Is private, for-profit care making Canada’s health system inefficient?

A policy analyst argues that Canada already relies a lot on private health care, which leads to unnecessary costs

An ongoing challenge to Canadian public healthcare argues for increased private care to reduce the long wait times plaguing the system. However, in a column published by the Vancouver Sun, Canadian Centre for Policy Alternatives-BC analyst Alex Hemingway pointed out that Canada already relies quite heavily on private care.

“The private health sector in Canada has grown to nearly a third of total health expenditures, largely in the form of out-of-pocket payments and private extended health insurance,” said Hemingway. “The other 71% … [is] financed under the public system, a proportion that trails the vast majority of countries in Europe, according to OECD data.”

The result of Canada’s relative under-reliance on public care, he argued, is “billions of wasted dollars annually.”

For example, health policy experts estimate that prescription drug costs would be curtailed by $7.3 billion if a national pharmacare program were put into effect. Administrative costs in the private sector could also be bloated, based on studies showing that such costs in the highly privatized system of the US are twice that seen in Canada’s public system.

“[F]or-profit extended health insurance in Canada is among the most inefficient in the world,” Hemingway added, citing a study showing that Canadians receive only 74 cents in benefits for every dollar they pay in private health insurance premiums.

He also pointed out potential savings from preventive public care solutions. The estimated annual cost of mental illness in Canada is at least $50 billion, whereas recent research shows that increased national access to psychotherapy would cost a few hundred million. Expanding public investment in out-of-hospital care for seniors and people with disabilities could also prevent crisis situations that lead to expensive emergency care and hospital confinement.

Hemingway also noted that public sector solutions to long waiting times have already been outlined in a study by the Canadian Centre for Policy Alternatives, whereas “international evidence shows that private clinics fail to improve wait times while they increase costs and reduce quality of care.”

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