The decision in the recent Chaoulli court case may presage the development of a nontrivial private sector in the Canadian health care system. Australia models many aspects of its Medicare system on Canada's plan: Australia has a national, universal scheme that is administered, in terms of hospital access and fees, at the State level within a national framework. But in Australia, a prominent private system exists alongside the public system. In 2003/04 about 40% of all hospital admissions were to private hospitals.
About 43% of the people residing in Australia have private health insurance. This dual system has deleterious implications for the equity and efficiency of the health care system, and similar ill effects could occur if Canada were to follow the Australian path of health care organization.
The current Liberal federal government in Australia has supported expanding the role of private health insurance. In 1996 it introduced a subsidy to the industry in the form of a rebate against the cost of insurance. Effectively, the government pays 30% (a larger proportion, for older people) of the cost of any private health-insurance package. The government also introduced other incentives to take out insurance: a higher federal tax (a 1% surcharge on taxable income) on high-income earners that can be avoided if they take out private insurance; policies to reduce unexpected gaps between bills from hospitals and doctors and the benefit payments from health insurance funds; and — the most effective policy, in terms of increasing mem bership — the 1999 Lifetime Health Cover policy, which encourages Australians to take out health insurance by age 30 and maintain it life-long.1 Higher-income groups seem to have benefited more from these changes than those with lower incomes.2
The current net cost of private health insurance coverage for private hospital care for a couple is US$1000–$2500 per year, after taking into account the government rebate. Packages at the lower end of the price range have higher “front-end” deductibles and, hence, higher out-of-pocket costs when a person is admitted to hospital. Costlier insurance packages cover better amenities.
Private hospitals have 2 roles in Australia. In the first, they fulfill a supplementary or “top-up” function: patients can purchase additional amenities such as single-occupancy room accommodation and better meals. The second and more contentious role is that of an alternative provider of services available in the public sector: patients are able to pay to bypass public waiting lists or to guarantee that their elective surgery shall be performed by their specialist rather than by a surgeon in training. These complementary roles create inequity and (because the private sector contributes very little to surgical training) also militate against comprehensive training for health professionals.
Many surgeons practise in both the public and the private sectors for ideological, financial or convenience-related reasons. Public-sector constraints are such that, inevitably, surgeons are unable to get the operating sessions that they would desire in the public sector; thus, the private sector provides additional scope.
The greater the proportion of time a surgeon spends in the private sector, the less time he or she is available for work in the public sector. Arguably, greater reimbursement in the private sector provides some incentive to delay operations in the public sector so that patients are “forced” to move into the more lucrative private sector.
A reduction in surgical time in the private sector (and public-sector funding constraints) contributes to increased wait times in the public sector. Australian data have shown that in any specialty, the greater the proportion of surgeries performed in the private sector, the longer the public-sector waiting times, and the shorter the waiting times for procedures in private hospitals.3 Waiting times currently vary by specialty; for example, the median wait in an Australian public hospital is 46 days for orthopedic surgery, but 60 days for ophthalmology. Relations between the public and private sectors are therefore complex, and the development of private services in Canada could lead to a reduction in access to services similar to that experienced by Australians.
Public and private sectors in Australia are not perfect substitutes for one another. Private hospitals there tend to specialize in elective procedures; for example, 50% of orthopedic and urologic surgeries are undertaken in private hospitals, whereas almost no neurologic or cardiothoracic surgeries are done in these venues (Table 1). This “division of labour” also sidesteps the scheduling problems inherent to providing emergency services.