Overcoming challenges in health-care reform

Canada’s public health-care system (Medicare) offers top-notch care for legislatively-defined essential services, without charge, to all residents. Treatment quality and aggregate health outcomes are good, and the population values in particular the notion of fairness. However, pressure for health-care cost control is constant. Allocations of scarce health-care resources take place through supply-side restrictions, often in the form of waiting lists for elective services, as prices do not play any role. As a result of the historical development of Canada’s health care system, some of the fastest rising costs, notably for pharmaceuticals and home care, are largely outside of Medicare. Despite equality of access to health care, there is some inequality of health outcomes, suggesting the need to pay greater attention to other (social) determinants of health. As in other OECD countries, constraints are set to tighten further, both in the medium term as post-crisis deficits are wound down, and more durably in the longer term, as an ageing population requires substantially more services, while growth in the tax base to fund them slows, and technology goes on expanding possibilities for life extension and life quality. The objective should be to complement top-down supply control by more accountability and use of price incentives at the micro level as the main means of promoting both efficiency and quality, and hence system sustainability.

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