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To fix health system we need to invite competition from private sector

Åke Blomqvist is health-policy scholar at the C. D. Howe Institute and an adjunct research professor at Carleton University.

Until a few years ago, the main concern in the Canadian debate over health policy was how to control costs. When provinces managed to restrain health-care spending growth to an average rate below that of the economy as a whole (since 2010), that concern subsided somewhat; we had "bent the cost curve" and things seemed to be under control. But as a devastating pair of reports in The Globe and Mail makes clear, the cost-cutting in health care is threatening to make a mockery of the claim that access to health care in Canada does not depend on ability to pay.

As wait times even for things like urgently needed orthopedic and eye surgery become impossibly long, there are more and more desperate patients who are paying out of their own pockets for privately supplied treatment. In most cases, the waiting lists under the public plans are not caused by a shortage of specialist doctors, but by insufficient access to operating room (OR) slots in provincially funded hospitals. Clamping down on private clinics will not shorten these waiting lists – it will make them longer. If the provinces want to get rid of the waiting lists, they must give the hospitals more money so they can pay for more OR nurses. Unless the system is operated more efficiently, aggregate costs cannot be reduced without compromising access or quality of care.

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In the current system of health financing, provinces are caught in a bind. Doctors and hospital employees in Canada have done well for themselves: They are in a good position when bargaining with the provincial governments whose plans are supposed to be the only legitimate providers of hospital and physician services, and who cannot afford strikes that would close down the system. The only way governments can effectively control total spending is by cutting back on the growth of hospital funding, which is what they have done since 2010. But these cuts have forced the hospitals to cut back on staff, which has ultimately caused the scarcity of OR slots and other services the public needs.

How can we avoid waiting lists without losing control over health-care costs? Provinces can try to control rates of pay more effectively by outlawing strikes of doctors or hospital workers, but they may then have to offer them binding arbitration instead (the current negotiating position of the Ontario Medical Association). Arbitrated settlements also tend to be costly, as arbitrators take the view that the government's ability to pay is essentially unlimited (since they can always raise taxes).

Alternatively, governments could relax the rules that currently make it illegal for doctors to supply their services privately, outside the provincial plans. This is not the same as allowing "double-dipping," the practice of charging extra for services that are supplied under the public plans. In other countries where privately financed care co-exists with universal public plans – the U.K. and Australia are examples – such extra billing is not allowed, and in Canada, a province that allows it is subject to federal penalties under the Canada Health Act.

But there is no double-dipping when privately supplied care is paid entirely out of patients' own pockets, or through their private insurance. So provinces could continue to outlaw double-dipping, but abolish the current rules that essentially outlaw any form of privately supplied care. Everyone would win from such a change: The patients who received faster private treatment; young doctors with no OR slots who now could practice their specialty; those on the public-sector waiting lists that would become shorter. Many Canadians remain opposed to any form of private care on principle, of course, but the arguments in favour of allowing at least some public-private competition seem compelling.

The Globe and Mail reports have been greeted with a familiar Canadian response: We don't need to change the system, we only need to muster the "political will" to fix it with better management. But in our single-payer (monopoly) systems, provider groups have a strong bargaining position not only in negotiating their own rates of pay and working conditions, but also when it comes to blocking innovation and reforms that they perceive as inimical to their interests.

The political will to manage health-care resources efficiently may never be forthcoming, unless we allow effective competition from private alternatives. Other countries have done so, without compromising the ideal of universal access. It is time for us to do the same.

Video: ‘No reason for panic’ on rapidly aging population: Philpott (The Canadian Press)
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