Our Descent into Madness

In One Flew over the Cuckoo's Nest , Ken Kesey tells the story of a man anything but mad, but who suffers the consequences of being labeled mad because of his rebellion against the petty tyranny of those who run the asylum. Think about that as you think about the course of health-care legislation, which is now perilously close to passing.

Because of an accident of World War II, many Americans get their health care through their employers, as tax-free compensation. Because of wartime wage controls, companies looked for ways to solicit workers, and offering fringe benefits like health insurance was one way. The authorities long ago declared that such benefits are not taxable income. If employers bought us houses in lieu of paying higher wages, our houses would be really big. And because they buy us health-insurance in lieu of paying higher wages, our health insurance tends to be gold-plated. Like any subsidy, a tax subsidy of health insurance has led to higher demand for health insurance, and therefore people relying on others to pay for their own routine, perfectly predictable health expenses.

In response to those higher costs, which plague all third-party payer systems, but seem to affect ours more than most, we are now apparently resolved to control costs by taxing the pretax plans that have premiums that are too high. In other words, we don't tax the insurance to begin with, as we would for any other form of compensation, but then decide to compound the sin when people then choose to demand a lot of healthcare, which then claims a lot of resources at high social cost.

The Wall Street Journal indicates the current state of play:

Under the Senate bill, health insurers would have paid a 40% tax on premiums that exceed $8,500 annually for individuals or $23,000 for family plans. That would have affected 19% of existing policies. The new agreement raises those thresholds slightly, to $8,900 for individuals and $24,000 for families, so fewer workers would be affected.

Of course no one knows the "right” amount to spend on health care. Anyone who says we spend too much is obligated to give a number of what healthcare should cost -- 16.378% of GDP, an appendectomy should cost $2130.62, something along those lines. But of course no one knows that answer. Like any other good, those numbers are the result of interplay between millions of competing buyers and millions of competing sellers, with the sellers themselves buyers of the resources needed to sell their services, and everyone possessing information invisible to the planner. There is no imposing a bureaucratic solution on that. The result of cost controls will inevitably be some combination of rationing, people lobbying to get their special health-care needs or role in society declared exempt from cost controls, black markets, increasing the attractiveness of health-care services by ways other than improving the quality of the care but billable to the user (e.g., more luxurious hospital rooms), and other ways that we can never predict but which the planner is always expertly quick to find someone to blame for.

Cost targets are the weapon of the slave master. That we have gotten to this point -- we are prepared to give bureaucrats and politicians control over costs that are created because of the decisions of past bureaucrats and politicians -- is essentially planning in a nutshell. The proper solution to this problem is simply to tax health-insurance compensation like any other.

But we have long since left the moment when good sense was an option. During the early years of the Great Depression President Hoover consented to legislation authorizing farm subsidies, because he wanted farmers to make more money. Alas, subsidies encourage overproduction, and farm prices fell at an even faster rate than they otherwise would have. Thus, Hoover supported the Smoot-Hawley tariff’’s ability to raise farm prices, with catastrophic consequences. This is where our health care is headed, if this isn't stopped.

What Is the Real Lesson of the Cleveland Clinic?

President Obama was at the Cleveland Clinic today, and planned to say that it should be a lesson for the rest of us on how to run the health-care "system." He apparently admires, in particular, the way the clinic has decoupled medical decisions from financial incentives. In his news conference last night, he indicated he wanted to eliminate the problem where the doctor chooses a tonsillectomy instead of a cheaper alternative course of treatment because "I make a lot more money if I take this kid's tonsils out."

Leaving aside the casual way the political leader insults the integrity of a huge proportion of his constituents, presumably in the belief that it is only they who block his grand plans, the Cleveland Clinic indeed merits thought. It is a lesson alright, but not in the way the president thinks. The primary lesson of the Cleveland Clinic is rather that it is there . According to the Wikipedia entry, the clinic was founded by four physicians as a group, back when that was an unusual practice, in an attempt to provide better patient care. Since then, it has evolved into a massive facility that treats patients from all over the world. Like the Mayo Clinic, the Texas Medical Center, and other facilities, it is a crown jewel of American medicine.

