Queues in Time or Money

In my health economics class, students often think that America has faster waiting times for medical procedures than other nations because they have heard about healthcare systems like Canada that have waiting lists for procedures that the government considers to be ‘elective’.   In contrast, the US allocates medical care according to supply and demand and lets the price rise in order to eliminate queues.  Economists often criticize the Canadian system for forcing people to wait for care (queuing).  The idea is that because the Canadian government provides free healthcare to all Canadians, they ‘ration’ care.  Of course, giving something away for free would be an odd way to ration it, so the ‘rationing’ accusation is a bit odd.

The standard mutilitarian argument against queuing is that raising the dollar price would cause people spend less time waiting in the queue and more time working to get the money to pay for the desired healthcare (or whatever the queue had been for).  This is more efficient in dollars of production, but it doesn’t actually change the waiting time unless it causes a larger supply of healthcare.  And that is part of the problem in the US.  The supply of healthcare is limited by the licensure regulations that restrict the supply of healthcare providers.  A higher price for healthcare just means higher incomes for providers as long as the number of places in medical school is fixed by the medical cartel (in collaboration with the legal heft of the US government).   Instead of everyone waiting equally like in Canada, in America’s market system, wealthy elites can skip to the front of the line whereas the rest of us have to work overtime before we can afford to get treatment.

It isn’t at all clear that Canadians wait longer for medical care than Americans because the statistics don’t include the underinsured Americans who are waiting to sign up for healthcare procedures until they have enough money to pay.  In 2010, a third of American adults said did not get recommended healthcare because of the high cost.  That is higher than in any other rich nation in the study.

That isn’t to say that Canada has a perfect system.  One problem with the Canadian system is that they arguably spend too little on healthcare.  In fact, they spend so little that even though the Canadian government gives free health insurance to all Canadians, their government spends less per person than the US government.

The US healthcare system is so inefficient that even though the US government spends more per person than almost any other nation (see chart) our government only covers 31% of Americans (the old, the poor, disabled, federal employees (notably active-duty military), Native Americans and veterans).  The population that the government insures includes some the most expensive demographics because old people, the disabled, and newborns  have very expensive healthcare.  Almost half of babies born in America are paid for by Medicaid and premature babies can cost millions of dollars.

This graph comes from Avik Roy who wants to eliminate Medicare and Medicaid, because he dislikes socialized insurance (and seems opposed to insurance generally), but those government programs provide much cheaper treatments than the private health insurance system in the US.  The private part of the US healthcare system is what is really expensive compared with other nations.

Posted in Medianism, Public Finance

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