Privatization of Health Care Part 1.5: Health Care Around the World

In understanding the debate around the future of health care (with specific regards to the question of privatization) in Canada, it is useful to examine various models of health care in developed nations around the world. It is important to remember that no country really has a universal system of health care. Canada – who some might say comes the closest to universal health care – only publicly funds the most essential services, with non-essential health services such as drugs, dental care, medical appliances etc. being funded by a mixture of public and private finances. Although I will talk about four major health care models, no single nation operates entirely within a single model. In reality, health care in developed nations is incredibly variable and complex, with each country taking pieces from each model to construct their own unique health care system.

The fact that health care systems can be so variable, even among the most developed countries, should be reason for politicians and citizens to keep an open mind to new ideas. For example the term “two-tiered” has almost developed a derogatory connotation in Canada, even though Britain has a two-tiered model and was ranked 12 spots ahead of Canada in the WHO’s 2000 World Health Report. The extreme complexity of health care systems and population health indicators should be noted, and the WHO’s ranking should be taken with a grain of salt; nonetheless it is still a good reason to keep an open mind.

In “Privatization of Health Care Part 1: The Background,” I indicated that Part 2 would focus on the views and ideas of prominent health care policy researchers, politicians and political parties. So as not to lie to my audience, please note this blog is titled Part 1.5, and will serve as a segue to Part 2. The remainder of this blog will be a brief description of the four main health care models, and comparisons of various national health care systems.

Health Care Models:
The health care models below are as described by researchers at the University of Toronto in a report titled “How Does Private Finance Affect Public Health Care Systems?”

• Parallel Public and Private Systems:
• A privately financed system exists parallel and as an alternative to a publicly funded system
• Often the privately financed system will cover a relatively narrow range of services

• Co-Payment:
• Financing of a broad range of services is partially subsidized by the public purse
• The remaining amount comes either out-of-pocket or from private insurance
• Amount of subsidization may be determined by the income of the patient

• Group-based:
• Certain groups of citizens qualify for complete public coverage, while other groups (usually the wealthiest) must rely on private insurance or out-of-pocket payment

• Sectoral:
• Certain sectors within a health care system are entirely publicly financed, while other sectors rely heavily on private insurance or out-of-pocket payment

National Examples:
The information below also comes from the U of T report, as well as the following sources:
CBC News In Depth on Health Care
Dutch Ministry of Foreign Affairs: Health Care
New Zealand Health System - What you Might Pay for Healthcare
Medhunters: Healthcare in the United States

• Britain:
• Most comparable to a parallel public/private model
• Broad range of services publicly covered by National Health Services (NHS)
• NHS is completely funded by general taxation
• Parallel private sector covers a relatively narrow range of services
• The private sector provides many of the same treatments as the NHS and therefore the main purpose for using it is decreased wait times
• Private financing comes from private insurance and out-of-pocket payment
• Dental services and out-of-hospital drugs are partially subsidized by the NHS, and partially paid for by the patient (co-payment)

• New Zealand
• Most comparable to a parallel public/private model
• Similar to the British model in that a private hospital system provides a narrow range of services parallel to a publicly owned/operated system which provides a broad range of services
• Significant co-payment is required for ambulatory care (i.e. seeing a GP, or outpatient services)
• The public subsidizes ambulatory care based on level of income; above a certain level of income there is no subsidy

• Netherlands
• Group-based model which is almost entirely privately delivered, but financed by both sectors
• Three main insurance schemes:
1. Exceptional/Catastrophic insurance covers entire population
2. Sickness Fund covers hospital/physician services, drugs and home care for the less wealthy 60% of citizens and all civil servants
3. The wealthiest group of citizens must pay for private insurance and can only fall back on the public system for “exceptional/catastrophic” expenses
• Since the delivery of health care is mostly private, it is tightly regulated to ensure that everyone has equal access
  
  Note: In the last year Netherlands has somewhat revamped their health care system making it mandatory for everyone to purchase basic health insurance from their choice of provider. My analysis of the Dutch model probably does not reflect these changes since it is primarily based on a 2004 report.

• Australia
• Hybrid system that combines both parallel public/private and co-payment models in an attempt to balance the three sources of health care funding: public, private out-of-pocket and private insurance
• Parallel private hospital system similar to Britain/New Zealand
• Subsidization and tight regulation of private insurance
• Similar to New Zealand, Australia relies on co-payments for ambulatory care, although to a lesser degree; Australia bans private insurance for these co-payments which therefore must come out of the patient’s pocket

• Canada
• Most closely based on a sectoral model where essential hospital/medical services are entirely publicly financed, and all other services have a mixed mode of public/private delivery and finance
• The Canada Health Act stipulates that no private charges can be paid for publicly insured services
• In 2005, the Supreme Court of Canada overturned a Quebec Law which prevented citizens from buying private health insurance for medical services available through the publicly funded system
• In their decision the Chief Justices noted that “access to a waiting list is not access to health care”

• United States
• A complicated mixture of public/private funding and delivery
• Federal law ensures everyone access to emergency services regardless of ability to pay
• Three ways in which health care is funded:
1. As a benefit through employer
2. Through government programs including Medicaid and Medicare which provide coverage to seniors, persons with low income and/or disabilities
3. Through privately purchased health insurance
• Generally regarded as the industrialized nation with the least universal health care system
• Spends more of its GDP (around 15%) on health care than any other industrialized nation
• A U.S. Census Bureau study found that 15.8% of Americans had no health insurance at some point in 2006
  

$150 Million for What??

