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starbucks4ever (78.50)

Voting with your feet often means a vote of confidence in the system



August 18, 2009 – Comments (4)

In the healthcare debate, opponents of the Canadian system have little else to do except to repeat that infamous "But they have lines" mantra. And of course we are presented with selective coverage of several hundred Canadians who cross the border to get treatment here. It goes without saying that HMO spimasters don't show us the inconvenient images of Americans going to Costa Rica to get treatment for 10% of the price, or the Eastern European immigrants combining a trip to their native country with a health care tour (I was one of those tourists, on at least two occasions). But these two opposite lines of trafic are very different in nature. The Americans going abroad are just choosing the cheaper option. There is really nothing to understand here. The Canadians choosing the more expensive, if quicker, option, is a more interesting phenomenon. It could mean disappointment with their current system, or else it could mean something entirely different. 

In any Starbucks cafe, the customers belong to one the two categories. There are coffee affectionados who feel that the other, cheaper coffee brands just don't make the cut. And then there are customers who have no particular objections to their local McDonalds who just feel that they can afford a $4 latte once in a while. In the former case, it's McDonald customers voting with their feet. In the latter case, it's discretionary spending. The irony is that this second type of customers must thank their cheap local McDonals for the fact that they now have some extra quarters to splurge on a premium brand of latte.

I remember that in the last years of the Soviet Union, all the liberal economists hailed the first private enterprises that just began to apear at that time. Many of those successful startups were the equivalents of Starbucks: cafes or fast food joints that charged several times more than the average price and offered good service, "atmosphere", and a better selection of food. Somehow these establishments never faced a lack of customers, which gave those liberal economists a reason to say something like this: "You see? The people are voting against socialism with their feet. If we only liberalize everything, such excellent private restaurants with become the common standard."

That was a pipe dream, and it became obvious the next day after the government listened to them and adopted their recipe. In hindsight, we can see now where they were wrong. The simple truth was that at the time, the people were still relatively well-off, and after the necessary expenses were made, there were still some extra rubles to go shopping with. When the bread for 18 kopecks disappeared from the now-private stores to appear again for a whole ruble a loaf, that was the end for these aspiring Starbucks wannabes. As their former patrons were now spending their last kopecks on milk and potatoes, these "green shoots" of capitalism had to either shut down or reposition themselves as exclusive restaurants for the very rich. The fact that under the old system, people were willing to go to a private cafe to order a 10-ruble glass of pomegranate joice was not an indication of their disappointment with the Socialist economy; it was an indication that Socialism had succeeded in bringing the price of bread down to 18 kopecks so that they could go shopping with the rest of the money.

Now, going back to the topic, this is how I am inclined to explain the medical tourism phenomenon. When you have cheap medical care from the State, that gives you the option to spend some extra money on a discretionary service. If Americans didn't have to save something like $100,000 for that inevitable day when their request for treatment gets denied by the insurance company, then sure enough, many would take that money to a premium hospital where the nurses are smiling, the bed linen is clean, and the surgeon has a diploma from Harvard. Including a trip to Ottawa if that's where such a hospital is located. If my hypothesis is correct, then the simple explanation that Canadians show some demand for expedited services becuase their basic system is efficient enough that they can afford it should lead us to a very different conclusion from the one that HMO spin masters have in mind. 

4 Comments – Post Your Own

#1) On August 18, 2009 at 3:03 PM, dickseacup (< 20) wrote:

When you have cheap medical care from the State, that gives you the option to spend some extra money on a discretionary service.

Or, maybe the case is that when you are subject to socialized medicine that is rationed by some anonymous bureaucrat and the government runs out of money, yet you still require medically necessary care, you will find it somewhere. Even if that means spending out of pocket and traveling abroad.

Thousands of surgeries may be cut in metro Vancouver due to government underfunding, leaked paper.

According to the leaked document, Vancouver Coastal — which oversees the budget for Vancouver General and St. Paul’s hospitals, among other health-care facilities — is looking to close nearly a quarter of its operating rooms starting in September and to cut 6,250 surgeries, including 24 per cent of cases scheduled from September to March and 10 per cent of all medically necessary elective procedures this fiscal year.


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#2) On August 18, 2009 at 3:43 PM, throwerw (28.29) wrote:

government intervention in the market is already the cause of high healthcare costs, shall we make it worse?  I can't believe that anybody would still trust the u.s. government to do anything in a financially sound manner.  there is no santa claus people!

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#3) On August 18, 2009 at 5:53 PM, devoish (63.65) wrote:

Even if that means spending out of pocket and traveling abroad.

It doesn't. Canadian healthcare pays for your surgery if you travel abroad to get it. My insurer doesn't let me travel out of network.


Strong government intervention in Norway,Canada, Germany, France, Denmark and other countries delivers better healthcare than we get to every single citizen in their countries for half the per capita cost.

Only small weakling Governments cannot.

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#4) On August 18, 2009 at 6:02 PM, devoish (63.65) wrote:


According to your article they could solve the problem by charging $6.00 per person. 1/4 my next copay. They could solve the problem by reallocating funds from where Canada is overserved to other needs. Apparently they have done a study and can make a decision.

I pay more than three times the average Canadian, and my peditrician has me making my kids next appointment for 6 months from now. I cannot travel out of network without paying more, much less to another country.

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