Health Care, Wait-lists and Private Benevolence

After waiting almost a year for a specialist appointment, I was able to get into a clinic for a test in one of our local hospitals two weeks later. While I was “on the table”, the doctor discovered that another test was necessary. He promised that he would try to get me in on a cancellation—probably in two weeks. I then received a letter from his office that showed the test has been scheduled in two months! Surgery followed. After an overnight stay, I was sent home with the order to call the doctor and set an appointment within a week. The call to the doctor produced and appointment in five weeks!

While going through the “micro” wait in the hospital (to register, to the department, to the surgery room), I was struck by the amount of “named” facilities—those named for specific donors. The hospital wing was named for a donor, the first waiting room was named for another and even the tiny inner waiting room sported a donor’s name. In Hamilton, we even have a totally newly rebuilt hospital named for its major donor. Now I have nothing against private donors to public or non-profit facilities. In fact, we can only be grateful to these awesome people who help in this way to keep our health care facilities up to date. Without them, some of our government-financed hospitals would no doubt look like the crumbling Champlain bridge in Montreal! However, this visit started me thinking about wait times and private benevolence—after all I had a little time to think!

Government or Market?-Now let’s recognize that basic economics teaches that if something is free, the demand will obviously exceed the supply. Thus, in Canada, where basic health care is free to the patient, obviously there are wait times. The Fraser Institute reported in its 23rd annual edition of Waiting Your Turn: Wait Times for Health Care in Canada that “Canadians are waiting months on average for close to a million medically necessary elective surgeries and diagnostic tests right now”. The 2013 median waiting time of 18.2 weeks was about three days longer than 2012, and substantially longer than 1993 when it was just 9.3 weeks.“Canada is effectively reneging on its promise of universal healthcare for those citizens forced to endure these long waits. Simply putting someone on a list is not the same as providing necessary medical attention in a timely manner,” said Bacchus Barua, Fraser Institute senior health policy analyst and the report’s lead author. In addition to waiting for specialists and for surgery, many Canadians do not even have access to a family doctor and add to pressure on hospital emergency departments (where I recently spent almost a day to get treated for a post-surgery infection!).

In a totally free market (for which I would normally have a preference), actual waiting lists would, at best, be only temporary. The price of a product or procedure would simply go up until the quantity demanded equaled the quantity supplied. Those who could not “buy” at the prevailing price would just not get the procedure. Over time, the higher prices would induce more hospitals or clinics to provide the procedure and attract more doctors to do so. The Christian principle of Neighbour Love would not, however, condone the exclusion of anyone from necessary health care. A totally free market solution is not an option! On the other hand, the current Canadian system—almost totally government financed and controlled health care—has proved itself inadequate to the task—long wait times and ever-increasing need for government funds. If governments simply increased the funding to meet all requests, health care spending would quickly take up a huge portion of all government spending and other things like our crumbling bridges would be further starved for funds.

A New Research Centre Proposal-The prevalence of “named” facilities led me to wonder whether we could somehow harness private donors to not only fund physical facilities but to also direct some funding to researching how best to solve the wait-time problem[1]. Since politicians and bureaucrats have been unable to solve the problem--and it appears to be getting worse—could one or more Canadian private donors not set up and fund a “Research Centre”? The main purpose of such a centre would be to study the causes of the waiting list problem, to publish that research and recommendations for change. It should also actively "market" their recommendations. This centre should be staffed by both medical personnel and economist and other financial experts (and younger research staff to carry out the work). They should, however, be open-minded researchers and exclude ideological adherents to the “universality is a sacred trust” mantra; they should be open to adding market related pieces to the system.

The following possible questions are only an example of those the centre could seek to address:

1. What are the most successful provinces, hospitals and procedure? What can we learn from them? Benchmarking best practices to set achievable goals is a common practice in industry. Recent changes in the Canadian Health accord between the federal government and the provinces are set to allow provinces more flexibility to choose best practices[2]. Perhaps, even fewer federal restrictions would be helpful so that provinces have more incentive to choose alternatives that reduce waiting lists at lowest cost.

2. Which countries have fewer problems with waiting times than us? What can we copy from them? My impression is that countries with more of mixture of government and private practices have less of a problem.

