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Universal Private Choice: Medicare Plus Proposals for reforming Canada’s health care system presented to the Senate’s Kirby Committee by the Montreal Economic Institute

Montreal, October 31, 2001 – Proposals contained in Universal Private Choice – Medicare Plus, a Montreal Economic Institute (MEI) Research Paper, were presented today in Montreal to the Canadian Senate’s Committee on Social Affairs, Science and Technology (Kirby Committee), now studying the role of the federal government in health care. These proposals offer a new approach for financing, insuring and delivering medical and hospital services in Canada.

The brief submitted to the Senate Committee was presented by Dr J. Edwin Coffey, former president of the Quebec Medical Association and co-author of Universal Private Choice, and Michel Kelly-Gagnon, MEI Executive Director.

While retaining universal entitlement to Medicare insurance as a core publicly funded service, the study proposes new voluntary private alternatives for medical and hospital insurance and the delivery of health services. This new approach aims to rejuvenate and improve the present system by allowing free individual choice and competition through the implementation of a parallel and mixed public-private health system.

Concrete proposals

While the authors’ approach is original in a Canadian context, it draws, in part, on current models in other OECD countries such as Sweden, where public and private health care systems co-exist. One important advantage for patients, in these parallel and mixed public-private systems, is better access to medical and hospital services. The following concrete proposals were among those presented to the Kirby Committee today:

  • The universal publicly funded health insurance plan (Medicare) should be retained as a basic core insurance plan, available to all residents.
  • The health care system and its legislation should be upgraded to at least meet European and OECD standards of parallel public and private health care and health insurance services.
  • The system should allow for pluralism, free choice and innovation in the financing, insuring and delivery of health services, with increasing reliance on natural incentives to improve, when competition is allowed.
  • All eligible taxpayers would be required to financially support Medicare, but individuals could opt out of benefits covering certain categories of services such as office visits, hospital, diagnostic and laboratory, drugs, etc and receive a per capita cost-equivalent tax credit or voucher for that category.
  • Tax credits and vouchers could only be used for purchasing an alternative form of private insurance or a health plan covering that category of service.
  • Individuals without income could still make private choices with public funds. Government insurance vouchers would always pay for a core private insurance or health service plan, thus the concept of universal private choice means what it says – available to everyone.
  • Another option for alternative financing of routine health care expenses is a Medical Savings Plan (MSP) or Account (MSA), set up in conjunction with a compulsory high-deductible, low premium catastrophic health insurance plan that covers all expenses after a certain threshold is reached each year. The MSP/MSA is patterned after a familiar Canadian institution – the Registered Retirement Savings Plan (RRSP). Contributions to the MSP/MSA would be tax deductible, and money withdrawn for medical expenses would be tax-free.
  • Health Purchasing Agencies could be set up by a minimum of 10,000 consumers, privately owned by their members and organized to assist and fully inform them regarding health insurance matters, and with the financial clout to negotiate group purchases of health insurance and health plans for its members. Medicare patients who endure an unreasonable delay for diagnostic services or treatment would be issued a voucher to pay for these services elsewhere, at the offending hospital’s expense.
  • With greater financial and vocational independence of hospitals, and growing numbers of financially empowered health consumers, who are cost conscious and fully informed on hospital matters of quality, access, available technology and professional reputation, hospitals should become more competitive in attracting patients.

A timely study

The publication of this Research Paper and the presentation to the Senate Committee is timely. Recent polls indicate that a majority of Canadians are not only ready to debate the role of the private sector in Canada’s health system but also believe that access to private health care, far from endangering the system, would rather improve it.

In a letter recently sent to the federal Health Minister, the MEI Executive Director, Michel Kelly-Gagnon, suggested that this change in attitude on the part of Canadians must now be recognized and asked the current Romanow Commission on the Future of Health Care in Canada to conduct its work with the same spirit of openness. The MEI also intends to testify before the Commission when it holds its public hearings.

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