Research Paper presenting two concrete examples of liberalized universal health care systems that can be a valuable guide to policy-makers across Canada
The Quebec government, through Health Minister Christian Dubé, will soon present its plan to overhaul the health care system. The MEI is proud to unveil this major study by economist Maria Lily Shaw on the best practices of the health care systems of Sweden and the United Kingdom—two examples that Quebec should follow if it really wants its reforms to be successful.
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This Research Paper was prepared by Maria Lily Shaw, Economist at the MEI.
The Swedish and British health care systems have undergone profound and widespread transformations since the 1980s. As a result of the transition to a mixed system, their populations now benefit from more flexible health systems that respond to their needs in a timely manner—all with a price tag similar to or lower than the cost of many provincial health systems in Canada. With the shortcomings of Canadian health care more glaringly obvious than ever, having two concrete examples of universal health care systems that successfully transitioned to a liberalized model can be a valuable guide to policy-makers across the country.
Chapter 1 − Role Models for Health Care Reform
- The number of physicians per 1,000 population is nearly three times higher in Sweden than in Quebec and British Columbia, and the relative number of nurses is around twice as high.
- Even though Sweden spends somewhat more on health care, their system’s performance is undeniable. Meanwhile, the UK, while spending less than Quebec or BC, manages to do more with less.
Sweden Case Study
- Sweden’s deteriorating economic climate throughout the 1970s led to a critical public debate about the organization of social services, which were wasteful, overly bureaucratic, and deprived the Swedish people of their right to choose.
- The main focus of the health reforms that occurred in Sweden in the 1980s and early 1990s was reducing costs and transferring the responsibility of health care provision from the national level to the county councils.
- Decentralization efforts continued for several years after the 1985 Dagmar Reform, but during the first half of the 1990s, the main focus became accessibility and reducing waiting lists.
- County councils began introducing DRG funding, by which hospitals receive a fixed amount for each patient they treat based on the type of patient treated, the severity of the medical issues, and other criteria, thus encouraging both efficiency and cost containment.
- Starting in the late 1990s, the pharmaceutical sector in Sweden was decentralized and liberalized and the oral health care system was reformed.
- In the late 1990s and early 2000s, the management of several hospitals was delegated to entrepreneurs, including the Saint Göran hospital in Stockholm, which from the patient’s point of view is no different from any other public hospital and which is a model of efficiency.
- In 2010, Sweden made duplicate private health insurance available, and gave patients the ability to choose their primary care provider through the Patient Choice Act.
UK Case Study
- Before liberalization, secondary care institutions in the United Kingdom were funded by historical budgets, and the health care system was being described as “a rigid organisation with too many layers of decision making.”
- The National Health Service and Community Care Act of 1990 introduced an “internal market,” within which the health care system would be structured around a novel separation of the roles of purchaser and provider of health services.
- In 1997, political power was devolved to national administrations in England, Scotland, Wales, and Northern Ireland.
- Competition between institutions in England was subsequently reinforced by the use of the entrepreneurial sector in the provision of clinical care, taking competition one step further than the prior internal market.
- In 2003, England introduced the Payment by Results tariff, an activity-based funding scheme (the equivalent of DRG funding in Sweden) that provides incentives to improve performance.
- In 2006, every patient in England was given the freedom to choose their hospital for secondary care, creating financial incentives for providers to improve their clinical performance.
Chapter 2 − Enacting Meaningful Health Care Reform in Canada
- The Canada Health Act (CHA) does not prohibit duplicate insurance that covers services similar to those provided by Medicare, nor does it explicitly prohibit mixed practice or delegating the management of public hospitals to entrepreneurs.
- The Canadian provinces that prohibit the purchase of duplicate insurance are among the only universal health systems in the world to do so.
- Despite one often-raised objection, doctors practising in countries that allow mixed practice, such as Australia and Denmark, do not spend any less time caring for patients in the public system.
- In the Chaoulli case, the Supreme Court of Canada ruled that the ban on duplicate health insurance in Quebec was void and unenforceable. In the words of then-Chief Justice Beverley McLaughlin, “Access to a waiting list is not access to health care.”
- Quebec’s National Assembly, however, did not completely strike down the ban on duplicate insurance, as would seem to have been required by the Supreme Court’s decision.
- The ongoing Cambie case challenges the constitutionality of every disposition of British Columbia health law that has the effect of blocking the emergence and development of a parallel decentralized and liberalized health care system.
- If successful in whole or in part before the Supreme Court of Canada, the Cambie case has the potential to rapidly accelerate the development of a parallel health care system across Canada.
Lessons Quebec and BC Can Learn from Sweden and the UK
- The reforms presented in this section are included based on their compliance with the CHA and their real-world use and success in other countries with universal health care.
- What’s more, the order in which these reforms are applied is arguably just as important as the reforms themselves.
- Adopt Electronic Patient Records and Expand Access to Health Data
- Remove the Prohibition on Duplicate Health Insurance
- Remove the Prohibition on Dual Practice
- Increase the Supply of Medical Professionals with Three Reforms
- Adopt Funding and Payment Mechanisms Conducive to Performance, Efficiency, and Productivity
- Transfer the Management of Some Hospitals to Entrepreneurs and Expand Private Care Provision.