And it is a product, lest we forget, of the American medical system we keep hearing such bad things about. It is an economic/medical life form of sorts, that has evolved in response to the environment, both on the cost side and the demand side, it faces. It is not something a central planner could have concocted. Indeed, the centrally planned version of the Cleveland clinic would presumably look like the big state-owned hospitals in single-payer countries, with their crowded conditions, long waiting periods, and ghastly hygiene.

When the allocation of scarce health-care resources is a matter for politics, cost containment looms extremely large. In theory, democratic competition is supposed to lead to the best health care system, in the same way that competition among restaurants leads to the best ones staying in business and the worst ones closing. In fact, political competition privileges those who speak loudly and those who lobby effectively. Given that the pressure groups seeking to stake claims to public funds are hardly confined to health care but include individuals from every arena of social activity, those claims always exceed the resources available, so that cost-cutting becomes an overpowering concern. The market system requires self-interested producers to incorporate cost into their decision-making, but also the value they are providing to patients. There is little evidence that this is true in politics. Indeed, it is more than discouraging to read about the extent to which cost control has dominated the discussion of why we need more government control over health-care decisions. In general, costs go up when more resources are claimed, and for them to come down usually requires that the service be provided. Only the arrogant politician supposes that there is some giant pot of "waste" waiting for him to discover it and fund more for less, confident, in the teeth of all the evidence, that such efficiency is the hallmark of every other type of government activity.

In a properly functioning market, the aforementioned interplay among health providers and health consumers leads, as it does in every other economic endeavor, to experimentation, and that experimentation culminates in institutions like the Cleveland Clinic. Health-care providers try, and if necessary abandon, new medicines and new surgical techniques, and more importantly they try, and if necessary abandon, new forms of social organization. They operate clinics that require payment in cash; they try group practices based on incredible degrees of specialization (the orthopedics group that has the hand specialist, the knee specialist, etc.), or they select comprehensive clinics that contain under the same roof every specialty imaginable. Those experiments that succeed stay; those that fail go. The things that don't work are purged quickly, although it is for precisely that reason that we do not observe them, and therefore cannot tally them as a success of the market system, even though they are. In a centrally planned system, in contrast, those experiments that might succeed are never born, and those that fail lobby to stay forever. This is the biggest tragedy of the looming massacre of our already wounded health system; the Cleveland Clinics of the future that we will never hear of.

National Healthcare and the Battle of the Sexes

Here is Canada's National Post newspaper on a classic central-planning problem, and associated social conflict, involving the Canadian health-care system:

The growing ranks of female physicians in Canada will slash medical productivity by the equivalent of at least 1,600 doctors within a decade, concludes a provocative new analysis of data indicating that female MDs work fewer hours on average than their male colleagues.

The paper comes just a year after a blue-chip list of medical educators publicly condemned what they called the scapegoating of women for Canada's severe doctor shortage.

The fundamental problem, as I have often noted, in public expectations about health care is that there is no such thing as "universal health care," if by that people assume that they can have any health care they want, anytime they want it. Health care is costly to produce. The resources needed to do so have alternative uses, and so health care must be rationed by some criteria or another.

A "doctor shortage" is unfortunately a term too imprecise to be helpful. According to the article, "The long surgical wait times and lack of family physicians that plague the Canadian health care system are largely blamed on the paucity of doctors.”

But what is the right number of doctors, the number of doctors that ends the "paucity"? The article attempts to answer this question by comparing the number of physicians in Canada to the number in other OECD countries, but Canada is not a copy of other countries. Like every other country, it is a collection of many different individuals. Its individual citizens have different opportunities, different health profiles, different lifestyles, different attitudes toward health. Information about how much each person needs health care is dispersed to each individual; no government agency can possess it all.

