The Fraser Institute

The Fraser Institute

November 24, 2010 06:33 ET

The Fraser Institute: Federal Government Should Call 'Time Out' on Canada Health Act, Allow Provinces to Experiment With New Policies for Funding Health Care

TORONTO, ONTARIO--(Marketwire - Nov. 24, 2010) - The federal government should suspend enforcement of the Canada Health Act on a five-year trial basis in order to allow provinces to experiment with new health insurance policies such as patient cost-sharing, private competition, and private medical insurance, recommends a peer-reviewed study from the Fraser Institute, Canada's leading public policy think-tank.

"Any chance of meaningful reform in Canadian health insurance is effectively hobbled by the outdated Canada Health Act, which forbids many of the successful policies used in other countries," said Mark Rovere, Fraser Institute associate director of health policy research and co-author of Value for Money from Health Insurance Systems in Canada and the OECD.

"By taking a temporary 'time out' on enforcing the act, provincial governments would have the option to experiment with new policies without fear of financial penalties. The trial period would allow us to test different options to improve the delivery and accessibility of health care for ordinary Canadians by emulating the policies used in other countries."

Rovere points out that the majority of countries within the OECD (Organization for Economic Co-operation and Development) have health insurance systems that include variations of three policies that are effectively limited or outlawed in Canada because of the Canada Health Act:

  • Some form of consumer/patient cost-sharing for the use of publicly funded hospital care, general practitioner care, and/or specialist care;
  • Medical care is financed through some form of social insurance where individuals and employers make direct and significant contributions to premiums; and
  • Private for-profit hospitals are permitted to bill public insurers for services.

In the study, Value for Money from Health Insurance Systems in Canada and the OECD, Rovere and co-author Brett J. Skinner compared the economic performance of health insurance systems in 28 OECD countries, including Canada, based on the most recent available data from the OECD. The study examined national health spending as a percentage of GDP, 18 indicators of medical resource availability and output of medical services, and the funding mechanisms of each country's health insurance system.

The comparison found that Canada is one of only four OECD countries that ban patient cost-sharing for the use of publicly funded hospital care, general practitioner care, and/or specialist care. Canada is also the only OECD country that does not finance medical care through some form of social insurance where individuals and employers make direct and significant contributions to premiums. Additionally, Canada is the only country within the OECD where private comprehensive medical insurance is illegal. Instead, private insurance in Canada is only allowed to cover goods and services not covered by our universal government-run health insurance plan, mainly dental services and prescription drugs.

Although these types of policies are common in most other OECD countries, the Canada Health Act expressly prohibits them here. The act forbids user fees and extra-billing for health care, and reduces federal transfers for health care to any province that allows such policies. Additionally, many provinces have broadly interpreted the act as also forbidding private insurance. Consequently, six of 10 provinces have policies in place that effectively prohibit private medical insurance.

As a result, governments control the growth in public health spending by capping health care budgets and effectively rationing medical services, causing longer waits for medical treatments, and limited availability of the latest medical technologies.

Rovere and Skinner's recommendation for a moratorium on enforcement of the Canada Health Act comes as both the Alberta and Quebec governments struggle to deal with crowded emergency rooms and lengthy waits for hospital beds after revelations that patients died while waiting for treatment in hospital emergency rooms.

"The provinces have no incentives to experiment with alternative methods of financing health care because of federal enforcement of the Canada Health Act. But we can't continue pretending we can pay for health care from public means alone," Skinner said.

"Higher taxes are not an option because they are economically harmful. We have to stop the paying more, getting less approach to health care in Canada."

Skinner recommends an immediate five-year moratorium on the Canada Health Act.

"It's time to try some of the things used successfully in other countries," he said.

"A temporary suspension of federal enforcement of the Canada Health Act would give provinces the opportunity to experiment with cost-sharing, a greater role for private financing, competition, and consumer choice here in Canada. This in turn would ultimately lead to innovation and improved access to care for all Canadians, just as it has for other countries in the OECD."

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 80 think tanks. 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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