Health Care and Health Insurance System in Canada - Research Paper Example

Health care and health insurance system in Canada- in Comparison to the private Insurance Model (report) Introduction Healthcare reform is a very critical issue in the 21st century for all developed and developing nations today. The growing awareness among people regarding health, fitness and health care has further necessitated the need for updating and reforming the national healthcare policies to stay abreast of the globally accepted standards. Economists and healthcare experts worldwide are of the view that Canada’s healthcare system can be looked upon as a possible role model by all other countries. The prime appeal of the Canadian system lies in the fact that it does much more for much less. It offers complete access to health care for all its citizens, by spending only 10.4% of its GDP. (The WHO website, 2014) This report aims at presenting a comprehensive overview of the Canadian health care and health insurance system, along with its comparative analysis with the private health insurance model. The Healthcare System in Canada The Canadian healthcare system was established by the Canada Health Act which was adopted in 1984. According to the Act “the primary objective of Canadian health care policy is to protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers.” (Canada Health Act, 1984: Section 3) For the most part publicly financed, this system is a single-payer system, consisting of thirteen provincial and territorial health plans. These regional plans are interconnected in terms of their compliance with the national principles laid down at the federal level. The Canadian government offers healthcare policy on a prepaid basis to all its eligible citizens, with no direct charges levied at the point of service. As a result, the Canadians have an equitable access to all sorts of health insured services. Role of Canada’s Federal Government in the Healthcare System The role played by the federal government of Canada is very crucial in the smooth operations of its healthcare system. The federal government if the sole authority that lays down as well as implements the national codes or criteria for the insured health care services. It enables fund transfers to extend financial assistance to the provincial and territorial health care services. It arranges for direct health care services for certain niche groups of the nation such as the First Nation persons, federal prisoners and military personnel. Apart from all these direct functions, the federal government also gets involved in various allied activities like health promotion, health protection, and disease prevention. (Canada Health Act, 1984) Guiding Principles of the Canadian Healthcare System The healthcare system in Canada is directed by the global values that prevail worldwide in the realm of health care. These principles include valuing health care as a right for all, equity in the distribution of health care benefits, public administration of the health care policies, affordability and cost-effectiveness of the measures. In keeping with these conventions, the Canada Health Act too is founded on the pillars of public administration, comprehensiveness, universality, portability and accessibility. Health care in Canada is “administered and operated on a non-profit basis by a public authority, responsible to the provincial/territorial governments and subject to audits of their accounts and financial transactions.” (Canada Health Act, 1984: Section 8) Comprehensiveness entails that the health insurance plans must cover “all insured health services provided by hospitals, medical practitioners or dentists”. (Canada Health Act, 1984: Section 9) Universality ensures that all insured individuals within the province or territory have an open access to public health insurance schemes based on the even terms and conditions. This goes hand in hand with the tenet of portability that states that "Residents moving from one province or territory to another must continue to be covered for insured health care services by the "home" province during any minimum waiting period, not to exceed three months, imposed by the new province of residence. After the waiting period, the new province or territory of residence assumes health care coverage." (Canada Health Act, 1984: Section 11) And lastly, the access of insured persons to the necessary healthcare services must not be hampered by any barriers related to “age, health status or financial circumstances”. (Canada Health Act, 1984: Section 12.a) The Private Model of Health Insurance Private healthcare system is a system in which the medicine and health care services are supplied by bodies other than the government. The term is usually prevalent in the European countries which follow a public health care system and tend to differentiate their own system from that of nations where private healthcare is the custom. Usually, in most of the countries following the private system, health insurance plans are a part of the employee incentives and benefit packages offered by the employer or the company. In some cases, the employer may even provide his employees the option of paying for extra health insurance from their own salary. Then again, there are private insurance providers from whom the people can purchase insurance policies. (McNamara & Rejda, 2013) A typical example of the private health insurance model is the one followed by the United States. The total expenditure of the US on healthcare was $2.3 trillion in the year 2007, rose to $2.6 trillion in 2010 and is expected to touch $4.2 trillion by the year 2016. In this, more than 10% of the costs are accounted for by the prescription drugs, 31.4% by hospital care, 5.5% for nursing home care and 19.9% by the physician and clinical services. The healthcare expenditure formed 17.9% of the Gross Domestic product in 2011. The per capita expenditure on healthcare was almost $ 8,608, which formed over 15% of the gross national income per capita in same year. In spite of these, the number of Americans who do not have a health insurance is over 47 million, of which more than 20% are children. (The WHO website, 2014) Advantages of Canadian Healthcare Model over the Private Healthcare Model Private healthcare system lacks the laws and regulations that are of utmost importance in order to match up to the standards laid down by the government pertaining to protection, value and effectiveness in delivering healthcare services. As opposed to the publicly funded model, the private health insurance systems are generally motivated by profit interests rather than by the quality of healthcare. Under such a system, an average earner cannot at all afford the healthcare