The privatization of medically required care in Canada is a myth

Montreal, December 15, 2015 – Contrary to what certain commentators declare, we are not witnessing the gradual privatization of health care funding in Canada. An Economic Note published today by the MEI demonstrates that this is a myth, at least when it comes to medically required care, which forms the core of our health care system.

While private spending as a share of total health care spending went from 25% in the mid-1980s to 29% in 2013, this is essentially due to an increase in private spending on care that is peripheral to the health care system. This includes among others dental care, eye care, and care provided by professionals like psychologists and physiotherapists, which governments do not consider to be medically required.

The share of private funding is not increasing at all for care provided in hospitals and in doctors’ offices. This care remains firmly in the grip of the public monopoly in Canada, and the proportion of private spending in this core area has remained unchanged since the mid-1980s.

“Medical and hospital services provided to Canadian patients are in fact practically 100% financed by the public sector, and this situation has not changed in three decades,” says Yanick Labrie, author of the publication.

When compared to health care spending in other countries, it becomes obvious that Canada is the odd one out in so severely restricting private financing for care that is considered medically required. For example, around 20% of hospital care is privately financed in Switzerland and Belgium, and nearly 30% in Australia. These are mixed health care systems where no citizen is excluded from universal insurance coverage.

The greater participation of the private sector in other countries is also evident in the provision of care, points out Mr. Labrie. In most countries, patients can choose to be treated in public or private hospitals. This is not the case in Canada, where 99% of hospitals are public. “Every other OECD country provides more hospital services through the private sector than Canada—even those where private funding is only a small proportion of total funding,” says the author.

“By fostering confusion about the distribution of public and private health care funding, those who support the status quo obscure a basic fact that is at the root of our structural waiting list problem, namely the lack of competition and patient choice in our public health care system,” says Michel Kelly-Gagnon, President and CEO of the MEI.

“It is crucial to set the record straight in this regard if we want to correctly diagnose the problem and apply the right remedies,” he adds. “Yet the care provided in hospitals and doctors’ offices remains in the grip of a government monopoly, contrary to other industrialized countries, with the predictable consequences for patients that we observe each day.”

The Economic Note entitled “Setting the Record Straight on Health Care Funding in Canada” was prepared by Yanick Labrie, Economist at the MEI. This publication is available on our website.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

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