Universal Private Choice: Medicare Plus, a proposal for reforming Canada’s health care system

Montreal, September 11, 2001 – A Research Paper, made public today by the Montreal Economic Institute (MEI), offers a new approach to the financing, insuring and delivery of medical and hospital services in Canada. Dr J. Edwin Coffey, former president of the Quebec Medical Association, and Dr. Jacques Chaoulli are the authors of Universal Private Choice: Medicare Plus, a concept of health care with quality, access and choice for all Canadians.

While retaining universal entitlement to medicare insurance, as a core publicly funded service, Universal Private Choice: Medicare Plus proposes new voluntary private alternatives for medical and hospital insurance and the delivery of health services. This new approach aims to rejuvenate and improve the present system by allowing free individual choice and competition through the implementation of a mixed public-private health system.

Concrete proposals While the authors’ approach is original in a Canadian context, it draws in part on current models in other OECD countries such as Sweden, where public and private health care systems co-exist. A positive result for patients, in these mixed public-private systems, is better access to medical and hospital services. The study makes the following concrete proposals:

• The universal publicly funded health insurance plan (medicare) should be retained as a basic core insurance plan, available to all residents.

• The health care system should be upgraded at least to European and OECD standards of parallel public and private health care and health insurance services.

• The system should allow for pluralism, free choice and innovation in the financing, insuring and delivery of health services, with increasing reliance on natural incentives to improve, when competition is allowed.

• All eligible taxpayers would be required to financially support medicare, but individuals could opt out of benefits covering certain categories of services such as office visits, hospital, diagnostic and laboratory, drugs, etc and receive a per capita cost-equivalent tax credit or voucher for that category.

• Tax credits and vouchers could only be used for purchasing an alternative form of private insurance or a health plan covering that category of service.

• Individuals without income could still make private choices with public funds. Government insurance vouchers would always pay for a core private insurance or health service plan, thus the concept of universal private choice means what it says – available to everyone.

• Another proposal for alternative financing of routine health care expenses is a Medical Savings Plan (MSP) or Account (MSA), set up in conjunction with a compulsory high-deductible, low premium catastrophic health insurance plan that covers all expenses after a certain threshold is reached each year. The MSP/MSA is patterned after a familiar Canadian institution – the Registered Retirement Savings Plan (RRSP). Contributions to the MSP/MSA would be tax deductible, and money withdrawn for medical expenses would be tax-free.

• Health Purchasing Agencies could be set up by a minimum of 10,000 consumers, privately owned by their members and organized to assist and fully inform them regarding health insurance matters, and with the financial clout to negotiate group purchases of health insurance and health plans for its members.

• With growing numbers of financially empowered health consumers with cost consciousness, and fully informed on hospital matters such as quality, access, available technology and professional reputation, hospitals would become more competitive in attracting patients.

A timely study

The publication of this Research Paper is timely. Recent polls indicate that a majority of Canadians are not only ready to debate the role of the private sector in Canada’s health system but also believe that access to private health care, far from endangering the system, would rather improve it.

In a letter sent today to the federal Health Minister, the MEI Executive Director, Michel Kelly-Gagnon, suggested that this change in attitude on the part of Canadians must now be recognized and asked the current Commission on the Future of Health Care in Canada to conduct its work with the same spirit of openness. The MEI intends to testify before the Commission when it holds its public hearings.

Universal Private Choice: Medicare Plus and the letter sent to the federal Health Minister are available in English and in French.

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