3. Can we not make more use of private health care centres such as Centric Health which was recently profiled in the National Post? In Canada, many provincial governments have been ideologically driven to prevent any additional private treatment. Won’t, letting those who can afford to pay go to alternative clinics, reduce the waiting list for those remaining?[3]

4. How can we achieve more funding at medical schools to allow more students to enter? We know that it is extremely difficult for students to get into Canadian medical schools. Many good students are forced to go abroad or choose different careers. Can higher fees for medical schools with some additional scholarships play a part? Can larger but income-contingent repayment student loan plan be a part? Since doctors achieve relatively high incomes, students would be able to repay these loans out of their future income; those who earn more would repay faster while those with lower incomes would repay slower.

5. Should we have more attractive scholarships and/or loan forgiveness for those who choose those specialties where the need is greatest?

6. How can overall health-care funding be improved? Note that Ontario’s main source of health care funding (other than transfers from the federal government) is a payroll tax. All payroll taxes are, however, “job-killers” since they reduce the ability of businesses to hire workers. Businesses can only hire workers if the financial contribution from the work they do is greater than the cost in wages and related taxes that have to be paid.

7. How can hospitals best be financed e.g. a fixed annual amount or variable amount depending on the output—patients treated, procedures done etc.--or a combination of these? Currently, there appears insufficient motivation for hospitals to work on reducing wait times. In a recent article by Tom Blackwell,[4] a doctor notes that a speedier, “less risky treatment, ‘offers very little advantage’ for its finite annual budget.It’s even a hindrance because the faster you get someone out, the faster you get someone else in, and then they occur new costs”. This shocking quote suggests that some part of hospital funding ought to be related to success in reducing waiting times (although not at the cost of patient health).

These questions are, no doubt, enough to show that there are plenty of questions the proposed new research centre could focus on. Wouldn’t it be nice if some private benefactor(s) could take the initiative and found such a centre?

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[1]  Note, this “thought”. This posting is not the result of a lot of expert research but merely gathering my thoughts as a generalist economic thinker and “customer” of health care.  Perhaps there are already such research facilities available but the problem persists.

[2]  Ake Blomqvist and Colin Busby, “Get Ottawa out of health care”,  National Post, Apr. 14, 2014, p.A12.

[3]  Of course, adequate licensing and supervision of practitioners will have to be in place.

[4]  Tom Blackwell, “Canada lags in less-invasive surgery trend”, National Post, July 30, 2014, p. A6

Private Property or Common Property: What does the Bible Say?

From an economic perspective, the question of who owns the tools of production--land and capital (factories, machinery and other productive resources) is a very important one. In a totally free market system, these are owned exclusively by the private sector (individuals and companies); in the other extreme--communism-- they are owned by society in common --as represented by government. Private ownership and free enterprise are intrinsically linked. For individuals to operate in a market economy, they need to be able to possess their own property. Of course, in practice, the choice is not a clear one between private and common property. The issue is, how much property should government own?—part and parcel of the free enterprise versus socialism debate.

The issue--private versus public (government-owned) property--has been controversial among Christians as well. Some, for example, have claimed a strong biblical mandate for private property, for instance, that "private property is a Divine providence"–everyone must, therefore, own property. On the other hand, others use the reference in the story of Annanias and Saphira in Acts 4:32 that "no one claimed that any of his possessions was his own but they shared everything they had" as an indication that the Bible requires us to "hold all property in common" and, therefore, requires government to own all.

God is Owner:-Neither position is, however, biblically supportable. Rather, the basic thrust of Biblical teaching about property is the stewardship principle--the mandate that the "earth is the Lord's and everything in it (Ps 24:1)." God is the "absolute Owner" of everything so that the rights of the human owner are, in principle, of a limited character. That thrust is accepted by many Christian economic authors. Chewning , for instance, stresses that God is the Owner (Gen 25:23; Ps 24:1) and man holds all property as His steward with "appropriate obligations and granted rights."[i]

 

The Dutch theologian J.Douma has provided an extensive analysis of biblical proofs and historic Christian views concerning ownership. He concluded that man is steward under God, who remains absolute Owner. Both Old and New Testament indicate that private ownership is permitted. There is no evidence, however, that we all must have private property: "Differences in ownership are nowhere condemned; communal ownership, centrally controlled, is nowhere commanded."[ii] But, the Bible does make clear that personal money and property should be used for the benefit of others. 

