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At Least Follow Quebec's Lead

Release Date: November 3, 2005
Defenders of the status quo often claim the solution to Medicare’s woes lie in a tougher ban on privately funded care and stricter control of drug expenditures (to ensure sustainability). Evidence from La belle province however suggests exactly the opposite.

Quebec’s health spending per person is among the lowest in Canada and yet Quebecers experienced the shortest wait times. If other provinces are unwilling to emulate the world’s most successful universal access health care programs, they should at least follow Quebec’s course.

According to the latest measurement of wait times across Canada, published recently by The Fraser Institute, Quebecers experienced the shortest wait time among the provinces for treatment after seeing a specialist this year. And 2005 wasn’t unusual: Quebec has only crept over the national average in three of the last 11 years. Between 1994 and 2005, Quebec’s wait time was, on average, one-half week shorter than the national average.

What’s surprising about this performance is how little it costs relative to other provinces (keeping in mind, of course, that Canada’s universal access health care program is among the most expensive in the developed world). In 2002, the most recent year for which data are available, Quebec’s total health spending per capita was the lowest in Canada ($3,294 vs. $3,635 on average in Canada). Looking at only provincial government health expenditures per capita, and adjusting for the age and sex of the population, only Nova Scotia spent less on health care. Quebecers seem to be getting better value for their dollar than taxpayers in most other provinces.

Quebecers also enjoy lower rates of growth in their health expenditures than almost all other provinces, suggesting that the superior value Quebecers receive will continue, and possibly improve, relative to other provinces in coming years.

Quebec gets more and spends less than the other provinces by allowing more competition from the private sector and spending more on pharmaceuticals.

According to independent academic research, spending money on newer (and generally more expensive) drugs can actually reduce health care expenditures. Frank Lichtenberg, in the academic journal Health Affairs, examined the relationship between the age of pharmaceuticals taken by Americans and the number of non-drug medical events that these individuals experienced for the same condition. Lichtenberg determined that switching from a 15-year-old drug to a 5.5-year-old drug would increase the cost of a prescription by about $18, but would reduce the expected number of hospital stays, the length of those stays, and the number of health services used overall, saving $71.

Evidence from Canada also shows that higher drug expenditures can reduce waiting times, partly because of the effect described above and partly because pharmaceuticals can act as a substitute for some surgical interventions. That is, provinces that commit more of their spending to pharmaceuticals have shorter wait times.

In 2002, 18.7 percent of Quebec’s total health expenditures were spent on pharmaceuticals, the largest proportion among the provinces and higher than the national average of 16.1 percent. That gap between Quebec and the other provinces grows substantially when comparing only public expenditures on drugs (11.1 percent vs. a national average of 8.6 percent). Evidently, higher proportional spending on drugs in Quebec has provided a health care program that is more affordable for taxpayers and that provides better access to care for patients than the level of expenditure (relative to other provinces) would suggest.

Quebecers have also benefited from access to one of Canada’s largest parallel private health care sectors. A privately funded sector provides patients the opportunity to demand better quality by having the option to purchase services privately. Such an environment encourages efficiency and innovation in both the public and private sectors. If patients are not permitted to opt for superior accommodations, surroundings, or care from private providers, the public health care system would not need to consider supplying them. Put simply, a private parallel health care sector will lead to a better public health care program, and more importantly, will also give individuals the freedom to choose when and where their health care will be delivered, regardless of whether the government is willing to offer it.

Though all provinces, including Quebec, need to be looking to the world’s most successful health care programs (such as Switzerland’s) for guidance on much-needed fundamental reforms, there is a lesson here. Many of Canada’s health care pundits wrongly advocate for spending less on pharmaceuticals and limiting private health care options. Following Quebec’s example by proportionally devoting more health spending to pharmaceuticals and allowing a greater role for the private sector to fund health care would be at least a step in the right direction for all Canadian provinces.