The ‘de-Ki John R. Graham Fraser Institute Columnist ALBERTA’S Bill 11, which will allow private clinics to provide some publicly financed med- ical services, has gener- ated much comment. Robert G. Evans and four colleagues, all well-known health policy analysts, have weighed in with “Private Highway, One-Way Street: The Deklein and Fall of Canadian Medicare?” — a dis cussion paper riddled with economic fallacies. The authors are unequive- cal in their belief chat the nein goals of profitability ond patient care are incompatible. ‘They nete that 80% of patients video of the operation} ata price of $400 to $700. However, the lenses cost about $25 to manufacture. Hence, Evans et ai question the value to the consumer of the foldable lens implant. They do this despite the fact that the ophthalmologist who reported the manufactur- ing cost of $25 states that procedure.” By substituting their own values for the pacient’s, Evans and fis colleagues fundamen- tally question consumer sover- eignty. Hew can anyone but the patient decide the value of the convenience of the fold- able implant? Why should we allow a group of health econo- mists to decide how much that procedure (or a video of the operation) is worth, rather than the patients themselves? Similar to their disdain for consumers choosing what ser- vices to purchase is their skep- ticism regarding the provision of those services by for-profit firms. However, their concept of profit is based upon book- keeping, not economics. For them, if there is no profit shown in the financial statements, then no profit However, in the absence of explicit profit, employees of non-profit insticugons have ways of capturing surplus. Professor Kenneth Clarkson of the University of Miami has documented that managers of government hospitals take non-monetary rewards in the form of more relaxed person- nel policies, including less supervision, and salary increas- es not connected to perfor- mance. Another example of che dif: ference between government and private hospitals is that privately owned clinics are icy ana! unlikely to pay exorbitant Wages to non-medical public sector union members, Evans notes that this will result in lower wages, but because it merely transters income to shareholders or tax- pavers, it results in no increase in welfare. This seriously flawed argu- ment ignores allocative effi- ciency. Paying excessive public union wages will cause too few workers to be hired. More generally, in the cur- rent Canadian system, where there is virtually no scope for good decisions to be rewarded by profit, chere is ao motivs- tion to use the nahtomix of capital and Jabour. This is reflected in Canadian hospitals’ appalkingly low stock of valu- able assets such as CT scanners and MRI machines. However, the authors are not interested in attracting private capital: “since governments can raise capital more cheaply chan pii- vate firms, the cost of capital will be greater when it is paid for by a private company.” This has nothing to do with health care; it is true tor See Surgical page 10 ou, Lube & Filter All services: exists, Therefore, “whatever I fay warranty 21 pt Safely check, 1© minutes - FAST! j motivations lie behind hospital i behaviour, profit is not one of them.” “foldable intraocular lens materials have transformed contemporary cataract surgery into a truly minimally invasive of for-profit providers of catarac; surgery in Calgary buy foldabie lens implants (along with other services such as a includes up to 5 bres of 10w30 Quakerstate 1362 Marine Drive 980-9115 [Mon-Sat E00am-6 00pm, Sun 900am-5:00pm Expires May 3/2000 § Let the sunshine in... or not. You have a choice with window cover- ing designs to suit every window. S.LAURSEN & SON draperies & blinds Itd. 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