We may intelligently speak of an economic shortage, in the sense that, at the prevailing cost of doctors' services to the patient, more people want doctors’ services than there are doctors willing to provide them. (Even this definition is imprecise, but it is close enough.) Canada has this problem in that, according to the article, waiting times are extremely long for both surgery and for services by family physicians.

And somewhat remarkably, the rising presence of female doctors among all Canadian doctors is said to be responsible for this. Women are about a third of Canadian doctors now, but since they're a majority of medical-school students there, they will soon be a much greater share. And since, according to research, women doctors work on average fewer hours than male doctors (because of more claims on their time due to their child-care responsibilities), it only stands to reason that the presence of more female physicians in the workforce will lead to longer wait times. Right?

Alas, this group-based zero-sum thinking is inevitable when genetic groups -- the sexes, races, religions, etc. -- look to the state to referee their disputes. In fact, even if it is true that women on average have more competing claims on their time, so that they devote fewer hours in a week to medical care than male doctors do on average, there are many female doctors for whom this is not true, and many male doctors who also have a high opportunity cost of time. This is the classic example of a problem that a free market solves through its capability to make use of highly decentralized information -- in this case, each physician’s private knowledge about the opportunity cost of his or her own time.

If there are currently more claims on physicians' time than there is time available to be claimed, then the solution to that problem is to raise the compensation for physicians' time. But that is the sort of problem state health-care systems can seldom solve, because they are interested in getting the cost of the entire system down (assuming heroically that they are not interested merely in maximizing politicians’ political success functions by soliciting transfers from special interest groups). What the government should be interested in is encouraging physicians who have sufficient amounts of time, relative to the alternatives, to devote that time to patient care. By allowing the market to set the wage, all such physicians by definition do so. There is no "shortage," although health care is rationed by money instead of by time. But on the other hand, there is no aggregate conflict between male doctors and female doctors. No one blames female doctors are putting in too few hours. Instead, there are only individual doctors, either male or female (it makes no difference), each of whom decides how much time to devote to taking care of patients, and how much time to devote to child care, golfing, or whatever the next best alternate use of his or her time is.

The kind of thinking on display in the article is a result of the belief that good social outcomes only require that the government crunch the right equations. But the Canadian physician shortage is not a function of the aggregate sex composition of Canadian doctors (30 years ago this would have seemed obvious), but the result of the fact that, given what the government has decreed they be paid, too few people are willing to work.

The Medicare Miracle That Isn't

Many advocates of single-payer health-care make the argument that the U.S. government should simply extend Medicate to all citizens. The elderly are overwhelmingly satisfied with Medicare, the argument goes, and so it is a simple matter to preserve all that is best with the U.S. health-care system - a free choice of a doctor with whom a patient can have a long-term relationship - while fixing what is worst - its unaffordability. I confess I do not know where the evidence that the elderly are satisfied with Medicare comes from. I suspect it is mostly argument by anecdote. When my mother turned 65 she was delighted with it, although whether she got the same quality of care she could've had had she (and we) been responsible for all her health care, as we were for her food, housing, and other essentials, is impossible to say.

But I have always had my doubts about how satisfactory Medicare really is, and know an offhand remark in The Portland (Ore.) Tribune has brought those doubts some support. Below are the money quotes:

Those waits already are long for many Portland patients, especially those with Medicare or Medicaid health insurance. Those providers don’t reimburse physicians at as high a rate as most private insurers.

About 45 percent of all Oregon physicians won’t even take new Medicare patients, according to McMullan. With a glut of patients and a lack of internists, McMullan says, they have begun rejecting the patients whose insurance won’t reimburse them as well.

As I suspected. With Medicaid this has long been known, but time-based (as opposed to money price-based) rationing may be endemic to Medicare as well. The article notes that it is happening too with some fully insured primary-care physicians (PCPs), although I suspect not nearly as much.

