I spent a couple of hours at Tokyo Narita airport yesterday morning, changing planes on the way back from Sydney to London. Like many geeks people, I like to check frequently to check my e-mail / check the news / see if anyone has insulted me in the Samizdata comments section, so I wandered around the terminal looking for an internet terminal on which to do so. Narita is well served with such terminals, so I was quickly satisfied.
What is interesting here is that there are internet terminals provided by two separate companies here. The ones on the left are provided by a local ISP, and users are charged ¥100 (about £0.50) for ten minutes of use. The ones to the right are provided by Intel, and are free to use. The photograph illustrates that the usage patterns are indeed what would be predicted by the laws of economics.
It is actually quite common now to find free internet terminals for use in airport terminals, particularly in airside transit lounges where passengers may spend a few hours between flights. This is a relatively simple and cheap amenity for airports to provide to their customers, so they do. Often though, the airport does not even need to provide it: some technology company will set it up for free, in the belief that the sorts of people changing planes at major airports are the sorts of people they want to advertise their services to. As well as free internet terminals provided by Intel, I have also seen free internet terminals provided by Yahoo at Tokyo airport. (I have seen free internet terminals provided by Samsung at Sydney airport which never seem to be working – probably not a good way for the company to advertise itself). The good thing at Tokyo is that they seem to be willing to allow competition between various organisations that want to set up such terminals, and they apparently don’t have to be free.
Which when you think about it makes a certain amount of sense. If you provide a good for less than the market price, access to the good will normally end up being regulated by queues and quotas (ie willingness to wait, and restrictions on the amount of the good you consume, regardless of how much you want) rather than by ability or willingness to pay for it. (The public health systems of the world, which are full of people waiting endlessly for medical care, are prime illustrations of this). In busy periods, queues are likely to form for the free terminals, and at that point people who really need to access the internet quickly are still likely to be able to do so if they are willing to spend money. And such people can then use the terminals for as long as they like, whereas time restrictions are normally placed on free terminals. (From this we can also conclude that the health system of Australia, in which people who are willing to pay more can jump the queues of the public system and have their healthcare done privately, is better than the situation in Canada, where private provision of healthcare is essentially illegal).
In practice though, I doubt the providers of the for pay terminals at Narita are making much money, simply because the provision of free terminals there is so good. Putting them behind security restricts their use to passengers, and therefore demand cannot grow in the way it does for many free goods. They may get some use at busy times, but I suspect not much. However, in certain other airports (for instance Singapore) where there are free terminals but not many of them, for pay terminals could (and do) also get a lot of use.
And in the case of healthcare, where demand is capable of growing completely out of hand if you eliminate price sensitivity completely, private provision that people pay for directly is the only way that anyone will end up with reasonable access to healthcare. Given that (unlike with free internet terminals) people are paying for the public health system out of their own taxes in the first place, the argument for eliminating most public health care and having proper price sensitivity from the start is pretty strong.
It’s not true that Canada has no private health provision. It does. It’s called the U.S.A. And increasingly (I know this for a fact, having talked to health tourists in my local bar) it’s called Costa Rica.
When did private healthcare become illegal in Canada? From the Canadian Department of Finance page on health:
Euan:
This article by Pierre Lemieux discusses the illegality of private health insurance. Apparently, carrying no insurance and paying for everything out of pocket might actually be legal.
Needless to say, so-called “consumer” groups like this one in Alberta can’t stand the idea of folks taking care of their health care needs themselves.
OT: any time you hear the term “consumer advocate”, think “government advocate”.
Interesting. Private health insurance is forbidden by law yet two thirds of the population make use of it and the Canadian finance ministry is quite open about the fact. Hell of a lot of criminals in Canada, then.
I suspect “illegal” might be used in the same sense that some argue (even to the point of imprisonment) that federal income tax in the US is “illegal”. Or the Reich government of Germany still exists. Or some Jacobite is technically the rightful King of England.
Don’t believe everything you read! 🙂
I prefer to think “advocate of your right to consume only what the advocate permits and/or is selling”.
EG
Just think of it this way, you have 3 countries in the world where it is illegal to buy private healthcare(not insurance that’s different) , Canada, North Korea, and Cuba. Quite a system we have here.
The fact that you can not get ‘private’ healthcare in Canada is illegal, you can on the other hand buy extended coverage which gets you a slighty better room(so you don’t have to pay for it) covers your medications and things like that.
In Canada, not only can you buy private insurance (usually but not always through your employer), there are private for-profit clinics and surgeries. It seems that soon enough there will be full scale private hospitals. I think to say that private healthcare is illegal in Canada is a bit of a stretch – it’s restricted, but it’s certainly not illegal.
Many people tend to consider that making a profit out of other people’s illness is ethically questionable. Fewer people have problems with provident or mutual organisations like BUPA, which are seen to have the efficiency advantage of private ownership without the perceived dodgy morality of for-profit healthcare. Provident organisations were the way the UK system was going before it was nationalised. Aside from that, there is the more fundamental question of whether for-profit healthcare actually works any better than not-for-profit or state run systems. Of course, in looking at this you have to ignore individual sob stories either way and consider the overall picture.
