The Morality of Choice

Picture yourself walking into a department store to purchase some laundry detergent.  As you approach the aisle stocked full of brightly-labeled containers, you come face to face with a crucial decision.  Which detergent do you choose?  Do you go with the tried-and-trusted brand?  Do you save money with the generic variety?  What’s on sale?  What about the high-efficiency kind?

The choice between something as inexpensive as laundry detergent seems trivial in a modern economy marked by mass production and the division of labor.  But the large selection of goods that consumers are faced with today is an incredible betterment relative to the past thousand years of human existence.  Indeed, the lives of even the most impoverished in Western economies far surpasses that of kings centuries ago.

For all the condemnation it receives by those considered on the forefront of intellectual thought, capitalism is responsible for lifting mankind out of a dreary life of hand to mouth survival.  Economic freedom is ultimately to blame for the higher standard of living the West enjoys compared to the once Communist East.  Material prosperity is a phenomenon not brought to the world by governments but by entrepreneurial spirit.  The state just is a reactionary institution that derives its power from the gun it puts to the back of public’s head.  Those who succeed in the marketplace only do so by appealing to consumers.  Businessmen force no one to purchase their wares less they play footsie with the political class for special privilege.  The pursuit of profit is what drives competition and expanded choice.  Without it, societal progress stagnates as living standards lower.

In Canada, the demand is growing for the country to allow a private alternative to its public health care program to emerge.  In a new poll conducted by Ipsos Reid for Postmedia News and Global Television, almost three quarters of the respondents were in support of a mixed model of health care delivery.  From the Vancouver Sun:

The majority of Canadians support a “mixed” model of health care that would give them the option of spending their own money for care in a private system, according to the results of a new poll.

And three-quarters of them support being able to buy private health insurance for all forms of medically necessary treatment, including cancer care and heart surgery, which they could then obtain outside of the public health care system.

In recent years, the very health of the system has come into question and there has been persistent debate about whether the federal government should allow the emergence of a “mixed” model in which the non-profit public system and for-profit private system operate side-by-side to give patients greater choice.

As many know, the Canadian health care system is publicly funded and under strict government control.  Care is administered in so-called “private entities” that receive their funding from the various levels of government.  In reality there is little private competition.  It has been this way since 1984 with the passage of the Canada Health Act.  The only exceptions are dental work and drug coverage which aren’t usually covered by the government but by private insurance.

According to the Vancouver Sun article, the mixed model would allow Canadians to purchase private insurance “for all forms of medically necessary treatment, including cancer care and heart surgery, which they could then obtain outside of the public health care system.”  It is believed that such an option would relieve the wait times for major surgeries.  While the extending of private competition is certainly a step in the right direction, it will by no means be the definitive cure to a non-market model that lacks the necessary characteristics which allow markets to function.

The problem with Canada’s health care system is the same problem every socialized industry faces: the lack of price signaling.  Doctors are prevented from charging extra and user fees are prohibited.  Services can’t be rationally allocated because consumers have little indication of prices.  Government acts as a third party by picking up the tab and concealing the true cost of care.  State administered health care almost always has the same results of high demand, low supply, and scarcity of service.

Economic issues aside, Canada’s health care system isn’t lacking in just market incentives.  What is missing is the allowance for something so simple and taken for granted, it hardly receives serious consideration.

What I am referring to is the option of having a real choice when it comes to medical care.

Choice itself is really an extension of the moral basis for capitalism.  In exercising your preference for a particular good or service, you are really exercising your free will to consume.  Choice is the embodiment of freedom, private property, and is the key ingredient to rising living standards.  As long as people aren’t obstructed from pursuing their interests, they will act in a way to improve their own lot.

What government does through its various regulatory edicts is stomp down upon the free interactions of others.  The political class can only inhibit commerce; it can’t enhance what would otherwise be unrestricted.

To imagine what the prevalence of choice in healthcare would look like, it helps to picture the world of television’s The Simpsons.  In the famous cartoon show, two reoccurring characters are that of Dr. Julius Hibbert and Dr. Nick Riviera (typically referred to as Dr. Nick).  Fans of the show should easily remember that Dr. Hibbert is considered the more competent of the two while Dr. Nick is horribly inept.  Given his track record and blatant incompetence, few would trust Dr. Nick to perform major medical procedures.  However, despite all of his shortcomings in being a professional, he might still be able to perform relatively simple medical procedures and check ups.  Because of the low quality of care he offers, Dr. Nick would thus have to bid down his prices to appease consumers.  As the old saying goes, “you get what you pay for.”

The question is, why should consumers not be able to choose Dr. Nick over Dr. Hibbert even with their clear differences in ability?  Surely Dr. Nick would botch any complex procedure, but should he be barred by the state from practicing medicine?  Should consenting adults not be allowed to pay for his services?

Recommending that someone reconsider their choice in doctors and forcefully prohibiting them from doing so are two starkly opposed positions.  The former is a recommendation without the threat of violence to back it up.  The latter is the crushing of liberty by dictatorial insistence.  In erecting legal barriers to industries, what the political class is effectively telling the public is that they are incapable of making sound decisions without the help of the paternalistic state.  The real objective is instilling an all-encompassing dependency to a nanny government that is always on the prowl for excuses to increase its own power.

It is a shame that Canadians currently have little choice in medical care.  It is equally disheartening that “for-profit” industry is demonized while a system built up on the violent suppression of genuine competition is dominant.  What’s really perplexing to hear big government supporters antagonize over the threat of monopolies when they give full dedication to the greatest monopoly of all.

