A prominent feature of Canada’s healthcare system, as mandated by the Canada Health Act, is the absence of any charge for publicly insured healthcare services at the point of consumption. Unfortunately, this has led to the mistaken notion that such “first dollar coverage” is a necessary component of universal coverage for healthcare services. In fact, it has even been argued that user charges are incompatible with universal coverage.
On the contrary, most developed countries characterized by universal coverage do not outlaw user charges, and Canada is something of an outlier in this regard. Indeed, countries such as Australia, France, Germany, Italy, the Netherlands, New Zealand, Sweden and Switzerland impose cost-sharing on patients in the form of either deductibles and/or co-payments with annual limits and exemptions for vulnerable populations. These are all countries where either the government (like Canada) funds health services through the tax system (i.e. Norway) or where insurance coverage is provided to all residents through statutory health insurance funds (i.e. Germany).
A more plausible argument against cost-sharing is that it may discourage the consumption of “necessary” medical services with the potential consequence of much larger future costs being imposed on the healthcare system as patients’ health status deteriorates. In fact, there’s no consistent evidence that cost-sharing results in adverse long-term health outcomes. In part, this is likely the result of safeguards built into the various user charge schemes. For example, in France, children and people with low incomes are exempt from paying non-reimbursable co-payments. In Sweden, there is a national ceiling for out-of-pocket payments that caps an individual’s spending on healthcare visits. In Switzerland, maternity care and a number of preventive services are exempt from deductibles, coinsurance and co-payments.
The absence of evidence that user fees damage healthcare outcomes might also reflect the fact that cost-sharing can improve the overall performance of the healthcare system. Specifically, user fees can promote the conservation of healthcare resources by discouraging low priority uses of the healthcare system. To the extent that the resources that are freed up are put back into the system, waiting times can be reduced, and patients with relatively serious medical conditions will be able to receive services and treatments in a timelier manner than would otherwise be the case. More timely treatment of diseases and other health problems can help people remain productively in the workforce or at least get them back to work sooner rather than later. It can also mitigate the pain and suffering that patients endure while waiting for consultations and treatments.
It’s likely no coincidence that countries with cost-sharing programs in place have waiting times that are significantly shorter than those in Canada.
The overall message to be gleaned from the cost-sharing experiences of other developed countries is that user fees can improve the overall performance of the healthcare system. Certainly, cost-sharing raises concerns about fairness and undue hardships that might be suffered by specific groups in society. The related message in this regard is that safeguards can be built into cost-sharing arrangements to protect vulnerable groups in society against undue financial hardship. The chosen safeguards for any country should reflect characteristics of that country including demographics, health status and income distribution.
At the least, the experiences of developed countries that impose cost-sharing on users of healthcare services should serve as illustrative guides to a full and fair consideration of introducing user charges in Canada.
Steven Globerman is the Kaiser Professor of International Business and director of the Center for International Business at Western Washington University, and a senior fellow at the Fraser Institute.