The Marda Loop Medical Clinic in Calgary earlier this summer sent an e-mail to patients, telling them that if they wanted to see their doctor, they’d have to pay. The clinic’s family physician and owner, Dr. Sally Talbot-Jones, wrote that she’d be seeing patients at no extra charge one day a week, but the other four days would be reserved for patients with a “membership.” Becoming a member would cost $2,200 a year for a single adult, and $4,800 for a family with kids.
It’s as if the doctor thinks she’s Taylor Swift. And thanks to decades of bad decisions by Canadian governments, she kind of is.
Under the Canada Health Act, extra billing for most medical services – pull out your credit card if you want to see the doctor – is illegal.
But under another law – the law of supply and demand – the Calgary clinic’s move is understandable. As a supporter of universal health insurance, I’m entirely opposed. But I don’t find it surprising.
In modern free-market economics, there is no “real” or fair price for anything. The price is whatever buyers will pay, and sellers will accept. And for most things, that’s the best system for allocating scarce resources.
Taylor Swift is currently in the middle of what could be the first concert tour to earn more than US$1-billion. Why are tickets to her shows so expensive, and even more pricey in the resale market? Because people want more tickets than are available.
Why is a doctor trying to extra-bill for basic medical services? Same reason. Legally she can’t. But economically, she has a powerful incentive to give it a try.
An estimated one in five Canadians do not have a family doctor. There’s a big gap between supply and demand. Millions of people would pay anything to get a family doctor, or to not lose theirs. In a free market, that scarce resource would be rationed through prices. Pay, or else.
When tickets went on sale last fall for Taylor Swift’s tour, prices were high but demand was higher, with bids in the resale market rising far above face value. As of Monday afternoon, the cheapest pair of tickets to Ms. Swift’s next date, in Los Angeles on Thursday night, were going for more than $2,000 on StubHub. And that was for tickets behind the stage, and up in the nosebleed section. A pair of seats near the front on the floor were asking nearly $7,000.
A family doctor in Canada is as rare as Taylor Swift tickets.
Family doctors are in such short supply because, a generation ago, provincial governments decided that one way of keeping costs down was to make sure there weren’t “too many” doctors. They thought restricting supply would lower costs, so they cut admissions to medical schools.
From the mid-1950s to the early 1980s, the number of doctors graduated from Canadian medical schools doubled. But then enrolment flatlined, and dropped. Canada graduated 1,749 doctors in 1992 – a number not matched again until 2004.
At the same time, the number of graduates choosing family medicine also began falling. In 1993, Canada had 101.6 family docs per 100,000 people, according to the Canadian Institute for Health Information (CIHI). The ratio declined through the 1990s, and wasn’t reached again until 2009.
Medical school enrolment has risen since, but with a growing population and limits on foreign-trained doctors, including Canadians who attended medical schools in Europe, the United States, Australia and the Caribbean, catch-up has been slow. Canada has among the developed world’s lowest number of doctors per capita.
Canadian doctors are not poorly paid, and family physicians in Alberta are in fact the country’s highest paid. CIHI estimates that the average full-time family doc in Alberta in 2018-19 had a gross income of more than $392,000. And that was nearly half a decade ago.
But Canada has an acute shortage of providers of primary medical care. Absent the ban on extra billing, and the fact that provincial health plans enjoy a kind of market power as the only legal purchaser of most medical services, a visit to many doctors today almost certainly would involve pulling out your credit card.
Why? Because demand exceeds supply. And markets resolve shortages by rationing through higher prices. Can’t pay the high price that balances supply and demand? Then you’re not going to the Taylor Swift concert.
Our health care system rations scarce goods in other ways. If you found a family doctor years ago, you’re inside the tent. But if you’re young, or a recent immigrant, or you moved, or your doctor retired, you’re relegated to a walk-in clinic.
If she wanted, Ms. Swift could fix her supply-demand imbalance, and lower prices, by adding more concert dates.
And if Canadian governments wanted, they could address the supply-demand imbalance for family doctors’ care by doing the blindingly obvious: hiring thousands more family doctors.
There’s a world of them out there, including Canadian-trained physicians blocked from coming home. If we want to fix our doctor shortage, we can – and quickly. More on that, later this week.