Why the lack of Private Health Care threatens Medicare in Canada

Canada is unique in the world in the sense that its universal publically funded healthcare system is a domestic monopoly. Under the Canada Health Act, domestic access to privately funded health care services that are covered by the provincial health insurance plan is prohibited. If it is a service that is not covered under the provincial health insurance plan – like a cosmetic nose job or a vasectomy reversal – then access is through the private system and patients pay out-of-pocket. It is interesting to note that waits for medically necessary, but “elective” procedures (note: elective simply means scheduled in advance) are rather endemic, meanwhile waits for medically un-necessary elective surgeries (ie. The cosmetic nose job) are fairly minimal. It is a stark contrast.

The provincial health insurance plans are funded via tax revenues and medical service plan premiums (note these are nominal premiums that do not vary as a result of risk – really more of a head tax than an insurance premium). It should be noted that not all provinces in Canada charge a medical service plan premium. The province also determines which services are covered and which services are not covered – and this also varies between provinces. All urgent and emergent medical care in Canada is publicly funded and considered a priority – as such, after the resource needs of those healthcare demands are taken care of in priority to the non-urgent or elective healthcare demands. However, the resources available to meet those demands are not infinite, and as a result the remaining health services must be rationed, simply because there is not enough resources to pay for everything that doctors and patients have decided are needed. However, even between elective services, the priority of those services varies and so access to healthcare services is again limited. Those whose healthcare needs are determined to be of the lowest priority face the longest waits – and it is theoretically possible for a patient deemed “not a priority” to never gain access to that service in Canada even though that patient and that doctor have determined that having access to that particular service is in the patient’s interest. That patient has paid their taxes and health insurance premiums, but cannot access the benefit to which they are entitled because their needs are determined to be lesser than other people’s needs in the system. Further, because that patient never accesses the health service that they needed – the government never has to pay for it, keeping health expenditures artificially low. It should be noted that the government does not track the number of health services “needed but never delivered”. That patient has very few options: they can go without the service entirely or they can go abroad to access the service. The one option the patient does not have is to pay out of pocket to access the service or guarantee access to the service in Canada because this would contravene the Canada Health Act.

Many – including Dr. Danielle Martin, the head of “Doctors for Medicare” – have argued that this status quo (a public monopoly on the provision of services covered by the provincial health insurance plan) should be defended against those who would like to see a parallel private health insurance or “dual practice” emerge in Canada. They fear that allowing privately funded healthcare will weaken the universal public healthcare system. Theoretically, this is possible in a variety of ways:

1. The private system would require doctors and nurses – doctors and nurses who would be exclusively available to the public system if no private system exists. To the degree that staff shortages already exist, they would be exacerbated, and the public system would struggle even more so to meet the needs of the public. The competition for human resources could drive up wage costs, and put further pressure on healthcare expenditures.

2. The private system, and the dual practitioners would have an incentive to keep wait times long in order to steer people into the private system for their own economic benefit.

3. The private system would take the “cheap and cheerful” patients who are most profitable and leave those who are complex and expensive to care for to the publicly funded system. As a result, the cost per case handled in the public system would increase.

4. The complications that result from health services delivered in the privately funded system, some of which may be urgent or emergent in nature, might be left to the publicly funded system – increasing demands for non-discretionary resources and leaving even fewer resources for those with elective health care needs.

5. Healthcare services might be “inappropriately” used, in other words people and their doctors might decide to undergo unnecessary procedures.

6. Public resources would be needed to accredit facilities providing privately funded healthcare services.

7. People might become less willing to pay towards the publicly funded universal health system if they carry parallel private health insurance, and as a result attempts to bolster tax revenue in support of that system would be met with even greater resistance.

Indeed it is possible, that a parallel private system could, in theory, result in a deterioration of the universal publicly funded healthcare system.

