Krugman has an interesting post refuting the commonly held belief that Canadians spill over the border into the US for health care, much like how the Niagara Falls spill from Ontario over into New York State.
In my current job, I’m often surprised by how often warring anecdotes are the cause of some sort of cooperative stagnation. People are inductively gathering data and forming opinions constantly, and over time these opinions become assumptions. This is problematic for many reasons, but notable among them is that fact that any of these assumptions can be challenged by a single anecdote. In any conversation where opposing anecdotes have been shared, the participants believe they have summarily refuted the other side, and antics ensue shortly thereafter.
I peddle data for a living, and while data itself can be misinterpreted or skewed or exaggerated, some sort of common ground like this is almost always necessary where conflicting viewpoints will be present. This opens the door for anecdotes to serve as interpretive tools for analyzing data, rather than the data itself.
For instance, F knows some folks who drive across the border to America for treatment because Canadian medicine apparently sucks. I, however, have been to the doctor once since I was 15, mostly because doctors and medicine cost money and I don’t really have much of that.
Canadians have high taxes, it’s true. I, on the other hand, will spend (before taxes) just over 16% of my salary on healthcare in the coming year. After income taxes (15% marginal for my bracket) and payroll taxes (my share is roughly 7.5%, depending on which economist you ask), we’re roughly in the neighborhood of 37% of my income, more than the average tax rates of Sweden, Italy, France, the U.K., and even Canada. However, that 16% for healthcare isn’t a constant percentage rate, because the costs of healthcare are fixed (roughly) and the percentage is a function of my salary. For the rich, the percentage cost is much lower. For the poor, the percentage cost is much higher. In our current progressive system, or even in a flat tax system, my healthcare cost would go down as a result of aggregate averaging.
I’ve taken care to average my taxes by computing marginal rates, and I’ve included healthcare benefits as well as payroll taxes paid by my employer. Of course there are complexities (Canada has stunningly high sales taxes, for instance), but they work both ways – one might argue that, given the current recession, labor supply is now inelastic and absorbing more of the payroll tax. All in all, even given a pretty steep margin of error, the point is the same: in America, the rich can afford healthcare easily. The poor have a much more difficult time, and could be better off in a socialist state.
So while some may say that people in Canada come to the US for healthcare, others say that 40 million Americans are already here and aren’t using it. The warring anecdotes – quality vs. quantity – flatline the conversation completely.
I haven’t been able to look at this report in detail yet, but I’m interested in data that may challenge the conventional wisdom. Frank, if you have time, I’d appreciate your input. If the methodology looks even reasonably solid, it may be an opportunity to interpret our anecdotes differently and rethink our assumptions.
Another fact to be considered is that the only currently known cure for Frankophilia resides in Canada. The healthcare therefore can’t be all that bad. Perhaps we can try importing.
Chris,
Sorry it took so long to reply – I’m not sure how much value I can add to the conversation, but I’ll give what I can.
For the record, I don’t actually know anyone who has ever gone across the border for medical treatment. My apologies if I misled you on this: I don’t think I’ve ever really talked about this supposed flow, but I’m not really surprised to hear that it happens in handfuls rather than hordes.
Also, I’m not sure I’d agree with your comparison between what you pay for taxes + health care and what we’d pay. I haven’t received a paycheck yet, so I’m not sure exactly what the breakdown will be; however, I do know that my health care isn’t exactly free (I will be paying monthly premiums — much less than I would in the States, though) and as you pointed out, sales tax here in B.C. is astronomical.
I’d also ask what you get for the health insurance you pay for. For example, I was thrilled to discover that my last job offered dental benefits. My current job doesn’t offer them, nor is dental covered through my government health care (not even regular hygienic work). I’m not sure exactly what else isn’t covered, but I’d be willing to bet the health you pay 4x as much for is at least 4x better than what I’d receive up here.
Example? Rob Beck is currently on the waiting list for hernia surgery. He’s been on that list for several months, and as far as I know, he’s not about to get that taken care of anytime soon.
I understand the danger of warring anecdotes, but when I criticize the Canadian health care system, I’m not doing so from an idealogical “Oh, I wish every corner of the world ran on the free market.” I’m criticizing it because it hasn’t been good to the people I know. And how else am I to judge it?
Lastly, I’d suggest that to say, “The poor have a much more difficult time, and could be better off in a socialist state” is short-term thinking. Don’t get me wrong: I agree that there are big problems with how the US health care system works. But what happens in twenty years when you’ve trained all the poor people that health care is a natural right and can be obtained at no cost? You’ve really traded long-term growth for short-term band-aids. Because now, the poor have no reason to grow in maturity or responsibility and no need for financial independence (because, why bother?).
Perhaps I’m being idealistic, but I truly believe the Canadian health care system is just as cold-hearted and sterile as America’s. More so, even. And just because Canada makes a pretence of “helping” the poor doesn’t make them one bit better.
1. I didn’t mean to directly attribute the Niagra Falls of Healthcare to anything you have ever said. I wouldn’t be surprised to have heard the argument from you, but, up until recently, I would have admitted the truth of the argument myself.