services, as they cannot go on paying more for their healthcare services or health insurance policies. (McNamara & Rejda, 2013) In Canada, every citizen is inevitably health-insured right at birth and the insurance remains valid for one’s entire life. The primary focus of the health care system is the people, and not the profits. Countries with a private healthcare system, however, offer health care coverage only as long as one can manage to pay for his share. The government does practically nothing to restrain the profits sought by the insurance industry and rather augments the insurance industry profits. The public healthcare system in Canada allows one to freely decide on and stick to doctors and hospitals of his own choice. In the private system, one’s freedom of choice is highly restricted by the lists of “in-network” places and the extra payments that need to be incurred for going “out of network.” In Canada, all people receive the same insurance benefits and the same quality of services irrespective of their financial status, employment condition or income level. A private healthcare system, however, relies on one’s job status and income. If one loses his job or loses his income, he automatically loses his existing health insurance. While the Canadian system provides equal and uniform benefits to all citizens, in most of the private systems the benefits are primarily diverted to the topmost strata of the society. For example, in 2012, emoluments and benefits worth around $83.3 million were paid to the CEOs at six of the leading insurance firms in the U.S. (Nader, 2013) In Canada, the system is controlled and supervised by the federal government. Not only does the government keep a check on costs, but it also contributes 10 percent of its GDP into its all-inclusive health care system. The government thus shares the liability and the burden of its citizens towards insurance costs. Moreover, the healthcare costs are funded by a progressive system of taxes, wherein the poorer population pays a lesser percent of income while the richer population pays a greater percent. Insurance costs in the private systems, on the other hand, continue to hit the roof. The U.S., for instance, pays 18 percent of its GDP for health insurance and still thousands of Americans are afflicted by bankruptcy caused by health care costs. In countries having the private system, every year, thousands of people die from lack of diagnosis and treatment as they cannot afford the exorbitantly high premiums of health insurance. The health care system in Canada is financed by income, corporate and sales taxes, the cumulative value of which is much less than what the US citizens pay in insurance premiums. The complexity of the system under private insurance model is, to a large extent, responsible for the soaring administrative and overhead expenses. Such a possibility is completely ruled out under Canada’s public system which is exceedingly simple and lucid. The fallacies of the private insurance model are best revealed during the phase of a financial crisis which results in unsteady employment conditions in the country. Small firms drop their employee insurance coverage during recession to survive the crisis and to maintain funds for staff salaries. In most of the cases, the insurance premium is raised which further pushes up the healthcare costs. For instance, in the year 2007 in the USA, the employer health insurance premiums were increased to 6.1%, as a result of which the annual premium for a four-member family shot up to $12,000. Moreover, loss of job automatically leads to the loss of health insurance benefits. It has been studied and estimated that under a private healthcare model, every 0.5% increase in unemployment rate leads to the loss of health insurance coverage of approximately one million people. (Martin, 2011) Drawbacks of Canadian Healthcare Model vis-à-vis the Private Healthcare Model The public health care system followed by Canada includes all the basic medical services such as hospitals and physicians for primary care. There are, however, quite a few services that are not covered under their system, such as the cost of prescribed medications, optometrists, corrective lenses, dental services, home care, private hospital rooms and ambulance services. Those opting for such services, which are not covered under Canada’s provincial health insurance, can avail of private insurance packages to add on to their existing primary health coverage. Private system can thus fulfil the specific needs of the insurance holders, a provision that is lacking in the public health care model. The private system is primarily encouraged on ethical grounds that it permits the seriously ill patients to save their lives by spending their money. Besides, private healthcare operators can at times be more efficient, innovative and productive than public healthcare, owing to their profit-making motive. This factor gives it a great advantage over public healthcare, as the latter’s scope is considerably restricted by readiness of the individuals to pay the corresponding taxes. Conclusion A thorough comparison of the private health insurance model and the Canadian healthcare system would reveal the pros and cons associated with both of them. Although the private healthcare system scores higher in some aspects such as the scope for innovation and investment, the comprehensiveness in terms of benefits and services offered; yet the publicly funded system in Canada surely surpasses the private model owing to the vast range of advantages it brings along. The report clearly establishes that the public healthcare system followed in Canada provides better healthcare services in terms of equity, affordability and quality when compared to the private system. Hence, the health care and health insurance system of Canada is, no doubt, a perfect example to be emulated by the modern developing countries which are struggling to establish a sound and effective health care system. References: Government of Canada. (1984). Canada Health Act. Retrieved from: http://laws-lois.justice.gc.ca/eng/acts/C-6/page-2.html#docCont Martin, A., Lassman, D., Whittle, L., & Catlin, A. (2011). Recession contributes to slowest annual rate of increase in health spending in five decades. Health Affairs, 30(1), 11-22. McNamara, M. J., & Rejda, G. E. (2013). Principles of Risk Management and Insurance. Prentice Hall. Nader, R. (2013). “21 ways Canadian healthcare better than Obamacare”. Press TV. Retrieved from: http://www.presstv.in/detail/2013/11/22/336106/canada-healthcare-better-than-obamacare/ World Health Organisation. (2014). United States of America: Data from Global Health Observatory. Retrieved from: http://www.who.int/countries/usa/en/ Read More