The crumbling case for two-tiered health care

Brian Day has put Canadian universal health care on trial in BC Supreme Court, seeking to swing the doors open to privatization by challenging foundational laws that underpin our public health system.

Yet ironically, at the same time, the public policy case for privatized health care is increasingly in tatters. As I recently discussed, the biggest source of waste and inefficiency in the Canadian health system is actually the private, for-profit sector.

One reason is that privatized health care tends to have bloated administrative costs. The most glaring point of comparison is the United States, where, as I said in the piece: “Academic studies have found that administrative costs in the United States’ highly privatized health care system are about double those in the Canadian health care system – part of the reason the US spends much more on health care as a share of its total economic pie (GDP) than we do in Canada.”

Knowing this, privatization advocates sometimes say that they don’t want US levels of privatization. Instead, they claim European health care systems are their inspiration. Perhaps they don’t know: European health systems actually have a larger scope of public coverage than Canada’s, not smaller.

As I emphasized: “71% of Canada’s health expenditures are financed under the public system – a proportion that trails the vast majority of countries in Europe according to OECD data. In countries such as Germany, France, Denmark, Sweden, and the United Kingdom, privately financed health care represents a significantly smaller share than in Canada – between about 15% to 21% of health expenditures.”

So, the US health system is an inefficient nightmare, and the key lesson from Europe is that we need a bigger role for the public system in our health care, not a smaller one.

In that case, what’s a privatization advocate to do? The health privatizers – including witnesses for Brian Day’s side in the trial – have recently trumpeted Australia as a favoured model. Unlike most of Europe, Australia does indeed have a larger share of private health expenditures than Canada, having moved to two-tiered health care over the past 15 years or so.

Their move to a two-tiered model, however, is not going well – at all. Australian health policy experts have begun sounding the alarm about the failure of privatization. The private insurance industry appears to have accomplished little in exchange for $7 to 9 billion in annual subsidies from the government, as well as rapidly rising premiums it charges individuals and families.

The Guardian Australia is chronicling these developments, including record levels of complaints about private health insurance plans. Consumer groups, in turn, say private coverage is both confusing and inadequate. The Consumers Health Forum finds that, “Evidence has mounted in recent years that private health insurance has failed to deliver on one of its fundamental goals: taking pressure off the public system to preserve the fundamentals of universal access.”

This observation is precisely in line with earlier academic analysis showing that privatization actually worsened wait times in Australia’s public health care system (contrary to the promises of the privatizers). All this will be no surprise to readers of recent CCPA-BC research on surgical wait times.

And here’s the kicker: Australian health policy experts are now recommending the country move towards scrapping private insurance and replacing it with – you guessed it – a Canadian-style single public insurer.

So, even as the Day trial unfolds, the case for health care privatization is crumbling under his feet. And that’s worth remembering. It’s time to move on from the misinformed privatization agenda, and start investing seriously in the range of public sector health care solutions at our fingertips.

Topics: Health care, Law & legal issues