Halifax Chronicle-Herald
December 26, 1999

The best prescription for our ailing medicare is in Europe, not the U.S. 

By Nancy Faraday-Smith 

Canadians have an exaggerated fear of proposed changes to our medicare system. We automatically assume that any alternative to the status quo will inevitably lead to the Americanization of health care delivery in Canada. Yet this blinds us to the many constructive reforms to publicly-financed health care that Europeans have introduced in recent years in response to the same sort of challenges our home grown medicare faces. 

Perhaps we’ve been watching too many episodes of ER or Chicago Hope. Perhaps, as David Gratzer, author of Code Blue, an important new book about health care reform in Canada, notes, we cling to something that we do better than them. Whatever the reason, it’s time to give up our obsessive fear of evolving into an American style health care system if we adopt any changes at all. We can all agree that the U.S. system is one we do not want, so why do all attempts at change meet the facile charge of importing American values into Canada? There are other health care systems throughout the world that can and should be used as models for our own. That is where there are valuable lessons for Canadians to learn about universal health care that really works but doesn’t break the bank. 

Popular media and many politicians simplify the health care debate into one of “the state vs. the market”. But that kind of unsophisticated argument implies that there is a single, simple market design that would replace the public model. Nothing could be further from the truth. One only need look at the health care reforms in Western Europe as an example to realize the complex, wide range of delivery options available. Countries there have introduced market-driven arrangements into a number of different health care sub-sectors. They have developed hybrids of private and public sector participation to suit their own particular needs and priorities. 

In Sweden, health care coverage is universal although the government has devolved responsibility for tax-based financing to their local counties. In turn, the local counties have sought to contain costs by experimenting with internal markets – allowing competition among health care providers. The result has been an improvement in health care efficiency. Overall, the Swedish government spends less on health care, as a percentage of GDP, than Canada, yet has a much better record in measures such as infant mortality, and hospital beds and physicians per 1000 population. 

In Britain, there is a similar separation of purchasers and providers. New arrangements have essentially made district health authorities (DHAs) and general practitioners responsible for purchasing medical services on behalf of patients in their local communities. This has prompted the DHAs and doctors to get the most competitive prices from other providers, such as hospitals. It has also forced those other providers to become more competitive both in terms of price and quality of services offered. Important improvements in Britain include a substantial decrease in waiting times 

Switzerland is different again from Canada, Sweden, and Britain in that it funds health care through a health insurance system rather than through taxes. Ninety-nine percent of Swiss are insured under this model. Health insurance funds are non-profit companies that have to operate under stringent government regulations. Because individuals can choose among funds, insurance companies must compete with one another to attract clients. The introduction of markets in this sub-sector has successfully improved efficiency while maintaining universal coverage. 

These examples provide just a sample of the health sector reforms that have been seen in Europe over the past decade. But they illustrate clearly the ability of countries to introduce change without emulating the American health care system. In general, those countries that have introduced market incentives into their health sectors note a higher degree of patient satisfaction and more cost-conscious decisions on the part of doctors. We desperately need those kinds of improvements here in Canada. 

In a recent paper that I co-authored entitled Operating in the Dark, we stated what many within the medicare and political establishments know but will not say: the system will face repeated crises in the next 10-20 years if we don’t find a more efficient and effective way to deliver its many services. Concerns for and dissatisfaction with health care in Canada will only escalate under the current system. Remedying this requires greater competition and private sector participation in our health care sector. We should be exploring today the potential for adopting more market-based incentives into appropriate health care services. 

We could, for example, look at alternative delivery or cost sharing arrangements in a host of areas such as support and hospitality services, labs and clinics, or certain surgical services. We could develop ways to make bureaucrats, hospitals and doctors more competitive and cost-conscious. The current reality demands that we find a way to make our health care dollars go further. By not acting now, we get perilously close to being too late for any of these reforms to make the kind of difference that has been achieved in Europe. 

As the wave of economic and demographic pressures grows ever larger, the health care debate remains mired in the Americanization threat. We must seek higher ground in our discussions on health care reform and look beyond the U.S. to the innovative systems and solutions that have so benefited other countries without sacrificing fairness.  

Nancy Faraday-Smith is a Policy Analyst at the Atlantic Institute for Market Studies, a public policy think tank based in Halifax.