]]]]]]      Will Corporate America Copy Canada's Calamity?     [[[[[[
                       by Hans Stennholz, Ph.D.          (12/2/1989)
                   From Private Practice Nov 1989.

              [Kindly uploaded by Freeman 93401DORM]

   The U.S. health-care system is the subject of intense debate. Because
the cost of medical care is rising much faster than individual income,
many Americans no longer can afford the services they want. Some even
may suffer and die without proper care.
   Businesses large and small are adding bitter complaints to the debate
about rising costs. Chrysler Corp. Chairman Lee Iacocca argues that
employee health care cost his company $792 million last year Q $700 for
each car it produced. According to lacocca, these expenses could hurt U.S.
automakers competing in world markets, which might force them to
reduce production and lay off workers.
  Iacocca points excitedly at Canada's national health- care system, which
imposes substantially lower costs on Chrysler plants than the collective
bargaining agreements called for in' nearby Michigan. Sounding like a
politician addressing his electorate, he waxed eloquent in the Aug. 8, 1989,
Financial Post "Health care and education are the two foundations of
civilized society. If you can't take care of your sick and your aged, and you
don`t take care of your kids' minds, you are nothing. And we are slowly
becoming a nothing."
     Most people would disagree with Iacocca if he were more concise and
upright in his pronouncements. If, in the name of a civilized society, he
called for legislators, regulators, administrators and other civil servants to
take care of the sick and for government teachers to indoctrinate the minds
of schoolchildren, he probably would be booed off the stage.
       However, he dresses his plea for a Canadian-type system of national
insurance in the shiny garb of an appeal for civilization, making him the
brave defender of a civilized order. Actually, he argues for a government
health-care system that promises to lower Chrysler's health-care costs and
raise company profits by shifting part of the health-care burden to
taxpayers. He is willing to sacrifice the freedom and efficiency of the noble
profession of medicine on the altar of Chrysler profits.
       American doctors wanting to retaliate against such attacks on their
profession may want to form a political pressure group pleading for prompt
nationalization of Chrysler. They could argue convincingly that, in the
name of safety and fairness, the American people deserve better
transportation, and bigger and safer cars Q at lower prices. Chrysler
should be made to provide such transportation, under the watchful eyes of
federal legislators, regulators and inspectors, and with civil-service pay
and benefits for all automotive workers, including Iacocca. The doctors
may mention that many of them know more about automobiles than
Iacocca knows about medicine.
       Iacocca is rather naive to believe that the United Auto Workers would
allow him to reduce health-care benefits upon inauguration of a
government health-care system. Indeed, surrendering benefits won in the
past contradicts the very rationale of a labor union. The UAW would rather
launch a bitter strike than surrender a penny in benefits without a
corresponding increase in salary. And Chrysler soon would be as non-
competitive after the introduction of a government health-care system as it 
was before.
       Every penny of the health-care costs borne by American corporations 
is contract costs to which management has agreed. It may have done so to 
remain competitive in the labor market, or it may have done so under 
pressure from powerful labor unions. However, in every case, management 
has no one to blame but itself for accepting this financial burden. Shifting 
the burden to taxpayers is highly irresponsible.
       The automotive industry has a long record of readily accommodating 
union demands, which has made it second only to the steel industry in 
labor costs. When auto plants are forced to shut down because of unbearable 
losses, workers usually are earning some 165 percent of the average wages 
and benefits paid in all manufacturing industries. It is rather inaccurate to 
blame rising health-care costs for such shutdowns.
       To look with envy toward Canada's taxpayer-financed system of 
national health care is to look in the wrong direction. Surely, most 
Canadians are satisfied with their health services, which they have come to 
view as a basic right. Canadian employers bear a fraction of their 
employees health costs through premiums and payroll taxes; the main 
source of funds is taxes paid by individuals, which are substantially higher 
than in the United States. Yet Canada has held health spending to 9 
percent of its gross national product, while America's health-care 
spending has spurted to 11.3 percent of GNP.
       In the Canadian system, the provinces negotiate annual budgets 
with the provincial medical and hospital associations, effective setting a 
ceiling on total expenditures. The associations then distribute fees to family 
doctors and specialists. All doctors are paid out of province funds and are 
forbidden to charge their patients. Unlike Britain's National Health 
Service, which paved the way for the Canadian system, the Canadian 