No matter how profoundly the reforms that were adopted in Sweden and the United Kingdom have transformed health care in those countries, the universality of their health systems was maintained. These systems, therefore, are models that Canadian politicians can use to show that the growth of entrepreneurial involvement in the provision of care need not be done at the expense of the principle of equality of access. Now is the time for policy-makers to acknowledge the benefits of a liberalized health care system by looking beyond the current legislation and taking note of what has been accomplished elsewhere.
The Swedish and British health care systems have undergone profound and widespread transformations since the 1980s. Concrete steps were taken to increase system productivity through policy reforms and the introduction of competition. These reforms have resulted in more flexible systems that encourage the creation of partnerships between public and private providers, support the delegation of health facility management, and offer patients greater freedom of choice and increased access.
When the current Medicare system was first championed in Canada 74 years ago,(1) the development of the universal health system paralleled that of other universally accessible government-run systems in countries like Sweden and the United Kingdom.(2) Today, while both of these countries have moved on to “mixed” health care systems of one form or another that incorporate both public and private components, the Canadian system has unfortunately stagnated. As a result of the transition to a mixed system, the populations of Sweden and the UK now benefit from more flexible health systems that respond to their needs in a timely manner—all with a price tag similar to or lower than the cost of many provincial health systems in Canada.(3)
The health care systems in Sweden and the UK, and their evolution since the 1980s, is of particular interest in the context of future health care reform across Canada for several reasons. First and foremost, both countries have maintained the universality of their health care systems, meaning access to publicly funded health services is available to everyone, while at the same time greatly decentralizing decision-making and allowing for major operational autonomy across their respective regional authorities and institutions, as detailed in the first chapter below. The experience of Sweden and the UK will therefore be instructive to provinces that are proceeding with, or contemplating, the decentralization of their health care and hospital system management.
In addition, these two countries are among those that seriously experimented with the principles of managed competition and internal markets, ideas that have been central to the international debate about health system reform since the late 1980s.(4) Canadian provinces can therefore learn from the outcomes of these experiments and apply similar policies or reforms. The model of managed competition in a system of publicly funded health care is based on the idea that health services will be delivered to the population not by a monopolistic organization, as health care is mainly delivered in Canadian provinces, but by a number of independent providers, both government-run and private, that compete for patients and funding.(5) The information generated by the Swedish and British experiences could be of considerable interest to provincial decision makers as they grapple with questions regarding the methods that should be used to pay for the services of hospitals, doctors, and other providers.
Having two concrete examples of universal health care systems that have successfully transitioned from a fully nationalized health network to a liberalized model can thus be a valuable guide to policy-makers across Canada who wish to improve their health care systems. Not every feature of these two health systems need be adopted in order to successfully liberalize provincial health care systems, however, just those that best suit the needs of the population. As such, the most impactful health care reforms will be presented in the first chapter of this research paper, along with an overview of some key characteristics and operational features of the Swedish and British health systems before and after the reforms took place.
For similar changes to be feasible in the Canadian context, however, it is necessary to determine which public policies and legal components currently represent the greatest obstacles to the liberalization of our provincial health care systems. An analysis of the most restrictive aspects of the Quebec and British Columbian health care systems will thus be presented in the second chapter. These two provinces were chosen because they are not only among those with the most legal barriers to liberalization, but the legislative frameworks of both systems have also been challenged in court due to the consequences of said barriers.
In Quebec, the Chaoulli case (2005) was the first serious challenge to the monopolistic Canadian public health system. Among other legislation, it addressed the question of whether a province can forbid its residents from purchasing duplicate insurance to cover the cost of services that are normally covered by the provincial health care system.(6) In British Columbia, in the Cambie case, which has been ongoing since 2009, the plaintiffs have asked the court to invalidate every single legislative disposition of British Columbian health law that has the effect of blocking the emergence and the development of a parallel decentralized and liberalized health care system.(7) Accordingly, this second chapter will also explore the Chaoulli case and the changes it brought about in the Quebec health care system—limited though these were, for reasons that will be discussed—as well as the opportunities that could arise from the Cambie case in the context of a favourable ruling.
- Danielle Martin, et al., “Canada’s universal health-care system: achieving its potential,” The Lancet, Vol. 391, April 28, 2018, p. 1718.
- Monica Andersson, Liberalisation, privatisation and regulation in the Swedish healthcare sector/hospitals, Pique, November 2006, p. 6; Steve Gold, “Four healthcare systems divided by the English language,” The Guardian, June 7, 2011.
- See Table 1-1.
- Donald W. Light, “Cost Containment and the Backdraft of Competition Policies,” International Journal of Health Services, Vol. 31, No. 4, October 2001, pp. 695-697.
- Productivity Commission, Managed Competition in Health Care, Commonwealth of Australia, 2002, p. XI.
- Bruna Chagnon, “The Chaoulli Case and Its Impacts on Public and Private Health Insurance,” Canadian Institute of Actuaries, p. 1.
- Colleen M. Flood and Bryan Thomas, Is Two-Tier Health Care the Future? University of Ottawa Press, 2020, p. 84.