I have never experienced an American hospital, but from what I have been told by American, British and Canadian people who have, they aren’t that impressive. The bureaucracy and semi-competence that pervade state systems are just as present in the private US hospitals, although you have to factor in the excessively litigious nature of American society when considering at least the bureaucracy. But you still have to wait (sometimes longer, sometimes not, sometimes much longer), you still get basic errors and incompetence.
I think in the end you need both, perhaps substituting provident organisations for profit-making ones. You will always have people who can pay, but you will also always have people who cannot – either because they just don’t have enough income or because they have chronic or terminal conditions that private insurance will not cover or will only cover at a cost they perhaps cannot afford.
My personal favourite idea is to have all hospitals owned by providential organisations, and taxation based subisidy available for those who cannot afford the full cost of (providential) insurance and to pay for uneconomic treatments that are not available privately at reasonable cost. Insurance should be usable at any hospital, subject only to the limits of cover and any applicable treatment subsidy.
I don’t think making a shareholder profit from healthcare is immoral as such, but I don’t see how it actually benefits anyone other than the shareholders – as such, in the case of the health of human beings, I think it is unnecessary because equally efficient alternatives are available.
EG
Euan:
One of the big problems with the US health care system is the large amount of government interference. The tax system is geared towards having employers provide health care, which as you can imagine severely distorts the market.
Euan, the Canadian system nearly killed me. The US system saved my life. The last time I need to goto to a hospital in an emergency I told them to ship me to Buffalo or Detroit.
9 months for an MRI in Canada, 2hrs in the US…quite a difference. That was life or death…ofcourse people up here would simply argue that I ‘slipped through the cracks’…right. It’s taken 3 years to get back to something close to a normal life because of the screw ups in the system, not at one MRI center or two, or three, but at at 5 MRI centers…why? They were too busy, too full, not enough staff, under bugeted.
But yes, illegal in itself you can not goto a ‘private’ hosptial in Canada(they don’t exist), nor can you open one here. Doctors can not operate as a private individuals(they must work within the provincial healthcare systems), or any of the other beauties that go along with a free system…such as in the UK or US.
While this is going off topic abit, I bet you would say that owning a US dish(non CRTC(government) approved) is only ‘restircted’ in Canada as well, and not illegal.
I ‘m quite sure there are plenty of stories the other way around. As I said, you have to discount individual stories when considering emotive subjects – I’ve heard plenty bad stories about all of the systems.
Just because something is run for a profit does not in itself make it better. Profit does not guarantee better performance, more responsive management or more efficiency, just as (whatever the Marxists think) profit does not guarantee greed, exploitation and plutocracy – although you can get all six at various times. It’s just one of the ways of doing something, in some cases it’s better, in others not. My personal view has been for years that the profit motive is unnecessary in healthcare since provident or mutual organisations can do just as well.
EG
If provident and mutual organisations can provide outcomes that are as good or better than for profit companies, then they are an actively good thing and consumers should be free to choose them. And I have no doubt that in many cases they do provide such outcomes. But it is a long way from there to actually banning for-profit companies from providing healthcare to people who actually want to buy their healthcare from for-profit companies.
What I want is a maximisation of choice and a maximisation of competition, because I believe that these two things most definitely lead to better outcomes. Once we have that, the ownership structure that leads to the best outcomes for consumers is likely to assert itself, just as it has in most other industries. Denying consumers the right to choose in the name of their own good or in the name of protecting them from people who want to make profits strikes me as completely wrong, personally.
(Healthcare almost everywhere is so regulated that such free markets exist nowhere, unfortunately. I happen to think this is a very bad thing. However, some systems contain more competition than others, and I think they are better for it. Canada’s contains just about the lowest level of competition to be found anywhere).
Michael – Basically I agree. I’m not saying for-profit healthcare should be banned, I am saying I think the profit motive unnecessary in the matter of dealing with human health.
There advantages and disadvantages to all forms of ownership. I get my mortgage from a mutual organisation, because it’s cheaper than you can get from any for-profit bank. On the other hand, some of the for-profit mortgages are more flexible – but they’re never cheaper overall.
I think in healthcare, provident organisations have the efificency of non-state control, they don’t suffer from perception of moral dodginess that for-profits do, and they’re probably the cheapest solution all round. By all means let for-profits operate, but you may well find thye don’t do so well in a society where people are used to something else – and where they can buy the same services more cheaply elsewhere. Not because they’re for-profit companies, but because they’re for-profit healthcare companies.
Euan: I am saying I think the profit motive unnecessary in the matter of dealing with human health.
So are you seriously saying that the huge advances in medicine, and in particularly drugs, over the last few decades would have happened without the profit motive?
