In Ontario, a opthamologist is paid $441.95 per eye for cataract surgery. In Ottawa, the cost of canine cataract surgery is about $4,000. (I cannot give you an exact price, as the Ontario Veterinary Medicine Association's suggested fee guide is not available to non-members).
Why do opthamologists charge more to repair a dog's eye than a human's eye?
In a competitive market, all price differences reflect cost differences, as shown in the figure below.
But health care markets are very different from the competitive markets of ECON 1000 textbooks. There are barriers to entry. Admission into veterinary schools is restricted, and foreign-trained professionals undergo extensive scrutiny before their credentials are recognized. Veterinary medical associations set "fee guidelines" - suggested prices for services. In some parts of Canada there are veterinarians who charge less than the guidelines suggest - but not where I live.
When a health care provider is insulated from competition, they may be able to charge above-cost prices - if that is what the market will bear. After all, a pet owner has little choice: either she pays the price quoted by the veterinarian, or foregoes treatment entirely.
The market for human health care, however, is different. Health care in Canada is best described as a "bilateral monopoly." Physicians and health ministries sit down together and negotiate a fee schedule. The price that is set will depend upon the bargaining power of physicians and health ministers. (Can physicians credibly threaten to move to the US if their pay does not increase? Can politicans credibly threaten to impose legal or other sanctions on non-cooperative doctors?)
One thing that an economist can predict about the contract is that it will be efficient: the agreement reached will maximize the total benefits from cataract surgery operations. It is less clear how the benefits will be divided between physicians and patients.
But if governments have any bargaining power at all, they can use it to keep down the price of cataract surgery. In the presence of medical monopolies, government intervention can reduce prices and lead to increased social welfare.
Over the next 20 years, population aging will strain Canada's health care resources. Some might hope that private health care markets will reduce costs, easing the burden of care.
My experience of canine care suggests that private medicine has many benefits - caring, professional staff, excellent quality of care, short waiting times. But low cost is not one of them.