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The problem with health care user fees

User fees can be useful. They can subsidize a public service, they can offer an understanding of the value or benefit of a service, and they can help determine the quality and quantity of a desired output.

User fees can discourage negative behaviour such as driving (through road tolls, congestion charges), pollution (tied to volume of waste) and water consumption (to encourage conservation).

But if user fees prohibit certain beneficial activities or they discriminate on ability to pay, then the user fee attached to the public service in question is no longer equitable. In short, efficiency and cost should not trump fairness and equity and there is a risk of this happening with the application of certain user fees.

Quebec, in its budget tabled this week, is raising taxes in part to cover health care costs. But the Finance Minister, Raymond Bachand, says his government is intrigued by user fees charged per medical visit.

First, there is no doubt that health care costs continue to rise. But, provincial and federal revenues are falling. Those revenues have fallen for a variety of reasons, one of which is the reduction in taxes collected. For example, in 2000, the federal government taxed corporations at 35%. That's now down to 18% with a goal to push it down further to 15%. This represents a huge hole in federal revenues.

To keep the math simple, if one imagines an annual budget of $100 billion and health care is budgeted at $33 billion per year, health care represents 33 percent of government spending. But if revenues fall to $75 billion and health spending inches up to $34 billion, then health care represents 45 percent of spending.

If revenues fall and spending continues to rise, of course governments scramble to do more with less. If anything is unsustainable it's that we've starved public programs through individual and corporate tax cuts that only a handful of Canadians demand; and that demand is quite often based on ideological grounds not on evidence.

So yes, I am in complete agreement with Murray Dobbin, TD Bank's Ed Clark, and for a fleeting moment (before he worried about his electability) Michael Ignatieff: we need to think about fair tax reform and not be afraid to speak about tax increases. Indeed, in Quebec's budget taxes are raised on a few fronts, including a health tax tied to income.

But back to user fees and health care.

There is some very good evidence that out-of-pocket payments may deter patients from seeking care (see some of the excellent work by Tuohy et al "How does private finance affect health care systems? Marshalling the evidence from OECD nations"). And deterrence, not better health care or improved outcomes, is quite often the purpose of per visit user fees. According to Finance Minister Bachand: "What is sought is an orienting effect, not a moderating effect: the purpose is to encourage delivery of the right care at the right place." When Bachand says that he is not seeking a moderating effect, he's seeking a moderating effect.

In New Zealand, where there are co-payments for patients, that country's citizens have worse health outcomes on certain measures than other developed nations. Further, this disincentive to utilize health care services has the expected effects on lower income earners: deterred by co-pays they may not seek timely care and health outcomes can worsen.

Quebec is often held up as a model of progressive social policies (the niqab decision is for another post). For example, its $7-a-day day care is the envy of many.

But Quebecers have the worst access to family doctors in Canada (only about 75% of Quebecers have a family physician compared to ~90% in other provinces). How would a user fee improve the health care system? How would it improve health outcomes and equitable access to primary care?

The Charest Liberals say they are struggling to contain health care costs. But are they certain that a $25 per medical visit fee would not cost more in the long run if health outcomes worsen?

The Quebec Liberals are right to raise taxes if they want better social programs, but entertaining a health care user fee is the wrong approach.

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