How Well Has Canada Contained the Costs of Doctoring?

Abstract

Canada's provinces have had varying success at containing the costs of physician services through the use of fee schedules and expenditure targets. This article examines the wide variation in the increases in the costs of physician services among Ontario, Quebec, and British Columbia between 1975 and 1987. Cost increases during that time resulted from various combinations of increases in prices (fees) and utilization, stimulated by an increased supply of physicians. Differences among the three provinces resulted from differences in the aggressiveness of fee schedule controls and whether expenditure targets were imposed. Regardless of the degree of expenditure increases, utilization increased steadily in all three provinces and was associated most consistently with growth in the supply of physicians. This was most dramatically illustrated in Quebec which noted the most rapid rise in physician-to-population ratio. Cost containment may ultimately require constraints on the number of new physicians in addition to control on fees and utilization.