On day one of the official Saskatchewan election campaign, Lorne Calvert promised a $150M universal drug plan, should his party win the upcoming election. One day prior, an independent research organization at the Fraser Institute released a study showing that surgical wait times in Canada are at an all time high. According to a CBC news article reviewing the study, Saskatchewan has the highest surgical waiting times in the nation, with a total wait time average of 27.2 weeks. On the positive side, Saskatchewan was one of the four provinces where wait times have actually come down in the past few years.

It seems as though a universal drug plan is really not one of the most pressing needs of Saskatchewan citizens at the moment. It certainly doesn’t sound like a bad idea, especially in an age where prescription drugs are becoming more common, more important to general health care, and definitely more expensive. If we are going to have a health care system where everyone has equal access to see a doctor, diagnostic services, surgery etc., it makes sense that everyone should also have equal access to medication, with no discrimination based on financial circumstance. My concern is that it didn’t seem like a universal drug plan was an issue before the election was called. There were however other issues related to health care including surgical wait times and doctor/nurse shortages that have been important and pressing issues for some time now. One has to notice that with a major announcement coming almost every day from the major political parties, the hundreds of millions of dollars are really starting to add up.

Privatization of Health Care Part 1: The Background

According to the Canadian Institute for Health Information, total health care spending in Canada has nearly doubled in the past decade, falling just short of $150 billion in 2006. The rate at which health care expenditure is increasing is simply staggering and cannot possibly be maintained in any economically feasible future. To make matters worse, the problems that plagued health care in 1996 are the same problems that the system is facing 10 years later, despite all the extra funding. Many might argue that health care provider shortages, increasing wait times, and rural hospital closures are even more problematic now than a decade ago.

Considering the importance of the issue to all Canadians, there has been relatively little debate on the necessary course of action that will improve the provision of health care across the country while also curbing health care spending. Historically, the debate has had two main proponents: those in favour of revamping the system within the current framework set out by the Canada Health Act, and those in favour of revamping the Canada Health Act and establishing some type of privatized or for-profit health care system (commonly called two-tiered). More recently there have been proposals for a type of hybrid system that would combine aspects of private health care and aspects of public health care, and might look similar to systems that already exist in some European countries.

One of the factors that may be limiting this debate is the sentimentality that exists toward the universal system of health care that Canada was once so well known for. Universal health care has given Canadians a long-standing sense of moral superiority over our southern neighbors, who we consider barbaric for not affording all citizens an equal opportunity to health. In principle universal health care is a very noble concept, but if it is not accessible, timely and efficient, it is not beneficial to anyone, let alone everyone. An article in the National Post discussing the need to have an open debate about health care reform points out that “politicians will immediately cast any spokesperson for debate and discussion as pro-American, pro-private, two-tier health care.” The article’s author Kevin Libin also notes that “leaders are often reluctant to address growing problems for fear of being accused of trying to demolish universal health care.”

What many Canadians might not realize is that private health care is already a big part of Canada’s health care system. Private health care is loosely defined as anything beyond what the public system will cover. Of the nearly $150 billion spent in 2006, $43.2 billion was spent on private health care. Things like ambulance rides, private hospital rooms and many cosmetic procedures are not covered by the public system and either come out of extended medical insurance coverage, or the patient’s own pocket. It is also important to distinguish between publicly funded services and publicly delivered services. Most family doctors and specialists for example work out of the private sector, in practices that they themselves maintain and manage, and bill the public system for each patient that they see or treat. This service is therefore privately delivered but publicly funded. An increasing amount of long-term care facilities, and diagnostics labs are run privately and not-for-profit, again billing the public system for their work.

Private health care is not something that Canadians should fear, or be scared to talk about just because of our proud history of universal health care. In a democratic society, open debate is absolutely essential, especially when the issue is one that affects everyone, and one that so much of our taxes go towards. In part two of this blog I will delve further into the debate, and discuss the views and ideas of prominent health care policy researchers as well as the positions of politicians and the major political parties.

Sources:
CBC News In Depth: Health Care
Financial Post Article: Medicare Myths
National Post Article: People Should Speak Openly On Reform: NCC
Canadian Institue for Health Information