Quebec and the brave new world of fee-based Health Care

 Quebec has chose to implement a series of user fees in its health care system, contrary to the Canada Health Act which forbids such practice. During the last serious recession, Alberta was penalized by the federal government for allowing user fees. We should be under no illusions that the same treatment will be meted out upon Quebec. In fact, the move by Quebec is coming soon to a province where you live.

That said, what matters most when establishing a user fee for medical services is not the amount of money it will raise for cash-strapped provinces like Quebec but how such a fee will affect consumer decisions. In other words, a user fee is a price signal and price is king when it comes to managing consumer behaviour.

The common misdiagnosis in Canada is that we have a supply problem in our health care systems. In fact, we have a consumer behaviour problem. Any highly regarded service - and no one argues that health care isn't highly regarded by Canadians - that is priced well below its market value will result in a serious demand problem. Demand will out strip supply every time whether it's medical services or the world's greatest brownie.

The answer, however, is not more supply. Adding more supply - in this case doctors, nurses, technicians, hospitals, surgeries, MRIs and other scanners - only makes the demand problem worse since it increases the value of the service and therefore demand for that service. (Obviously, population health and demographics also play an important role).In fact, since the health accords signed between the provinces and the federal government after the Romanov Commission, the supply of medical services has increased but wait times have stubbornly remained near constant. Why? The more we offer something valuable for free the more people will want of it. To put it concisely, free is good and people like free.

The answer is to place a premium, in this case a user fee, on the service. A price signal will force consumers to evaluate their consumption of medical services and make decisions accordingly.  Do I really want to spend $25 to see the doctor for 5 minutes (which equates to $300/hour? Am I really $25 sick or do I just want a day off? Do I have an extra $25? Perhaps I should wait and use the $25 for when my kids are sick?

The price solution to a demand-side problem however is never as clean and precise as the economic theorists describe.

In fact, it's messy and particularly so when it comes to pricing medical care.

For example, applying a price signal to reduce the high demand for medical services can have the paradoxical affect of lowering overall demand while still increasing costs of provincially funded health care. Patients who delay seeking medical help because they wish to avoid paying a high user fee or because they are unable to pay it may require more invasive and higher cost solutions if their condition worsens while they wait. Early intervention saves lives and money in the long run.

It should also be noted that the effect of adding a user fee will be largely lost if it becomes part of employer health benefit and/or employer group insurance programs. This is no doubt one reason why the Quebec government has implemented the fee as a annual levy or tax rather than a straight up user fee.

The better question is how do we change consumer expectations in regards to health care? The answers are no less messy than introducing a price signal/user fee.

When you go to the doctor, there is an expectation he or she will provide a solution and it frequently comes in the form of a prescription, therapy, referral or additional diagnostic testing.

Having to spend 30 minutes or more waiting to see an over-burdened doctor for five minutes and being told to go home, rest and drink plenty of fluids is not what most Canadians want from their doctors. Having to pay $25 for the same thing will only make it worse.

And there's not a doctor or a patient in Canada that doesn't want the latest pill, surgery technique, or technology. Doctors cure us, the government pays for it. Free is good. More for free is better. That's our health-care mantra.

Adding a price signal will affect consumer behaviour toward health care but will leave consumer expectations unchanged. Do doctors - and by extension governments - have to cure every affliction? Which is really just another way of asking if governments have to pay for every cure? Where's the line between social and individual responsibility and is it possible to redraw the boundaries?