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Canadian health care: A failure of central planning, not funding

The health care establishment's lamenting of the expiry this week of the health accord, negotiated 10 years ago between Ottawa and the provinces, contained lots of hand-wringing about alleged "underfunding" and lack of "federal leadership." Neither of these things is at the root of health care's malaise.

Canada's system underperforms when compared with most other universal access systems in peer Western industrial democracies: Queuing, access to the latest technologies, physicians, paraprofessionals and specialists, and coverage of health services beyond hospital and physician care are all examples. Yet our system is one of the most expensive.

Despite this compelling evidence of deep systemic dysfunction, those who benefit from the status quo are sticking with the philosophy of Ottawa's Romanow Royal Commission that prefigured the health accord: That there is basically nothing wrong with medicare that more money won't fix. Ottawa must, through this and a vague and unspecified "leadership" role, rescue the system from its torpor and decline, their argument goes.

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This is roughly equivalent to Dorothy believing she could close her eyes and wish really hard to be home in Kansas, and the magical ruby slippers of good intentions, federal leadership and more money would take her there.

But magic cannot make disappear the fact that, 10 years after the federal health accord and record high levels of federal health transfers that were to buy us change, the system is essentially unreformed – 10 years older and more expensive than ever.

The fall of the Berlin Wall is the great unlearned lesson of our health care system. The wall fell for a reason, and until we learn that reason and apply it to health care, we are doomed to repeat these cycles of pretty sentiments and squandered money.

The lesson in question is the impossibility of central planning. Eastern Europe and others that tried it learned there are systemic reasons why it fails. It fails because of its inherent contradictions and flaws, no matter how beautiful the theory or how good the planners' intentions.

Centrally planned economies couldn't feed, clothe or house themselves. Why? Because it made impossible demands on central planners.

It demanded that they know how many shoes people would want, in what styles and sizes and where they would need them. It demanded that planners know whether people would prefer more shoes or fewer if they had to make a choice between them and, say, coats or cars or food or houses or computers. Central planning fails because it can only operate on the basis of what distant planners knew, which is always much less than what people knew about their own circumstances and needs.

By contrast, Western society is based on the ideas of decentralized information and control, of the rule of law, individual decision making and competition. Our society operates on more information than any individual or committee or ministry can gather, analyze and act on. Our system works because no planning ministry is in charge.

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But while we might have escaped the delusion of central planning for the most part in the West, medicare remains a lonely outpost of its logic. Provincial ministries of health govern, administer and evaluate the services their system provides. They define "medically necessary services" and then pay for all such services. They forbid private insurance for those services. They negotiate pay with powerful provider groups. They often set the budgets for nominally private health care institutions, appoint most of their board members, and may override management decisions, a power that they employ freely, especially when political controversy looms.

In a Manitoba provincial election a few years ago, the quality of toast in hospitals was a major issue. The parties thought that they could and should be able to affect this matter, and the electorate did not laugh them out of court. That's the central-planning mentality.

Central planning encourages delusions of grandeur in which officials come to believe that there is a right solution to every problem (how should doctors be paid and their practice organized, how paraprofessionals should be integrated into medical practice, etc.), and it's up to them to find and impose these solutions. But there is no one right answer to most such questions, because everything depends on circumstances known only to people on the ground. The system cannot be run successfully from the centre, no matter how many billions you lavish on it.

Brian Lee Crowley ( is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa:

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About the Author
Head of Macdonald-Laurier Institute

Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa. More


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