Canada’s
health care system is one of the costliest and
most poorly performing of all the
universal public health care systems in the Western democracies. Now, according
to Alika
Lafontaine, head of the Canadian Medical
Association (CMA) it is on the verge of collapse.
Indications of collapse abound. Millions of Canadians
cannot find a family doctor, wait lists for specialists are at record lengths,
access to diagnostic equipment is severely limited and the emergency
departments of hospitals are sometimes closed.
What
can be done to improve the system’s performance and prevent an even bigger
collapse? The CMA says: “It’s time to stop pouring
money into a broken health system and invest in a new one.” In answering a
question in Parliament about health care, even Justin Trudeau said, “We can’t
just throw money at it.”
The
most recent federal proposal for
improving the system is “creation of a
countrywide health database, which would track health outcomes based on a set
of common indicators.” For
its part, British Columbia’s government has announced
reforms to
relieve the shortage of family doctors and end chaos in health care by
paying doctors “on the basis of time spent with
patients, the number of patients seen in a day, the number of patients attached
to their practice, the complexity of the patient’s issues, and their office
overhead costs.”
These responses and others like them are totally inadequate. Whatever
operational improvements they may provide will be accompanied by significant administrative
costs both for governments and for doctors, who will have to take more and more
time to fill out more and more forms.
Since
the creation of Medicare in 1966 many changes like those recently proposed
have taken place. They obviously have not prevented the present chaos. The
fundamental reason is that the system is planned and operated by the government.
As Milton Friedman put
it: “If you put the federal government in
charge of the Sahara Desert, in five years there’d be a shortage of sand.”
What
would happen if instead Canada’s health care system relied on free markets
rather than government planning? There would be no more doctor shortages,
waitlists or limited access to diagnostic facilities and hospitals. Doctors,
hospitals, nurses and others would provide the best services they could, using
the best technology, to attract patients to their practices. As they always do
in a market system, prices would adjust to make that happen. Competition would
limit providers’ profits, just as it limits the profits of bakers who serve
customers without shortages and with better quality and greater variety of
baked goods every passing year.
Many
Canadians would oppose the adoption of such a free-market system over concerns
that their and their families’ future medical problems could impose large costs
on them. In a free market, insurance companies would provide the opportunity to
allay these concerns through the purchase of insurance.
The
total amount of money raised through insurance premiums would
have to cover the cost of the services provided by the industry. But because of
market competition this amount would be lower than the current tax-financed
system requires. Canadians would get health care by paying providers and
insurers of their choice rather than paying taxes to the government.
Poor
Canadians might not be able to afford such premiums. The government could help
them using general welfare programs. A more targeted approach would be to
create a publicly owned non-profit insurance company authorized to provide
health insurance for the poor. The funds needed for this would come from taxes,
which fall heavily on higher-income Canadians so that the current income
equalization efforts would continue. A publicly owned company along
these lines exists in Germany. It competes with private companies and charges
premiums, which private companies obviously cannot exceed if they want to stay
in business.
Private
insurance companies would compete with the public company by providing better
services, especially by offering premiums at different rates depending on the
chosen level of co-payments, that is the amount the insured person pays for
each doctor visit or treatment. Such co-payments reduce the demand for health
care for the benefit of all users, just as co-payments on car insurance do.
The Canadian
health care system is collapsing and cannot be saved by more money or merely marginal
changes in operation
and data collection. Fundamental reform is needed and the return to free markets is the best
alternative.
Herbert
Grubel, professor emeritus of economics at Simon Fraser University, is a senior
fellow at the Fraser Institute.
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