Centralized health care has failed patients for too long

Montreal, July 13, 2017 – The centralizing approach of Quebec Health Minister Gaétan Barrette, of which his Bill 130 and the MUHC board of directors crisis are representative, is at the very heart of the recurring problems affecting Quebec’s health care system for the past three decades.

Indeed, trying to plan the development of the health care system and centralize decision-making, as Quebec has been doing, is a project that’s doomed to fail and that will not solve the problem of wait times, shows a Viewpoint published today by the MEI.

“Minister Gaétan Barrette, despite his good intentions, cannot know the number of doctors that will be required a decade in advance, the innumerable characteristics of the population, or which illness needs to be treated most often,” points out Germain Belzile, Senior Associate Researcher and author of the publication.

In a field as vast as health care, serving eight million Quebecers, one would need an enormous amount of information in order to plan the provision of care. Yet it is impossible for bureaucrats at the head of a vast and complex organization to control everything efficiently, as demonstrated by Friedrich Hayek (1899-1992), the 1974 Nobel laureate in economics.

“Note that there are not long wait times to see a dentist, an accountant, or a hairdresser, and shortages are very rare for most goods and services. Why? Because these areas are not run by an authority that tries to plan everything, but by the market and by the thousands of individuals who interact based on price signals,” explains Mr. Belzile.

Centralized planning requires an omniscient planner if selected objectives are to be achieved, while the market does not need us to know everything, but merely requires actors to react to prices.

“It’s no surprise that health care systems that work better than ours, like Sweden’s system, are generally more decentralized and competitive. This decentralization allows actors on the ground, who see the needs of patients and the availability of resources, to make better decisions,” adds Mr. Belzile.

Relying more on market prices or on related coordination mechanism models, for example by introducing activity-based hospital funding, should be foremost among the minister’s concerns if he wants to improve the lot of patients.

“Even in a mixed universal health care system financed for the most part by government, it is possible to steer clear of the main hazards of centralized planning. According to the teachings of economists like Friedrich Hayek, instead of further centralizing administration to resolve recurring problems, as we’re currently doing in Quebec, we should do the exact opposite.”

Table: Reports, reforms, and laws aiming to resolve health care system problems, 1988-2017

The Viewpoint entitled “Centralized Health Care: A Recipe That’s Doomed to Fail” was prepared by Germain Belzile in collaboration with Jasmin Guénette, respectively Senior Associate Researcher and Vice President of Operations at the MEI. This publication is available on our website.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

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Interview requests: Pascale Déry, Vice President, Communications and Development, MEI / Tel.: 514-273-0969 ext. 2233 / Cell.: 514-502-6757 / Email: pdery@iedm.org