Sunday, June 12, 2005

Canadian Supreme Court Weighs in on Private Healthcare

While I'm certainly no expert on the Canadian medical system, this has got to be a dramatic departure from the past. Canada's Supreme Court recently ruled that Quebec's government-run healthcare system violated it's own charter by forbidding private healthcare. This ruling opens the door to private clinics, practitioners and hospitals as well as private health insurance.

Prior to this ruling, only government healthcare was possible in Quebec and although it only applies to this province, new cases involving other parts of the country are expected soon.

Canada has a very "egalitarian" economic system characterized by extremely high taxes and a much greater government redistribution of wealth than is the case in the United States. One manifestation of this is Canada's so-called universal health insurance (the details of which vary from province to province). All medical costs must be paid through some version of this plan. This effectively renders any private healthcare funding sources illegal. The end result is an exclusively government-run healthcare system.

Private healthcare facilities are felt to contribute to a two-tiered system which itself is felt to be socially destabilizing.

Much has been written about the problems currently facing Canada as it comes to grips with some of the shortcomings of its healthcare system. Medical care there is troubled with very poor reimbursement rates, impossibly long waits for appointments with primary care providers, lack of availability of basic diagnostic testing, markedly delayed surgeries and a situation where countless Canadians seek healthcare in the United States. Canada has also experienced a significant exodus of physicians and nurses who seek employment in the United States as well.

It was in this setting that this recent ruling occurred. Although private clinics, providers, etc. are illegal, many exist clearly fulfilling a perceived need. Such facilities will now be legal at least in Quebec and it is obvious that many more will now open. It is also clear that private insurance will become much more readily available.

What is interesting to me is the legal argument upon which the Supreme Court relied on for its ruling. Their conclusion was based on a theory that the prohibition of private healthcare violated human rights in that this policy was responsible for results that, for most economists, are predictable.
"The evidence in this case shows that delays in the public health-care system are widespread, and that, in some serious cases, patients die as a result of waiting lists for public health care,"
wrote the court's chief justice. She continues:
"The evidence also demonstrates that the prohibition against private health insurance and its consequence of denying people vital health care result in physical and psychological suffering."
A lot of liberal-minded Canadians are not going to be happy about this. Although many will disagree with me, a bit more of a "free market" may go a long way towards increasing access through competition and by improving efficiency. This may also restore some of the profession's desirability which should increase the supply side. It is not inconceivable that some tax cuts may result reflecting less reliance on the government's insurance policy.

It is going to be very interesting to see how this plays out. I see a large number of healthcare policy PhD theses in the future comparing then vs. now in Quebec! Think tanks such as the Rand Corporation are going to have a lot to think about.

5 Comments:

Anonymous hgstern said...

.
Excellent post, John. I wrote about this late last week, with a slightly different take.

I'm not clear on why this move would result in tax cuts "up North." Certainly, those that *can* afford alternate (private) care will do so, but those at or near the bottom rungs will have little new choice, nor would I presume that their tax bill is very high in the first place. I'd be interested in your thoughts on that.

The other interesting point, which I hadn't thought of, but will consider now, is what Canada's new private (commercial) insurance market will look like. Certainly, there will be an initial influx of carriers (hey, it's a virgin market!); it'll be interesting to see how it evolves.

Oh, and Congrats! on your TechCentral piece!

June 13, 2005 10:42 AM  
Blogger The Medicine Man said...

Hank,

My sense is that if some of the healthcare is co-opted by the private sector, that will bring down expenses in the public sector.

It's probably wishful thinking on my part but perhaps this reduction in government expenses will manifest itself in lower taxes.

John

June 13, 2005 2:38 PM  
Anonymous Anonymous said...

Interesting post, and certainly it's interesting news. I'd like to take issue with a couple of your comments, though.
You say "Medical care there is troubled with very poor reimbursement rates." What do you think is a reasonable rate? How much I make depends of course on volume and exactly which services I'm providing, but I usually can pull in about $100 an hour, and I really don't think I've got much to complain about on that score.
"...impossibly long waits for appointments with primary care providers," where did you get that? If you're truly ill, you're going to be fit in quickly, or else referred elsewhere for care if it's something someone else can do. Sometimes those who insist on being seen today are perfectly well while the ones who don't want to bother the doctor are the seventy year olds at home with SOB and ankle swelling, but I suspect that's a universal problem. Most of us try to leave time open in the day for last-minute appointments and feel it's okay to put off someone's routine pap a few weeks. I can't speak for all of us, but if you're dying, I will personally attend you in your own home whenever required.
"lack of availability of basic diagnostic testing," This one really confuses me. Unless you think an MRI qualifies as "basic diagnostic testing."
"markedly delayed surgeries and a situation where countless Canadians seek healthcare in the United States." This one is more accurate, and is something that decentralizing the system might really help. We have limited numbers of surgeons, and more importantly, limited numbers of running ORs. So your elective hip replacement is going to wait a while. And might get bumped if a bunch of fractures come in right away. Moving the elective surgeries into designated standalone centres which don't compete with cancer surgeries/trauma surgeries/appendectomies and C-sections would likely help. I'm not convinced that those surgeries need to be funded any differently than the rest of them, though.
"Canada has also experienced a significant exodus of physicians and nurses who seek employment in the United States as well." Well, yeah. In any population some people will want to leave, and the US is really close. People often leave for reasons not even remotely connected to their own medical careers. Part of our problem is with a big spread-out country with a low population, its hard for us to replace our own losses.

June 14, 2005 9:24 PM  
Blogger The Medicine Man said...

Thanks for the input Anonymous. I will certainly have to defer to a Canadian PCP when discussing Canadian PCP's!

Your sense that Canada's universal coverage reimbursement don't leave you with much to complain about is certainly reassuring. My understanding has been that most of your colleagues would disagree with you but I haven't looked at any data to support that. I'm mainly drawing upon anecdotes from Canadians now working here in the U.S. (obviously self-selected) and from the MSM reports we read here.

Maybe I need to be more systematic and do a real literature review on the subject!

My sense from the MSM is that more Canadian physicians are coming to the U.S. to practice than the other way around and that this has been a problem for the Canadian healthcare system. Also not true? Again, I haven't looked at actual data.

I probably misspoke when I used the term "basic diagnostic imaging". I actually WAS talking about studies such as MRI's (as opposed to say, routine x-rays).

Take care my colleague from the north!

John

June 15, 2005 10:59 AM  
Blogger matthew said...

John. PCP man from the north is basicaly right, but I've gotten so fed up over the years with the rubbish being written about Canada (much of which you parrot here, and who can blame you as that's all you read in the US press) that I did the lit review you are talking about. On my site called "Oh Canada"

June 16, 2005 10:31 AM  

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