Canadian Medical Association Journal 1996; 154: 1084-1087
In 10 years, a Canadian who wants a hip replacement may face a difficult choice. She can wait in line for a spot on a surgeon's operating list at a public hospital, and after some delay have the procedure done with no out-of-pocket expenses. Alternatively, she may be able to sign up for same-day service by a different surgeon in a private facility, with extensive physiotherapy services and "spa extras" such as terry-cloth robes and gourmet meals. However, she will pay a hefty bill when she leaves.
That is how a parallel private system would work, and according to recent polls commissioned by the CMA more than 70% of doctors favour the idea. However, only 40% of the general public show any support for it.
In a two-tier medical system, two levels of care are available for consumers: one funded entirely out of tax dollars, and the other funded directly by consumers from their after-tax dollars. The division between public and private is clear - the same procedures would be available in both systems, but physicians would have to decide whether they want to work in the public or private sector.
Primary care physicians, for the most part, would have little incentive to go private, since few Canadians would expect to pay for day-to-day treatment for minor ailments. Specialists, however, would be able to build a client base, particularly for nonurgent procedures such as joint replacements, cataract surgery, breast reduction, hernia treatment and diagnostic tests.
In any discussion of private medicine, it is important to explain what a two-tier system is not. For one thing, there would be overlap between the procedures available in each sector; that is not the case now, where there is a public system that covers everything that is defined as "medically necessary," and a private system, which accounts for 28% of all health care spending and covers everything else, such as dentistry, most medications and medical expenses incurred outside Canada. The current move to shrink the list of "medically necessary" services and expand the private sector does not challenge the architecture of our health care system, as supported by the Canada Health Act.
Neither does a two-tier system permit someone to pay to jump the queue for faster access to publicly insured services. That is how much of Britain's private health care sector works: patients can zigzag from their National Health Service family doctor to a specialist's private consulting room to the public-sector hospital bed, with the same specialist, now funded by the NHS, performing whatever procedure is required (see Richmond C: NHS waiting lists have been a boon for private medicine in the UK CMAJ 1996; 154: 378-381 [full text]).
Alberta's "hybrid" ophthalmology clinics also operate on this principle. People who want immediate cataract surgery pay a "facility fee" of about $1000, which gives them rapid access to a surgeon who bills the provincial health plan for performing the procedure. This "subsidized queue-jumping" contravenes the Canada Health Act, and is anathema to the federal government. As a consequence, Ottawa has been deducting $420 000 a month from its transfer payments to Alberta; David Dingwall, the new federal health minister, promises to get tougher if the issue isn't resolved soon. Ottawa has made it clear that it will not permit physicians to do "wallet biopsies," meaning it won't allow them to decide whether to see a patient publicly or privately, according to their estimate of a patient's means instead of her need for treatment.
Until now, the fundamental principle of Canada's health care system has been equity, the belief that health care services should be allocated according to need, not according to ability to pay. Every opinion poll demonstrates that most Canadians like it this way. But there is a growing tide of opinion, especially among some specialists and upper-income Canadians, that a much larger private sector is inevitable, for two reasons.
First, they argue that governments can no longer afford to supply all the health care that Canadians want and expect. This year, provinces must swallow the $7 billion cut in transfer payments announced in the 1995 federal budget. Some provinces, such as Alberta, have already performed radical surgery on their health care systems, and Ontario plans to initiate massive cuts in its hospital sector this year. By next year, the percentage of gross national product that Canada spends on public and private health care will have dropped to around 9% from a high of 10.1% in 1992-93. Continuing cuts may mean that our current system will not be able to provide an adequate level of care.
The philosophy underlying the argument for a parallel private system is utilitarian. In a discussion at the CMA's annual meeting last August, Dr. Colin McMillan, chair of the Board of Directors, quoted historian Michael Bliss: "What do you do if you promised to supply people's needs for something and then find you can't afford to do it any more? You have two choices: you can fund only a certain percent of everyone's needs or you can fund the needs of those who have nowhere else to turn and ask the well-to-do to fend for themselves. In the first scenario, no one's needs get fully satisfied. In the second scenario, everyone's do."