government refuses to license unregulated doctors and bars hospitals from 
admitting patients outside the system.
       Health care may well be Ran issue that transcends all political 
boundaries,S as Pertin Beatty, the Canadian Health Minister, put it, but it 
surely does not transcend the basic principles of human action. A useful 
good or service offered free of charge invariably will be in short supply, 
which necessitates rationing and breeds intrigue and corruption, conflict 
and strife and, in the end, is destined to break down.
       The evil effects of such a system would become apparent immediately 
if we were to apply its principles to other industries. If, for instance 
Congress were to reshape the automotive industry and grant every 
American the right to free automobiles, the industry soon would suffer al 
the symptoms of socialization. Every American would be on a waiting list, 
clamoring , arguing and politicking for his turn to buy a car. Expert 
committees would establish priorities and sit in judgment of the need and 
merit of every application; appellate committees and courts would review 
their decisions. Arbitrariness, corruption, conflict and strife soon would 
infect every phase of distribution. Production would decline and quality 
would deteriorate as auto managers and workers battled for their fair 
shares in the distribution process. In the end, few cars would reach the 
people, and every delivery made would be the painful result of political 
power, political connection and political know-how.
       The Canadian health-care system suffers all these symptoms. In 
Montreal, where authorities have set quarterly ceilings on physician 
income, many doctors take two-week vacations every quarter. On holidays, 
hospitals close wards and operating rooms. In Quebec, there is a backlog of 
patients in emergency rooms. RThe system is breaking down,S observes J. 
Edwin Coffey, MD, an obstetrician and secretary of the Quebec Medical 
Society. RWe are beginning to move off the delivery of the highest standard,S 
says John O'Brien-Bell, MD, president of the Canadian Medical 
       Every budget negotiation is accompanied by a fury of charges and 
counter-charges. Doctors, nurses and other health-care workers point at 
underfunding, shortages and excessive waiting lists to negotiate their 
share of government revenues Q including their own incomes. 
Nevertheless, the shortages are real. They cause delays of many months for 
non-emergency surgery or special tests at leading urban medical centers. 
And, above all, shortages delay or even prevent the purchase of needed 
hospital equipment.
       According to the Canadian Health and Welfare Ministry, there is one 
cardiac catheterization lab for every 166,000 people in the United States and 
every 816,000 people in Canada; one lithotripter for every 1.096 million in the 
United States and every 6.325 million in apply its principles to other 
industries. If, for instance, Canada; and one magnetic resonance imager 
for every Congress were to reshape the automotive industry and 182,000 
Americans and every 2.108 million Canadians. grant every American the 
right to free automobiles, the The Canadian shortages officially are 
explained away with the observation that not every hospital needs every 
piece of modern equipment.
       For prompt attention and immediate treatment, thousands of 
Canadians flock to hospitals in Detroit, Seattle, Cleveland, Buffalo, N.Y, 
and Rochester, Minn. American facilities quietly alleviate the shortage 
pressures that the Canadian system inevitably creates. They act as a safety 
valve without which the Canadian system would labor under much greater 
       The American safety valve also may help explain the popularity of 
the Canadian health- care system. If a short trip across the border permits 
Canadians to escape some visible shortcomings of their system, they may 
learn to live with it, no matter how unsatisfactory it is. Unfortunately, for 
millions of Canadians, there is no escape; they wait patiently on long 
waiting lists and in overcrowded waiting rooms.
       The Canadian health-care system is relatively new; the provincial 
governments created it during the late 1960s. While it caused the demand 
for health-care services to multiply immediately, it did not instantly depress 
the quantity and quality of care offered. Surely, hundreds of health-care 
professionals chose to emigrate rather than submit to the commands of a 
political system. But the main body of the profession acquiesced because it is 
rather difficult to emigrate and very painful to abandon a profession after 
investing so many years in preparation and practice.
       The erosion of the quantity and quality of service in a government 
health-care system, therefore, is necessarily slow. It takes many years to 
weaken such a noble profession as medicine. If it were not for the 
immigration of hundreds of physicians from other parts of the world, 
especially from Asia, the debilitating effects of the Canadian system would 
be visible more clearly, especially to Canadians.
       To model the American health-care system after the Canadian 
system is to ignore both experience and common sense. It would be a tragic 
blunder for which we all would pay dearly in years to come.

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