Worse than failure: Near misses, contingency, and the regulation of doctors’ payments in the Australian and the Canadian Medicare systems

This paper advances a distal causal approach to the study of regulation though a comparative analysis of the regulation of doctors’ payments in Australia and Canada. While the two countries have very similar universal health care systems (Medicare), they differ in a crucial aspect: In Australia, no actor, whether public or private, can place mandatory caps on how much doctors bill for their services; in Canada, conversely, governments set the maximum amount doctors can charge. This difference has had profound implications for how accessible and affordable health care is in the two countries. The reason for the different choices on the regulation of doctors’ payments by the framers of Medicare in Australia and Canada in the 1970s and 1980s ultimately goes back to the failed attempts to introduce universal health care in both countries in the 1940s. In Australia a Labor government tried to take advantage of voters’ support for a more generous Welfare State at the end of World War II by calling a constitutional referendum giving the federal government power to act on health care policy. While the referendum passed, a last-minute addition to the constitutional amendment was later interpreted as giving constitution doctors the constitutional right to freely set their prices. Labor lost the elections to a conservative coalition, and when it came back into power in the 1970s its hands were tied on how far it could go in imposing regulatory constraints on doctors’ payments. In Canada too the reform attempts of the 1940s narrowly failed. However, in the wake of this failure private first insurance funds and eventually the government in the 1980s faced no constitutional limitations on their ability to cap doctors’ fees. Near misses can therefore be just as influential as successful reforms on the ensuing development paths of policies, including regulatory ones.