The Greatest Canadian Supported User Fees

Commentary, Healthcare & Welfare, Frontier Centre

The choice of Tommy Douglas, the winner in the people’s network recent contest to name the “Greatest Canadian,” should come as no surprise. The intellectual father of Medicare exerted an influence on social policy far beyond his modest electoral success. How did his powerful ideas work out in practice?

Socialized medicine heads the list. Spawned by economic depression and Christian conscience, the Prairie populism Douglas embodied brought the British model first to Saskatchewan and eventually to the whole country. Although it is floundering badly – Canada ranked only thirtieth in a recent United Nations ranking of the effectiveness of its medical system – its failures cannot be laid at Douglas’ door. We have strayed far from his ideal model.

Most important, and the least understood by the various politicians and hangers-on who have sold Medicare down the river, is the issue of user fees. To wit, listen to the words of Tommy Douglas in an address to a special session of the Saskatchewan legislature on October 13, 1961:

“I want to say that I think there is a value in having every family and every individual make some individual contribution. I think it has psychological value. I think it keeps the public aware of the cost and gives the people a sense of personal responsibility. I would say to the members of this House that even if we could finance the plan without a per capita tax, I personally would strongly advise against it. I would like to see the per capita tax so low that it is merely a nominal tax, but I think there is a psychological value in people paying something for their cards. It is something which they have bought; it entitles them to certain services. We should have the constant realization that if those services are abused and costs get out of hand, then of course the cost of the medical care is bound to go up.”

Although he was certainly no economist, Douglas here expressed an intuitive grasp of the importance of prices. Had he been one, his analysis would have included more than a warning about the effect of zero price on consumer behaviour. Providers, hopelessly compromised by the healthcare industry’s almost total isolation from normal calculation of costs and benefits, lack the information necessary to allocate resources efficiently. Instead, decisions about such matters are totally political.

Medicare’s slide – lengthening waiting lists, deadly treatment delays, the capture of spending by provider groups and bureaucratic Health Authority empires at the expense of direct patient care – is consequently tainting a noble legacy. Asked if Douglas would have been surprised by how his dream turned out, Former Manitoba NDP Health Minister Larry Desjardins said, “I think he would have been disappointed. I knew Tommy quite well. He never felt we were going to do everything for people’s health. He looked at what’s critical, whether we can save people in catastrophic situations. Then everybody started adding more.”

Janice MacKinnon, Roy Romanow’s Finance Minister in Saskatchewan, went even further: “He didn’t think it was a good idea for healthcare to be free; he thought it was a good idea for people to pay for part of it. . . . [I]t should make sure that nobody is denied treatment because of their income. . . . I think we have to be much more commonsensical in dealing with healthcare and, as I say, opening it up to private sector competition, try experiments from other parts of the world. . .” Here MacKinnon heads towards the heart of the error in Medicare. Instead of functioning as the financial guarantor of health coverage, the Canada Health Act dictates that the state assume control of its provision.

We should move quickly to emulate the innovations that are fixing similar state insurance programs in Europe, including Britain’s National Health Service which Douglas originally imitated. To light a fire under moribund public providers, Britain’s NHS is busy bidding out whole pieces of its provider network to private companies, and is discharging its responsibility by guaranteeing its clients service within a specified time, no matter where they obtain it.

British “new left” thinker Anthony Giddens, writing in the September New Statesman says: “Healthcare in Sweden, also previously centralised and bureaucratic, has undergone similar reforms. Local councils now have control, and can experiment with different forms of service provision, contracting out some types of service to non-state agencies. Most have introduced a purchaser-provider split.” And then returning to Douglas’s support of user fees: “…User charges have been extended: since 1990, the proportion of healthcare spending that comes from private sources has increased from less than 10 per cent to more than 20 per cent, mostly through higher patient charges.”

In Canada, our politicians are scared to death of real structural reforms to Medicare. They prefer to throw money at an unfixable problem caused by a lethal mix of zero price, naïve policy thinking and unrealistic public expectations.

The man who triumphed in the CBC’s interactive ballot deserves better. Tommy Douglas wanted a Medicare system that works. We can honour his memory by making people pay at least something for the service, healthcare premiums and user fees, for a start.