The last Quote of the Day discussed Princeton Economics Professor Uwe Reinhardt’s New York Times blog entry on rationing in Canada and the United States. I (Don McCanne) wrote a response to his article, and he responded to my comments. That response follows.
The New York Times
Economix
Uwe E. Reinhardt
Daily Economist
April 29th, 2011
Len Charlapās Comment No. 27 requests that I respond to Comment No. 9 by Don McCanne, even though Dr. McCanne did not explicitly called for a response.
I agree with Dr. McCanne that the role of queues can easily be misunderstood.
Given a naturally or artificially limited supply of a thing, queues arise when money prices are not allowed to rise to levels that shrink the demand for the thing to match the available supply. Other prices ā e.g., the price of time (e.g., waiting in a doctorās office) or discomfort prices (the disutility of having to put up with a physical impairment while waiting) then do the equilibrating.
In the case of naturally limited supplies ā e.g., supplies of transplantable organs ā neither of these prices equilibrates demand and supply and some administrative mechanism of rationing occurs. My former Princeton student, later leader of the U.S. Senate and then my co-teacher of a course on health policy at Princeton, told us how that works. It is less than perfect.
In the case of artificially limited supplies, one way to reduce the time-andādiscomfort prices is simply to expand the supply of the artificially limited supply.
It is true that in the past I have criticized Canadian policy makers for not doing so. They responded that they are actually quite concerned over the issue and, in fact, have sought to understand the nature of their queues better through one (or perhaps even two) Royal Commissions on queues in health care.
Since that time, they have worked on what they call āevidence-based queuing,ā that is, a form of queuing that uses queuing theory and seeks to minimize the physical harm of queuing, giving serious cases faster access than is available to less serious cases.
My Canadian colleagues tell me what Canadians do not want to do is to have their supply side driven by entrepreneurial forces that can easily flood the market with excess capacity and drive up costs. They cite the huge American literature on the excess use of imaging in the US as example.
Similarly, my Canadian colleagues tell me that what Canadians do not want to do is spend 17% (soon going on 20%) of the GDP on health care, especially when there is no evidence that it begets better overall health statistics (and often worse statistics), greater patient satisfaction, and moreover leaves millions of citizens without health insurance and spotty access to care, not even to speak of financial distress.
It is not hard to sympathize with them on that view.