The Moral Myths of Medicare
Sometimes when I talk to people about my views of medicare, I feel a bit as if I’m from the planet Pluto and my audience is from Jupiter, so I’m going to try to get a little feedback as I go along today, just to see how much work I’ve got cut out for me to persuade you.
First audience survey
I’m going to start by asking what people think about our current health care system, and I’m going to give you two options. The first option will be: put up your hand if you think that our current health care system is preferable to option two. For this purpose, I will define our current health care system as a system of socialized medicine, consisting of a single-payer system in which government owns all the hospitals, pays all the doctors and other hospital personnel, defines what illnesses will be covered and what services will be provided, does not allow people to purchase private health insurance, and actively discourages the provision of private health care services if they overlap with what is available in the government-owned system.
The second option is a system
similar to what they have in
(Vote taken on November 5, 2005: Option 1, estimated at 20 percent. Option 2, estimated at 50 percent. Abstentions, estimated at 30 percent.)
I suspect that there are a number of people here today who hold that premise. Can I have a show of hands, please? If you have a gut reaction that says it’s evil, or wrong, for someone to be making a profit off of another person’s need for health care, just raise your hand.
The people who hold this idea seem to have
some kind of idea
that the price of everything is like an old-fashioned bottle of milk. Most of you here today have probably never
seen milk being sold in glass bottles the way it used to be sold fifty
ago, before homogenization became the norm.
But the image is still common enough, I think, even among
generation. You probably know that the
cream floated to the top, so at the bottom there was skim milk, and at
there was a layer of thick, floating cream.
Advocates of state-run medicine or
non-profit medicine seem
to think that this is what a private-sector price is like—the skim milk
represents the costs of labour and materials, and the cream at the top
profit. If you eliminate the layer of
profit, everything will be cheaper, because the price will just have to
the enterprise’s costs. That’s why if
government does it, everything will cost less.
There’s no need to cover the profit.
This is a wholly unrealistic way of looking
at both private
ventures and government ventures. The
truth is, every price, whether it’s something provided by private
by government, resembles a bottle of homogenized milk, where the cream
profit, if you prefer) is so thoroughly mixed in with the rest of the
you can’t separate it out.
Well the news flash is—there are no shmoon in real life, not even in non-profit organizations or in the civil service.
In a private business, the entrepreneur’s
desire for profits
actually serves an extremely useful function: it provides the incentive
for the most efficient way to do things.
If the owner can keep expenses down by finding cheaper
inputs, or by inventing an entirely new and more economical method of
the same finished product, he gets to pocket the difference. This is a
not only to him, but to society at large. The fewer resources that are
in making one product, the more resources are available for use
Critics contend that the profit motive leads
corner-cutting and shoddy output. They say the entrepreneur tries to
his profit by taking the quality out of the product.
They forget that where competition is
permitted, entrepreneurs can’t get rich by cutting costs alone. They
to fight for market share, which means they
have to make the best possible product at the lowest
And I think if you take an objective look at
around you, you’ll see that this is borne out in almost every field you
think of. Computers are getting better
and better, not shoddier. Cars are
getting better in terms of fuel efficiency, reliability and safety. They’re not getting shoddier.
The same goes for clothing, electronic
equipment, etc. All of these things are
provided by for-profit firms operating in a competitive environment
increase their profits by providing better and cheaper products, not
ones. On the other hand, if you look at
things that are provided primarily by government, that is where you
things continually getting worse and worse.
I’m thinking here not only of health care but of
education, which is
almost entirely publicly provided.
I’ve brought some empirical evidence in
support of my
argument. The Fraser Institute did a
study comparing compared the wages being paid to non-profit sector hospital workers and
for-profit sector hotel workers in
Source: The Fraser Institute, Fraser Forum, January 2002, page 32
happens when you eliminate the profit that would
otherwise go to an entrepreneur: it gets divvied up among employees at
levels in the enterprise instead. There’s
still plenty of profit being sucked out of the health care industry,
sucked out at lower levels, by the cooks and painters rather than by
So from the moral point of view, if you still think that making a profit out of other person’s ill health is evil, then logically you will have to reject not only privately provided health care but also publicly provided health care, because there is just as much profit, or possibly more, being made in non-profit or government-owned institutions as there is in the private sector.
Existence of Profits Does Not Predict Price
There are a couple of other
points I want to make about the
existence of profits in privately-provided health care.
The fact that a profit is being made says
absolutely NOTHING about what the cost of the product is going to be to
consumer. You can see this quite easily
by looking at two extremes in the retail clothing industry. I can go to Wal-Mart and buy a T-shirt on sale
about $5. I can also go to Holt Renfrew
and buy a designer T-shirt with someone’s name embroidered across it
cost me $100. Now, here’s the
point: both Wal-Mart and Holt Renfrew
are in business to make a profit, and both of them DO make a profit,
there’s a huge difference in the cost of their T-shirts.
And there may also be a difference in the
quality of the T-shirts. But it’s
extremely unlikely that the $95 difference in price is due entirely to
quality of the T-shirt. Holt Renfrew may
pay not very much more to its T-shirt manufacturer for its
than what Wal-Mart pays to its supplier.
But Holt Renfrew’s stores have a different cost structure. They have a lot more open space than Wal-Mart
stores. Their merchandise is arranged in
more attractive displays, instead of in long aisles.