Perry,
I was thinking about hospitals, clinics and insurance, not the manufacture of drugs. Or for that matter the manufacturers of medical equipment or developers of techniques such as NMRI and so on.
Having said that, though, people do, amazingly enough, carry on research for its own sake – shocking, imagine people wanting to do something without needing the compulsion of money? Pedants and the humourless need not react to that sentence.
But to be serious, no I don’t think medical science would have advanced so far and so quickly without the profit motive. That’s not to say it wouldn’t have advanced at all, of course. And whether hospitals and insurers (not drug companies) make profits or not doesn’t have much to do with it, either.
EG
Euan:
“Profit does not guarantee better performance, more responsive management or more efficiency…”
It does. Because profit in a free environment depends on attracting consumers, and this is done by better performance, better service, etc.
“My personal view has been for years ….”
Your personal view is of utmost importance, but that’s not reason enough to have governments force upon people one solution or the other. Let people choose for themselves.
It doesn’t guarantee it. It makes it more likely, but there’s no guarantee. I’m well aware of several less than responsive private companies. No system is perfect.
Which I wasn’t advocating anyway.
EG
When a private company is unreponsive, you go to a competitor.
When the government is unresponsive, you… what?
—
Any talk of a moral dimension to health care production is nonsensical. Health care is a private economic good (and a luxury good at that) no different from any other. It will be most efficiently provided by for-profit production and sale on the open market. That illness plucks at our heartstrings doesn’t alter the nature of our demand for health care, or the best way of supplying that demand.
Why are for-profit companies more efficient than provident associations? Would they be cheaper? If so, why?
Try telling that to someone who can’t afford the premiums. In fact, try going to a poor area like the semi-legendary one (Muirhouse, Edinburgh) 5 miles from my house, say this at a public meeting and see how long you last. I’ll bring the body bag.
This is why libertarianism isn’t a major vote winner 😉
I agree something serious needs to be done about healthcare in the west, but opening it up as a profit opportunity for a bunch of suits isn’t going to go down frightfully well in the good old People’s Republic of Great Britain. Rightly or wrongly.
I incline to the view that the mark of a civilised society, or one mark, anyway, is that it accepts that there are times when economic efficiency needs to take a back seat to human decency. Sure, use market capitalism for making cars, widgets, whatever – but at least sometimes see people as something other than a source of dividend. BTW, that doesn’t mean I think the state is the best healthcare provider.
EG
Michael Jennings wrote:
This last sentence is one that bears repeating. I’m an avid shortwave radio listener, and one of the things that drives me nuts about listening to Radio Canada International (and the CBC programs it rebroadcasts) is that so many Canadians seem smugly self-righteous in that they think they’re morally superior to the US because they take away people’s right to take care of themselves.
Every time I talk to a Canadian on the Internet about health care, I point out that one of the most fundamental human rights is the right to take care of one’s own needs — and that this includes paying for opting out of a government health care system if one so desires. (And if the Canadian interlocutors protest, I like to follow up by asking why Canadians should have to go into political exile in the States to exercise this right.)
Ted,
This is all perfectly true. I don’t object to for-profit healthcare, although I am aware that many (esp. in places like Canada and the UK) do. I don’t think it’s necessarily the best solution & as said before prefer the idea of provident associations. But that’s just a personal preference.
Whatever system there is, it has to provide support for those who cannot afford private healthcare. This can of course be done in a number of ways. Theoretically, providential insurance should be cheaper due to the absence of shareholders – in the UK, generally speaking, providential financial services are better value than for-profit ones. For-profits can load premiums to subsidise the less well off, as can providentials. It is possible to mandate such subsidy. Alternatively, there can be state subsidy, which is admittedly not without its problems.
I think there’s room for both, but the problem with simply enabling an opt-out is that either you still need to pay the state at least something, or the state system will still try to cover everyone with a much reduced revenue base, or possibly both.
Having a solely private system is unlikely to be supported by the people, again esp. in places like the UK and Canada – however efficient it may be. People don’t tend to look at health care on the basis of business efficiency. I don’t approve of unqualified democracy, but even in a qualified system you still need to take account of the more fundamental wishes of the bulk of the people.
The perception problem that libertarianism suffers from, particularly with things like healthcare, is that it’s all very well for those who can afford to pay, but it is not seen as being particularly (or at all) concerned with those who cannot. “I’m all right, Jack” isn’t a viable basis for building a new and better society. This is the perception, not necessarily the fact. It isn’t helped by assertions such as that healthcare is a luxury.
Digression: Not that relevant, but my mother trained as a nurse in the mid 1950s, and subsequently had a nursing career in both state and private sectors in the UK. Many of the nurses training at the same time wanted to work in the American system, since the pay was markedly better and it was reputed to have higher standards. The vast majority of them came back very quickly, repelled by what they saw as the unfeeling cash-driven basis of for-profit healthcare and the refusal to treat anyone who couldn’t pay. Now that’s 50 years ago, and things have changed – but it’s still how British people tend to look at it.
EG