Healthcare in Canada: To Privatize or Not to Privatize To Privatize or not to Privatize: Healthcare in Canada

Canada prides itself in one of the most generous healthcare systems in the world. Canadians do not have to rely on their employers for health insurance or to pay out-of-pocket for their medical procedures as the greater part of their healthcare bill is footed by the government. This has had the effect of making the country a rather healthy nation; however, its health comes at a cost. Canada currently spends over 9% of its GDP on healthcare -- the highest amount in the developed world. This proportion can be expected to rise over the coming years as the Baby Boomer population ages. Privatization has been proposed as a possible way of reducing the government's expenditure on healthcare. This text assesses the potential costs and benefits of healthcare privatization.

Open letter to the Hon. Melanie Wight of Burrows Constituency in Manitoba

The Privatization Issue

The Canadian healthcare system has time and time gain been identified as one of the core elements that make Canadian citizens proud to be Canadians (Howard, 2011). Beginning in the 1960s, the Canadian administration instituted a program geared at phasing out for-profit healthcare institutions, and replacing the same with a universal publicly-funded regime. The regime provides comprehensive health insurance coverage to all Canadian citizens through health insurance plans administered by the various provincial governments. What this means, in practice, is that Canadians do not have to rely on their employers for health insurance or to pay out-of-pocket for their medical procedures. The majority of the bill is footed by the government, with citizens only paying small monthly premiums -- usually$100 or less. This has proven to be a very generous plan, and very popular among Canadians. However, it is also very expensive to run, and has an indirect effect on access. In recent years, provincial governments have begun considering ways of making the healthcare system more sustainable in the long-term. A number of solutions have been proposed, including the privatization of hospital and clinics currently under government ownership and administration.

Any attempt to shift the burden of healthcare from the government to the individual citizen is likely to face massive resistance from the public. The Manitoba government has been identified as one of the greatest supporters of this strategy (Howard, 2011). As a matter of fact, a number of changes along the same line have already been introduced and implemented (Howard, 2011). One move geared at shifting healthcare costs to the individual is the province's recent decision to eliminate publicly-delivered school-based dental programs. Such changes represent an almost-certain move towards privatization (Howard, 2011). It is crucial that stakeholders understand the potential implications of such shifts so that they can make decisions based on facts. There is no doubt that the rising expenditure on healthcare may come to hurt the economy, particularly with the ageing of the Baby Boomer population. It is prudent, therefore, that provincial administrations devise an effective way to make the healthcare system more sustainable. This text assesses whether privatizations really is the way to go.

Background of the Healthcare Privatization Issue

The origin of the Canadian healthcare system can be traced back to the passage of the Hospital Insurance and Diagnostic Services Act in 1957, which accorded Canadians the privilege to access diagnostic and hospital services as needed (Wilson, 2000). The Act was expanded in 1966, with the passage of the Medicare Insurance Act, which ensured public funding for physician services (Wilson, 2000). The Canada Health Act passed in 1984 strengthened the country's healthcare system through the inclusion of an accessibility clause stating that Canadian citizens were not to pay any charges or medical fees for medically-necessary healthcare (Wilson, 2000). These three pieces of legislation form the basis of the country's healthcare system as we know it today.

Recent decades have, however, seen some serious cost-related issues arise in relation to the same. Between 1990 and 2000, the average portion of territorial and provincial budgets spent on healthcare rose from 32% to 38% (Commission on the Future of Healthcare in Canada, 2002). Canada currently spends 9.3% of its GDP on healthcare budgets -- the highest proportion in the industrialized world (Commission on the Future of Healthcare in Canada, 2002).

Numerous task forces and commissions were instituted in the 1990s to provide recommendations on the sustainability of the country's healthcare system (Wilson, 2000). In 1993, the World Bank began to pressure the Canadian administration and...

Many nations reformed their health systems to conform with the World Bank's preferred model (American-style privatized healthcare).
As a cost-cutting measure, provincial governments began to take different policy options to limit the role of the public sector in healthcare provision, and to define the same as a private responsibility. In Manitoba, this privatization has taken several forms including: i) the delisting f health services for outpatients, ii) the elimination of publicly-delivered school-based dental programs, iii) the contracting out of cleaning and food services in hospitals to private companies, iii) the privatization of home care services, and iv) the use of private laboratories (Howard, 2011).

All these are clear indications that the province is moving towards a privatized healthcare system. There, however, is still raging debate on whether or not privatization really is the way to go. The 'considerations' section details the potential implications of privatization on the province, the country, and the global environment.

Considerations: To Privatize or not to Privatize?

Proponents of privatization have put forth two main arguments to support their viewpoint. The first of these is that privatization allows faster access to care and also greater choice on the type of care provider to access (Wilson, 2000). Secondly, since private ventures operate on a for-profit motive, they are deemed to be more efficient and less costly to the private consumer or the taxpayer (Wilson, 2000).

Critics of privatization, however, argue that the reduced operating costs by private entities is as a result of lower staff wages, a reduced number of healthcare providers, and a reduction in healthcare workers' qualifications, all of which result in a lower quality of care (Wilson, 2000). According to Estes and Swan ( as cited in Wilson, 2000), the efficiency of private entities could also be linked to private businesses only offering selected healthcare services to selected groups of patients, during restricted hours of operation -- a phenomenon popularly referred to as cherry-picking or creaming. The implication is that private companies will begin competing for the same clients or the right to offer certain services, resulting in an oversupply of some healthcare services and an undersupply of others (Wilson, 2000).

Another issue with privatization is that it could cause dumping -- where private entities do not want to provide care for unprofitable patients, and the general hospital is then forced to offer 24-hour, 7-day a week services to meet the needs of the general public (Wilson, 2000) This affects the quality of care delivered in general hospitals, and opens up opportunities for the development of a two-tiered system, where citizens with money can buy their way to better medical care as those using the public system perpetually access low-quality services (Wilson, 2000).

Evidently, privatization has more costs than benefits. There is no doubt, nonetheless, that cash is the problem -- Canadians do not want to have to pay more for lower quality healthcare. The solution to making the healthcare system more sustainable lies in finding new and more sustainable ways to spend the funds that are currently available. The subsequent sections detail some potential courses of action that could be pursued.

Options

The commission on the Future of Healthcare in Canada proposes two potential courses of action for dealing with the current financing problem:

Expanding the Role of User Fees for Services Covered by Medicare: user fees are already in use in the healthcare system (Commission on the Future of Healthcare in Canada, 2002). Things such as prescription drugs are not covered by Medicare outside the hospital setting; they may be covered by private coverage or may not be covered at all (Commission on the Future of Healthcare in Canada, 2002). The term 'user fees' in this context refers to a policy geared at charging fees for care received in a hospital or from a physician -- the Health Act does not currently allow such a framework (Commission on the Future of Healthcare in Canada, 2002). These user fees could be collected in a number of ways: i) patients could pay a flat rate (usually a very small proportion of the cost) for every visit to the physician, ii) the public could pay deductibles for care -- such as the bill paid for auto accident repairs even if the owner has motor vehicle insurance (Commission on the Future of Healthcare in Canada, 2002). Just like what happens in motor vehicle arrangements, the rest of the bill would be covered by the government under the health coverage plan (Commission on the Future of Healthcare in Canada,…