The point was made more bluntly last September by the director of the University of Ottawa Heart Institute. Dr. Wilbert Keon was exasperated by the provincial government's refusal to provide an extra $3 million funding so the institute could reduce the size of its waiting list. He told an Ottawa Citizen reporter that patients should be allowed to pay for their own operations. "The government is never going to stop a Canadian from going out and buying a car. But they legislate people against spending $11 700 to buy their life."
The second argument for a parallel private system is that Canadian values are changing and we are becoming more like Americans in our attitudes toward health care: we are seeing it as a consumer investment rather than a public good. "Consumers want choice and are willing to invest in their health," observes Andrew Vaz, national director of health care consulting with Ernst & Young. "More and more Canadians consider health too important for waiting in a queue." If a lawyer or a truck driver prefers to spend money on a fast knee replacement rather than a holiday in Hawaii, he should have that choice. After all, Canadians already have that option for two other items considered public goods: education and pensions. We all pay for the public systems through our tax dollars, and can also make the choice to spend our own money on private schools or pensions.
The philosophical underpinning of this argument is libertarianism, with a good measure of scepticism about government thrown in. One of its main proponents within the CMA is Dr. Edwin Coffey, a Montreal gynecologist, who expressed his views with great gusto at the CMA's 1995 annual meeting. "When Canada's medicare legislation was crafted, policy advisers convinced the legislators that personal liberty and free choice in health-system financing had no significant claim, that bureaucrats make better choices than patients and doctors, and that state monopoly and regulation was better than the competitive market place at controlling costs and ensuring access and quality . . . this doctrine has no intellectual defence."
Along with other supporters of a parallel private system, Coffey suggested that such a system would have several advantages:
If the tide of public opinion turns in favour of allowing a parallel private system to develop, what are the implications? At the government level, the Canada Health Act will have to be redrafted to eliminate the barrier between "medically necessary services" and everything else. A system will have to be implemented for the inspection of private-sector professionals and facilities to ensure that adequate standards are maintained. Will private hospitals be accredited in the same way as public hospitals? Under what circumstances will private physicians be permitted to use experimental medications, technologies and treatments that are untried in the public system? Will provincial or federal governments be responsible for making the rules?
There is also the issue of national standards, and whether Ottawa will have the authority to ensure the provision of "core services" in the public system in every province. A province like Alberta may, for instance, allow its public-sector capacity for cataract surgery to shrink dramatically, since it already has well-established private eye centres. Would Ottawa be able to step in if a low-income Albertan is faced with a wait of 18 months for cataract surgery because there is only one surgeon left in the public sector? (At present, no one in Alberta need wait more than 6 weeks.)
Running parallel to the new parallel private system would be an expanded health-insurance industry. "The good news," points out Mark Daniels, president of the Canadian Life and Health Insurance Association, "is that we already have a mature insurance industry in this country, with considerable expertise in health care." Out of a total workforce of 13 million in Canada, 9 million people already have some form of group medical insurance for services not considered medically necessary. In all, companies like Great-West Life and Sun Life cover about two-thirds of Canada's total population, mainly through employee-benefit packages, and many of the rest are seniors who have additional coverage under provincial plans.
The home-grown industry, says Daniels, sees itself as complementing rather than competing with medicare. "We don't see ourselves as an alternative to the publicly funded system." At the moment, the industry is scrambling to deal with "creeping privatization" -- being suddenly stuck with the bill for certain items, such as annual checkups, that provincial plans have unilaterally stopped covering. Private insurers find themselves faced with bills for items they previously had never been expected to cover. There was controversy recently when it was reported that Toronto's Hospital for Sick Children was charging for private rooms if a family had private health insurance; almost all rooms in the hospital are private.
Daniels insists that American insurers are not pushing for entry into Canada to cover "medically necessary" services. Most emergency medicine would have little appeal to private insurers: "Insurers have to be careful to set the premium price right; they'd go bankrupt on cardiac care."
