Health care lacks patient choice, competition

Certain commentators like to point to the fact that almost a third of health care spending in Canada is private, and then blame our chronic access problems and poor international rankings on this statistic. A little bit of sleuthing, however, reveals that this diagnosis is profoundly mistaken.

It is true that private spending accounted for 29% of total health care spending in Canada in 2013—up four percentage points since the mid-1980s when the Canada Health Act came into effect, according to data compiled by the Canadian Institute for Health Information.

While this share is far lower than that of the United States, and comparable to what prevails in Australia, Spain, and Switzerland, it is admittedly higher than the private sector’s share in Germany, France, and the Scandinavian countries.

The devil, however, is as always in the details. In a ranking of 16 major OECD countries with universal health care systems, Canada was dead last when it comes to the proportion of private spending for medically required care (which is to say, care provided in hospitals and in doctors’ offices). Whereas an average of 18% of spending on such care is private in the other countries examined, only 5% is private in Canada.

Even this 5% figure is misleading, as it doesn’t actually concern medical treatments provided to Canadians. Instead, it’s mostly made up of spending by patients for private or semi-private rooms, television rentals, parking fees, or medical services not considered essential to health, like renting crutches or prostheses. The only private spending for medically required care included in this figure is spending by foreign patients.

The simple fact is that medical and hospital services provided to Canadian patients are practically 100% financed by the public sector, and this situation has not changed in three decades. When health care funding is broken down by spending category, it becomes obvious that Canada is the odd one out, compared to the countries of Europe, in so severely restricting private financing for care that is considered medically required.

As for private health care spending in Canada, it essentially concerns areas that are peripheral to medically required care, such as care provided by dentists, optometrists, and other health professionals, as well as spending on prescription drugs. In these areas, governments only finance expenditures for specific segments of the population, like young children, seniors, or welfare recipients. And not coincidentally, given the significant private sector participation in these areas, they generally function well, with no long waiting lists.

This is not at all the case when it comes to the core of the health care system. The public monopoly maintains an absolute stranglehold on services provided in hospitals and doctors’ offices in Canada.

No other OECD country, in Europe or elsewhere, so severely restricts the participation of the private sector in the provision and funding of medically required health care services. And these mixed systems, while fully respecting the principle of universality, generally manage to achieve much better results than Canada in terms of patient access.

By fostering confusion about the distribution of public and private health care funding, supporters of the status quo obscure a basic fact at the root of our structural waiting list problem: the lack of competition and patient choice in our public health care system. If we want to correctly diagnose the problem and apply the appropriate remedies, clearing up this confusion has to be a top priority.

Yanick Labrie is an Economist at the Montreal Economic Institute and author of "Setting the Record Straight on Health Care Funding in Canada." The views reflected in this op-ed are his own.

This op-ed was also published in the Calgary Sun, the Ottawa Sun, the Edmonton Sun, the Winnipeg Sun and the Daily Herald-Tribune.