On health care reform, it's time to consider going Dutch - Appeared in the New Brunswick Telegraph Journal

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Appeared in the New Brunswick Telegraph Journal
Health care reform has once again become a common dialogue around the water cooler as the 10-year $41 billion funding agreement between the feds and the provinces is set to expire in 2014. The Canadian Medical Association and other key stakeholders expressing their opinions on how health care should be reformed appear to be repeating their tired old status quo story (more money, more plans, and three cheers for Medicare). Canadian politicians and policymakers would be wise to ignore them and take this opportunity to introduce real reform.

The reality is that neither more money nor the “health care action plan” some stakeholders have proposed will actually do anything to make health care spending more sustainable or improve access to medically necessary services. Neither of these proposals, nor any others being commonly tossed about in the discussion today, solve the real problem: the structure of Medicare itself.

Internationally, Canada maintains one of the developed world’s most expensive universal access health insurance programs - and the costs are growing at an unsustainable pace. Yet despite all the money thrown at health care, the system is simply not performing up to standard. Consider that in 2010 Canadians waited around 18.2 weeks from the time they obtained a referral from a general practitioner to the time they received elective treatment from a specialist. Not only is that nearly three weeks longer than what physicians considered clinically reasonable, it is some 96 per cent longer than the wait in 1993.

Canada is also the only country in the developed world that effectively prohibits its citizens from purchasing private health insurance for medically necessary services and bans user fees at the point of service.

This is in contrast to every other developed nation, where patient cost sharing and parallel private financing is commonplace. Notably, many European countries have incorporated competitive market mechanisms for financing health care services while achieving universal coverage. The Netherlands provides us with an optimal example of how economic incentives can be implemented while maintaining the social goal of universality.

In 2006 the Netherlands introduced sweeping reforms to their health insurance system. Prior to the reforms, the Netherlands had a mixed insurance system where patients had public insurance coverage and the ability to opt out of the public scheme and purchase private insurance. However in 2006, the Dutch introduced a compulsory health insurance scheme where patients were mandated to purchase a standardized health insurance plan in the private insurance market. This significant reform completely changed the way in which health care was financed and delivered throughout the country, to the benefit of both patients and payers.

Today, health insurance in the Netherlands is very competitive; insurers negotiate with providers on price and quality, and must compete for patrons. At the same time, patients have the ability to shop around for the insurance plan that best meets their personal medical needs and financial capabilities. Information on price and quality is easily accessible to the public, making the entire health insurance industry transparent and competitive. In addition, public subsidies are provided to low income individuals so that they can purchase a standard insurance package of their choosing in the private market.

Importantly, the national government has changed its role from directly controlling the insurance system as a public insurer (similar to Canada), to ensuring that the private health insurance sector is running smoothly. Responsibilities for those things best handled outside of government have wisely been transferred from the government to insurers, providers and patients. Although the government regulates the insurance industry by ensuring that all patients are eligible for coverage regardless of pre-existing medical conditions and by making sure premiums for the standard package are ‘affordable’ and priced at community rates (i.e. not priced based on individual characteristics); generally speaking, both patients and providers are faced with competitive market forces that create the necessary economic incentives to use and provide medical services more efficiently.

For instance, the ability for insured individuals to change insurers incentivizes insurance companies to provide the best service at the lowest price. Likewise, the ability for insurers to negotiate prices with providers creates the necessary incentives for health care providers to ensure high quality care at the lowest cost. Critically, in addition to private health insurance, patient cost-sharing is also required at the point of service.

Importantly, the Netherlands achieves universal coverage without a government insurance monopoly, and the wait times for care in the Dutch system are nowhere near the delays endured by Canadians. In addition, the Netherlands spends a smaller amount of their GDP on health care, and the availability of medical resources is as good as Canada.

As the 2004 health accord is set to expire, Ottawa should begin with an immediate temporary suspension the Canada Health Act in order to allow the provinces to experiment with a number of policies currently being practiced in countries like the Netherlands.  

Instead of renegotiating a financial agreement that would maintain a government-run monopoly over our health insurance, it’s time for Canadians to consider going ‘Dutch’.

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