Canada’s health care takes a hit

Canadians tend to smugness about the country’s health care, but new research suggests private insurers rake in billions more than they pay in benefits. And a study published today, which examined 20 years of records, revealed that Canadians pay far more for less benefits from private insurance than do Americans.

The Canadian public model stars often in battles over so-called “Obamacare” health care in America’s right-left culture war. Canada’s system is lauded at home and cited constantly in the United States as a better model — although World Health Organization research shows that neither system ranks among the world’s least-costly and most-effective.

But when it comes to private insurance — which covers 60 per cent of Canadians for prescription drugs and dental and eye care —  researchers say Canadians pay more than Americans, and Canadian regulations lag those of the United States. For example in 2011, states the analysis in the Canadian Medical Association Journal, Canadians paid $6.8 billion more in premiums than they received in benefits.

The study contends:

  • Private insurance companies play a substantial role in financing particular health care services in Canada, such as prescription drugs.
  • The percentage of private health insurance premiums paid out as benefits has decreased markedly over the past 20 years, leading to a gap between premiums collected and benefits paid of $6.8 billion in 2011.
  • Governments across Canada should regulate the private health insurance industry more effectively to provide greater transparency and better value for Canadians.

“Although most health care in Canada is paid for by the public, private health insurance plays a major supporting role,” said researchers at the universities of British Columbia and Toronto. In 2010, for example, private insurance expenditures were 11.7 per cent of total health care spending, placing Canada second among nations in the Organisation for Economic Co-operation and Development in terms of per capita private health insurance expenditures.

“Small businesses and individual entrepreneurs are the hardest hit – they end up paying far more for private health coverage,” said study lead author Michael Law of the University of British Columbia, in a press release. “It’s essentially an extra health tax on one of our main economic drivers.”

Early reaction from the private health insurance industry protested that the study does not account for all factors, and one organization told CBC the study is “misleading.

The study is available online at the CMAJ site (for journal subscribers, or for a fee of $25 per article). A press release from the University of British Columbia provides a summary.

— Deborah Jones

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