Nationalized Health Care

In this post I noted that the Canadian health care system had enacted a law that basically eliminated the in vitro fertilization (IVF) techniques in Canada by prohibiting payment to women who donate their eggs. I noted that while this could be an unintended consequence, it might also be a clever attempt to limit access to the health care system. The limiting of access to the health care system is one way to constrain the costs of providing health care at a national level. Since most people think only of money when they think of costs, increasing non-monetary costs such as wait times, access to certain techniques, etc. would be seen as effective ways of controlling the monetary costs.

Now in the comments to that post a commenter, kappiy wrote the following,

A better solution would be to make IVF treatment entirely market based. Meaning, there would be no public moneys spent on regulation (for health and safety), and women would be free to sellf their eggs at will.

While this might sound like a good solution, I doubt the people who run the health care system in Canada would like this idea. The problem would be that IVF techniques are expensive. As such it would be a lucrative profession for health care workers to go into. If it was cut loose from the Canadian health care system the effect would be to suck resources (namely doctor’s, nurses and other staff) from the Canadian health care system and into the new private market for IVF techniques. This would mean that the Canadian health care system would have to compete for these resources which would likely mean higher wages which would drive up the costs for the Canadian health care system and defeat the very goal of controlling costs. Now the Canadian government could try to controlling the problem by limiting the wages of those working the IVF field, but that would basically have the same effect as we are seeing now–i.e., no IVF market.

So, this mixed approach probably wont work. In fact, I submit that part of the problem with costs in the U.S. is the mixed approach we have. We have massive government intervention in the health care industry. Medicare is basically a mutli-billion dollar subsidy for consuming health care resources. It shouldn’t be hard to see that such a subsidy will drive up prices (costs) in general. If we go the route of completely nationalizing health care in this country we could very easily control costs. The problem is that it will likely mean a degredation in the quality of care that is provided. I know many people like to point to the life expectancy statistics to “debunk” this claim. However, one has to remember several points about life expectancy statistics. The first is that more than the quality of health care goes into determining life expectancy. I’m sure we have all seen the news headlines that Americans are…robust shall we say in regards to their weight. Further, there is quite a bit of violent crime in the U.S. I don’t know if that plays a role in life expectancy variations from one country to another, but I’d at least like to see some attempt to control for it. Another factor is that, you can change the results of life expectancy by re-directing health care resources. For example, if more resources are directed at infants and young children this could bump up the life expectancy. So I am not convinced that the different life expectancies is strong or even weak evidence in favor of nationalized health care.

My over all feeling on this issue (heck on many issues concerning the allocation of resrouces) is that there isn’t much thought that goes into it. People all to frequently assume that there is just two variables at work such as health care and life expectancy. Taxes and economic growth. Social security and taxes. There seems to be a severe lack of appreciation that many of these issues have multiple variables that influence what we are observing and focusing on just one or two can give a misleading picture.

FILED UNDER: Economics and Business, Health,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

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  3. Teri says:

    I didn’t know that women were paid for donating eggs for in vitro. I would have expected that it would be a donation, like giving blood or bone marrow. I understand that the process involves some discomfort – I think the donor is asked to take medication to increase the number of eggs produced for harvesting. But still, I would think that there would be a certain number of women who would be willing to do it for free, either because they just like helping people have babies or because they want to donate to a specific friend.

  4. Some discomfort? Its surgery, Teri.

  5. kappiy says:

    I see your point James–but one would have to know about what the demand for the IVF services were before you could really understand the extent to which market-based IVF would increase costs for the health system.

    Are there really a lot of people who are trying to get IVF treatment? Also, are doctors & other health care workers strictly motivated by money? Would the fact of medical specialization make it less likely that someone would ditch the Canadian national system to go the private route?

    I have no idea what the answers are…I think that it is true that the Candians stopped this practice because they saw it pulling resources from the national health care system.

    That makes sense, since, as I mentioned in the comments, IVF is a medical procedure that has absolutely nothing to do with public health. It is a non-essential “surgical” procedure, qualitatively equivalent to getting a tatoo or a tounge pierce.

    Because IVF is strictly a private good, there should be no public subusidies for it.

  6. kappiy says:

    Steve, sorry I called you “James”! I keep forgetting that James has comrades in the posting seat!

  7. Kappiy, you continue to misrepresent the issue as one of “subsidy”. That isn’t what is going on at all in this or the previous discussion. The question is one of suppression of politically disfavored health care that people want, in order to control the costs of the politically favored.

  8. Teri says:

    “Some discomfort? Its surgery, Teri.”

    Robin, so is donating bone marrow, and people do that for free.

  9. Steve says:

    I see your point James—but one would have to know about what the demand for the IVF services were before you could really understand the extent to which market-based IVF would increase costs for the health system.

    Are there really a lot of people who are trying to get IVF treatment? Also, are doctors & other health care workers strictly motivated by money? Would the fact of medical specialization make it less likely that someone would ditch the Canadian national system to go the private route?

    Lets put it this way. Right now there are people in Canada who are willing to come here to the U.S. and pay more than they would if they had private suppliers in Canada (i.e., travel costs, lodging costs, food costs, etc.). So there are gains to be made via trade here. This would suck up resources from other health care activities and would end up costing the Canandian health system money. Considering that the Canadian system was in money trouble that last time I read about it (i.e., there were some saying the system was unsustainable), I don’t think this idea would be looked on kindly.

    That makes sense, since, as I mentioned in the comments, IVF is a medical procedure that has absolutely nothing to do with public health. It is a non-essential “surgical” procedure, qualitatively equivalent to getting a tatoo or a tounge pierce.

    Because IVF is strictly a private good, there should be no public subusidies for it.

    But this raises the issue, if you have the money to pay for it why should you be prevented from doing it. Canandians are lucky in that they have the U.S. as a neighbor (for this issue) and can come here with relative ease. But the higher costs means that some people who could afford it at home, but not abroad wont be getting IVF and wont have the children they clearly desire.

    Is this really a decision for the government to be making?