With the outlawing of a complete private option, the Canadian authorities have denied the people the right to do as they see fit with their own property. It has, in essence, disallowed them to be human and exercise their own free will.  As Ludwig von Mises wrote, “under capitalism, private property is the consummation of the self-determination of the consumers.” With “government knows best” superseding consumer choice, Canada’s health care system will only continue to suffer in terms of quality and service.  And it is all because the most human of all aspects has been forcibly removed; that is the ability to choose for oneself.

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5 Responses to “The Morality of Choice”

  1. Bill Baerg says:

    I am 67 years old. My parents raised 7 children starting in 1937 and the 7th born in 1954. My father was a farm laborer, construction worker and a small farmer. He paid cash for a doctor's care at a full fledged hospital for the birth of each one of the children. There were no end of broken legs and arms and cuts and cracked skulls all taken care of professionally by a Dr. and with prescribed hospital stays. I was hit by a car and spent 5 weeks in traction in hospital. All of this was paid as matter of factually as buying food for the table and clothes for our bodies. This was accomplished in a small town in Alberta 10 miles from a City. The government's only involvement in health care was to license Dr, and Nurses which already had it's own costly ramifications. None of the GREAT medical breakthroughs in the first half the of the 20th century were government funded or should be called "hampered" ! !

  2. Winston Smith says:

    As an American, with this "wonderful" benefit I would like to tell you that you are either smoking crack or receiving payment from the Canadien Insurers Association. My very recent experience with "private" insurance was getting charged $360 by a walk in clinic to have my ears cleaned – ie about $800/ hr for the equivalent of an admin to squirt water in my ear – despite being told it was going to be $109. Apparently $360 is what they can charge the insurance company but "self-pay" is $109. Since I was out of my "jurisdiction" for this procedure insurance wasn't going to pay. I've paid in full with apologies from the local office. However, I keep getting dunned from the "central" office 1500 miles away. Soon it will probably be passed over to collection agency where I will have the thrill of talking to someone who will stalk me 24X7. This is more like Stalin's phone service in the 30s than Amazon or Apple.

    "Private" insurance is nothing but outsourced socialism. I am extremely disappointed that an economics group seriously thinks that 3rd party payment of services is anything close to capitalism. Is the ability to withhold payment not a basic tenet of capitalism?

    If you are healthy things are great but if you have any congenital or other difficult health issues, insurance companies will do absolutely everything to kick you off so that the only choice you have is to get insurance from the state. In the US, that basically means welfare.

    I guess insurers have captured not only government but opinion leaders as well.

    • Redmond says:

      Thanks for the readership Winston

      Funnily enough, I don't think that James once mentioned that the Medical system of the USA should be emulated by the Territorial Monopoly on the use of force known as Canada.

      And in any case, I don't know why you would think that the American Medical system is in any way "free-market" or Capitalist – the US Government has been intervening in it and manipulating it in a Fascist Fashion for well on 100 years now…

      As Tom DiLorenzo points out

      Layers of regulation plague every aspect of medical care and health insurance in America. In the health-insurance industry, for instance, each state imposes dozens of regulatory mandates on health insurers, requiring them to include coverage of everything from massage therapy to hair implants. The reason for mandates is that the message-therapy and hair-implant industries (and many others) hire lobbyists to bribe state legislators to require insurers to cover their particular practice if they want to sell insurance within a state. Among the states with the largest number of mandates as of 2009 are Rhode Island (70), Minnesota (68), Maryland (66), New Mexico (57), and Maine (55). Idaho has the fewest mandates (13), followed by Alabama (21), Utah (23), and Hawaii (24).

      You can read far more here, if you are so inclined

  3. Greg Taylor says:

    Health care transactions are opaque and rife with information asymmetries. Even after the fact, it is often difficult for the customer to assess the quality of care provided. A trustworthy free market for these services would require many "private" regulatory mechanisms that do not yet exist. Without these mechanisms, there would be no way to make a rational choice.

    In a free market, there would be:

    1) no government enforced licenses to practice medicine or provide medical care,
    2) no government assurance of limited liability for owners of health care corporations,
    3) no government assistance for health care research, and
    4) no government supported insurance programs to pay for care.

    What kind of private regulatory mechanisms could replace and/or enhance provider licensure? Why don't these mechanisms exist in the U.S. today to provide meaningful ways to select providers?

    Without limited liability, how would private enterprise conduct or regulate effective research? Why don't we have these mechanisms today?

    I can see the potential for substantial problems with government mandated health care – many of which are described in this post. However, just turning health care over to corporations will just make matters worse. The opportunities for fraud and predatory behavior in health care are even greater than in finance. Finance deregulation in the U.S. and Europe over the last 30 years has reduced trust in the sector to the point where many private markets for securitized products have permanently collapsed. The entire sector requires massive government support to function. If we aren’t careful, health care deregulation could turn into a much bigger disaster than finance deregulation.

    Until private regulatory mechanisms are in place to reduce or eliminate opportunities for abusing the information asymmetries inherent in health care transactions, a trustworthy free market health care system will not exist. Very few would be willing to transact with an unregulated health care system.

  4. If Mulroney is responsible for Trudeau's debt; then I hope you understand that that means that Harper is responsible for blowing the Chretien/Martin surplus. What does that say about the Harper government's record on fiscal responsibility.?

    Don't have time for a lengthy reply but
    1. the GST
    Two personal issues:
    2. although legally separated, he changed the income tax laws so that I had to declare the income from my ex-husband to determine whether or not I would receive the child tax benefit. Since my husband made 1 & 1/2 times what I made and paid pittance for child support and no alimony, I was out a part of my income
    3. his government made grants/scholarships to students (such as SSHRCC & graduate student scholarships) taxable – this made a substantial dent in the available income that I had to work with

    Economics are all well and good – however, most of the time economists tend to forget that there a real people that get affected by government policies. They tend to work within the context of 19th & early 20th century idealism and utopianism. Real people get put out of work; real people lose access to services.

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