Other universal health-care countries allow private health insurance—and have shorter wait times
A new study by the Fraser Institute details how Canada is one of the only high-income countries in the world that does not embrace private insurers for medically necessary care. Importantly, each of the 16 countries examined share Canada’s goal of ensuring universal access and insurance coverage for medically necessary care—and many of them have much shorter wait times than we do.
So how do they do it?
While each country, obviously, takes its own unique approach in order to best suit the needs of their residents, the approaches followed by Switzerland, the Netherlands, Germany and Australia help illustrate the range of private-sector involvement for health-care insurance.
Despite having similar goals as the Canadian system with respect to universality, both Switzerland and the Netherlands have opted to take a different path to ensure primary coverage for basic services. Swiss and Dutch residents are required to purchase insurance from private firms in a regulated (but competitive) market. Health-care expenditures are mostly financed through a combination of community-rated premium charges (paid by residents to insurers) as well as payroll taxes. Residents who do not actively purchase insurance are either automatically assigned an insurer (in Switzerland) or charged a penalty (in the Netherlands).
The primary role of government in both countries is to manage competition, regulate insurers to ensure universal access regardless of pre-existing conditions, and help define the basic benefits package. The government also provides subsidies for individuals who cannot afford their premiums. However, in order to ensure responsible and sustainable use, cost sharing in the form of co-insurance (mostly in Switzerland) and deductibles (in both) are a common feature of these universal health-care systems.
While the concept of “two-tier health care” carries a negative connotation in Canada’s health policy discourse, other countries have been very successful using this approach while still ensuring universality. Coverage in Germany, for example, is essentially split between two entities: i) competing private not-for-profit sickness funds under a statutory health insurance (SHI) scheme and ii) private insurance. Germans rely on about 118 of these competing sickness funds in combination with 42 private insurance firms to provide coverage.
Coverage under the SHI scheme was mandatory for all those earning less than $56,200 in 2016, whereas those earning above this threshold were allowed to opt out of the SHI system entirely and purchase private insurance for themselves. Individuals who leave the SHI system for PHI cannot return to the former. However, patients in both systems can purchase additional (complementary or supplementary) private insurance to receive access to better amenities (like private hospital rooms), or to cover copayments.
It should be noted that private and public hospitals in Germany serve both the SHI and PHI schemes, with 99 per cent of all hospital beds accessible to SHI-covered patients.
For those Canadians who find these approaches extreme (albeit successful), the private insurance market in Australia may provide a more familiar example of the important role duplicative private secondary coverage can play within (or in addition to) a publicly financed system. Similar to Canada, Australia provides universal coverage for health-care services to all residents through a tax-funded system. Both countries also have large private insurance markets that covers a range of health goods and services. However, that’s where the similarities end. Unlike Canadians, Australians can purchase private insurance that allows for faster access to non-emergency services, greater selection of health-care providers, and coverage for co-payments that are charged by providers billing above the publicly reimbursement rate.
Importantly, each of these countries routinely outperform Canada on a number of key health-care indicators—and particularly on measures of wait times. In comparison to the Netherlands, Switzerland, and Germany and Australia, Canada had the highest proportion of patients with long wait times for specialist appointments and elective surgery. They also had more physicians, MRI machines, and (excluding Australia due to lack of data) acute-care beds.
A common concern about increased private-sector involvement is that it will lead to inequities in access. However, data from the Commonwealth Fund ironically reveal that low-income Canadians actually fare worse on some measures of inequitable access. For example, the difference in timely access between low-income adults and those in other income brackets was actually higher in Canada (10 days) for patients waiting six days or more for medical appointment, than in Switzerland (5 days) and Australia (4 days). Although low-income patients in Germany faced slightly more inequitable timely access (11 days compared to 10 in Canada), those in the Netherlands reported no difference.
Although the idea of opening our health-care system to private insurers has been pilloried in Canada for many years, the evidence from around the world is clear. Not only can private insurers act as key partners to ensure universal health insurance coverage, they’re a common feature in many of the countries that don’t experience the wait times problems that plague our health-care system.