It is not correct to say there is a "shortage" of PCPs, as the article suggests there is, because that shortage has to be connected to some notion of willingness to pay, willingness to offer, prices and alternatives, and never is in such claims. But time-based rationing is almost certainly far more common among Medicare and Medicaid patients than among those paying cash or fully picking up the tab for their own health insurance (where it is probably zero), and than among patients with conventional employer-based health insurance.

In principle there is no objection to having more and more doctors be specialists, and fewer and fewer willing to be PCPs. Increasing specialization has been a hallmark of medicine, as with every other line of work, for centuries. There is probably nothing magical about PCPs per se, except that employers and insurers, in an effort to keep moral-hazard costs down, insist on interposing them as gatekeepers. That of course is a function of the fact that in the U.S. we treat health insurance as an opportunity to get others to pay for our routine health care, rather than as conventional (e.g., auto-liability or homeowners') insurance against low-probability, high-consequence acts. I think the more serious issue is time-based rationing of health-care treatment generally. And that, I fear, may be coming soon to a country near you.

Is There Anything Special About Health Care?

Here is David Freddoso in The National Review on Wal-Mart’s success in providing cheap prescription drugs:

In January 2006, the federal government began implementing the controversial Medicare Part D program, which pays most or all of the cost of most senior citizens’ prescription drugs, regardless of income level. The program has basically been successful at what it set out to do, providing drugs through competing insurers at low premiums. Between 2005 and 2006, the taxpayers’ burden for drug payments shot up by 35 percent, from $55 billion to $74 billion. American consumers’ out-of-pocket prescription-drug spending dropped only $1.2 billion, to $47.6 billion.

In September of 2006, Wal-Mart rolled out its $4 generic prescription deal, which promised to provide a month’s supply of some 300 drugs (now 361) for less than the cost of a pint of beer. Several other chains — Target, Costco (which is now offering 100 drugs for $10), and Kroger’s, among others — lowered prices in order to compete. Wal-Mart announced last month that its program alone, enacted without any government compulsion, has saved consumers $1.03 billion in less than 18 months. If the other firms’ price reductions are included as well, the total savings could easily be twice as great.”

The market for Wal-Mart prescription medicines is functioning as most do. A producer is producing a thing as long as the cost of doing so is less than what consumers are willing to pay for it, and consumers are buying it as long as the price is less than their willingness to pay. Wal-Mart fully takes account of the cost to society of making the medicine available, and consumers fully take account of the cost to society of their decision to consume a drug. (The argument would be identical if Wal-Mart ran cash-based clinics, as it is contemplating.)

Contrast this to the way most health care is delivered in advanced countries. People consume health care and not only pass off much of the cost to others – to other policy-holders and insurance-company employees for those with private insurance, taxpayers for those in a government health-care program, here or elsewhere - but struggle to make others bear most of these costs. Patients want insurance companies, employers and their fellow taxpayers to do it, drug companies want patients and taxpayers to do it, employees want their “employers” (i.e., owners and other workers) to do it, etc. This is completely unlike how most markets, even for such vital goods as food and housing, function. No one expects third parties (the poor occasionally excepted) to pick up the tab for these items; rather, we are fully expected to feed and house ourselves. Yet for medical care this cost-shifting is taken for granted. Veterinary medicine and some human medicine (Lasix and cosmetic surgery, e.g.) function too in the cost-bearing rather than cost-shifting way.

Leave. aside the gains to be had from jettisoning the extraordinary amount of government control over the health industry, more innovation in particular. If employer-based and taxpayer-funded comprehensive health insurance (i.e., insurance not just for catastrophes but for routine medical expenses) were ended at midnight tonight, would this market, after a few months’ adjustment, function any less well than these others?

What Hippocratic Oath?

A lot of British doctors apparently think that treating the old and the sick is no way to run a health-care system:

Doctors are calling for NHS treatment to be withheld from patients who are too old or who lead unhealthy lives.

Smokers, heavy drinkers, the obese and the elderly should be barred from receiving some operations, according to doctors, with most saying the health service cannot afford to provide free care to everyone.

