Despite the fear mongering, evidence shows private competition in health care works

Printer-friendly version
Appeared in The Province and New Brunswick Telegraph Journal

Those opposed to market-based health care reform do their best to scare Canadians, suggesting that the introduction of private competition will lead to longer wait times, higher costs, and poorer quality, particularly for lower-income individuals and families.

Reality, however, is considerably different. International experience suggests that private competition is a fundamental feature of a high-performing, universal access health care system.

This is a key insight: private competition and the noble goal of universality aren’t incompatible. In fact, private competition in the health care system supports universality, leading to better performance including shorter waiting times.

For evidence, consider the Dutch health care system where private (and even for-profit) insurance companies, private providers, activity-based funding and cost sharing combine to provide more timely access to high (if not higher) quality care than Canada’s system for similar cost.

How much more timely? In 2010, 31 per cent of Canadians reported waiting four hours or more in emergency before being treated, compared to just three per cent in the Netherlands. A third of Canadians reported waiting six days or more for access to a doctor or nurse, compared to just five per cent in the Netherlands. Canada also underperformed in waits for specialist care and elective surgery: 41 per cent of Canadians waited two months or more for a specialist appointment and 25 per cent of Canadians waited four months or more for elective surgery compared to 16 per cent and 5 per cent in the Netherlands.

Key to understanding those substantial differences in timeliness is the much larger role for the private sector in financing and delivery in the Netherlands.

Unlike Canada, there is no monopoly government insurer in the Netherlands. Rather, the Dutch are required to purchase standardized universal health insurance policies from a private insurance company of their choosing. While insurance premiums do vary among insurers, government regulations require that each company offer all individuals the same premium regardless of age and medical history. Lower income individuals receive premium assistance from government to ensure they have access to the same insurance as higher income individuals.

Insurance companies must accept all applicants. But they also compete for subscribers through premiums and other competitive factors including services that reduce wait times. Some Dutch insurers even guarantee access to select treatments in as little as five working days.

When it comes to getting the care they require, Dutch residents take their private universal insurance coverage to private care providers of their choosing (insurance companies may limit choices for subscribers in search of higher quality, lower costs, or both). Patients must share in the cost of care consumed through deductibles, which can be voluntarily increased if they wish to reduce their health insurance premiums.

Finally, if Dutch residents would prefer to look after their own health care with their own resources, they are free to do so. There is no requirement that the universal insurance system pay for all medically necessary care in the Netherlands.

Combined, these policies have created a world-class health care system in the Netherlands. Just as important, reforms in recent years focused on competition and activity-based funding have successfully dealt with concerns about delays in accessing medical care, unlike in Canada where throwing a lot of money at the problem resulted in little success.

The Dutch approach of government playing a key role in funding, regulation, and oversight but leaving the operation of the health care system largely to private insurers and providers is very different from the predominant role of government in both financing and delivery in Canada. Notably, the Dutch system incorporates all of the policies Canadian defenders of the status quo say would destroy medicare. Yet the Netherlands has a far more accessible, high quality health care system for those who fall ill, regardless of their ability to pay.

If Canada is to ever get the world-class universal access health care system we’re already paying for, it is imperative that we pay more attention to health care models that actually work. False claims that misrepresent the realities of sensible reform, causing Canadians to be fearful of policies that work well in top-performing universal systems around the developed world, do us all a disservice.

Subscribe to the Fraser Institute

Get the latest news from the Fraser Institute on the latest research studies, news and events.