Ake Blomqvist is an adjunct research professor at Carleton University and a health policy researcher at the CD Howe Institute, where Rosalie Wyonch is also a senior policy analyst.
The pandemic has exposed the fragility of Canada’s health care system, and there is growing recognition that changes are needed to curb rising costs and promote efficiency. But in a health care funding model like ours, change is difficult, especially when the responsibility is divided among different political masters. We should try a different approach, based on a model like the one in the Netherlands, which performs better on criteria such as comprehensiveness of coverage and waiting times.
Canadian Medicare, of course, is often described as a “single-payer model” because everyone in a given province or territory is covered by the same government plan. Physicians and hospitals derive virtually all of their income from the government plan of the province or territory where they practice.
This current system is obsolete. Canadian Medicare was designed more than 50 years ago for a simpler world in which most curative care could be provided by sole practitioners. With today’s complex medical and pharmaceutical technology and a plethora of specialist professionals and services, effective care requires a different, more collaborative and integrated approach, with different payment methods.
Adapting the health care system to changing technology would benefit from the competitive forces of a multi-payer funding model (like that in the Netherlands) where consumers have a choice of different insurance plans. These plans can compete with innovative new arrangements that affect how their clients’ health care is administered.
Canada should seriously consider emulating the Dutch example and modifying its universal health insurance model so that it also allows consumers to choose among other competing plans, whether public or private. The Dutch multi-payer model of “managed competition” preserves the principles of universal insurance and fair sharing of health care costs. Universality is ensured through compulsory insurance, and equity is achieved by requiring plans to have open enrollment.
In a multi-payer system, insurers can negotiate funding methods and other contractual arrangements with providers that incentivize them to make more cost-effective choices when caring for their insured patients. Consumers will choose plans that offer what they consider to be the best combination of cost and expected quality of care; contractors will only join those who offer acceptable working conditions and remuneration. As a result, the health care system can adapt and become more efficient through the voluntary decisions of consumers and providers, without the need for politically difficult reforms.
Changing the way health care is delivered to patients is difficult. Modernizing a publicly funded single-payer system that covers all patients and providers can only happen through political initiatives, and reforms to improve the efficiency of the system will always be controversial. More efficient delivery of health care generally means lower spending on certain services, and therefore less income for those who provide them.
In Canada, health policy is also complicated by the divisions in jurisdiction over health care between the federal and provincial levels of government, and by those who think we should use health policy to show how Canadians are more committed to fairness than our neighbors to the south. In a multi-payer system, change can happen gradually and with less controversy.
The multi-payer system that most Canadians are probably familiar with is of course the United States, which is very expensive and leaves many people without insurance. But the United States is an exception. Countries such as Switzerland, Germany, Israel, and the Netherlands are examples of multi-payer financing systems where costs are much lower than in the United States and health insurance coverage is universal ( and includes more than the Canadian system, such as prescription drugs). One way to make the proposal to transform the Canadian system into a multi-payer model less controversial would be to treat existing provincial health insurance plans as a default option, which means that everyone would continue to be covered by their provincial plan unless they choose to opt out and obtain coverage through an approved replacement plan.
Canada’s health care system faces significant challenges, including the need for more doctors and health care professionals and the growing demand for their services from aging baby boomers. To make the system more efficient and sustainable, we need structural reform. A financing system with controlled competition between several payers, in the Dutch way, would give us a better chance of achieving this. We should try.
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