Private Ownership Assumed-Not Mandated:-That the Bible accepts or assumes private ownership, as such, is also supported--among others, by Grudem, and Griffiths[iii]  The Eighth Commandment "You shall not steal" is generally recognized as biblical protection of such private ownership. Removing the landmarks that establish property boundaries was expressly forbidden (Deut 19:14, 27:17). The fact that God gave Israel the promised land and allotted to each family group according to size can certainly be seen as God’s material blessing on his people[iv] and an indication that private property is understood to be the normal pattern. From the underlying theme from the Old Testament land distribution, we can also derive the need to search for “effective structures...that will enable every family to have the basic capital needed to earn a living.”[v] It would go too far, however, to take this Old Testament distribution to Israel as a mandatory pattern for us at this time.[vi]

The contrary contention that the Bible rejects all private property has been adequately demolished by these and many other authors.[vii] Neither private or public ownership is specifically scripturally mandated or rejected. As Chewning concludes, 

Scripture must...not be forced to answer questions that are culturally foreign to it...One cannot automatically extrapolate from the property arrangements of an agrarian and tribal culture the specifics that should be applied to a complex modern arrangement.[viii]

Those who argue for a biblical mandate for private property also point to the division of the land in Israel and the protection of these inheritances through the Jubilee laws. That is, it is argued that since God ordained that the Israelites must all have their own land, we also must all have our own land or private property. As Douma has shown, however, "these laws, intended as they had been for the old covenant people in the land of Canaan" have "no validity as integral legislation for Christians in other lands."[ix] To take these Old Testament laws as meaning that God requires us to have private property is, therefore, unwarranted.

Proponents of absolute private property rights also point to Acts 4 and 5 where Peter tells Ananias, "didn't it belong to you before it was sold, wasn't the money at your disposal?" However, socialists use the same passage by pointing to 4:32: "no one claimed that any of his possessions was his own but they shared everything they had." While they are wrong to interpret this to mean that be Bible requires us to "hold all property in common," it would be equally wrong to use this narrative to say that the Bible requires individual property holdings. In sum, the exaggerated claim that private property is required or a matter of divine providence should be rejected.

The Theft Fallacy:-Yet various Christians do, in fact, claim that the Bible provides much more definite guidance than the relatively limited conclusions presented above. Of particular concern is the view of Beisner and others[x] that the Eighth Commandment's prohibition against theft mandates unlimited private property rights which can also not be encroached upon–even by the government-- for instance, through taxation to assist the poor. Now, in opposition to Beisner's claim that if the government were excluded from this commandment, the Bible would have said so, McKinney argues that "If individual property rights were absolute, the Eighth Commandment would [explicitly] forbid the state's taking of income or property away from an individual for the common good."[xi] While that claim is also speculative, it does indicate the weakness of Beisner's claim. McKinney does point to God's ownership of everything and the distribution of the third-year tithe to the "Levite, the alien, the fatherless and the widow" and concludes:

Given God's concern for the poor, is it inconceivable that society, through the state, could legitimately redistribute some of this property to alleviate the plight of the poor? I think not.

The stewardship principle is also used by Hay to argue against absolute property rights. He observes that,

these rights are not those of Roman law, which imply 'unconditional and exclusive use of the property by the individual'. They are rights which impose duties and obligations in the sense of stewardship.[xii]

Given those obligations, is it not legitimate that the government as God's servant should place limits on an individual's use of private property? It would certainly seem that the Bible contains no prohibition against such limitation.

Conclusion:-In any case, we can conclude that the Bible teaches directly only that:

1. All property belongs to God; we hold it as stewards on His behalf; we must use it to His glory, in His service.

2. The Bible does not require or forbid either private or public ownership of property.

3. Private ownership, where it exists, must be protected.

Tragedy of the Commons: I do believe, however, that it does appear possible to derive a biblically inspired preference for private ownership which I hope to deal with in the future. I conclude this posting with a note on, what economists refer to as the “tragedy of the commons” as an illustration that holding property “in common” is unstewardly. The term derives from the old English custom of holding some grazing land in common—everyone could graze his cattle there. With everyone entitled to use the grass, the incentive for all to let their cows or sheep graze there as soon and as long as possible. "If my cows don’t get it now, someone else’s will!" Instead, of orderly rotating the use of the field in order to allow the grass to regrow, all users are motivated to let it be “grazed  to death”. Another example of this tragedy is the demise of the American buffalo. Since no one owned the herds, all hunters took as many as they could get without worrying about the sustainability of the herds. 