To repeat: there is no health care system in this universe that gives everyone all the health care they “need.” There is only scarcity, and different criteria for coping with it.

How Wal-Mart Could Really Improve Health-Care Benefits

The New York Times tells of Wal-Mart’s new willingness to increase its contribution to health benefits for its employees. As others have noted, whatever reforms to our health-care system emerge will not do much if they only happen one demonized employer at a time. But, in what the author obviously considers a throwaway line, a key to Wal-Mart really doing a lot for the health-care system is buried in the middle of the article:

In one sign of its success so far, the company has pushed down the price of 2,400 generic prescription drugs to $4 a month for employees, starting next year, a program that it offers, in more limited form, to its customers.

Now, the chain is even considering weight-loss clinics in its 4,000 stores and is toying with the idea of selling health insurance, hoping to finally bring coverage within reach of most Americans. (Emphasis added)

Like all producers, Wal-Mart is a seller of goods and services first and a buyer of labor services second. Jobs and wages are the tail, consumer demands the dog. But Wal-Mart is an unusually influential and powerful producer, because of its business model of constantly lowering prices. And here it could make a big difference, by revolutionizing the way health insurance is sold. Presumably, its plan would offer lower prices for the same services, but would also have higher deductibles and more resemble a catastrophic health-insurance model (the traditional one, and the expected one for an insurance product) rather than simply a plan to pay almost all the policyholder’s health costs, routine or unexpected. By selling health insurance the Wal-Mart way the company could do a lot for Americans who find health care expensive.

Alas, the insurance industry is one of the most regulated in the nation. It is no coincidence that industries such as insurance, pharmaceuticals and others that are the most regulated by government are those where public dissatisfaction is the highest. And so I suspect that any product that Wal-Mart offers will be nibbled to death by various pressure groups, substantially diluting its effectiveness. But the idea of health-care as an economic problem with an entrepreneurial solution is the way forward.

How Not to Fix Health Care

Health care will loom large in the coming election campaign. A couple of principles are worth remembering as we decide how to “fix” it:

1. We need to care about future patients too. Health-care systems are dynamic. But the degree of dynamism depends on the payoff to innovators of innovating. When thinking about the health-care system patients in the future ought to loom almost as large as patients now. Expanding the existing health-care system to provide more health care to people (poor and/or uninsured) who get the least now may well come at the expense of lost opportunities for better health care for people not even born yet. When the British set up the NHS they probably weren’t thinking about future Britons who would not receive cancer treatment because the queue was too long, but ethically, they should have. We need to preserve the incentive for health care to continue to improve. (And anyone who thinks the health-care system in total is not vastly better than it was 25 years ago, no matter how many “uninsured” we have, is delusional.) Anything that limits medical innovation – not just new medicines or procedures, but the process of delivering and paying for health care – is a problem.

2. Health care is not free; people should pay for the consequences of their health-care decisions. Health care requires scarce resources with competing uses. People who want to claim them need to take account of the full consequences of their choices for others. Most proposals on the table fail in this respect. Mitt Romney wants to give people tax deductions to buy health insurance, Hillary Clinton wants to shift the burden to employers by making them nominally pay for it (although these costs will be passed on to workers, through lower compensation elsewhere and fewer jobs, and customers, through higher product prices) but giving them a tax break.

All of this furthers the gold-plating problem, the tendency to get every procedure and make every doctor visit if someone else is paying the cost. As I have said before, homeowners’ insurance doesn’t cover plumbing clogs, and auto insurance doesn’t cover oil changes; people pay cash out of pocket for these things. Much medical care is of this kind. Making people pay out of pocket seems like an immense financial burden, but for most of our history this is how it was done. The arbitrary decision to treat health insurance as nontaxable income gives employers an incentive to offer, and employees an incentive to take, more of their compensation as health insurance rather than cash. Portions of the health-care system not covered by insurance, such as cosmetic surgery or laser eye surgery, often see declining costs and improving quality and amenities, something many patients would kill for. Most health care would function this way if health insurance were only for catastrophes such as cancer or an appendectomy.

