How much money should be spent on health care — collectively and individually? There is a finite value for everyone’s life, and some lives are more valuable than others. So there should be limits.

Some people are lucky. They avoid accidents and/or have good genes. Others are not as lucky. Then there are those who take unnecessary risks, whether it be by drinking, smoking, taking drugs, eating badly, or participating in high risk activities. Does it make sense for everyone to pay the same amount for health insurance and be eligible for the same levels of coverage? The obvious answers are no!

There are two market failures which justify government involvement. Health care is a credence service. That is, consumers simply do not have the information and knowledge to determine the quality of the advice they are offered and the quality of the treatment they receive. Is your doctor good, or even competent? Who knows? That is why entry into this field is regulated.

Then there is the “Black Swan” — the possibility of a catastrophic illness and costs which can bankrupt most individuals. Some people are just unlucky.

Universality is an income distribution issue, not specifically a health care problem. Governments could choose to directly subsidize all or part of the costs of health care insurance for low income individuals — the paternalistic approach — or they could increase existing welfare payments and let the recipients decide how to spend the money.

Portability can make an economy more efficient. But this requires that insurance is linked to an individual, not a job. Thus, individuals should have to purchase health care insurance just as they with other types of insurance.

So how should the health care system be structured? Everyone should be required by law to purchase insurance. Premiums, deductibles and coverage will vary. Those who take unnecessary risks will pay more, have higher deductibles, and might have fewer services  covered and have a smaller cap on total payouts over a period of time. Why should we subsidize these people? As we get older, our premiums will increase and the coverage might become more limited.

Those who are unlucky will pay more for their insurance as well. But the government (i.e. taxpayers) should subsidize their higher premiums. People should not be penalized further for bad genes. Government also could choose to subsidize the escalating premiums for seniors.

The standard policies should cover “basic” services and have a cap on total payouts. One of the five principles of Canada’s health care system is “comprehensiveness”. Over the years, as health care costs have grown dramatically, the provincial governments have tried to control the rising costs in part by delisting more and more services. Comprehensiveness has declined over time and will continue to rise until Canadian politicians tackle the underlying problems. What should be the basic services and the cap? And should they be the same for everyone? There are no definitive answers.

Individuals should have the choice of buying more than the basic insurance coverage. For Black Swan events which befall unlucky individuals and lead to payouts in excess of the caps, government should step in to cover the differences between the caps and the actual total costs. But, and this gets us back to the original question posed, as we age, should all of us be entitled to the same basic services as younger people? Does it make sense for an 85 year old man to have hip replacement surgery as part of the basic coverage?

It is time for governments to decide what basic services should be provided at different ages. If people want more coverage, they should pay for this themslves. It is quite easy to demonstrate that there are many better ways for government to spend $1 than on health care. Death panels may sound macabre and evil. But decisions regarding who gets treated are made every day, generally by doctors alone. This places additional pressures on them. They are doing the politicians’ dirty work.