Canadian HealthCare System Now Unsustainable?

Current healthcare system unsustainable: CLHIA

September 22, 2009 | Mark Noble

The president of the Canadian Life and Health Insurance Association says Canadian healthcare system is headed for a crisis, unless serious reforms are made.

Speaking before the Economic Club of Toronto, Frank Swedlove warned the current Canadian healthcare system is not sustainable.

Swedlove said too many people believe there are just two healthcare options available—a private system like the one in America, or a fully-funded public system. He argued there’s a way to preserve the integrity of Canada’s universal public coverage, while offloading some expenses to private care providers.

"We’re in the midst of an aging population and there are newer and more expensive treatments. If the trend continues, in ten years many provinces will spend 70 cents out of every budget dollar on healthcare, with little remaining for education, infrastructure, and innovation," Swedlove said.

This figure suggests it’s virtually impossible to have a world-class healthcare system under the current model.

Successful private partnerships in certain medical services can reduce the funding burden of the government, Swedlove said. There are homegrown examples of private-treatment offerings—sometimes covered by insurance—that don’t undermine the public healthcare system in Canada.

"A 2006 Conference board of Canada study, comparing 24 leading OECD countries, ranked Canada 11th in terms of overall health. There are more recent studies that rank us even lower," Swedlove noted. "There are plenty of countries for us to learn from. Home-grown success stories can also be studied and built on. For instance, there is the Shouldice Clinic here in Toronto—a leader in privately delivered hernia surgery — and similarly the Calgary-based Gimbel Eye Centre—the first out-of-hospital institution in Canada to offer small-incision cataract surgery."

In fact, Canada actually has an above-average participation of privately covered healthcare versus the global average.

"The average public healthcare spending by partner nations is 73%. Canada’s public spending ranks lower at 70%. The rest comes from private sources, a mixture of private health care providers and directly from your pocket," Swedlove said.

Skyrocketing drug costs account for part of the growing healthcare costs. According to a white paper released by the CLHIA in June, Canada ranks second in total per capita spending on drugs, both prescribed and non-prescribed, out of the 20 leading OECD countries. Total drug spending in Canada reached $26.9 billion in 2007, representing an annual growth rate of 7.2% over 2006. Spending on prescribed drugs grew faster than spending on non-prescribed drugs and reached 84% of total drug costs in 2007.

The cost of drugs is staggering for those who don’t have private drug coverage. Even, generic drugs in Canada are much more expensive than they are in other developed nations.

"Healthcare may be a universal benefit of living in Canada, but it isn’t the same reality when it comes to affordable drugs. Consumers continue to face prescription drug costs that can be staggering. Supplementary insurance provides some drug assistance but not all Canadians have such insurance," Swedlove said. "Our paper calls for catastrophic drug coverage for all Canadians, equitable drug pricing across public and private programs, and a competitive generic drug regime."

Incentives for LTC

Currently, Canadian insurers cover about 220,000 Canadians for long-term health care (LTC). And the number of Canadians needing LTC is growing dramatically, according to CLHIA, and the public system will be unable to support LTC claims as the number of elderly Canadians drastically increases over the coming decades.

The CLHIA white paper says many Canadians hold a "mistaken belief" that all of their long-term care needs are met by the government. The CLHIA says the responsibility to pay for such care remains largely with them. With the number of seniors expected to balloon to 9.8 million by 2036, (according to Statistics Canada), there will be a significant cost burden to Canadians fighting for an LTC spot.

According to Swedlove the CLHIA would like to see the government introduce tax incentives through an RSP-equivalent vehicle such as a Medical Spending Account to allow Canadians to fund LTC.

"Governments need to ensure that people living with a chronic illness receive health care services that are integrated across the primary care system and coordinated by family doctors or clinics," he added. "Tax and financial incentives for Canadians would also help them take greater responsibility for the care of aging or ill family members at home through the purchase of private insurance."