Nobody should profit from health care? Get Real

Posted on November 10, 2010 in Health Debates

Source: — Authors: – News/National/TimetoLead
Published Wednesday, Nov. 10, 2010. Last updated Wednesday, Nov. 10, 2010.   Karen Selick

Office supply stores sell wooden pencils for as little as eight cents each. Swanky gift shops also sell pencils: gold-filled and priced as high as $1,400. Both pencils will make marks on paper, but they have another less obvious similarity: Both create a profit for their respective retailers, and for every intermediate link in the supply chain – from the tree-cutter or the gold miner to the manufacturer and the shipper.

It hardly seems possible that there can be that much profit built into an eight-cent pencil, but that’s exactly the point: “Profitable” is not a synonym for “expensive.” Consumers can buy expensive shoes or cheap shoes, luxury cars or economy cars, filet mignon or hamburger. Whatever the commodity, the free market offers goods produced at a profit, by privately owned enterprises, in a staggering range of varieties and prices.

People don’t generally accuse supermarkets of being evil for profiting from people’s hunger, or shoe stores for profiting from people’s barefootedness. Yet, Canadians have become so accustomed to thinking that health care must be provided by government that moral panic ensues the moment anyone suggests it could be provided by private, profit-making enterprises. “Nobody should profit on the backs of the sick,” opponents cry.

Like it or not, every single person who attends to the sick in our system of government-monopoly medicine is there for his or her own profit. Profit is simply income minus expenses. If our system were really non-profit, doctors, nurses and orderlies would get paid just enough to enable them to perform their duties. They would subsist on a diet of rice, possess only a single change of clothing, bunk down in dormitories at night, and walk to work.

But health-care workers don’t live like that. Instead, they have abundant food and clothing, private homes, transportation and luxuries such as entertainment, vacations and savings. These extras over mere subsistence are their profits, even though we don’t ordinarily call them that. There’s nothing immoral about their earning profits. But there’s also no contingent of saints in our society who are willing to work without a profit. The notion of non-profit health care is simply a myth.

A study published by the Fraser Institute in 2002 compared the wages of non-medical personnel such as cleaners, payroll clerks and cooks working in “non-profit” hospitals against those working in hotels. The hospital employees were paid from 9 per cent to 39 per cent more than hotel employees doing identical jobs. The layer of profit supposedly absent within these “non-profit” entities was actually being dispersed among employees rather than being shaved off the cost of services.

But wouldn’t allowing private, for-profit health care mean that some people would get filet mignon health care while others had to make do with hamburger health care? Perhaps – but, in the long run, even low-income patients would benefit.

New technology is typically expensive at first but declines dramatically in price as more people hear about it and competition kicks in. We’ve all seen this happen with computers and television sets. It even happens with medical procedures, so long as they aren’t covered by the government monopoly. Laser eye surgery, for instance (provided by the private sector in Canada), has declined significantly in price even as safety and outcomes have improved.

If we insisted that nothing new be made available to wealthy consumers until it was cheap enough to be provided to every member of society, very few new products would become available.

The big picture proves that private-sector goods and services keep on getting cheaper even as quality improves. In 1961, the average Canadian family spent 56.5 per cent of its income on food, shelter and clothing (all private-sector products). By 2009, families spent only 37.1 per cent of income on these basic necessities. Meantime, products and services monopolized or near-monopolized by government – primarily health care and education – grow ever more expensive even as quality declines.

Those who really want to help the poor and sick should be clamouring for the private sector to be allowed to do the job.

Karen Selick is the litigation director for the Canadian Constitution Foundation, which is challenging Ontario’s government monopoly health-care system through the courts.

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