Ownership in common means, in reality, that no one manages the property on a stewardly basis. Private ownership encourages careful management!

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[i] Richard C. Chewning, ed., Biblical Principles & Economics: The Foundations, Christians in the Marketplace Series, Vol. 2, Navpress, Colorado Springs, 1989, p.117. Similar points of departure are found in Griffiths Morality and the Market-Place, Hodder & Stoughton, London, 1989 (Originally 1982), p.82 Donald A. Hay, Economics Today: A Christian Critique, Eerdmans, Grand Rapids, 1990, p.151and many others. See my book p. 183ff.

[ii]  J. Douma, Vrede in de Maatschappij [Peace in Society], Gereformeerd Maatschappelijk Verbond, Zwolle, 1985, Ch. 4. See also his The Ten Commandments: Manual for the Christian Life, P &R Publishing, Phillipsburg, N.J., 1996 (translation Nelson D. Kloosterman), pp.297ff.

[iii] Griffiths, The Creation of Wealth, Hodder & Stoughton, London, 1984, p.56 and 1989, op. cit., P.92.

[iv] Blomberg, op. cit., p.40.

[v] Sider, 2005, p.74

[vi] Chewning, Vol. 2, p.130

[vii] See Brown in Chewning, Vol. 2, Ch.6, E. Calvin Beisner, Prosperity and Poverty: The Compassionate Use of Resources in a World of Scarcity, Crossway, Westchester, 1988, Ch.5,  John R. Schneider, The Good of Affluence: seeking God in a Culture of Wealth, Eerdmans, 2002, p.195ff. and Blomberg, op. cit.,p.163ff

[viii] Vol.2, p.61.

[ix] J. Douma, Christian Morals and Ethics, translation by John P. Elliott and Andrew Pol, Premier, Winnipeg, 1980, p.28. Of course, they still have meaning for us. He says we have to  seek out the substance, the essence of these laws, e.g., "God wanted to impress upon His people that He not only had an eye for man and his social relations but also for land and animals". It is worth noting that the jubilee laws applied only to agricultural lands not to town houses and other property. It would be, therefore, be a further unwarranted extension to apply them to all private property as we now know it.

[x] See McKinney in Chewning, Vol.2, Ch. 11. Pointing to Beisner as a "forceful statement of this view," he lists other writers espousing this view as Gary North, An Introduction to Christian Economics, Nutley, N.J., Craig Press 1973; David Chilton, Productive Christians in an Age of Guilt Manipulators, Tyler, Tex., Institute for Christian Economics, 1981; Ronald H. Nash, Social Justice and the Christian Church, (Milford, Mich, Mott, 1983, Poverty and Wealth, Westchester, Ill, Crossway, 1986. See also Harold Lindsell, Free Enterprise- A Judeo-Christian Defense, Tyndale, 1982 and John Jefferson Davis, Your Wealth in God's World, Presbyterian and Reformed Publishing House, 1984, p.80.

[xi] In Chewning, Vol. 2, p.235

[xii] Op. cit., p.78, where he responds to Griffiths who also uses the prohibition against theft to justify property rights

Does the Minimum Wage help the Poor?

In his recent State of the Union address[1], U.S. president Obama said: “Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty.” He then went on with a plea for Congress to raise the minimum wage from $ 7.25 to $10.10 (US$) an hour (a 15% increase) and promised to ”issue an Executive Order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour”. At the same time, the Ontario provincial government is set to rise from Can. $10.25 an hour to, possibly $11.00[2]. No doubt, other provinces will seek to follow and more than 30 U.S. states are considering increases. Some cities are going even further. The city of New Westminster in British Columbia, has been the first in Canada to follow a trend established in the U.S. where more than 140 municipalities have introduced legislation requiring employers who do government work to provide a “living wage”—for New Westminster $19.62 compared to the minimum wage of $10.25[3].

