Wednesday, January 30, 2002
Chronicle Herald

NOTE: The following article appeared in slightly different versions in the following papers: the Moncton Times Transcript, the Vancouver Sun, the Calgary Herald, the Ottawa Citizen during the week of January 28, 2002 – February 1, 2002

Healthcare: Competition and the single payer

By Brian Lee Crowley

Across the country, reinventing public health care is at the head of the agenda of almost every province. And that’s not surprising. Every single premier sees the health care cost juggernaut bearing down on him. Provinces now pay over 85 percent of the cost of increasingly costly public health care. In Ontario, health now absorbs almost one half of all program spending (that’s all government spending less interest paid on the debt), and in capitals from Victoria to St. John’s the trend is the same.

That leaves less and less money for other provincial priorities, like schools and universities, roads and police, sanitation and tax reductions, many of which, ironically, contribute to population health. Provinces should be at the forefront of finding powerful strategies to prevent health care costs from eating every tax dollar in sight. Instead they’ve been making the problem worse by continued centralization of health care facilities, such as giant and unresponsive hospital and regional health care districts that run health care facilities over vast areas and for millions of people.

But things are changing, albeit far too slowly. Province after province is getting the message that the old inefficient public sector health care monopoly is unsustainable. New Brunswick’s Premier Bernard Lord, for example, has just announced that his province, following the lead of Alberta and Ontario, will seek partnerships with the private sector for hospital construction.

That’s a timid step, but clearly in line with the direction that health reform must take. For too long the provinces have been immobilized on the health care file by the touching belief that Ottawa would rain loonies on them if only they held their breath and stamped their foot long enough. A few provinces are still transfixed by this fantasy, while most of the other premiers, meeting on health care in Vancouver last week, have clearly got Ottawa’s message: no new money.

A few provinces are fighting a rearguard action, but the outlines of health reform are increasingly clear. Governments are going to adopt an attitude of ever-greater neutrality between public and private suppliers of health care within our single payer system. Provincial governments will act as purchasers of health care on behalf of their citizens, and will buy wherever they can get the best quality and best access at the lowest price. Neither public nor private providers will get preferential treatment.

The old public sector monopoly model conferred huge power on ever-bigger hospitals, professions and trade unions who, together, exercised a stranglehold on the production of medical services. Not having alternative suppliers of services to turn to, provincial governments had little leverage over these giant organizations. Poor service, lengthening queues, high prices, inadequate technology; what was the alternative?

This was one of the reasons why Ottawa gave up in disgust at the idea of pouring new funding into health care. They were too used to seeing the money disappear into the health system through increased administration, salaries and wages, with no increase in either the quality or the quantity of medical services.

Policy makers are increasingly realizing that without a vital element of competition between health care providers, they will not be able to break this monopolistic stranglehold and ensure that they get full value for every health care dollar. Choice and accountability are a powerful discipline.

Of course the friends of the old system claim that there is no evidence that privately provided health care services are any more accessible or cheaper or of higher quality than publicly-provided ones. But to make this case they rely on research by non-economists published in medical journals. You wouldn’t want to be operated on by somebody who had learned their medicine in the Canadian Journal of Economics, and you shouldn’t get your economic analysis from the New England Journal of Medicine. In fact the economics literature, as well as practical experience in places like Sweden, shows that there are lots of areas where private sector providers can add value and help keep costs down.

The real point, however, is that if governments were truly neutral between public and private providers, they wouldn’t buy from any provider who couldn’t meet tough accessibility, quality, price and accountability standards. Governments would no longer be in a conflict of interest where they are measuring and reporting on their own performance in running health care. And if private providers couldn’t meet the performance standards, they’d go out of business. Strict reporting requirements would give government and the public an independent yardstick by which to measure the performance of health care institutions. And a little bonus: those institutions would have to provide better service, or else see their clientele leak away to better quality competitors, and their valued employees decamp to better employers. That’s why monopolists always hate competition, and why governments should embrace it, including in health care.

Brian Lee Crowley is president of the Atlantic Institute for Market Studies, a public policy think tank in Halifax and is a member of the Mazankowski Commission on health care in Alberta. E-mail: