Physician Patient

Lee Kurisko Testimony

The following testimony was against proposed bill H.F. No. 3106 imposing single-party payer universal health insurance in Minnesota commencing 2010.

I am Dr. Lee Kurisko, a radiologist with Consulting Radiologists Ltd. based in Minneapolis. I am a Canadian physician having lived and worked in Canada until four years ago. I have 14 years of experience working in Canada’s system of universal health care. I was Medical Director of Diagnostic Imaging for Thunder Bay Regional Hospital in Thunder Bay Canada before I left. As a medical student, I recall defending Canadian universal health care as morally superior to U.S. health care. As I came to assume higher and higher levels of responsibility in within the health care system, I saw the impossibility of delivering care under such a system and became fully cognizant of its limitations.

When I was working in Canada, I had a waiting list 13 months long for MRI and 7 months long for CT. I had the nightmarish task of triaging hundreds of patients awaiting these tests. There were patients that I had triaged too far out in the waiting list that had unknown rampant infections or tumors that could have benefited from earlier treatment. But if I new what their tests would show, they would not have needed the test. Much of our x-ray equipment was old and decrepit. Our angiography equipment was so old that it had a habit of breaking down; sometimes in the middle of the delicate medical procedure of cerebral angiography during which I would thread a catheter from a person’s femoral artery in their groin up into the blood vessels to their brain. I knew orthopedic surgeons and a gastroenterologist with two-year waiting lists. The waiting list for an MRI in Newfoundland is presently two and a half years long.

What is being proposed today is a major intrusion into the health care economy and therefore is subject to the same basic economic and political factors that cause poor health care in Canada.

There are three practical reasons why Canadian universal health care is a failure. Firstly, neither physicians nor patients have any accountability for costs. If a commodity has no direct cost attached to it, the demand becomes infinite. Hence the bankruptcy of the Canadian system. With the third-party payer system here in the U.S., the situation is similar. Physicians and patients alike are not accountable for costs hence true costs are exorbitant.

Secondly, rather than being an economy-stimulating, employment-generating, resource-creating business, health care is a government run monopoly which parasitizes the Canadian economy and whose primary purpose is to save money while maintaining the façade of providing care.

In Canada, with health care being delivered from governmentally derived budgets rather than from profit, a Zero Sum Game is created in which doctors and patients alike must clamor for their fair share from a limited resource pool. As government in the U.S. foots the bill for more and more of health care, the same dynamic unfolds. In Canada, such a strategy does not actually control costs. As of about two years ago, 46 cents of every provincial tax dollar in Ontario was being spent on health care with massive federal assistance on top of that. That is money that is not available for other services like infrastructure and education.

Thirdly, health care is a major segment of the economy which government attempts to centrally plan just as the Soviet economy was centrally planned with disastrous consequences. As a payer for health care, government, whether American or Canadian, has an enormous incentive to direct and control how dollars are spent. Imagine if the government declared itself the sole provider of bread. The government alone would determine how much wheat would be grown, how many bakeries there would be, how many loaves of bread could be baked, where and when the bread could be sold. The number of loaves of bread baked would be far below public demand. People would be squabbling over those few loaves of bread. Chaos would reign. Such is the state of Canadian health care just as it was for food production was in the Soviet Union. If both the Soviet Union and Canada have failed with socialism, there is no reason to believe that the United States or Minnesota, for that matter, will be successful.

Americans, just like Canadians, incorrectly believe that the shortcomings of American health care are due to the market nature of U.S. health care. The truth is very different.

When was the last time that you went to the mall and purchased some clothing, books, jewelry, saw a movie, had lunch and then went home with only paying a minimal co-pay? The different vendors would simply submit a bill to your home insurance company. The goods would seem cheap but your home insurance costs would be astronomical! With no accountability for costs on the consumer’s part, each store would bill the insurance company as much as possible. Suppose the insurance company could arbitrarily decide to not pay for some of the purchases. The stores would try to bill as much as possible. The insurance company would try to pay as little as possible. The established prices would have nothing to do with what the consumer would have been prepared to pay. Such a situation would be a gross distortion of free market capitalism.

The described scenario is preposterous but it is the equivalent of modern U.S. health care. Who is to blame for this bizarre scenario? It was an act of Congress, not the free market that started medical services being billed to third parties rather than directly to the patient. It was also an act of government, not the free market, that established the norm of insurance being tied to the employer. With wage and price controls established during World War 11, employers had to compete for employees by providing insurance. With health insurance tied to employment, choices are limited and problems arise when a person loses their job. There is no equivalent peril with individually purchased life or disability insurance.

In free markets, prices are set at the meeting point between the most that the consumer is willing to pay and the least that the vendor is willing to receive in return for the product. The consumer is free to go elsewhere to seek a lower price and the vendor is pressured to reduce prices to attract business. This pressure tends to reduce the profit margin per item sold. To maintain a viable business, the vendor must sell as much product as possible to as many people as possible. The vendor must continuously strive to make a better product at a low price. If unsuccessful, they will go out of business and someone will step up to the plate and do it better. The business world is in a continuous state of reordering while getting better and better at delivering what people want at lower prices. According to Michael Rothschild, author of Bionomics; Economy as Ecosystem, virtually every consumer product ever studied has dropped in price when measured in non-inflationary dollars if free markets are allowed to work. Because the U.S. health care market is not a free market, double-digit inflation is the norm putting it further out of the range for the have-nots of society.

The key ingredient in an efficient market is the consumer-vendor interaction. The consumer must be able to decide if he is getting sufficient value for his dollar and the vendor must be pushed to provide that value. In American and Canadian health care, this interaction is negated. With a third party payer system, the patient does not function as a consumer. The inflated prices seen in U.S. health care are not an example of “market failure” but the result of failing to make health care a market. With a minimum of 43 percent of all health care costs borne by government, the potential market for health care is further undermined creating a greater disconnect between patients functioning as consumers. The proposed bill under discussion today would increase that figure further thereby worsening the problem.

I admire the moral imperative of what you are attempting to achieve with this proposed legislation. I, like you, desire to see as many people as possible have access to affordable quality health care but disagree with the method that you propose. I believe that government should work to extricate itself from the delivery of health care and allow market processes to flourish so that costs may drop and more people can access care. Although administered by the individual provinces, health care in Canada is a form of national socialism. With the control by multiple third parties, health care in the United States is a form of corporate socialism. Moving towards one or the other will not produce something new or different. We need to think outside of the box, and rather than empowering government or third parties, we need to empower individuals through free markets. With health savings accounts, appropriate tax credits and tax deductions people should be empowered to cover their own health care needs. Perhaps the state should experiment with using some of the funds now spent on the needy and directing these into HSA’s for the poor. Obstacles to delivering private charitable care should be lifted. Furthermore, there should be more flexibility to purchase insurance independent of the employer so that individuals and their families own health insurance as they presently can own universal life and whole life life insurance. Perhaps whole life health insurance could be purchased with the costs amortized over decades just as a mortgage is. If markets were allowed to work a plethora of new ideas may unfold that force prices down and availability up. When Frederick Hayek wrote of the power and importance of markets in the 1940’s, he stated that no one can know what the collective actions of millions of people interacting in a market can produce. True to his prophecy, he could not have foreseen the marvels of the computer age and the writing of this testimony on a computer. Likewise, if we empower markets rather than empower government, we have no idea what great things we could achieve in health care.

Thank you.

Lee Kurisko MD FRCPC
Consulting Radiologists Ltd.
March 10, 2006

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