The “Love your Neighbour” principle would suggest that Christians also would not want families to be “raised in poverty”. However, on this issue also, we must “Count the Cost”—look at the unintended consequences. The fact is that most economists have concerns about legislated increases in wages. While increased minimum wages will, no doubt, benefit those who remain employed, these benefits come at the cost of putting people out of work. Noble laureate James Buchanan has suggested that “the notion that raising minimum wages would have no adverse impacts on employment was equivalent to..believing that water could flow uphill.”[4]  Unfortunately, this fallacy readily attracts votes of those unaware or uncaring about the negative consequences.

Consider an oversimplified situation, in which a company produces a product which sells for $15, requires $3 worth of materials and one hour of labour to produce. If the employee is paid $10 an hour, the company can earn $2 on the product towards profit and other general costs (e.g. equipment, factory maintenance). However, if that wage rate is increased to $12 an hour, there is no contribution to profit and other expenses—no incentive to produce. The employee will be laid off.  If the business is able to raise its selling price at all, it will sell fewer products and the number of jobs will also be reduced. 

While this example is simplified, the results in the real world are similar. In the market, the wage rate that can be paid depends on the value of what the worker produces (“marginal productivity of labour”). If the price of labour goes up, some companies will produce less, and reduce jobs (at least, not expand) or reduce the hours worked by their employees. Moreover, an increase in the minimum wage will inevitably cause wages in general to go up, since, obviously, those higher up will also want an increase. 

The negative impact of an increase in minimum wage has the most effect on the poorest--those least skilled who will be the first to be laid off and those unemployed who have the most difficulty getting another job. When given a choice, employers will hire the most qualified. Young people with no experience will have more difficulty getting that first job. 

In his address, Obama also claimed that the increase “will give businesses customers with more money to spend”. That, will be true for those who retain their jobs but untrue for those who lose theirs. Moreover, if businesses do pay the higher wages, that money has to come from somewhere—higher prices by consumers who will have less to spend, less spending on new equipment, less profits to shareholders who will also spend less. Thus the increased spending by some is unlikely to be a net gain for the economy.

The “living wage” efforts will have even more negative effects. U.S. research indicates that a doubling of wages (say from $10 to $20) reduces employment among low-wage workers by 12 to 17%. Moreover, 72% of workers benefiting from “living wage” laws were not poor.[5] Thus, such laws do little for the most poverty stricken while ensuring that taxpayers get less value for their money.

Now some, including president Obama, argue that the rise in wages will “boost morale” and, therefore, supposedly, productivity. If, for example, in the illustration above, the worker could be encouraged to increase his output per hour by taking only 50 minutes instead of an hour to produce the product, then there is room for a wage increase. However, productivity improvements are generally considered to come from capital investment, education and experience. It’s not clear to what extent “morale boosts” will have long-term productivity effects. Studies tend to confirm that the net effect of minimum wage boosts are not positive.

Thus, significant increases in minimum wages--particularly, in a period when unemployment is still above normal--are questionable; they help only the poor who remain employed. Efforts to help the “working poor” are, probably better directed through the tax system. Reducing taxes through tax credits (including refundable ones for those paying little tax) can achieve the desired effect without the negative job effects. Of course, that means tax-payers in general will pay the cost. But, is that not better than increasing unemployment?

Finally, if we must have minimum wage laws, a (lower) graduated youth wage  (as exists in some other countries) could be discussed to deal with the serious problem of youth unemployment--which is double the average rate of unemployment. It might even be extended to the "long-term" unemployed, to help them get back into the work force.

Another option to explore is some form of "profit-sharing"--keeping base wages moderate but sharing profits when things are going well. But, that's an issue for the distant future.

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[1] I will make no attempt to review the whole address. It did include things that we could all agree with and was short on detail on other issues.

[2] A National Post report suggests this will be done retroactively back to 2010; that would be ridiculous and impossible to implement. Can small businesses go back and pay extra past wages without raising revenues?

[3]  Charles Lammam, “Maximum Wage Damage”, National Post , Jan. 28, 2014.

[4]  Peter Foster, “MinimumThinking, National Post, Jan. 29, 2014 Lamman op. cit quotes a “comprehensive review” of more than 100 studies covering 20 countries and found the overwhelming majority of studies concluded that minimum wage hikes negatively affect employment.

[5]  Lamman, op. cit.