Rethinking Canada's Unbalanced Mix of Public and Private Healthcare: Insights from Abroad

28 Pages Posted: 4 Mar 2015

See all articles by Ake Blomqvist

Ake Blomqvist

Carleton University; C.D. Howe Institute

Colin Busby

C.D. Howe Institute

Date Written: February 25, 2015

Abstract

Roughly 30 percent of all Canadian healthcare is privately paid for, about the same proportion as the average for the 34 industrialized countries that are members of the Organisation for Economic Cooperation and Development (OECD). However, two things make Canada’s public-private mix unique. On the one hand, there is rather limited public coverage for items such as outpatient drugs, long-term care, and dental and vision care. But on the other hand, government pays for virtually all services delivered by physicians and acute-care hospitals. With limited government budgets for healthcare, these Canadian distinctions are linked: more spending on hospitals and doctors means there is less money for other areas of healthcare. In other countries, the public-private financing mix is typically more balanced, with government plans paying for a larger share of drugs, dental and continuing care, but with more private financing for hospital and physician services. In face of widespread calls for Canadian governments to expand public coverage for services such as drugs and homecare, policymakers must confront challenging trade-offs that rest on increasing taxes to help pay for these additional benefits. In this Commentary, we argue that a major contributing factor to Canada’s unbalanced public-private healthcare mix are the unique restrictions that many provinces impose on the private financing of hospital and physician care. Many health systems in Europe and elsewhere do not have similar restrictions and devote a much larger share of public resources to drugs and long-term care while still operating equitable and high-performing healthcare systems. Relaxing provincial regulations on physicians’ private income sources, such as opt-out prohibitions, limits on fees, and private insurance bans, could build on the strengths of our current system. Expanded patient choice and competition from healthcare providers outside medicare would create incentives for politicians and bureaucrats to manage the public system more efficiently. This Commentary also examines the Canada Health Act’s restrictions on the basic principles of our universal provincial health insurance plans. It describes the more pluralistic approaches to healthcare financing and production among other countries whose systems have been ranked well above ours in both efficiency and equity dimensions. Canada’s single-payer model for hospitals and doctors may be less expensive to administer than a pluralistic one with both public and private payment. However, a single-payer system in which doctors are expected to always use the best available medical care for every patient ultimately creates an impossible dilemma, as advancing medical technology raises the cost of doing so. Our single-payer system may have led to more equal healthcare between rich and poor than would have prevailed otherwise, but it arguably has made the social policy debate focus too much on healthcare to the detriment of other programs that are at least as important in helping society’s most vulnerable.

Keywords: Social Policy, Health Policy

JEL Classification: I10, I11, I13, I18

Suggested Citation

Blomqvist, Ake and Busby, Colin, Rethinking Canada's Unbalanced Mix of Public and Private Healthcare: Insights from Abroad (February 25, 2015). C.D. Howe Institute Commentary 420. Available at SSRN: https://ssrn.com/abstract=2572650 or http://dx.doi.org/10.2139/ssrn.2572650

Ake Blomqvist

Carleton University ( email )

1125 colonel By Drive
Ottawa, Ontario K1S 5B6
Canada

C.D. Howe Institute ( email )

67 Yonge St., Suite 300
Toronto, Ontario M5E 1J8
Canada

Colin Busby (Contact Author)

C.D. Howe Institute ( email )

67 Yonge St., Suite 300
Toronto, Ontario M5E 1J8
Canada

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