Microeconomics,, 16th Canadian Edition

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The Role of the Private Sector


Much of the debate over the reform of Canada’s health-care system rests
on the appropriate role of the private sector in what is a publicly financed
system. Some provincial governments, notably Quebec and Alberta, have
suggested that allowing a greater role for private, for-profit hospitals and
clinics can reduce waiting lists and therefore improve the overall quality
of healthcare that citizens receive.


The main concern with allowing a greater role for private clinics and
hospitals is that private hospitals may begin “extra billing” their patients.
In this case a “two-tiered” healthcare system would develop in which
individuals with higher incomes would have faster access to healthcare
than would individuals with lower incomes. If extra billing becomes a
feature of private hospitals and clinics, then only those individuals who
can afford to pay the extra fees will be able to use them. Furthermore, it is
argued that many nurses and doctors who are currently within the
financially strapped public healthcare system may move to the private
facilities if salaries or working conditions are better there. The overall
concern, therefore, is that the introduction of private hospitals and clinics
into the existing public healthcare system, while reducing waiting lists
and providing more healthcare services overall, may result in a high-
quality system for the wealthy and a low-quality system for lower-income
people. People who take this view argue that such a two-tiered healthcare
system would destroy the equity that the public system was initially
designed to promote.

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