They have a prestigious address on
The point is that in a private market for
health care, there
could be and (I predict) would be both the Wal-Mart version and the
Renfrew version of hospitals. Both of
them could be profit-making enterprises, but they would serve different
niches. You could get a heart bypass
operation at the low-end hospital that wouldn’t be much different from
bypass operation you’d get at the high-end hospital, but the rooms
might not be
decorated as nicely, or they wouldn’t be located in such expensive
neighbourhoods, or the hospital personnel might not be as attractive.
2. Everyone’s Equally Entitled to Health Care
(Results on November 5, 2005): estimated 20
There are three different ways that I want
to tackle this
First, I want to deal with the notion that
care is just bad luck, and it’s something that could happen to any of
us. There are a few instances in which
true. Almost any of us could be struck
by lightning or hit by a car, through no fault of our own.
And there are some illnesses such as Multiple
Sclerosis or ALS that appear to come out of the blue and strike some
have done nothing risky or inappropriate.
But this, I would argue, represents only a small percentage of the health care costs we are actually incurring these days. You can think of myriad examples of ways in which people voluntarily cause themselves to need more health care than other people. There are people who engage in risky sports, for instance. Why should someone who goes mountain climbing, or race car driving be entitled to the same “free” health care as someone who doesn’t assume these risks? Where’s the moral imperative in that?
Genuine Insurance versus Government Insurance
This is not true of most of what is covered
by our health
care system. Our so-called government
insurance covers routine check-ups and tests.
It covers trips to the doctor for a cold or the flu, which
untreated would usually disappear in any event after a few days.
Can you imagine what car insurance would be
like if it
operated like health insurance? Suppose
it covered not just accidents, but routine maintenance, and the cost of
up with gas, i.e. things that were both likely to happen, and fully
predictable, and desired by the insured person?
The cost of car insurance would be astronomical. The number of insurance claims would be
astronomical. And that’s exactly what we
see in our health care system.
Having More Money Shouldn’t Be an
The second way I want to tackle this is to
look at the
question of how having more money should affect the availability of
health care. On this subject, the
view seems to be that having money is also merely a matter of luck. You’re born with money, or you just happen to
get lucky and get a good job, or something.
While there’s no denying that luck is a factor in the
of wealth that people acquire, it’s certainly not the only factor. Again, the choices that people make have a
great deal to do with whether or not they have money.
And it’s not just the choices they make as
the money comes in, it’s also the choices they make about how their
Generally speaking, the marketplace rewards
incomes those who do more for other people.
In a free market, you make money because you satisfy
needs, as expressed by their voluntary willingness to pay.
These days, unfortunately, there are a lot of exceptions to this rule, since the
government plays such a huge role in the economy and it rewards players
completely different manner. The
government coercively takes money from some and gives it to others,
that the recipients of government incomes, whether they be civil
teachers or hospital employees, don’t have to satisfy the needs of the
community. And many of the people in upper
brackets these days are civil servants or people whose livelihood
the money coercively taken by the state.
This is becoming increasingly so.
Nevertheless, to the extent that the economy is still a
market economy, the
general rule still does apply, that by and large, the people who have
spend are those who have been the greatest benefactors of their fellow
Now, personally, I don’t see anything morally wrong with the notion that these people should get better health care than others. In fact, I think it’s morally wrong if they don’t. What on earth are they working for, if not to be able to spend their earnings on something better than what everyone else can get for free?
But that’s not the end of the story either, because there is also the question of how you manage your money in addition to the question of how much you earn. People are radically different from one another in this respect. I see this all the time in my law practice. There are some people who, no matter how much money they make, spend every last nickel and never have any savings. There are others who, no matter how little they make, are very conservative with their spending and always have money saved. They save precisely because they don’t trust others, and especially government, to provide for them, and they want to be able to help themselves in the event of an emergency. Why should people like this not be able to use their own resources to buy something better for themselves if that is how they choose to conduct their lives?
What Is Moral for Lady Luck Is Not Necessarily Moral for Humans
Luck is not a person.
Luck is not an entity of any sort.
Luck just happens. There’s
nothing fair or unfair about it. There’s
nothing just or unjust about it. It just
happens. Luck is not a moral actor.
Human beings are entirely different from
luck. Human beings are moral actors. We have to start with the situation that’s
handed to us, then decide from that point on what is the moral thing to
to treat people, given their conduct.
It is immoral, I contend, to forcibly take
money away from
people who have not harmed anyone else.
If person A assaults person B and causes him to need
medical care, then
I would say it is moral and just for us to force person A to pay for
care—because he caused the problem. But
if A did nothing to B, and B’s misfortune was caused by C or by B
himself or by
sheer bad luck, there is no justification in punishing A for something
he is completely innocent.
It is not the moral thing to do, to go
around saying we are
going to correct all the “mistakes” that “luck” made.
Because that would involve taking things away
from those that are “lucky” and giving them to those that are “unlucky”. But how can you justify inflicting harm on
someone who is completely innocent of any wrongdoing—someone who merely
to be lucky? It is wrong for us to punish
the innocent. The lucky have never
harmed anyone else in becoming lucky. We
can’t make it our goal to go around trying to correct all the errors
Those who don’t like to live with the luck
of the draw can
pool their risk of requiring expensive medical treatment by purchasing
voluntary medical insurance. It’s
extraordinary that in this country where we make the rectification of
into official policy, we do so only by coercive measures (that is, by
forced participation in socialized medicine through taxation) and we
forbid the pooling of risk by voluntary measures (the selling of
That might be about to change following the
Supreme Court of
Canada’s decision a few months ago in the case of Dr. Jacques Chaoulli,
fallout from that case is still uncertain at this time.
Okay, I’ve used up my half hour. It’s time for questions.
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