3. The system in many ways is not broken. Conditions that could not be treated now can be, new medicines are constantly being developed, cancer life expectancies are increasing, etc. We mess with this at our peril.

As politicians propose to more and more divorce health-care buyers from direct incentive contact with health-care sellers through insurance mandates, subsidized care and the like, expect complaints about the system to get worse.

Tax That Fellow Behind the Tree

Because of our alleged health-care crisis, governors all over the country are seeking to expand children’s health-care insurance coverage by increasing the income limit on who is eligible for a decade-old federal effort known as the Children’s Health Insurance program. In an opinion piece in The Dallas Morning News, John Castle of the Center for Public Policy Priorities (responding to an earlier piece by Texas Sen. John Cornyn) writes:

For every $1 Texas invests in CHIP, the federal government sends $2.64 in matching funds that go into the important health care sector of our economy.

In short, CHIP is good for Texas. Our congressional delegation needs to work with Mr. Bush to make sure that CHIP provides health care to as many Texas children as possible, and Mr. Cornyn needs to change sides in this fight.

Now CHIP, like Medicaid, and indeed Medicare and private insurance, is far from perfect as a way to deliver health care; more on that in a later post. But it appears that, since Medicaid is a program with federal matching funds (i.e., funds extracted from taxpayers nationwide), governors and state legislatures who are expanding coverage in their states via this channel are in fact raising the taxes of people who have no say in the decision, even if voting counts (as arguably it should not) as a “say.” This, once upon a time, was called taxation without representation, and I wonder whether an argument into the constitutionality of such a decision by a state government to have taxpayers in other states pay the freight for its programs has ever been mounted.

Cue Russell Long.

The Kids are Alright - in the US

The BBC tells the tale of a remarkable set of identical quadruplets:

A Canadian woman has given birth to extremely rare identical quadruplets.

The four girls were born at a US hospital because there was no space available at Canadian neonatal intensive care units.

Karen Jepp and her husband JP, of Calgary, were taken to a Montana hospital where the girls were delivered two months early by Caesarean section.

Autumn, Brooke, Calissa and Dahlia are in good condition at Benefis Hospital in Great Falls, Montana.

Canada is a country of over 30 million people. Great Falls is a city of fewer than 60,000. Why did a Canadian couple have to drive hundreds of miles across a border before they could find a routinely small city with enough medical technology to treat their problem, rather than using technology in their own country? Hint: your answer will involve the phrase "single-payer."

Universal health care, until such time as you really need it. Hat tip: Thomas Lifson.

Work the British Won't Do

In all the discussion about the drawbacks of single-payer health systems, there was one argument I had never considered before, in addition to the waiting lists, the criminalization of consensual trade between doctors and patients, etc. It was brought to my attention by remarks Mark Steyn made on the Hugh Hewitt show. He notes, incredibly, that 58 percent of Britain’s new doctors in 2003 came from other countries. Britain still produces native doctors to be sure, but many of the best ones come to the U.S. to practice.

While Mr. Steyn depicts this as a national-security issue, to me the most interesting part is what it says about future medical quality and innovation. Britain’s doctor shortage is essentially a price-control problem. That state-imposed price controls cause waiting lists for health services, especially in Britain, is a well-known problem. But perhaps a greater effect of nationalizing medicine is that medicine itself becomes seen to economic agents as a less useful activity, because the government is so big on controlling costs. And so medicine itself becomes less remunerative, and so the number of doctors declines, unless (as in Britain) low-cost doctors can be found overseas. To use the language of the American immigration debate, medicine in Britain is increasingly a job Britons are unwilling to do, like gardening in Los Angeles.

