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Health Economics

Health economics is a subset of economics which looks at the resource allocation, efficiency, and distributional aspects of the health sector. The first textbooks in the United States, when no economists yet described themselves as health economists, appeared in 1964 and 1965. Since no “analytical infrastructure” existed for the economic dimension of this sector, the response of the Hall Commission (1961–64) was to undertake an extensive research program under the guidance of the late Dr. Malcolm Taylor, culminating in publications that were to become standard references. In Saskatchewan, health economics may be said to have begun with J.A. Boan’s work with the Hall Commission, which he carried over into his research and teaching at the University of Regina. Testable hypotheses from available theories were subjected to rigorous empirical analyses. The findings in the published reports, subjected to rigorous standards of external review, became part of the received wisdom that finds its place in introductory textbooks.

Beginning in the 1970s, important analyses of user fees, the socio-economic determinants of utilization, price and income elasticities, and insurance risk bearing, were conducted by R.G. Beck and J.M. Horne at the University of Saskatchewan. This work pioneered accessing administrative health databases and developing linkages between them. The work on user fees motivated important public policy legislation at both the federal and provincial level. As a byproduct of this research, both the University of Saskatchewan and the University of Regina began to attract graduate students, many of whom later occupied research and policy positions in the health sector across Canada.

J.A. Boan convened a meeting in Regina in 1983, at which the Canadian Health Economics Research Association (CHERA) was born. Since then he has served unstintingly on its executive and in other capacities. This early pioneering work should have resulted in the formation of a health research institute at one or both of Saskatchewan’s universities, since the province of Saskatchewan had the most comprehensive and extensive health data sets. Proposals for such an institute were put forward, some under the notable mentorship of Dr. Vincent Matthews, with active support of Boan, Beck, Horne, Carl Darcy, and others. Unfortunately, nothing materialized.

Some of the reasons for the failure to exploit Saskatchewan’s comparative advantage include the fact that scholarly work involves unpredictable outcomes and can result in criticism of programs and governments. Both politicians and bureaucrats have ambivalent affections for Health Care research. Governments often pay lip service to the need for research; this interest has reached a crescendo in the current infatuation with evidence-based decision-making. For example, when the analysis of the effects of user fees on physician services was completed and publicly defended as a doctoral thesis, the ministry’s initial response was that it was fundamentally flawed. Soon there was an election with a change in government; user fees were abolished, and the health ministry then found it convenient to treat the analysis as thorough and authoritative.

From the early 1980s onward, Saskatchewan’s research community received very little access to databases. This situation was exacerbated because custody of government databases had been placed in the hands of a private corporation, and government itself began to enjoy significant revenue from fee-for-service data access to pharmaceutical companies. When research institutions were established, they were creatures of government. Their proponents would claim that they were held at arm’s length—but close examination would suggest that if so, this was a short arm. Few, if any, of their conclusions criticized government policy. Further, independent scholarly research became increasingly crowded out by community-based action research, some of it advocacy research with a predictable outcome. There is clearly a synergy between action research, knowledge transmission, and evidence-based decision making. Royal commissions have also changed and become primarily media events, organized around public hearings. Their research is largely, if not entirely, advocacy research, drawing heavily on focus groups. These reports stress “public values” rather than extensive independent scholarly analyses. Their contribution to public discourse is modest.

Health economics, as a discipline with an “analytical infrastructure,” has grown enormously in Canada and internationally. Now Canada has many health economists and several university-based health economics research centres. However, in research as in health, quality control remains an ever-present challenge.

R. Glen Beck

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This web site was produced with financial assistance
provided by Western Economic Diversification Canada and the Government of Saskatchewan.
University of Regina Government of Canada Government of Saskatchewan Canadian Plains Research Center
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Diversification de l'économie de l'Ouest Canada et le gouvernement de la Saskatchewan.