Time for 2-tier health care: Calgary economist

Canada's health-care system would be more sustainable if wealthy Canadians were free to pay for their own privately insured medical services, saida noted University of Calgary economist.

Health economist Herb Emery published a policy paper on private insurance Thursday, noting that Canada is the only OECD nation that expressly prohibits competition between private health insurance and the publicly funded system.

Arguing that while a two-tiered system would be unequal, the core public health-care system would be in better shape and politicians would court less risk if wealthier people could buy their own health insurance.

"You do harm people when you put prohibitions on what they're allowed to do," Emery said in an interview.

"What we've decided in Canada is that it's justifiable to impose that kind of harm on the well-off because it's hard to generate a lot of pity for someone who has high ability to pay."

Amend the act

Emery suggests it is time to amend the Canada Health Act to allow more competition in the system andlet Canadians who want to pay for their own health insurance to do so. The move would take a bit of funding pressure off the public system, he said.

"Most Canadians prefer public health insurance and have no demand for supplementary private health insurance," Emery noted.

But as governments are having to pour more tax dollars into the public system, there is increased risk of a middle-class tax revolt and reduced appetite for the rising cost of an entirely publicly-funded system, Emery suggested.

"Lower-income Canadians would choose to have a less generous public health-care system," Emery argues.

"And if the level of public health insurance coverage were to fall, the desire of higher-income Canadians to purchase supplementary private insurance would increase, since the public system would cover less of their total insurance demand."

"Maintaining the current system can only be accomplished by transfers from the federal government and so continuing those past practices that have led us to where we are today; a system with which many Canadians are growing increasingly frustrated."

Emery uses economic models to demonstrate that unless the system changes and taxpayers realize the true cost of the system, Canada could face a political crisis.

Emery notes that by the year 2030 the percentage of Canadas population aged 65 and older is forecast to increase to 25 per cent.

At the same time, it's predicted that public funding for health care will rise by just one per cent per year from now to 2050, forcing the next generation of taxpayers to pay far more for their health care than working Canadians today.