Prices tell us things – the value of using resources, including talent, for alternative activities, for example. Medicine is expensive in part because it’s so valuable (what is our willingness to pay, after all, to have our cancer put into remission or our painful hip replaced?), and “controlling costs” tells entrepreneurs that this is not such a valuable service after all. I have written before about how the U.S. switching to a single-payer system would be disastrous for medical innovation because the U.S. consumer’s willingness to pay in what is still a reasonably market-based system now motivates a huge amount of global medical innovation. The destruction of medical progress would be the greatest, although largely invisible, cost of completing the government takeover of the U.S. health system. Markets balance, as they should, cost of production and value to consumers. By obsessing only about the former, government-run health care destroys far too much of the latter.

There is No Such Thing as Universal Health Care

But do not tell California Gov. Arnold Schwarzenegger, who has proposed just that for California as he begins his second term. To be fair, he hasn't used that phrase (although some media organizations lazily have), promising instead to give all Californians access to "coverage."

And a good thing, too, because "universal health care" is a meaningless phrase. Health care, like anything of value produced from scarce resources, must be rationed by one criterion or another. Some systems of calling forth those resources distribute the resultant health care output one way, some distribute it another. What is meant, I suppose, by "universal coverage" is that everyone would be in a position so that the expenses of their particular health-care consumption would be substantially paid for by others. But this scheme will not result in "universal health care" any more than the current system, or than a purely market-based system, where each individual is responsible (either out of pocket or through whatever third-party arrangements others are willing to sell him) for his own health-care expenses. Indeed, the very phrase "universal health care" makes no sense if it means "anyone may have any health-care services a doctor asserts the patient needs." Rather, because it is costly to produce, health care must be rationed, and the only question is how.

Under a pure market system, a patient may obtain any services he is willing to pay for, at the moment he is willing to pay for them, provided only he can persuade someone to provide them. If I want hip-replacement surgery and am willing to pay the money price the providers (doctors, nurses, etc.) ask, I can get it immediately. Who gets what kind of health care is the result of the usual dance between consumers and entrepreneurs, which generally produces satisfactory results in a world of scarcity. But some procedures are, in principle, unavailable to some patients because the doctor's asking price exceeds the patient's resources. A very poor person may be unable to muster the funds, or may have been unable to afford the insurance, necessary to pay for the open-heart surgery he needs. This assumes away the remedy of providers providing charity care or of strangers helping him out, both of which are common, and implicitly assumes that competition cannot provide the necessary insurance. But clearly, monetary resources must be a constraint for some health care in some circumstances for everyone.

But a single-payer system such as Canada's also must ration. Being unwilling to impose monetary costs on patients sufficient to cover the social cost of their services, it must choose other criteria – time, for example. And so only those who can wait long enough get needed services. This wait may merely impose dramatic physical discomfort – say, because of a two-year wait for hip-replacement surgery, during which the patient is in immense pain. If the care is sufficiently urgent to maintain life, the wait may be fatal – e.g., a wait for cancer surgery so long that the patient dies. Hybrid systems, like those in Germany or France or the U.S., ration by both time and income.

Which is "best"? This is in isolation a nonsensical question, depending on which outcome – people refused care so that they die waiting at the back of the line versus people refused care so that they die because of insufficient funds – the citizen finds more outrageous. But the market system does have several advantages. First, it is consistent with freedom in a way a pure single-payer system is not – anyone who can voluntarily persuade a health-care provider to give him care gets it, something not true in single-payer. As the saying has it, in Canada it is perfectly legal to pay a veterinarian to give your dog an MRI today, but not to pay a doctor to give your mother one. (She has to wait.) Second, the greater the reliance on market forces the greater the amount of medical innovation, because medical innovation is more profitable for entrepreneurs. Third, politicians tend to have short-term time horizons relative to entrepreneurs, and so in a single-payer system they may de-emphasize factors like keeping health facilities clean because these factors require expenses now and payoffs mostly in the future.

And so I think that the market system (including employer-based insurance if it is chosen freely through bargaining rather than imposed), is obviously the moral system. Whatever one's personal preferences about such matters, the phrase "universal health care,”being economically nondescriptive of anything, should be purged from the language.