catch. The private system must not impoverish the public one, so there is a 100% tax on every private medical procedure. That 100% tax goes directly into the public healthcare system, not some government slush fund. In essence, this is a "buy one for me and one for the public good" system.
If we could hold to this principle then rich people could have their private health care. Some of them would balk at the price and engage in medical tourism, but that happens now anyways. Others would pay the money, and in so doing ensure that the public system maintains funding. If the private system really is more efficient than the public one, then maybe you cannot purchase as much health care for a public dollar as for a private one, but the purchasing power should be comparable.
Private companies like to undercut the competition on price, put their competitors out of business, and then jack up prices afterwards. That's fine; they still need to fork over 100% of their revenues (NOT their profits) to the public system. If the private institutions can be profitable while doing so, then hooray for them.
Rich people would complain about the price, but that is fine; rich people are allowed to wait and use the public system like the rest of us.
Companies would complain that the enormous tax makes them uncompetitive; my question is "uncompetitive as compared to whom"? We don't actually need private health care; whatever they offer would be a supplement to the public system, not a replacement for it.
Some doctors would leave the public system and work for the private system, but the tax they give to the government could pay for other doctors, or pay for training new doctors, or pay for nurse practitioners, or pay to upgrade the credentials of internationally-trained doctors who are working as Uber drivers and personal support workers. Furthermore there would be no prohibitions on doctors working in both systems if they want.
The Devil is in the Details
I would propose that the tax should be 100% on whatever the customer (or the customer's insurance company) pays. If the procedure costs the patient $100 ordinarily, the patient pays $200 and $100 goes to the public system.
I would propose no loopholes. No, private companies cannot pay their taxes in-kind, through the use of MRI machines or whatever. Yes, every service done privately would be subject to this.
Of course, the question arises of services that are not covered by the public system, such as dental care, mental health services, or opticians. This could be the loophole that breaks this idea. Ideally I would like private providers to be able to bill the public system at the rates the public system allows. This is not that different from how doctors work now; they are not employees of the government, but independent businesses who bill the government for services. The downside here is that then there would never be mental health or dentistry covered by medicare, because the dentists and psychiatrists would fight tooth and nail against their rates having to double in order to cover the tax.
When private health care providers mess up and there are complications with a patient, then either the private care providers clean up the mess, or the public system charges the private one for the health care costs. Private health care should not be able to get a free ride by pushing the difficult cases back to the public system.
Pushback
Every good idea contains the seed of its own heresy. There is no way this idea could survive. It would fail because we do not have backbone:
The private insurers have lobbyists who will play violins and relate sob stories about people who suffer so so much because they cannot afford the exorbitant tax rate, and so couldn't we make an exception for such people? My answer is no. Those people have the public option, which is well-funded.
An even bigger danger is that governments are going to stop funding the public system, because they would like to use that money for wars or sending seniors cheques in the mail or something. This would be a disaster. The government would need to continue funding health care as if the private money is not coming in; that money needs to be a supplement to existing health care funding, not a replacement for it.
Rich people have lobbyists too. The government will crumble under the pressure and lower the tax rate, and then the public system will fall apart, because this idea only works if the public system does no worse because the private system exists.
The private system will innovate, and adopt a bunch of procedures not covered by the public system. In an ideal world the public system would then cover those procedures too (because they are efficient enough that the private system can make money on it). In the real world the public system would be loathe to play catch up with the private system, and so the public system would fade into irrelevancy.
In order for this to work we would have to be resolute that the public system cannot be any worse than the public one, and we will not be resolute. We will cave. So at the end of the day we will be left with our mediocre, increasingly expensive public-only system, and the boogeyman of the United States healthcare fiasco will scare us away from actually fixing the system with any private involvement.