Gratzer: Hello.
FP: What inspired you to write this book?
Gratzer: I grew interested in health policy several years ago when, as a Canadian medical student, I discovered how badly that system functioned. I remember one day particularly well – cutting across a hospital ER on my way to class, stumbling upon the complete chaos, with elderly patients having waited 3 or 4 or even 5 days for a bed, the smell of sweat, and urine, and fear in the air. It made me re-think much of everything I thought I knew about health care.
Like many Canadians, I’ve found my future south of the 49th parallel, not north of it. Yet, looking at the debate in the United States and the quiet creep of government, it seems that the mistakes made previously by Canadians are now being made by Americans.
I wanted to write a book that pointed out the dangers of that approach – and argued for an alternative that would reduce health expenses, improve quality, and insure millions.
FP: What in your view is the core problem in American health care?
Gratzer: American health care is so expensive because it’s so cheap. That is, with Americans paying just 14 cents out of pocket for every health dollar, there has been little incentive for people to economize their health expenses.
As I write in the book, American health care has been shaped by 2 days: October 26, 1943 and December 1, 1942.
On October 26, 1943, the IRS ruled that employers could continue to pay health insurance premiums in pre-tax dollars; on December 1, 1942, Lord Beveridge issued his report on health care and pensions to the British Parliament, laying the intellectual foundation for Medicare and Medicaid here. The end result of these two days is that Americans – where privately insured or publicly covered – tend to be overinsured.
FP: Why do Canadians take it as a given that their health care system is better than that of the U.S.?
Gratzer: There’s an old expression about the Canada-U.S. relationship: Americans have a benevolent view of Canada while their northern neighbors have a malevolent view of the Americans. I think that true, especially when it comes to all things health care.
Canadians – seeing American health care through the jaundiced view of their media – are well versed in the deficiencies of the U.S. system. They know about the uninsured; they’ve read horror stories about HMOs.
That said, the debate in Canada has changed dramatically in recent years. While Canadians fear an “American-style” system, they are increasingly open to free market reforms. In fact, a private clinic opens in Canada at a rate of about one a week; one of the countries foremost critics of socialized medicine, Dr. Brian Day, was recently elected to lead the Canadian Medical Association.
FP: Overall, Canadians’ view of health care is very much tied in with their anti-Americanism and desire to be independent, no? This explains why so many of them consider it a given that their health care system is better when they actually know nothing about it.
I have spent many years in Canada and I can tell you that to make most Canadians admit that their health care system, pr any other system, is worse than their southern neighbor’s is like pulling teeth. And it doesn't matter to most of them what the actual evidence is.
Priding themselves on their mythical superiority in health care is a way that Canadians can feel patriotic and good about themselves. Correct?
Gratzer: Yes, absolutely. Some – particularly among the left in that country – have deliberately blurred the line between health policy and national identity. It’s not uncommon to hear one Canadian politician accuse another of wanting to “Americanize” health care.
Yet, I’ll go back to a point I made earlier: the debate in Canada (and in Britain and Sweden) has changed remarkably in recent years. Much of everyone now agrees that there is something fundamentally wrong with that health care system. Even the most socialist of politicians promise “reform.” Ideas that once seemed radical – privatization, for example – are accepted across the political spectrum.
FP: What is your prescription to cure the crisis?
Gratzer: In a sentence: we need to reform health care along the lines of individual choice and competition, as we have the other five-sixth of the general economy.
Here are five simple steps I discuss in The Cure: Make health insurance more like other types of insurance; Foster competition; Reform Medicaid, using welfare reform as the template; Revisit Medicare; Address prescription drug prices by pruning the size and scope of the FDA.
FP: From which quarters in American society would there be opposition to your suggestions for a cure and why?
Gratzer: Obviously, people who favor a greater role for government – unions, academics, health policy analysts, foundations – aren’t happily excited about market-based reforms. I see a bigger obstacle, however: cultural resistance.
If American health care is to be substantively changed, there must be a cultural change. People need to re-think the health care they want, and their role in obtaining it. For those receiving coverage from their employers – a majority of Americans – health insurance has been taken for granted. Instilling competition into American health care is a necessary prescription for an ailing patient. But changes aren’t just needed from Washington. People need to start asking hard questions when they see their doctor. Employers need to contemplate their role as not just a health payer, but as a health manager.
Is that a tall order? Today it seems to be. Take the 4-day strike in 2004 by the Communications Workers of America (CWA) against SBC Communication, Inc. Health benefits were a major point in the negotiations because management proposed copays that would have averaged $70 a month for the employees (as opposed to previous contract average of $35).
We need to re-think health care.
FP: Can you talk a bit about why competition is so important in health care?
Gratzer: Competition drives innovation.
That’s not just true of health care. It’s true for every sector of the economy. Think about the computer sitting on your desk – it’s much better than the computer you had just a few years ago. It’s faster and more powerful. It’s also cheaper. No wonder – hundreds of companies compete, trying to build a better computer for you (and others) for less money.
Health care doesn’t follow that general rule of thumb. Consider that health insurance premiums have doubled over the past 5 years. Would anyone argue that health insurance is twice as good? Part of the problem is that – with Americans overinsured – we haven’t seen a proper market for health care in the United States. People don’t demand better quality at lower prices.
It’s also true that much government regulation has stood in the way of competition. As I argue in The Cure, Congress has worked hard to reduce competition for, say, community hospitals from physician-owned surgery clinics, even though studies suggest that the latter tend to have better health outcomes at lower cost. The FDA has raised the regulatory bar so high that only a dozen companies in the world can bring a drug to the nation’s pharmacies. The end result: less innovation for pharmaceuticals.
I’m a doctor, not an economist. I see these things in human terms. Despite the medical advances of the last sixty years, we have not had significant breakthroughs with so many illnesses – like Alzheimer and Parkinson. A tragedy! We need a market for medical progress, and that requires less regulation.
FP: So crystallize what is wrong with the American health care system as well as with the Canadian one. The Canadian one is not enough like the American one and the American one has been influenced by the Canadian one, correct?
Gratzer: That seems accurate, if a touch complicated. In the United States, with roughly 50 cents on every dollar spent by the government, there is a semi-socialist health care system. We need to look to the other five-sixth of the economy for ideas, that is, to reform along the lines of individual choice and competition.
Canada has a socialist system of health care. What needs to be done? More perestroika.
FP: Dr. Gratzer, thank you for joining Frontpage Interview.
Gratzer: Thank you.
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