Canadians should recalibrate their resistance to private health care
Rightly or wrongly, the designers of Medicare decided that teeth, eyes, ears and medication would fall outside the definition of medical care. Some would expand the public system to cover more — or even all — of those things. But maybe Canadians should recalibrate their resistance to the growing privatization of the broader medical system and instead focus on making sure health-related markets are free of unnecessary barriers that inflate costs. We need more rational markets in the broader health space.
In the recent past, new entrants have reshaped markets to the benefit of consumers. Warby Parker Inc., a direct-to-consumer seller of eyeglasses, has transformed the spectacle market since it was founded in 2010. Previously, the eyewear industry was essentially a monopoly under European conglomerate EssilorLuxottica SA. Warby Parker started with a selection of five plastic frames for $95. Contact lenses also went direct to consumers a few years later, often with a subscription. Suddenly, people had more options for their eyeballs and they haven’t looked back.
It seems as if regulators have inadvertently locked up health-related markets with superfluous complexity, suppressing the creation of more Warby Parkers. Typically, health regulation is for our benefit. But too often, it creates and perpetuates barriers to entry. To be sure, we want clear, strong regulation of drugs and devices. After that, ideally we want light touch regulation that benefits consumers by allowing companies to legitimately compete on price.
The most recent example of this market lockup in Canada is hearing aids. The United States no longer requires a prescription or medical exam to purchase most devices, a simple change of policy that advocates such as Mead Killion, a hearing aid pioneer, started demanding 20 years ago. Yet Canadian authorities still support the barrier. Why?
Another industry in need of disruption is pharmaceuticals, especially as Canada considers a national pharmacare program. Pharmacare is ultimately a competition issue, as it asks us to intervene on pricing. Yet the federal Liberals have thrice demurred to Big Pharma when it comes to lowering drug prices. In the U.S., Mark Cuban Cost Plus Drugs Co. — an online upstart founded by billionaire Mark Cuban — has introduced huge savings for Americans. Are we over-regulating our market in favour of Big Pharma?
In contrast, long-term care in Canada is largely unregulated, and we do not dictate any requirements for outfits that want to call themselves long-term care facilities, proving that better competition isn’t always about over-regulation.
There’s lots of anecdotal evidence that technology companies have the potential to make health marketplaces more efficient at little or no risk to consumers beyond that which already exists.
Align Technology Inc.’s Invisalign and the SmileDirectClub Inc. are making cosmetic dental work more accessible. Maybe more braces should be 3D printed, as Lightforce Orthodontics Inc. is attempting to do, and eye exams will be conducted through AI-powered telemedicine, as EyeCare Live Inc. is working on. Perhaps we could spur more competition for the general diagnostic, genetic and naturopathic tests conducted by LifeLabs Inc. We would certainly benefit from a better sharing economy for casts, crutches, and wheelchairs, reducing out-of-pocket health costs.
Consider the experience, until recently, of Canadians who required sleep testing for common conditions like apnea. A visit to a sleep laboratory, often located only in major cities and taking appointments only after months-long waits, excluded many patients from rural areas. Worse still, the disruptive effect of sleeping wrapped in wires, in a strange bed, further disrupted these patients’ sleep, and often rendered test results unreliable. Wearable technology has already made much of sleep measurement as good in the home as in the lab, and the added diagnostic benefit of multiple nights’ data is a real improvement. Regulations and reimbursement paths hindered the adoption of at-home testing technology in sleep medicine and hinder it still, blocking access to better health for millions of Canadians.
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These changes wouldn’t target the billing rates of dentists, optometrists or ophthalmologists, but rather seek to significantly reduce the cost of physical products and any associated overhead. Further, these interventions would not come through changes to the Competition Act. Rather, they could be strategically targeted to facilitate healthier marketplaces by tackling regulatory moats and managing regulatory risk for a range of medical needs that are typically paid out of pocket. Elements such as medical testing and device rules and standards are routinely weaponized by legacy companies as barriers to competition and innovation. That actively harms consumers.
Canada has lacked a czar with a keen eye for modernizing marketplaces. However, with an all-of-government approach exemplified by President Biden’s executive order on competition, Canada could unlock health-related marketplaces. We should focus on how regulatory capture in medical and health technology, and in its administration and distribution, inhibits consumer benefit. The question is whether the nation is ready to actually take competition seriously.
Unfortunately, what we call “public policy” does not always reflect the public’s interest, as the development process is so often co-opted by corporate interests. Patents and assorted intellectual-property protections create exclusivity, but also increase innovation. Direct-to-consumer technology companies in the health and wellness space have the aspiration of actually solving these tensions by cutting out middlemen and going directly to you and me with radically transparent pricing models. Maybe it’s time to rethink the regulatory environments that govern various health-related marketplaces, get regulators out of the way, and dethrone incumbents that have been propped up by policy environments that let them arbitrarily pump up prices and protect them from robust competition.
There is space for private technology companies to lower the costs — we just need to make it.