2010 Karen Selick
An edited version of this article first appeared in the November 10, 2010 issue of the Globe and Mail.
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Should Profit from Health Care? Get Real!
Office supply stores sell wooden pencils for as little as eight cents apiece. Swanky gift shops also sell pencils: gold-filled, and priced as high as $1,400. Both pencils will make marks on paper, but they have another less obvious similarity. Both create a profit for their respective retailers, and for every intermediate link in the supply chain—from the tree-cutter or the gold miner, to the manufacturer, to the shipper.
It hardly seems possible that there can be that much profit built into an eight-cent pencil, but that’s exactly the point: “profitable” is not a synonym for “expensive”.
Consumers can buy expensive shoes or cheap shoes; luxury cars or economy cars; filet mignon or hamburger. Whatever the commodity, the free market offers goods produced at a profit, by privately-owned enterprises, in a staggering range of varieties and prices.
People don’t generally accuse supermarkets of being evil for profiting from people’s hunger, or shoe stores for profiting from people’s barefootedness.
Yet Canadians have become so accustomed to thinking that healthcare must be provided by government that moral panic ensues the moment anyone suggests that it could be provided by private, profit-making enterprises. “Nobody should profit on the backs of the sick,” opponents cry.
Like it or not, every single person who attends to the sick in our current system of government-monopoly medicine is there for his or her own profit. Profit is simply income minus expenses. If our system were really non-profit, doctors, nurses and orderlies would get paid just enough to enable them to perform their duties. They would subsist on a diet of rice, possess only a single change of clothing, bunk down in dormitories at night, and walk to work.
But healthcare workers don’t live like that. Instead they have abundant food and clothing, private homes, transportation, and luxuries such as entertainment, vacations and savings. These extras over mere subsistence are their profits, even though we don’t ordinarily call them that. There’s nothing immoral about their earning profits. But there’s also no contingent of angels or saints in our society who are willing to work without a profit. The notion of non-profit healthcare is simply a myth.
A study published by the Fraser Institute in 2002 compared the wages of non-medical personnel such as cleaners, payroll clerks and cooks working in “non-profit” hospitals against those working in hotels. The hospital employees were paid from 9% to 39% more than hotel employees doing identical jobs. The layer of profit supposedly absent within these “non-profit” entities was actually being dispersed among employees rather than being shaved off the cost of services.
But wouldn’t allowing private, for-profit healthcare mean that some people would get filet mignon healthcare while others had to make do with hamburger healthcare? Perhaps—but in the long run even low-income patients would benefit.
New technology is typically expensive at first, but declines dramatically in price as more people hear about it and competition kicks in. We’ve all seen this happen with computers, cameras, television sets, etc. It even happens with medical procedures, so long as they aren’t covered by the government monopoly. Laser eye surgery, for instance—provided by the private sector in Canada—has declined significantly in price even as safety and outcomes have improved.
If we insisted that nothing new be made available to wealthy consumers until it was cheap enough to be provided simultaneously to every member of society, very few new products would ever become available.
The big picture proves that private-sector goods and services keep on getting cheaper even as quality improves. In 1961, the average Canadian family spent 56.5% of its income on food, shelter and clothing (all private-sector products). By 2009, families spent only 37.1% of income on those basic necessities.
Meanwhile, products and services monopolized or near-monopolized by government—primarily healthcare and education—grow ever more expensive even as quality declines.
Those who really want to help the poor and sick should be clamouring for the private sector to be allowed to do the job.
Karen Selick is the Litigation Director for the Canadian Constitution Foundation, which is challenging Ontario’s government monopoly healthcare system through the courts.
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November 28, 2010