It is also possible, that a parallel private system could, in theory, strengthen the universal publicly funded healthcare system, and that the absence of a parallel private system results in harm to Canadians and the universal public healthcare system.

1. A parallel private system could expand employment in the healthcare sector – many jobs that would be created would be high-quality and high-paying jobs. The competition between the private and public sector could improve working conditions for those employed in the healthcare sector, making it a more attractive field to work in.

2. If remuneration for procedures in the private sector was regulated, the incentive to steer patients into the private sector from the public sector would be ameliorated. This would be particularly true if there were strong regulations with respect to the ownership of private healthcare facilities. It is irrational to think that a physician would care if his or her services were publicly or privately funded. Further, the participation of the physician in the public sector could be regulated such that he or she would be required to fulfill their obligations to the public sector. For example, private practice might be allowed only if the physician meets a specified number of hours of public service. This is done in some countries with parallel private systems that allow dual practice. Note: Many physicians in Canada find that the number of OR hours available in the public system is far below what they would like. Further, there is some evidence that the quality of healthcare services relies on practitioners being able to perform an adequate volume of services.

3. The impact of cherry picking patients who are “cheap and cheerful”, depends on how healthcare services are funded. Currently, healthcare services in Canada are funded on a combination of “block funding” and fee for service. It is true that the publicly funded health care system would lose the portion of the funding that is associated with the fee-for-service for that particular patient. However, in a circumstance where demand for publicly funded services exceeds the supply of publicly funded services, the money not spent on that patient WOULD most likely still be spent on some other patient, assuming the budget for publicly funded health services remains the same. The existence of a parallel private system might bring demand for publicly funded services closer to the supply of publicly funded health services.

4. The complications of delayed access to care might be avoided as would some of the complications and their costs associated with foreign access to care (some Canadians access care in Asia, Mexico, India and other places with burgeoning health tourism industries and unfortunately that care is not always of the same standard as care that is provided here).

5. A parallel private system might enable justified restrictions to accessing care in the public system, care that might be considered inappropriate or inefficient use of public healthcare dollars. In short a physicians’ ability to say no might be improved. Further, the decision whether or not a patient submits to a treatment should not be a matter of policy – if the patient and the physician have determined that the patient would benefit from undergoing the procedure, he or she should be free to do so – even if it means they need to pay out of pocket.

6. Public resources are needed to accredit and inspect all sorts of private businesses – there is no reason to think that the resources needed could not be raised from the revenues generated. The cost of accreditation might be more than covered by the increased tax revenue from the private health industry.

7. The willingness to pay for public services in general depends on whether or not people believe they are getting good value for their tax dollars – to the extent that a parallel private system might improve the efficiency and effectiveness of the public system, the public might become even MORE willing to support the public healthcare system. To the degree that a parallel private system expands the tax base (by increased employment and reduced losses of income as a result of healthcare waits avoided) – resources available to the public system might be improved.

8. A wait time guarantee in the public system could be meaningfully implemented if recourse to a parallel private system was available.

9. The laws and regulations that govern the delivery of health services in Canada could be brought into compliance with the Canadian Constitution.

10. The ability to “whistle-blow” about quality deficiencies might be improved as both patients and providers would no longer fear losing access to local healthcare or local employment should they disagree with what is happening.

Allowing private health insurance doesn’t mean abandoning the concept that access to health services should be a reflection of need, not ability to pay and it could enable a strengthening of the universal public healthcare system. If a parallel system could enable the public system to operate more efficiently with stronger guidelines and oversight, it is even possible that the set of services available in the universal public system could be expanded to include dental care and pharmaceuticals (much like in the UK). Maybe there’s good reason that Canada stands alone in its prohibition against privately funded healthcare: it’s an outdated model that simply doesn’t work. Many countries have strong universal public healthcare systems AND parallel private health insurance and achieve excellent healthcare outcomes at reasonable levels of healthcare expenditures – it is time we joined the ranks of the countries with the best healthcare systems in the world.