Nevertheless, on high-volume, low-risk procedures such as childbirth there would certainly be a market. Vaz suggests that major American companies will bring a lot of managed-care know-how to Canadian health care, since they already have refined tools and techniques for keeping costs down in the US. They will also introduce Canada to market concepts such as risk sharing, which will give both payers and providers an incentive to keep costs down.
Recent events in Alberta and Ontario suggest that suppliers are anxious to create a parallel system as soon as possible. In Alberta, a group of Edmonton doctors is negotiating to rent an empty hospital floor in Leduc, a small bedroom community, and offer pay-as-you-go surgery in a "Hotel de Health." Their target market is Americans, but if the Canada Health Act was amended, Canadians would be just as welcome. In Toronto, a group known as the King's Health Centre is working to establish a completely private hospital that would offer a range of diagnostic services and elective procedures. The Ontario government recently decided to allow public and private nursing organizations to compete to provide home care.
Once a private health-insurance industry that covers hitherto "medically necessary" services is established, pressure will develop for the premiums to be tax deductible. Health-insurance premiums receive favourable treatment in both the American and British tax systems; this means, in effect, that the private system is publicly subsidized. Ottawa will have to decide whether to give the private sector further encouragement through the tax system, regardless of the inequity of such a decision.
For many health care writers and economists, any shift to a two-tier health care system is unacceptable. They argue that health care costs would shoot up. However, the extra revenue would be spent on administration, not health care, since the private sector would require an army of administrators and clerical staff. Blue Cross employs more people to deal with health care claims for Massachusetts' 7 million citizens than are employed here to deal with claims made by 30 million Canadians to provincial and territorial health plans.
Medicare defenders also suggest that a private system would suck many physicians and a lot of public support from the public system. Dr. Michael Rachlis, author of Strong Medicine: How to Save Canada's Health Care System, says that wealthy Canadians will resent paying taxes to fund a health care system they're not using; as a result, the quality of the public system will quickly erode. "Just look at the sorry state of the American public-education system -- the inevitable result of the mass middle-class exit to private schools."
Dr. Victor Dirnfeld, president of the British Columbia Medical Association and a strong proponent of a parallel private system, said many comments from opponents are nothing but "fear mongering."
He said arguments that a parallel system would lead to a mass exodus of physicians and patients from the public system are groundless because the parallel private system would never be big enough to support large numbers of physicians. "Opponents also forget [physicians'] sense of responsibility and commitment to the public system," he said, "and that there would be a professional commitment to protect it." As well, he said professional associations such as the CMA would also ensure that the public system received adequate support from the medical profession.
"As a profession, there is no way we want to develop a model like the US system, although our opponents say that. The model we espouse is like that already found in places such as Switzerland, Germany, the Netherlands and the UK -- not the US."
The most insidious aspect of a parallel private system, argues health economist Richard Plain of the University of Alberta, is that it will be permanent. Under some interpretations of the North American Free Trade Agreement's antimonopoly rules, once an essential medical service is provided in both the public and private sectors, it can never be recaptured exclusively by the public sector. Plain says that once medicare begins to fragment, it is "gone, gone, gone."
However, Ernst & Young's Vaz says that greater private-sector involvement does not automatically mean a slide toward American-style health care. "The health and social-service fabric of Canada is too strong to permit such a radical shift. We will see different and innovative models here: the introduction of managed care will help prevent the introduction of a two-tier system." But Vaz warns that new models will not develop while fiscal pressures are the only driver. Provincial governments need to act to plan the kinds of partnerships among providers, drug companies and insurance companies that could transform our public system. "We can pre-empt the whole public-private debate if we can reform our current system through restructuring and an infusion of private capital."
Medicare will survive, in some form, as long as it has the support of most Canadians, but its shape will depend on the kind of leadership given to its transformation at the political and professional level. CMA President Dr. Jack Armstrong is all too aware of the shoals ahead. "I would hate to see us move toward the US system, where the whole thing is driven by large insurance companies, on the backs of the providers and patients."