27 March 2008 - 17:16What future for health-care in Quebec?

If you are living in Quebec you are probably aware about the debate surrounding the privatization of health-care, a debate that has been going on for quite a while. The debate about health-care in general has been going on for more than a decade, I wish I had a dollar for each political platform targeting this issue which pops up around election time.

There are generally 2 sides to the privatization of health-care debate: the side pushing for the privatization of health care services, typically pro-business, and the side wanting the government to run health care services, typically leaning towards a social democracy-type model.
The pro-business camp’s opinion is that privatizing health care services would make them more efficient and would also transfer the burden to the ones willing and able to pay for them.
The pro-social-democracy camp argues that this would cause an exodus of health-care professionals from the public services, which are barely coping with the current demand and which pay less, to the private services which would pay more and where health-care professionals would work under a smaller work load due to the filtering of “customers” by price. They argue that this would result in further degradation of the public health-care services, due to an even smaller number of professionals working for it, which in turn would raise the incentives for leaving it. The public health-care services would enter a down-ward spiral whose end-result would be that the people using the public services, the neediest in this case, would have no access to health-care services anymore. I subscribe to the first part (the public services would degrade over time), but not the second (the down-ward spiral) because there are ways to stop this exodus.
For the health-care as a public service camp the smallest chink in the public access armor would essentially rip it open to the onslaught of private health-care.

The fact is that what both camps are focusing on is the way health-care services are distributed to people and not on the imbalances between the supply and demand of such services. Anyone with a pair of eyes would see that the demand of these services greatly exceeds the supply: long waiting times in emergency rooms, people parked in the hospital corridors for days, etc… And here things start to get interesting…
Let’s suppose that you decide to privatize health-care completely and let the market decide who is paying for health-care that it consumes. A good or a service that has the supply and demand imbalances that health-care has would see its price get big pretty fast. Big prices mean also big profits, and there is no surprise here that the pro-business lobby is pushing towards privatization because they stand to gain quite a lot from it.
Now let’s suppose that you decide to keep the status-quo and allow health-care to be delivered only thru government agencies. The result would be that everyone would get the same pathetic service or no service at all, and this is exactly what we are getting right now: everybody gets to wait 5 hours in an emergency room regardless of how wealthy he or she is.

Both the pro-business group and the social-democrats are arguing over the means to distribute this very small supply of health-care services to a population that has a high demand for it. Leaving health-care to the market would ensure that only the wealthy would be have full access to it, leaving it the way it is would ensure that we are all getting the same service. It is essentially an argument over the way to distribute this scarce resource and over the winners and losers that come out of each particular distribution mechanism. Each camp is trying to prove that its distribution mechanism will also allow for the supply to grow faster, but I am pretty skeptical about it (*). So I would argue that we should look at the root of the problem and try to stimulate the supply of health care professionals and to enlarge the med schools quotas to reflect the current demand for such services.

Except that we have a bit of a problem (**) if we simply try to : we are leaving next to the US which is more than happy to let the whole health-care field to market forces. As explained above the result is that in US (which experiences pretty much the same imbalances between supply and demand) the price for health-care is very, very high along with profits and salaries among other things. If we increase the supply in Quebec we run the risk of seeing health-care professionals leave for the US in search of better salaries and reduced work-loads (***), an exodus similar to the possible exodus from public health-care agencies to private health-care companies.

So we have a problem. This pretty much is known. What solutions to this problem? Frankly, I don’t know. I think that we need to increase the number of health-care professionals running the risk of seeing some of them leave for US. In US things could be changing if the democrats get the White House (some health-care would be administered thru government agencies driving down prices and salaries) and this could dampen the incentives for leaving to US.
Hopefully we will manage to get out of the grid-lock that we find ourselves in…

* The pro-market argument for growing the supply to align itself with the demand is the following: a good which experiences high demand but a low supply sees its prices rise along with the profits. Entrepreneurs will realize that it is profitable to join this market because of the high profits and will start selling more of this very profitable good. This would in turn will raise the supply to match the demand for it and inevitably bring down the prices.
I don’t buy this argument because in health-care the supply is pretty inelastic to demand since it takes a very long time to “produce” a doctor, about 15-20 years. In order to have the supply align itself with the demand you would have to carry out extensive demographic studies from which to determine the future demand for health-care services and tweak the med schools admission rates for the future demand. The fact that supply is inelastic to demand in health-care make say that the only thing that a market-based health-care system will achieve in Quebec is to redistribute resources and not to redistribute resources plus create new ones.
There are probably some services within the health-care industry in which the supply is more elastic to demand and it would be a good idea to leave them to the market.

** It is a problem or an opportunity depending on how you look at it: high prices in US could drive the government of Quebec to sell some health-care services to US and use the money which these services would generate for funding other health-care services.

*** The fact that we have the US in vicinity renders a lot of the comparisons between Quebec and France moot: a French doctor doesn’t have the option of packing up his or her belongings in a minivan and drive 300 kms to his or her new workplace in US. This puts a downward pressure on health professionals salaries in France thus reducing the health-care costs.

P.S. I am seriously thinking about starting to write this journal in French, but I don’t have much experience in writing in French and I think the first posts would be absolutely ludicrous (I will be probably missing all the accents ;-)). I’ll see what I’ll do.

P.S.S. I like economics and I wrote this post mainly for applying my knowledge of economics to what I know about health-care in Quebec. I have not researched deeply how health-care is being regulated and implemented in Quebec, I just wanted to try out some concepts. Hope I got them right…