Privatization: Who are the Winners?

There is no doubt in anyone’s mind that Alberta’s health–care system needs help, and perhaps even the Canadian system as a whole. More often than not, the health care debate turns to the question: Will Canadians receive better health care if it is provided partly as a private, for–profitt product rather than as a not–for–profit government service? In the views of Prime Minister Stephen Harper as well as Premier Ralph Klein, yes – citizens will be better off once privatization has been introduced. The health care system that the Conservatives push towards, little by little, seems to share quite a bit in common with our neighbors down south. Unfortunately for us, it is blatantly obvious to just about anyone that American health care is in a state of crisis.

As it is, medical costs have become the leading cause of bankruptcy in the US, with access to insurance coverage being one of the growing problems. Competitive market forces in health care and between insurance companies has ensured that coverage remains highly selective. American health care is therefore ruled by the “inverse coverage law“: the more people need insurance coverage, the less likely they are to obtain it. Studies show that in the US, people in lower status groups utilized medical resources more frequently than those in higher status categories. This isn’t all that shocking, since increased poorer living conditions increase one’s susceptibility to all sorts of diseases, which subsequently leads to increased usage. Sadly, a lot of the time, the very people who need it most are not adequately insured, and end up paying right out of their own pockets.

What’s more is that over time and across the world, countless studies have shown that when market forces are introduced into health care, overall costs rise while efficiencies go down. This is because health care, being anything other than a regular market commodity, does not lend itself well to the laws of supply and demand. If it were, then free market competition would obviously bring free market benefits – lower costs, regulated by the simple laws of supply and demand. Here, competition isn’t necessarily driven by lowering costs. In fact, it is dominated by offering the latest and most expensive equipment. Physicians even in abundance know that they need not lower prices for the simple fact that when it comes to their health, a lot of people are willing to pay a higher price just to gain access to some newer, “better“, promising technology. User fees, which are often introduced as an option for controlling costs, run on the principle that requiring patients to pay a small fee would encourage them to think twice before visiting a doctor. But that simply isn’t the case. As studies show, even user fees do nothing in the way of deterring patient visits.

To take a thoroughly studied example outside of North America, we can turn to Singapore. The health care system in Singapore has been one well–studied, and well–documented. Until 1985, the country had relied on a tax–funded universal health care system, but introduced private elements into the system that very year in an attempt to cut costs and increase medical efficiency overall. Following this change, spending on health care rose quickly – notably the fees and incomes of physicians in the private sector, which increased substantially. Of course, more physicians migrated out of the public sector and into the private, so the government attempted to curb this migration by monetarily compensating public–sector physicians and health care workers. Needless to say, a decade later, Singapore’s own government concluded: “The health care system is an example of market failure.“

By now you may be thinking, Alright, fair enough. But won’t I get better care? Reduced waiting times? The latest and “best“ technology? Not necessarily. What we will see, is an emphasis on “state of the art“ specialized medical interventions; something that does not always result in better health care on the whole. In the case of waiting lists, Alberta’s own examples show that private clinics often make waiting lists longer. Looking at eye surgery alone, The Consumer’s Association of Canada shows that areas with private clinics have the longest waiting lists, as well as the highest costs. Calgary, where most cataract surgeries are carried out in private facilities, has much longer waiting lists than does Edmonton, where the surgery is done in public facilities. Finally, as it worked out with the United States, what we may notice over time with health care in general will be disinterest in prevention, primary care, and chronic care. Less than ¼ of physicians in the US today can be categorized as Primary Care of Family physicians. There is a burden on management time, soaring administrative costs, and a thrust for profit and growth. When priorities are thus shuffled, health care’s organizational goals start to favour business over health.

In Alberta, it is especially important for every citizen to know the facts on health care and privatization, so that we can make informed decisions. Since his election as Premier over a decade ago, Ralph Klein went into overdrive convincing Albertans that health care spending had gone through the roof during the Don Getty years, and that privatization was the answer to the health care woes. What he failed to mention however, was that provincial health care spending has remained very stable – what had changed, was spending on public services as a whole – education, transportation, social services etc. all faced strict constraints. Obviously then, comparing stable health care spending to lowered overall public sector spending made it seem as if health care spending was increasing, when in fact, it was not.

The health care debate is often daunting, especially for those of us on the “consumer“ end, with little knowledge of how it all works behind the scenes. Again, let’s ask ourselves – do we really need privatization? Simply put, no we do not. What we do need is for the Klein government to stop cutting provincial spending on health care – that would certainly help cease thousands of job losses in the HC sector. Perhaps then, we wouldn’t have to face constant erosion of public confidence in our system. The biggest area in Alberta to be touched by privatization so far is Calgary; not surprisingly, our troubles have been the greatest, and our deficit’s the largest. We have had longer waiting lists, and the highest patient charges. Privatized delivery, user fees, etc. do not lower costs or decrease demand on the system. All they do is discourage the elderly and poor from visiting doctors. Basically, any capacity freed up by reduction in demand would easily be filled with services initiated by physicians, and by people for whom money is not an issue.

Privatization clearly isn’t in the public’s best interest. The question therefore arises – if we, the public, aren’t the ones benefiting from it – who is?

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