Canada’s health care system has prominent
features that distinguish it from virtually all other high-income countries
that provide universal health care coverage.
One such feature is the absence of
private insurance markets for medically necessary services.
The Canada Health Act, along with the
potential loss of federal government funding if the Act is violated, has
resulted in provincial governments either prohibiting or severely discouraging
health care providers from treating patients under both public and private
insurance schemes. Providers are also prohibited or discouraged from operating
completely outside of the public insurance scheme. Consequently, there is
little legal scope or economic opportunity for suppliers of private insurance
to operate in Canada, either by offering insurance coverage that replicates
coverage under the public scheme or by supplementing coverage under the
government insurance scheme.
Conversely, in most high-income countries
with universal coverage, residents are free to choose between two options: full
private coverage of all medically necessary services, or supplementary private
coverage that facilitates faster access to medical procedures and treatments,
wider selection of providers, and amenities such as private hospital rooms.
The Canadian health care system also provides
“first-dollar coverage” for medically necessary services. That is, there is no
patient cost sharing for services provided under the public insurance scheme.
Hence, there is no market demand for private insurance, including
self-insurance, to cover expenditures incurred using the government insurance
plan.
The absence of patient cost sharing for publicly
insured basic health care services is another feature of the Canadian health
care system that distinguishes it from other countries with universal health
insurance coverage. The overall result of restrictions on private payments, for
medically necessary services and first-dollar coverage, is that there is no
private insurance coverage or out-of-pocket payment for basic health care
services in Canada -- which distinguishes Canada’s health care system from those
of other high-income countries.
Opposition in Canada to private insurance
markets for medically necessary services is ostensibly based on two concerns.
These concerns are that allowing private insurance coverage will result in
substantially reduced access to health care under the public insurance scheme;
or that private insurance will result in inequities whereby wealthier Canadians
obtain “better” health care than other Canadians.
The former concern is linked to an argument
that the growth of private insurance options will weaken political support for the
tax-funded public insurance option leading to reduced funding for the
government plan and, consequently, reduced coverage for medically necessary
services under that plan.
In fact, the experience of other high-income
countries that allow private insurance markets does not support this argument.
Specifically, there is no evidence that the availability and use of private
insurance options for basic health care services leads to reduced access to
health care under the public insurance scheme.
The argument that a private insurance market
will result in inequities in access to health care services along socioeconomic
lines is complex, and any evaluation of the argument is conditioned by the
standard used to assess the overall social welfare impact of allowing private
insurance for basic health care.
For example, it is likely that wealthier
Canadians would enjoy faster access to services and, perhaps, a wider choice of
providers and in-patient amenities compared to their less-wealthy counterparts.
However, it is also likely that the existence of a private insurance market
would reduce wait times for those Canadians exclusively using the public
insurance scheme, especially in the case of services provided on an out-patient
basis.
This substitution phenomenon, whereby those
using private insurance reduce their demand for services insured under the
public scheme, has been observed in a number of European countries, especially
where private insurance is used to obtain quicker access to health care
services than through the public insurance scheme.
The inference from the evidence is that a
private health insurance market in Canada would reduce wait times for most, if
not all, Canadians. In this regard, lower-income Canadians would enjoy improved
access to health care services, notwithstanding that their improved access
would not be identical to that enjoyed by wealthier Canadians. However, the
existence of a single-payer system does not ensure identical access, either.
Under the current system, wealthier Canadians
can obtain faster service by paying out of pocket for health care delivered
outside the country. Moreover, a major concern about wait times for medically
necessary services is that waiting will compromise the health of patients,
resulting in the loss of income, reduced quality of life, and increased
morbidity and mortality. Hence, to the extent that a private insurance market
would reduce wait times in Canada for many patients, allowing private insurance
is a significant policy instrument to improve the efficiency of Canada’s health
care system.
The linkage between single-payer coverage and
longer wait times is underscored by Canada having the longest wait times for
medically necessary services among all high-income countries with universal
coverage. At the same time, there is no consistent evidence that a “two-tier”
health care system, in which some people use private insurance to pay for
medically necessary services, results in unequal outcomes in health.
More specifically, there is no evidence that
the poorer health typically suffered by individuals with below-average incomes
and education is linked to the usage of private insurance markets by wealthier
and more highly educated individuals.
While reducing wait times would be a
substantial improvement in Canada’s health care system, perhaps the most
significant benefit of allowing a private insurance market is that it will
promote welfare-enhancing innovation in the provision of health care. Strong
arguments can be made that private markets promote welfare-improving
innovations. Improvements in health care technology should benefit all
Canadians.
As developments proceed in areas such as
artificial intelligence and genomics, the health care sector is arguably
already realizing breakthroughs in diagnostic and treatment protocols that
promise major improvements in morbidity and mortality rates. In this context,
continuing to restrict the emergence of a private insurance market for medical
services threatens to impose major costs on Canadians in the form of foregone improvements
in the quality and timeliness of delivered health care services.
Arguments surrounding the pros and cons of
private health insurance received some attention in the Chaoulli court case in
Quebec, as well as in the case brought by Dr. Brian Day in British Columbia.
That said, a systematic re-evaluation of allowing access to private health
insurance for basic services seems appropriate, especially in light of theory
and evidence that argues, on balance, that doing so would have net social
benefits.
To read the full report,
CLICK
HERE
AUTHOR: Steven Globerman
Resident Scholar and Addington Chair in Measurement, Professor Emeritus,
Western Washington University
Comments
Post a Comment