Complete Whimsy, Deficits, Dollar, Game Theory, Individual v. Collective, Live and Learn

Justin Bieber Disapproves of the US Health Care System

16-year-old popstar Justin Bieber isn’t a fan of the US health care system. The Canadian voiced his displeasure in the February 18th edition of Rolling Stone (which he happened to grace the cover of). When asked if he wanted to become an American citizen, Bieber took a shot at us:

You guys are evil. Canada’s the best country in the world. We go to the doctor and we don’t need to worry about paying him, but here, your whole life, you’re broke because of medical bills. My bodyguard’s baby was premature, and now he has to pay for it. In Canada, if your baby’s premature, he stays in the hospital as long as he needs to, and then you go home.

This from a kid who profits off the widespread pandemic of Bieber fever. Let’s just hope all of his “Beliebers” have health insurance.

I’m no defender of the health care system in the states. It is deeply flawed. Andrew and I have pointed out some of its shortfalls here, here, here, here, and here.

Single-payer systems result in health care rationing. They just do. Unlimited demand and scarce resources force that. Socialized health care can also result in longer wait times. The Fraser Institute has conducted a survey over the last twenty years to determine province-wide wait times in Canada. Here is an excerpt from the 2010 report:

The Fraser Institute’s twentieth annual waiting list survey finds that province-wide wait times for surgical and other therapeutic treatments have increased in 2010. The total waiting time between referral from a general practitioner and delivery of elective treatment by a specialist, averaged across all 12 specialties and 10 provinces surveyed, has risen from 16.1 weeks in 2009 to 18.2 weeks in 2010. Compared to 1993, the total waiting time in 2010 is 96 percent longer. This nation wide deterioration in access reflects waiting-time increases in all 10 provinces.

In contrast, according to a Merritt Hawkins survey, the average wait time to see a specialist in the US was 20.5 days in 2009. This included Boston as a high end outlier with a wait time of 49.6 days. I mention Boston because Massachusetts has RomneyCare and an individual mandate, something the whole country will enjoy in 2014.

Having to wait 18 weeks to see a specialist is absurd. Wait times in both the US and Canada have grown, but this is an issue with supply of health care not meeting demand. In essence, policies to encourage more medical practices would be the remedy. And it must be noted that socialized health care in countries like Canada, England, and Sweden is not free. It’s paid for in taxes. Yes, it is a transfer of wealth to give access to all; but the quality of care, timeliness, and efficiency of those dollars spent isn’t necessarily being maximized.

Something tells me that Justin Bieber hasn’t spent a lot of time delving into economics. Why would he? He’s 16, has an estimated net worth of $65.5 million, and has the world by the balls. But the first lesson is that there are always trade-offs. The Canadian system enjoys the benefits of providing access to all, but they pay a price in timeliness, efficiency, and potentially quality of care. I don’t mean to give the idea that there aren’t great doctors up North, but profit motives drive innovations in medicine, treatment, care, and technology. The greater the monetary reward in all aspects, the greater the likelihood of improvements in a competitive system.

Only aspects of the US system are competitive, and I think it is a complete disjointed nightmare. We need reform of state insurance regulations to promote interstate competition. That way, a person in San Diego, CA could be insured by a company in Columbus, OH. Instead, we’re stuck with state-by-state oligopolies. The competition would bring premiums down.

The fact that being insured is highly tied to employment is pretty terrible. Who needs (affordable) insurance more than the unemployed? Interstate competition would cut down on some of the unemployed that are uninsured. Unfortunately, when insurance pools are flooded with many high-risk, potentially high-cost people with pre-existing conditions in 2014, premiums will inflate even more. Funneling those folks into a government insurance scheme might be a good idea, provided they’re able to show an effort was made to be insured privately. As I will touch on later, the costs of uninsured people who don’t pay for their treatment are only reflected in everybody else’s hospital bills.

We need to start using actual insurance instead of pre-paid health care. Insurance, by definition, is a hedge against a rare event. I don’t think having an insurance policy which covers almost every possible illness, test, and treatment counts as a rare event. Patients should pay for more of their routine care out of pocket and be forced to shop prices, ask questions regarding the necessity of tests and treatments, and weigh trade-offs beyond a $20 co-pay.

We need to continually promote an increase in health care providers. Costs will continue to rise as long as demand for health care out paces supply. As Dr. Drew explains here, the Medicare system is not providing the incentive to treat Medicare patients, or for some, practice medicine at all.

Government reimbursements typically represent 35-45% of a hospital’s revenues. Reimbursements aren’t technically prices, but they are what is ultimately paid for a given service. In effect, that is a price. The price you see on a hospital bill has really been rendered meaningless in terms of market dynamics (supply and demand). Medicare and Medicaid often do not cover the costs of the services they provide access to. These shortfalls are made up for with revenues from commercial payers. Many commercial payers copy the reimbursement methodology of Medicare and Medicaid, with perhaps a more generous outlier provision (paying a greater percentage of a hospital bill past a certain high dollar figure). Hospitals negotiate allowed price increases with insurance companies, which eventually increase your premiums. It also produces the meaningless number on your hospital bill, well, meaningless unless you’re uninsured.

When you were served an over-the-counter anti-inflammatory at the hospital, and it cost $140 on your itemized bill, what were you paying for exactly? For one, the cost of having a staff of nurses available to bring the Tylenol to your bedside. For two, the people in the hospital who also received Tylenol but won’t be paying for it after they’re discharged. And lastly, the effort to make up for general shortfalls in reimbursement from Medicare, Medicaid, and private payers that copy government reimbursement methodology. I’m going to go way out on a limb and say that in a free health care market, a Tylenol tablet would not cost $140.

Bieber is right about one thing: in a health care system like the United States’, the patient i.e. end consumer, is the one that suffers. But I’ll take our wait times and quality of care over Canada’s any day.


For more Swift Economics, subscribe now to our RSS Feed
Follow Swift Economics on Twitter


4 thoughts on “Justin Bieber Disapproves of the US Health Care System

  1. nico says:

    The problem with waiting times in Canada has nothing to do with insurance. It’s because of the regulations regarding the number of doctors. Basically, the doctors decide how many doctors there should be.

    Canada’s problem is that everything is way too regulated. Just look at the recent issues regarding the CRTC and internet regulations.


  2. JEHR says:

    If you think of health care as a service for the individual, then I am sure you, who have health insurance in the United States, are perfectly happy. In Canada, EVERYONE has access to health care without having to apply to an insurance company. Sometimes the problem here is that not everyone has a family doctor and may have to go to a clinic where wait times are probably longer because there is no doctor to make sure you get the treatment you need right away. If someone is in an emergency situation he/she will not be forced to wait but will be seen to right away. Our system is not perfect but we are working to make it better. I am pleased that everyone has access to health care here in Canada no matter how poor or how sick. That is the genius of our system.


  3. JoeT says:

    While agree with most of the points the fact that you totally unsubstantiated the quality of care claims is a little off putting, particularly since the average person doesn’t need to see a specialist.


  4. Georgles says:

    Most of what you say, I agree with and thought of myself at some point, but never could have put it together with such clarity.

    An additional aspect of the American system that causes distortion is the tax advantage for plans provided by employers. Employees, before accepting a position, are unable to accurately compare one offer with another, with that wildcard variable mixed in, and after, are reluctant to leave the employer for any reason. Employers enjoy being on the flipside of this coin for the same reasons. Win-win on its face, it’s a win-lose scenario, in my estimation.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s