Posted: Saturday, 7 January 2006

Debate is raging about whether or not private insurance and parallel private delivery of medical care should play an increased role in our health care system.

As the Romanow Commission showed, our predominantly public system is both fairer and more efficient. The big problems on both counts are with the private part of our current system, which should be rolled back rather than increased.

We get better health outcomes and much broader coverage of the population than the US. This is done at a much lower overall cost (10% compared to 15% of national income), mainly because we have universal public insurance for physician and hospital care, and because the role of for-profit providers is very limited.

Our public system as a whole could and should be reformed and improved in numerous ways, from primary care, to expanded recruitment of health care professionals, to greater investment in skills and new technologies, to more sophisticated wait-list management. But we do not need to privatize and to compromise equal access in order to get the changes that we need.

Currently, 70% of our total health care system is financed publicly, and 30% is financed privately. A lot of attention has been given to the public side. But the growth in costs has been much faster on the private side, and private insurance does not deliver good results.

For all of the talk about “out of control” health care spending, the total cost of our publicly financed delivery system of doctors’ offices, hospitals and government residential care facilities has remained unchanged at about 5% of national income since the early 1980s, despite an aging population.

On the private side of the equation, meanwhile, the cost of private health insurance covering drugs, dental and vision care and some extra health services has been soaring, driven above all by higher drug costs.

According to the Canadian Institute for Health Information, private health insurance now costs some $15 Billion per year, and makes up 12% of all health care spending. The total cost of private health insurance has recently been rising by more than 11% per year.

About 90% of this private health insurance is provided by employers, and 57% of all employees - mainly unionized workers and those with large employers - are covered by an employer health plan. Already, a majority of private sector workers are not covered, and it is very difficult and expensive for individuals and small employers to access private insurance.

A study for the CLC shows that the cost of employer health plans now averages more than 5% of a worker’s annual wage, with the majority of that cost accounted for by drug coverage. This cost can be much higher in good plans, especially if retirees are covered.

Health benefits as a share of wages have doubled over the past decade, and will likely increase even faster over the next. Bargaining over health benefits has become more and more difficult in recent years because of fast-rising costs.

A key question that needs to be asked is whether it really makes sense to increase the contribution of private health insurance to the total costs of health care, as proposed by Premier Klein and numerous ideologically-driven media pundits.

Beginning with coverage linked to private delivery of knee and hip replacements and advanced diagnostic tests, private insurance could grow over time to cover more and more medically necessary procedures.

If we move in this direction, we will see a lot of pressure at the bargaining table to increase benefits coverage. It is not the best option, but workers and unions are not going to just sit idly by and watch corporate executives and the wealthy jump the queue to faster or better care.

Increasing private insurance coverage will poison industrial relations, lead to higher labour costs, and erode the widely acknowledged Canadian competitive advantage vis a vis the US which comes from public health insurance.

This advantage is greatest not just in auto, steel and aerospace where US unions are still a force, but also in growing “new economy’ industries where US employers still typically provide very expensive employee health benefits. Health care costs per hour worked are about double the Canadian level.

At the same time, moving towards greater reliance on private insurance would lead to greater exclusion of working families from needed health care services. We are already paying more and more for health care out of our own pockets as a result of cuts to public programs, de-listing of services such as eye tests, and rising co-pays for private insurance. 

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