07/20/2016 12:35 EDT | Updated 07/20/2016 12:59 EDT

Building A Fairer, More Sustainable Health-Care System For Canada

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Health care Cost statistics with stethoscope and Calculator

More than six in 10 Canadians say that the universality of the health-care system is their greatest source of pride in our country. The idea that people should have access irrespective of means has rightly become a Canadian political axiom.

Yet, as the premiers meet this week to discuss the future of Canadian health care and a new accord with the federal government, the reality is that Canada's present system is failing to live up to the principle of universality. Full public coverage is mostly limited to hospital and doctor services and otherwise Canadians are left to pay for uninsured services and treatments -- such as drugs, dental, and out-patient services -- through private insurance or out-of-pocket spending.

Simply put: Canada's current system of public health insurance is a mile deep and an inch wide. Fairer, more sustainable health-care financing should be among the top priorities for the impending health accord discussions.

Canada's health-care financing is called "single payer" because provincial-based public health insurance covers all medically-necessary hospital and physician services and private financing -- in the form of cost-sharing or private insurance -- for these services is largely prohibited under sections 18-21 of the Canada Health Act. Public expenditures in these areas exceed 90 per cent.

This basically means that when a Canadian goes to the hospital or the doctor in any province or territory the costs are covered irrespective of one's income or wealth. But hospital and physician services are only a portion of health-care services and treatments. They only represent 45 per cent of health-care spending according to the latest data from the Canadian Institute for Health Information. Most other health-care costs must be borne by Canadians with limited access to public subsidies or support.

Drugs costs are the prime example. Total spending on drugs reached $33.8 billion or 15.7 per cent of total health-care spending in 2014 -- making it the second largest overall health expenditure after hospital services. Yet public financing only covers about a third and all other drug expenses are financed by private insurance or out-of-pocket spending.

This mix of full public financing for hospital and physician services and mostly private financing for all other services produces a health-care system that's less universal and egalitarian than most might think. By subsidizing hospital and doctor costs for all Canadians we have little public monies left over to help low- and middle-income Canadians pay for uninsured services and treatments.

The result is that less affluent households, unattached individuals, and senior couples spend a disproportionate share of their disposable income on health care. And it's rising. Between 1998 and 2009, out-of-pocket spending increased by 2.9 per cent annually and the share of households spending more than 10 per cent of their after-tax income on health care climbed by nearly 60 per cent.

It doesn't have to be this way. Many countries are able to provide universal coverage for a broader range of health-care services than Canada, while minimizing the cost to taxpayers by relying on a different mix of patient cost-sharing and public subsidies for private insurance.

Canadian governments could enact a range of reforms to better leverage private financing to pay for health care, as we set out in a recent study. The goal of such reforms wouldn't be to undermine or replace public insurance but rather to target and expand it for those who need it. Why should a wealthy Canadian receive full public subsidies for a routine doctor visit while struggling families receive little or no support for drug purchases?

Such a policy shift would be consistent with the Trudeau government's recent changes to federal child-care benefits whereby means-testing was used to provide more generous payments for low- and middle-income families. The prime minister has frequently said that child benefits shouldn't go to wealthy families like his own. Ottawa could encourage similar reforms to health-care financing by repealing certain sections in the Canada Health Act to enable the provinces to experiment with different forms of cost-sharing for high-income Canadians.

Allowing a greater role for private financing in Canada's health-care system would permit provincial governments to broaden public coverage for those who actually need support. The result would be a fairer and more universal system without added pressure on government budgets. That's something that Canadians can be proud of.

Sean Speer is a Munk senior fellow at the Macdonald-Laurier Institute and co-author of the recent study, "Toward a more fair Medicare: Why Canadian health care isn't equitable or sustainable and how it can be"

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