The Fraser Institute

The Fraser Institute

September 21, 2009 06:30 ET

The Fraser Institute: Switzerland and Netherlands Provide Models for Reforming Unsustainable Canadian Health Care

TORONTO, ONTARIO--(Marketwire - Sept. 21, 2009) - The cost of the Canadian health care system is spiraling out of control and Canadians will continue to face lengthy wait times and limited access to new medicines and medical technology unless governments liberalize the health care system and adopt reforms similar to those in Switzerland and the Netherlands, concludes a new book released today by the Fraser Institute, Canada's leading economic think tank.

"The Canadian health care system is a textbook case of government failure in medical insurance and medical services. All available evidence indicates that Canadians are paying more but getting less from our government-run health insurance system," said Dr. Brett Skinner, Fraser Institute director of bio-pharma and health policy and author of Canadian Health Policy Failures: What's wrong? Who gets hurt? Why nothing changes.

The peer-reviewed book paints a troubling picture of a country whose public health expenditures have persistently grown at unsustainable rates, while the health insurance system has failed to provide the access to and quality of medical services available elsewhere in the world.

"No other developed country in the world has adopted the Canadian approach to health care where governments effectively ban private-sector funding of hospital and physician services and prohibit competitive provision of publicly funded services," Skinner said.

"Most other developed nations have chosen a pluralistic health care system that involves a mix of public- and private-sector involvement in medical insurance and delivery of medical goods and services."

In the book, Skinner details how Canada tends to be in the lowest ranks among all 30 Organisation for Economic Co-operation and Development (OECD) countries for availability of medical resources including physicians, diagnostic technologies, and new medicines per population, despite having one of the most expensive health care systems.

He shows the significant hidden costs buried within the Canadian system, including:

- Significant unfunded liabilities and a financial sustainability crisis facing governments because of the uncontrolled growth of public health care spending;

- Significant numbers of people who lack actual effective access to publicly insured and medically necessary health care;

- Shortages of medical resources, especially for high technology and the most advanced medical treatments;

- Significantly delayed access to the relatively fewer medically necessary goods and services that are available;

- Government-imposed restrictions on the incomes and supply of health professionals; and

- Serious disincentives for medical innovation.

Despite these alarming trends, Canadian policy-makers have resisted economically liberal policy solutions that are commonly used by the health systems of other countries with similar social goals to Canada.

"Other countries that share Canada's core social goals for health care have better health care systems," Skinner said. "In terms of delivering actual access to medical goods and services, the Canadian system is not doing a better job at universalizing effective health insurance coverage than the American system. Access to a wait list is not the same thing as access to medical care."

Skinner lays the blame for a refusal to consider real reform on a lack of political will, incentives within the system that encourage special interest groups to oppose reform, and a lack of objective information about health care options in use elsewhere, especially outside North America.

"Policy-makers face fewer political risks from raising taxes to fund health care than from introducing price mechanisms that are paid by everyone, and special interests in the health policy community benefit economically from the state's involvement in health care. As a result, they favour interventionist public policies and oppose liberalization," Skinner said.

He concludes that governments should implement a universal requirement for Canadians to buy private-sector health insurance, but also offer publicly funded subsidies to guarantee that low-income people can afford to buy such coverage.

"A private, competitive market for health insurance and medical services, combined with a regulatory-subsidization role for the state, could ensure that everyone has access to medically necessary services, while still allowing Canadians the advantages of consumer empowerment and competition among insurers and providers," Skinner said.

"This approach is similar in principle to the health insurance models in Switzerland and the Netherlands and would maximize consumer choice and introduce the economic benefits of price and competition."

Canadian Health Policy Failures: What's wrong? Who gets hurt? Why nothing changes can be downloaded as a free PDF or purchased in print at www.fraserinstitute.org

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The Fraser Institute is an independent research and educational organization with locations across North America and partnerships in more than 70 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

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