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Are the Dutch crazy capitalists for using private health care?

Appeared in the The Province and Prince Albert Daily Herald
Release Date: December 20, 2011

Canadians seeking surgical or therapeutic treatment will wait a median of 19 weeks between an appointment with their physician and when they receive treatment. According to physicians, this is nearly three weeks longer that what they consider clinically reasonable. What’s worse is that wait times have increased despite the billions of dollars in federal health transfers Ottawa has sent to the provinces to tackle wait times. Under these circumstances, where nobody is accountable, what options do Canadians have? They can get in line.

It should be clear to most that the ‘Canadian way’ is not working. While this requires a slice of humble pie for advocates of Canada’s single-payer health insurance system – patients and taxpayers more generally would be much better off without Canada’s health care hubris.

The first step is recognizing that greater private involvement in the delivery and financing of medical services does not mean an erosion of universal access to health care. It also does not mean that the well-off will have access to high quality health care at the expense of low-income families. But such fraudulent claims pop up time and again whenever private involvement—which is how every Canadian gets their food—is proposed in the health care sector.

Or there is this other diversion—that any private involvement in health care will lead to American-style health care. It can’t be repeated enough that every Canadian should take a pledge to end American comparisons and instead focus on Europe. There, in countries where universal health care is achieved, competition in the private sector has led to increased quality and efficiencies, lower prices, and virtually no wait times.

For example, take the Netherlands, where 99 per cent of the population is insured and which no reasonable Canadian thinks is a hotbed of supposedly radical anti-universal sentiment. In contrast to Canada where almost the entire health care sector is centrally planned by provincial and federal governments, the role of the Dutch government is to ensure a properly functioning health care market.

Everyone in the Netherlands must purchase a basic health insurance plan in the private market. Those who cannot afford to purchase the basic package receive subsidies from the state. That subsidy is then used to buy an insurance plan of their choice. Children under the age of 18 are covered by the tax-financed Health Insurance Fund.

Because everyone must be insured in the private sector and because individuals and families can switch insurers without a financial penalty, private insurers are forced to compete on price. At the same time, insurers negotiate prices with health care providers for preferred services. Consequently, providers compete on both prices and quality. That not only benefits patients but creates a system of accountability.

Compare that to status quo Canada. Here, there are no incentives to ensure patients receive the best medical care possible because there is no direct penalty to providers if patients are unsatisfied. Canadians cannot switch insurers. Instead, they are obligated to sit and wait for medical treatments for weeks or months without the ability to shop around.

But not the Dutch. Wait times for medical treatments in the Dutch system are nowhere near the delays endured by Canadians.

One of the most frequent Canadian criticisms of private health insurance is the notion that sick people will not be insurable. However, in the Dutch system, insurers must accept all applicants regardless of age or pre-existing medical conditions.

In addition, premiums are community-rated (as opposed to being risk-adjusted). That means that the price of the basic insurance package is the same for everyone. To compensate insurers, all working Dutch citizens contribute to a Health Insurance Fund through their payroll deductions. Those deductions are then pooled among health insurers based on a risk-adjustment system.

In other words, the entire population has the exact same access to health insurance irrespective of age, medical status, or ability to pay.

Notably, in addition to achieving universality, choice has become one of the fundamental characteristics of the Dutch system. By comparison, the notion of choice or freedom is nowhere to be found in Canada’s health care context and is routinely opposed by advocates of single-payer health insurance. Strangely, monopolies are frowned upon everywhere else in Canadian society – but not when it comes to health care.

Under our current system, Canadian families cannot access insurance that best suits their medical needs.

We can learn a lot from countries like the Netherlands but we can’t afford to wait much longer.