There are two basic concepts of policy-making that all politicians must understand: the Law of Unintended Consequences, and its more colloquial cousin, the Principal Principle. Canada’s experience with government management of the physician supply provides an excellent example of each. It also provides yet another case study of the reality that government central planning typically fails. Unfortunately, these examples have come with a steep price tag: declining access to physicians in Canada.
This sorry tale begins in the early 1970s. At that time, Canadians enjoyed one of the highest physician-to-population ratios in the developed world. It was a good time for physician training in Canada. In response to a 1964 federal-government commission’s call for a doubling of Canada’s capacity to train doctors, four new medical schools had been built and twelve others expanded significantly. In light of recent evidence showing that higher physician-to-population ratios are related to lower mortality rates, such generous access to physicians was good for Canadians.
Yet not everyone liked the direction things were headed.
In the early- to mid-1980s, some government officials and researchers voiced concern about the increasing number of physicians in Canada and its potential cost implications. They recommended governments reduce the number of medical-school admissions and training positions that were available. While no specific policy resulted from these calls, medical-school admissions were reduced slightly through the 1980s.
It wasn’t until the early 1990s that specific policies restricting physician supply were introduced.
In 1991, a paper known as the Barer-Stoddart report — published as a discussion paper for a conference of Canada’s Deputy Ministers of Health — recommended among other things: reducing medical-school enrolment by 10 percent in order to approximately maintain the physician-to-population ratio in Canada, reducing the number of provincially-funded post-graduate training positions, and reducing Canada’s reliance on foreign-trained doctors over time. In 1992, governments responded by accepting all three recommendations with the goal of maintaining or reducing the physician-to-population ratio over time.
Unfortunately, the government estimates of how many students should be trained were too low. The number of Canadian students being trained as physicians in Canada was insufficient to maintain the physician-to-population ratio even through the mid-1990s. Canada ended up relying on foreign-trained doctors to make up for the shortfall. By the turn of the millennium, officials had come to realize that more physicians were needed and began ramping up physician training once more.
This brings us to the Principal Principle, which states that for every solution not carefully considered, one always creates more problems than one solves (while some scholars will recognize this principle’s relationship to the Law of Unintended Consequences, it is considered as a colloquial cousin for discussion here). One of the key problems was that the plans laid out for Canada’s physician supply in the early 1990s were based on the realities of medicine in the early 1990s. Since then, the ability to treat patients has progressed significantly, the age of the population has also advanced, and people’s expectations have also grown along with the medical possibilities.
The original intention to maintain a physician-to-population ratio around the 2-per-1,000 mark may well be short of what is actually required — at the very least it is well short of the physician-to-population ratios in other developed countries. In addition, much of Canada’s past discussion surrounding physician supply has ignored the dynamics of physician supply, including increasing future retirements.
The restrictions were ill advised, and they resulted in a much greater problem than Canada started with.
And the problem is likely to get worse because Canadian enrolment figures have not yet caught up with reality and the needs of Canadians. According to Fraser Institute estimates, the number of new physicians needed to simply maintain the current physician-to-population ratio exceeds the number of Canadian-trained physicians entering the workforce every year from now to 2015 — and this doesn’t take into account the likely effects of an aging physician workforce, 34 percent of whom are now 55 or older. Unless Canada can make better use of the physicians on the ground today and in the near future, the nation will be forced to rely on foreign-trained medical graduates to maintain the level of services in Canada.
This brings us to the Law of Unintended Consequences, which dictates that the actions of individuals and governments always have effects that are unanticipated.
The first such consequence comes from Canada’s reliance on foreign-trained physicians. While these doctors have increased supply in Canada, the unintended consequence is that some nations where doctors are already scarce have had to make do with less, notably South Africa and India. Importantly, in 2002, one in ten physicians practicing in Canada was trained in a lower-income nation.
Other unintended consequences are foregone health benefits from a larger physician population and reduced access to health-care services. Access in Canada has gotten to the point where an estimated 1.2 million Canadians were unable to find a regular physician in 2003, and where long waits for medically necessary treatment are alarmingly common. The average wait time for non-urgent medical services hovered near the 18-week mark in 2005.
Importantly, for those convinced that the problems would have arisen regardless, or that further government intervention is the solution to the problems caused by government intervention, countries that have taken a different path have avoided Canada’s situation.
According to a recent report from the OECD, nations that have traditionally relied on the market to determine the number of domestically-trained physicians have enjoyed greater access to doctors than those nations that, like Canada, have tried to actively manage physician supply. The shortfalls of central planning in health care are equally evident on a broader scale: Countries that have relied on a policy backbone of private competition outperform health-care models like Canada’s, which are centrally planned and organized.
The lessons from Canada’s experience are clear: Central planning typically does far more harm than good. And in this case, as in most, it is the population that ultimately pays the price.
– Nadeem Esmail is the director of health-system performance studies at the Fraser Institute and author of Canada’s Physician Shortage: Effects, Projections, and Solutions, published by the Institute.