Alberta Premier Ignores Evidence that For-Profit Care Costs More
Globe and Mail Update
January 21, 2005
by Tammy Horne
Alberta Premier Ralph Klein has just unveiled the province’s latest health reform plan. He proposes a “third way” for Alberta’s health-care system, based on experiences of other countries around the world. He is especially interested in expanding private payment and for-profit delivery of health care. In his recent Calgary speech to the Canadian Club, Mr. Klein lauded a local for-profit operation, the HRC surgical clinic, while downplaying its higher costs to taxpayers. He said Alberta will not violate the Canada Health Act, but will encourage the health care sector to test its boundaries. Mr. Klein has consistently argued that Albertans be allowed to pay for faster hip and knee surgery at for-profit clinics. He also supports user charges within the public system. Federal Public Health Minister Carolyn Bennett and Ontario Premier Dalton McGuinty are correct to be skeptical of Mr. Klein’s vision. There is no evidence from other countries that suggests health care in Alberta or other Canadian provinces would be improved by allowing private sale of surgery,public-system user charges, or for-profit delivery. For instance, Premier Klein believes letting people buy private care will shorten public wait times.
A recent review from the University of Toronto concludes that parallel private systems in Britain and New Zealand have created longer public wait times. Waits only get shorter for those people who can pay to jump from public queue to private tier. Even in Australia, where private insurance is government-subsidized, the private system has not reduced public waits for most procedures. Australia’s private tier costs taxpayers $1.5-billion (Australian) a year. Canadian and Australian health economists, led by those at McMaster University, conclude that if that money had gone to hospitals, half to two-thirds of private demand could have been met in the public system.
Even without insurance subsidies, private parallel systems have extra administrative and regulatory costs. Health economist Robert Evans of the University of British Columbia explains that single-payer systems, such as Canadian medicare, control costs better than those with a public-private insurance. The McMaster team argues that private care can only save public dollars if the public system is allowed to deteriorate. Otherwise, people will not choose private payment over public services. The researchers also note that patients incurring complications on the private side use the public system for follow-up treatment, and private and public systems compete for scarce health professionals. The bottom line is this: Parallel private systems are costly for governments, businesses and individuals. A 2002 KPMG survey found Canada has the lowest business costs of nine countries, and universal health care is a key factor In controlling private benefit costs.
If Alberta allows a private-pay tier, and it leads to longer public wait times as in Britain and New Zealand, employees will demand insurance coverage to buy private care. And individuals without employer coverage may feel compelled to buy insurance or pay directly for care. The second type of private payment is user charges within the public system. Sweden has been promoted as a success story because it caps total user fees paid by patients each year. However, Swedish researchers conclude that fees discourage Swedes, especially the poor, from making timely doctor visits. This is consistent with research in other countries and in Saskatchewan, before doctor and hospital fees were dropped and eventually outlawed by the Canada Health Act. McGill University researchers recently found that Quebec’s drug-fee increases in the 1990s lowered use of essential drugs and led to poor health outcomes. This suggests we should eliminate existing fees, not add new ones. Alberta’s proposal of establishing a deductible part of health care benefits is a user fee by another name. Even Alberta’s 2002 Mazankowski report on health reform, which favours more user charges, acknowledges that taxing healthcare could create hardship for some Albertans. Premier Klein also supports more publicly-funded medical procedures being contracted to for-profit facilities. Yet the evidence is clear that not-for-profit delivery is more cost-effective and of higher quality. This research (including a large McMaster University study) is done in the United States because only that country has enough for-profit and not-for-profit facilities to do those comparisons.
Most acute care in Canada is not-for-profit. However, the U.S. comparisons are relevant to Canada because they involve facilities receiving public U.S. Medicare funds. For-profit delivery has also been problematic in Sweden. Daniel Cohn of Simon Fraser University documents how Stockholm County transferred operation of St. Goran’s Hospital to private hands in 2001 and started contracting services to for-profit facilities. Those facilities rejected seriously ill patients, who faced longer public wait times because public resources had been diverted to for-profit providers. For-profit facilities treated patients with minor problems a practice known as “cream-skimming.” Swedes who most needed care were least likely to get timely access. Sweden’s national government has halted further privatization. Canada can learn from international successes. Joel Lexchin of York University points out that Australia’s pharmacare program has resulted in drug costs 9 per cent lower than Canada’s, thanks to aggressive bargaining with drug companies. Canada’s patchwork of provincial plans limits bargaining power, bulk buying and administrative efficiencies. Our provincial and federal governments should make national pharmacare a priority for Canada. We could also look to Sweden, where 85 per cent of health care is publicly funded, compared to only 70 per cent in Canada. The Conference Board of Canada notes Sweden has extensive prescription drug coverage, health promotion programs and seniors’ health services. Sweden also has a comprehensive social-welfare system, including generous child care and free university tuition. There is lots to learn from Sweden about investing in both health care and in the social determinants of health, such as income, education and early childhood development. It’s also important to acknowledge Canada’s own health-care successes. Provinces are reforming public health systems to shorten wait times, improve access and promote health. These efforts need support. It would be counterproductive to get sidetracked by costly privatization experiments. Let’s learn from our own and other countries’ successes not repeat the failures.
Tammy Horne is a research associate of the Parkland Institute at the University of Alberta and lead author of the recently released report Public Remedies, Not Private Payments: Quality Health Care in Alberta.
