Private health insurance won’t improve health care

Mark Stabile explains the problem with private health insurance in Canada for Troy Media.

TORONTO, ON/ Troy Media/ – Canada is about to face its second court challenge over restrictions on private health insurance when Dr. Brian Day’s case appears before the courts in September 2014.

It is true that there are examples of jurisdictions that value universal health insurance coverage and also allow private insurance – the UK and Sweden would be two examples. But it is important to note that although these countries, among others, may allow for private insurance, they still have many of the same problems with their healthcare system that Canada does.

A recent review of the economic evidence on the effects of private insurance on public healthcare systems that I wrote with Matt Townsend for the Encyclopedia of Health Economics suggests that there is little evidence for many of the benefits that advocates of private insurance claim will occur for those who do not make use of the private system.

The first thing to note is that very few people in most countries purchase private insurance for care covered in the public system. In the UK, for example, it is less than 10 per cent, and in Sweden it is fewer than that. For the remaining 90 per cent plus of the population, the weight of the evidence suggests that private insurance provides little benefit for the rest of the system.

There is evidence, however, that physicians shift their time to the private system, resulting in fewer publicly-funded services. And there is evidence that the cases left in the public system are the most complicated and costly.

But there is little evidence that wait times in the public system go down. And there is little evidence that a private system reduces the costs of public systems. In fact, in some jurisdictions, overall costs in the public system actually went up in those cases where the tax system subsidizes people who purchase private insurance (as Canada does).

Overall, those systems that have private insurance have had to continue to grapple with issues of costs and access, much as we do here in Canada.

What is slightly more exceptional about the Canadian system is how it continues to promote inequality through two accidents of history. First, the evolution of our system from a system of mostly private insurance to one that focused on public insurance, first for hospital services, then doctors services, has left large holes in both coverage and financing. We continue to exclude prescription drugs from our basket of medically necessary goods.

Secondly, we continue to allow for regressive subsidies through our tax code for employer-provided health insurance. When we receive insurance through an employer, we don’t pay tax on the benefit the way we do with wages. It’s a lot of money – more than $3 billion dollars a year. And people in the highest tax bracket (29 per cent plus provincial taxes putting people in most provinces over 40 per cent) save over 40 cents on each dollar of health insurance they receive from their employer. People in the lowest tax bracket get less than half of that per dollar, making it a very regressive subsidy that contributes to inequality in this country.

We are more like the U.S. than the rest of the world in these respects, except that the Affordable Care Act (Obama Care), despite its flaws, aims to provide a much more comprehensive basket of medically necessary goods, including both prescription drugs and mental health treatment when required, and takes steps to counter the inequalities generated by unfair tax subsidies. These are first order problems with the Canadian system that need to be fixed.

International comparisons can’t provide all the answers to Canada’s healthcare system woes, but they can show us where there are similar problems even among differing healthcare systems. Those countries with two-tier health insurance still manage to provide a reasonable quality of care for their citizens, but they continue to face many of the same challenges we do.

To really improve our healthcare system we’ll have to look beyond simple solutions that other nations have shown don’t really work. Focusing on reducing the ways in which our system contributes to inequality would be a good place to start.

Mark Stabile is an expert advisor with, Director, School of Public Policy and Governance and Professor, Rotman School of Management, University of Toronto and a Fellow at the Martin Prosperity Institute.

Just Posted

Federal Green Party leader visits Ashcroft

Elizabeth May was in town with Mission-Matsqui-Fraser Canyon Green Party nominee John Kidder

Historic Cornwall fire lookout to get some tender loving care

Volunteers are being sought for a work bee at the lookout in August

Ashcroft resident now in his 25th year of riding to raise funds for BC Lung Association

Wayne Chorneychuk once more getting ready to ride in the Bicycle Trek for Life and Breath

Wildfire smoke can pose serious health risks

Tips to help you stay safe during the smoky summer season

Communities in Bloom judges coming to Ashcroft

All are invited to a meet and greet, where prizes for best gardens and street will be presented

Feds lowered poverty line, reducing the number of seniors in need: documents

Liberals introduced a poverty line that was below the prior low-income cutoff

$900M settlement reached in class action on sexual misconduct in Canadian military

After facing criticism, the government moved to begin settlement proceedings in early 2018

Tax take stays ahead of increased B.C. government spending

Tax revenue $2.1 billion higher than budget in 2018-19

Two toddler siblings found drowned on First Nation in Alberta

The Siblings were found drowned on their family’s property, according to RCMP

Chiefs honour Indigenous leader wrongfully hanged in B.C. 154 years ago today

Chief Joe Alphonse says they want his remains returned to his homeland in B.C.’s Cariboo region

Rare white ravens spotted again on Vancouver Island

Nature photographer Mike Yip said mysterious birds back in Coombs area

B.C. government seeks advice on reviving Interior forest industry

Public website opens as meetings start with community leaders

Psychics, drones being used to search for missing Chilliwack woman with dementia

Drones, psychics, dogs and more have been employed to help find Grace Baranyk, 86

B.C. mom to go to Europe court in hopes of getting alleged abducted daughter back

Tasha Brown alleges her estranged wife abducted their daughter Kaydance Etchells in 2016

Most Read