2. As far as I understand (and have read), Canadian Medicare is a single-payer system, meaning that the government covers it completely. You have a tax that is sent directly to the healthcare fund of your Province, but we have that tax too. Payroll tax in the US constitutes 15.3% of a worker’s pay, and is split between the employee and the employer; however, additional cost is partially passed on to the worker by indirect means, just as a business could pass a tax on to the consumer by raising prices. The amount that is passed on is a matter of debate, and depends on a number of factors. The payroll tax is in addition to federal and state income taxes, comes out of every paycheck, and funds medicaid and social security.
If you really want to cut through all of these factors and look at a “total tax,” the thing you’re looking for is a “tax wedge.” Here’s one for 2005. You’ll note that I’d be paying similar tax in either country, but in the US I’d still have to pay for health care. I’ve looked into an equivalent to the EIC in the US for Canada in order to understand the taxation gap in Married-with-Children families. I’m not sure if this wedge factors in the EIC, but I assume that it does. If healthcare costs increased in linear fashion for me for each child, each additional child represents a 6.5% cost to me that I would not incur in Canada. That’s an additional 13% for two children, or a 24.9% wedge, which is more than Canada. The more I make, the less that percentage would be, so these numbers are understandably malleable. But I think the point stands. The taxation gap is not terribly significant, but the gap in total national coverage is.
3. I only have basic coverage, no dental or vision. My earlier numbers include my personal benefits (which I don’t pay directly, but results in lower wages) and those for my soon-to-be wife. We have a pretty large deductible compared to other benefits packages available. It’s not exactly the Cadillac of insurance plans.
When I was a mortgage broker, I checked into insurance. Just basic catastrophic and disability for a husband and wife was around $300 per month on non-volume-discounted personal plans, which was also around 16% of my income, and I wouldn’t be covered for any preventative medicine or basic checkups for colds and allergies.
You can doubt numbers all you want, but there is no argument that there is a serious academic discussion about why healthcare costs are so stratospheric here in the States. The US spends almost twice as much on healthcare per capita as Canada, clearly more than any other country in the world. And, surprisingly, we’re not any healthier – our life expectancy is lower than Canada’s, while our infant mortality rates are higher.
4. Your assertion that “it hasn’t been good to the people I know” is exactly the problem that I’m talking about. You know only a select few people, and the data that you collect will likely be negative because success stories of the Canadian healthcare system aren’t very exciting. If Mr. Beck had received his operation in a hurry, would anybody have said more than a sentence about it?
We use data to go beyond our limited experience with the very few people we know, and by doing so we can look at the aggregate. The fact of the matter is, in the US, 40 million people don’t have insurance or are underinsured, those that do have insurance pay twice as much for it as Canadians do, we don’t live as long, and the tax for a single unmarried person is roughly the same (though in the US they pay for insurance separately so the net cost is actually higher). There are waiting lists in Canada because everybody gets treated. In the US, you don’t have to wait, because 13% of people aren’t being treated at all, and many others avoid treatment because of the additional costs of deductibles and copays.
5. I get your point about short-term thinking. I have a question. Is charity bad for the poor? One would think it would train them, over the long-term, to expect handouts. James seems to think differently, however.
A direct consequence of the US healthcare system is the further poverty of the poor. I have seen it a lot in Latah County as a broker. If you get sick and are uninsured, you’re essentially screwed for a long time. I saw medical bills on somebody’s credit between 10k and about 100k, all in collections, about once a week. We can go on all we want about how socialism is coddling these people, and “training them” to expect something that they didn’t actually earn, but the fact is that they all had jobs and were working to have homes; when they got sick, they were virtually guaranteed to live in poverty for at least a decade, and have ruined credit for about as long.
You cannot walk by one of these people, say “be warm and be fed” and then leave them in the dust, trusting the free market to somehow “train them” to be good capitalists and take care of themselves. You cannot likewise expect that invisible hand to dust them off, give them a good job with benefits, and take care of them. Poverty is not a sickness, not wholly due to somebody practicing poor stewardship or being otherwise foolish. Worrying about how our economics “train them” strikes me as condescending at best. It’s possible – and mark that I don’t believe this about you – that such a statement could be utterly faithless.
For more examples of “training,” look at OT law. The poor could glean food that they hadn’t grown. Every seven years, in the Year of Jubilee, whatever you gambled away through poor stewardship and foolishness was returned to you. This is because kindness and possession, not “training,” were central to the Law. This is because love and security came before any abstract economic philosophy devised by men. The Bible knows nothing of Markets. The only Invisible Hand is the Hand of God, strong to save.
To round off this rant, I ask you to reconsider the long-term effects of what you advocate. Healthcare as it currently stands in America leaves the poor in a state of almost perpetual insecurity, and sends many into a pit from which they will never emerge. If you are living paycheck-to-paycheck, a single ambulance ride can haunt you for a very long time. I would argue that the long term effects of our current system are contributing to the widening of the wage gap in America and the further oppression of the poor. If not oppression, certainly the ghettoization of the poor. Many have sold off their boots to pay for a surgery; laid up in bed and shoeless, they ain’t got no bootstraps to pull themselves up with.
Ultimately, I don’t advocate for socialist healthcare. I like personal property. I believe a system should be constructed in such a way that people should be equipped to take care of themselves. The answer I would propose could fill up another post. However, what I suggest above – that capitalism is just as enslaving as socialism – is in my mind as clear as day. I’d rather wait for treatment than have no treatment at all.
[...] well as rehashing some common tax misconceptions that I have already covered in a long post here – and correcting some errors I made in understanding and calculation – this Snopes [...]