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Canadians Do Not Need Private Pay for Medically Necessary Services

Canadians who are committed to publicly funded healthcare need to know that they have opponents that will use consumer dissatisfaction to suggest that private payment is required in our health systems. We sometimes forget that Canadian medicare is only 50 years old and still fragile. To understand the relative fragility of medicare, a brief history lesson is warranted.

Universal single payer health insurance began in Saskatchewan on July 1, 1962 following the 1960 provincial election that resulted in a majority Co-operative Commonwealth Federation (CCF) government with T.C. “Tommy” Douglas as premier. Medicare was the defining issue of the provincial election campaign and the election of the CCF determined that the new government would introduce legislation creating medicare.

However, North America’s introduction to socialized medicine was not accomplished without vehement opposition. Saskatchewan’s physicians’ college, the Canadian and American Medical Associations as well as the North American insurance industry were appropriately concerned that once started, medicare would spread like a virus. This resulted in an organized campaign against medicare which is important to consider given current risks to medicare.

When the CCF proclaimed medicare on July 1, 1962, organized medicine across North America supported the Saskatchewan Doctors Strike in protest. This strike, which lasted from July 1 to 23, was also supported by right wing elements within the province including the radical priest Athol Murray who infamously declared at an anti-medicare rally, “This thing may break into violence and bloodshed any day now, and God help us if it doesn’t.”

Public opinion in Saskatchewan continued to support universal coverage and publicly administered healthcare delivery. The popularity of medicare, as feared by anti-medicare forces, spread to the rest of the country and on July 1, 1968, the government of Canada proclaimed national medicare insurance legislation.

In the early days of medicare, coverage was provided for doctors’ services and for hospital expenses. Costs were shared 50:50 by the federal and provincial governments. Today, the provincial health insurance plans have expanded coverage to include drug plans, home care and nursing home coverage as well as the original elements of doctors and hospitals.

Constitutionally, health funding remains a provincial responsibility. During the 1990’s, the federal government substantially reduced their commitment to fund medicare. Currently, about 20% of Canada’s health costs are supported by federal transfers and the remainder comes from provincial taxation.

This combination of challenges- the increasing range of publicly insured services, reduced relative federal funding, and the increased cost of caring for our aging population- results in a growing perspective that we may no longer be able to afford publicly funded healthcare.

In particular, crowded Canadian hospitals and waiting lists for services are described as symptoms that the system is failing as currently organized. Similar to the arguments made against medicare in Saskatchewan in 1966, a variety of elements led by some physicians and insurers are claiming that our system needs a private delivery arm that is NOT publicly administered in order to provide appropriate care for Canadians.

And what is wrong with private funding for health services? After all, only about 70% of all Canadian health services are currently publicly funded. Dental care, drug coverage for most employed Ontarians, vision care, retirement living- are all paid out of pocket or through workplace insurance. Why not expand that privately insured coverage to allow enhanced access (queue jumping) to hospital and physician services?

Dr. Brian Day is currently engaged in a law suit in British Columbia that declares that paying privately for health services is a constitutional right. This case attacks the foundation of the Canada Health Act and if successful would promote private care across the country. Similar to the original fight against medicare, Dr. Day’s case is supported by interests eager to offer Canadians private health insurance.

And what is wrong with paying for faster access to “medically necessary services”- the term used in the Canada Health Act to describe care that should be universally insured and publicly administered? Wouldn’t private insurance reduce the load on the public system and reduce overall health costs to the government?

The reasons for strongly opposing private payment and insurance can be determined from Canadian evidence. First, private insurance is less efficient than publicly administered payment. Private employer drug plans in Canada pay more for drugs than provincial plans supported by the Pan-Canadian Pharmaceutical Alliance. Private drug plans have higher overhead expenses as well as more expensive formularies.

Ontario evidence demonstrates that private payment for enhanced access to diagnostics and therapies rapidly results in two-tiered medicine with private pay citizens pushing to the front of the line and other tax payers falling behind. This was demonstrated in Ontario during the “extra-billing” era prior to the passage of the Health Care Accessibility Act of 1986. This act eliminated the ability of doctors to charge above provincially insured rates for medically necessary medical services.

Patients who provided their doctors with extra-billing income prior to 1986 inevitably achieved more rapid access to surgery or diagnostics. It is not surprising that elimination of extra-billing resulted in the short lived 1986 Ontario doctors strike.

Access to private care increases overall health costs and contributes to unnecessary and inappropriate services. The determination of what is “medically necessary” is often very subjective. Choosing Wisely Canada (a physician group dedicated to reducing unnecessary services) suggest that up to 30% of care may be inappropriate or unnecessary.

If access to services is determined through public administration and limited funding, inappropriate or unnecessary care is constrained. Allowing privately funded access to diagnostic imaging services will inevitably result in more unnecessary expensive tests like MRI’s to diagnose joint disease. Private pay for surgery will result in many more unnecessary procedures like arthroscopy for knee arthritis.

Maintaining excellent health services in Canada requires constant vigilance and tough administration that recognizes the prevalence of conflicts of interest in healthcare. Although health care workers are close observers of the system’s deficiencies and opportunities, it is inevitable that personal interest will be apparent in their analysis of what the system needs. Nursing associations generally suggest that better quality healthcare will be provided by more and better paid nurses. Medical associations are known for arguing that better health services will result from increasing doctors’ fees.

Powerful forces in healthcare (clinicians and insurance companies in particular) will benefit by convincing Canadians that their health system is failing and that it requires an expansion of its funding sources. Our system definitely needs innovation and reform and this blog will address some of the changes needed to make our system more responsive and cost effective.

But we do not need private health funding for medically necessary services. We do not need to create two tiers of service for Canadians. We do not need to consume more of our GDP in healthcare services that are inappropriate and unnecessary.

Recognizing that cost-effective care generally provides the best patient outcome is likely the most important concept to understand in planning Canada’s health system of the future. The original principles of our vibrant yet fragile, 50-year-old social innovation- that Canadian healthcare should universal, publicly administered, portable, comprehensive and accessible- should continue to define our system in the future.

Image Credit: ©TheNikon – Can Stock Photo Inc.