The Fraser Institute

The Fraser Institute

October 07, 2009 06:30 ET

The Fraser Institute: Canadian Health Care Failing Patients and Taxpayers; New Book Explains What's Wrong, Who Gets Hurt, and Why Nothing Changes

TORONTO, ONTARIO--(Marketwire - Oct. 7, 2009) - Canadian health policy is increasingly failing patients, exploiting medical providers, and is ultimately financially unsustainable in its present form, concludes a new book published by the Fraser Institute, one of Canada's leading economic think tanks.

And things are likely to get worse unless Canada adopts policy alternatives that dramatically change the economic incentives in the health system, says Dr. Brett Skinner, Fraser Institute director of bio-pharma and health policy and author of Canadian Health Policy Failures: What's wrong? Who gets hurt? Why nothing changes.

"The Canadian health care system is a textbook case of government failure in medical insurance and medical services," Skinner said.

"Our elected leaders have no political incentive to make the necessary changes. Special interest groups oppose reform because they benefit economically from the status quo, and our policy-makers lack objective information about health care options in use elsewhere, especially outside North America."

The peer-reviewed book identifies six key areas where Canadian health policy is failing: unsustainable costs, shortages of health professionals, shortages of medical technology, long waits for treatment, inefficient drug spending, and a lack of access to new medicines.

The book also provides a small sample of published media stories and reports illustrating the ways in which real people are often harmed by Canadian health policy.

"Lengthy wait times for medically necessary treatment have become a standard part of the Canadian health care system as governments ration care in an attempt to control costs. The experience of other countries shows this doesn't have to be the case," Skinner said.

The book devotes two chapters to identifying and discussing the key health and prescription drug policies in Canada that are most problematic, as well as various potential alternative policies that could provide better outcomes. In both chapters, opposing opinions are discussed and critically analyzed and compared to research that supports the arguments presented in this book.

Skinner also examines the key political factors that act as barriers to the adoption of more economically rational health care policies in Canada.

One of his key findings is that Canadian policy-makers are affected by an imbalance of information when governments have surveyed expert opinion. The information that has comprised the basis for government-commissioned health policy reports has tended to heavily favour the status quo or advocate greater state intervention in health care.

"The ideological political values of many in the academic research community tend to be opposed to the economic liberalization of health policy, and this contributes to an information deficit for policy-makers," Skinner said.

Skinner also looks at the powerful special-interest groups that actually benefit economically from the state's involvement in health care and therefore face strong incentives to favour interventionist public policies and oppose liberalization.

Other barriers to change include the electoral dynamics produced by the distribution of the tax burden and of illness. The majority of the tax burden is paid for by a minority of the population. This means most people are disproportionately insulated from the price of public health insurance programs. Therefore, the majority of voters have significantly reduced financial incentives to make cost-benefit calculations about the performance of the health system. It also means that policy-makers face fewer political risks from raising taxes to fund health care than from introducing price mechanisms that are paid by everyone.

"The system is fundamentally unjust. The public is largely unaware of problems simply because most people don't use the health care system very much," Skinner said.

"People who are seriously ill-those most directly harmed by wait times and a lack of access to medical care-make up a small percentage of the population. Politically speaking, ill people don't represent a lot of votes. How can they have a decisive influence on policy-makers about declining access and coverage under Medicare? Politicians can afford to ignore them."

But the book concludes on an optimistic note, with a discussion about the political feasibility of achieving economically liberal health policy reform in Canada.

"The health reform debate in the United States has engaged both Americans and Canadians. Unfortunately, the discussion is dominated by many myths about government involvement in health care markets and the comparative structure and performance of the U.S. and Canadian health care systems. This book directly challenges these myths and provides objective, evidence-based answers to some of the most important questions about health care policy," Skinner said.

"Canadians should be outraged by the serious problems plaguing our health care system and the government policies that are to blame. Even worse, obvious solutions are ignored for purely political reasons. Informed voters can make a difference. Discovering what's wrong, who gets hurt, and why nothing changes is the first step toward the liberalization of health policy in Canada."

Canadian Health Policy Failures: What's wrong? Who gets hurt? Why nothing changes can be downloaded as a free PDF or purchased in print at www.fraserinstitute.org.

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The Fraser Institute is an independent research and educational organization with locations across North America and partnerships in more than 70 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

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