Re-privatizing Medicine in Canada --- By the Back Door

William E. Goodman, MD
Article Type: 
Feature Article
Winter 1997
Volume Number: 
Issue Number: 

It was apparent to both politicians and informed observers at the outset that Canada's compulsory socialized medicine scheme (now going on 42 years since the first tentative political steps were taken) would have enormous political appeal. After all, its five politically-promised and mandated principles, (universality, accessibility, comprehensiveness, portability, and public administration), were extremely seductive to the general public; and it was reassuringly touted as an on-demand, "free," no-financial-limit, no-geographic-boundary, no-responsibility-for-payment medical credit card provided by benevolent governments which would pick up the tab --- indefinitely.

To any first-year student of economics, it would have been obvious that such an open-ended scheme was fatally flawed and doomed to failure. Nonetheless, it has been and continues to be, by far the most popular pillar of our welfare state. The most common and recurrent question I'm asked in my lectures in the U.S. and elsewhere is, why? Why, in spite of the enormous financial and other problems which it has created and the shortfall in the hoped-for benefits, does it continue to be overwhelmingly popular? The answer, though not obvious, is not hard to find: a) at the point of contact between patient and health care provider, no money changes hands and thus, the public looks upon these services as "free" and unlimited; b) it seems to offer permanent protection against individual financial disaster resulting from a serious or prolonged illness; c) 95% of the public is not sufficiently sophisticated to equate these freebies on the one hand, with our extortionate taxation levels, (a U.S. resident moved to Canada by his multinational company has to be paid 40% more in U.S. dollars to end up with the same after-tax purchasing power), and governmental deficit financing (on a per-capita basis, almost double that of the U.S.), on the other; and d) only roughly 5% of the population is really sick at any one time. Those patients, their families and friends become aware very rapidly of the deficiencies of our system; but the rest of the public goes on in blissful ignorance of the fact that, when they need medical care most, the personnel, diagnostic and treatment facilities may well not be available, or available only after long, painful, damaging, or even fatal delays.(1-5)

In fact, as stated above, it should have been clear to any reasonably informed citizen that our open-ended health care scheme would inevitably end up with either closed-end funding or bankruptcy. This is, indeed, what has happened. As some sage once wrote, the demand for an unlimited, free commodity is infinite; and given a no-limit, no-responsibility-for-payment, on-demand medical credit card and encouraged to use it, our citizens have done so --- prodigiously. This, together with our similarly uneconomic welfare system and unemployment insurance (a misnomer, by any definition), has resulted in unbearable taxation together with unsustainable government deficits and debt loads.

Our Canadian health care system has been grinding to a halt --- with massive closures of hospitals and hospital beds; deliberate rationing of services by government-initiated delays in availability of diagnostic and treatment modalities; and cat's-paw bureaucratic techniques of forcing doctors to take the blame for the loss of accessibility (e.g., by legislated "capping" of doctors' annual incomes and "clawbacks" of money from the profession to pay for services demanded by the public and already provided by physicians, but in excess of what the government is capable of, and willing to spend annually). The predictable result: a) large-scale emigration of physicians (first, in the late seventies and early eighties, our most experienced and prestigious specialists while, more recently, large numbers of our family doctors have fled); b) premature retirement or change of occupation by many physicians; c) voluntary and self-imposed reduction of hours of work and services offered by the remaining MDs, resulting from both individual and generalized "capping" of incomes of the profession. It has come to the point where even the most caring physicians feel it simply doesn't make financial sense to sacrifice potential leisure time with their families, in order to provide medical care at a loss, or for what, in many fields, is ridiculously inadequate compensation. All of this, predictably, means considerably less access to such care by the sick public.

Far from eliminating red tape and bureaucratic dicta, as it promised during the last election, Ontario's supposedly conservative present government has recently instituted measures even more autocratic and draconian than those of its socialist predecessor --- again trying to legislate the unenforceable. However, it's becoming more and more obvious the system is going from bad to worse, and the government gurus, having had to reverse themselves recently on several major initiatives, face even more serious trouble. In spite of the fact the medical profession lost a half-hearted strike in 1986, there's now even more and stronger talk of "job action" (a euphemism for withdrawal of services), by large segments of general practice and specialist groups. The profession is in the process of becoming venomously politicized, and has learned (about 25 years too late, in this writer's opinion) that, as an American unionist once wrote, "Riot does far more than reason to change the law."

Whether or not a strike occurs, major changes are in the offing, and they bode well, in my opinion --- but only for that segment of the public which values good, fast, caring, state-of-the-art, personal medical care, and is willing to pay for it, either privately or through employer or other insurance. As in Britain, the remainder will have to cope with a severely deteriorating system --- unless it's completely overhauled, which appears extremely unlikely.

What is happening is that governments, now realizing they simply cannot afford our present open-ended scheme, are looking for face-saving formulas to bow out without committing political suicide. They're not about to rescind our sacrosanct Canada Health Act; but they can and are doing an end run around it. Like politicians since time immemorial, what they can't achieve through the front door is being gradually implemented by the back door. How? Under Canadian legislation, doctors and other health care providers cannot contract privately with patients for any services covered by the legislation; but, services not so covered are immune from government intervention. Until recently, this exemption meant only things like cosmetic surgery, acupuncture, and most alternative medicine modalities. Now, however, in a deliberately underpublicized program, government has embarked on a course of "delisting" (i.e., eliminating medical and pharmaceutical items previously paid for by the scheme).(6) Once such an item has been removed from the register, the government no longer pays for it. At that point, it reverts to the private sector, where patient and doctor can function, as before, on a private contractual basis. As more and more such items are delisted, the scope of resurgent private practice gets larger and larger. It's my considered opinion that, within 5 years, this exempted area will be so large that, in effect, we will have a parallel private practice segment in addition to the governmental one. At that point, we'll be in the same position as Britain, where private practice was never abolished by the introduction of the National Health Service in 1948, and where roughly 11% of the population still continues to buy such private insurance coverage in addition to paying the usual taxes. Such a change would solve part of the Canadian problem --- but for a relatively small segment of our population. It would leave the large majority untouched, except for a small increase in accessibility resulting from the absence of demands on the public purse by the privately-insured 11%.

Much as this would be a marked improvement over our present system, it's by no means ideal. I have had discussions with the Special Adviser on Policy to the Ontario provincial Health Minister, and stressed to him that the only arrangement which really makes sense, and which is viable in the long run, is one in which the patient, the consumer, is the gatekeeper to the system. It cannot be the bureaucrats, nor the insurance companies, nor the employers, nor health-care management corporations, nor the hospitals, nor even the doctors. Furthermore, it must be a system in which there are strong personal disincentives for wasting scarce health care dollars and equally strong personal incentives for saving them. Apart from providing a fiscal life-line to desperately broke governments, and eliminating billions of dollars in administrative costs, such a system would restore professional independence to doctors, and consumer choice to patients. The jurisdiction in which such legislation was first instituted was Singapore,(7) and the same principles have been incorporated in recent years in the U.S. with some modifications, in Medical Savings Account legislation in over 15 states, and as an option for federal Medicare beneficiaries.

Whether the Canadian authorities will come to appreciate the benefits of such a consumer-driven alternative remains to be seen. What makes me hopeful is it could be implemented without contravening the five basic principles of the Canada Health Act and thus, would give the politicians another face-saving formula, another opportunity for back-door wholesale revision of our presently unworkable setup. To become affordable and viable, the latter doesn't have to be sacrificed --- only reworked. Certainly, I've made it very clear to them there's more than enough money in the system right now to provide good, basic health care for our entire population. The current problem is simply misallocation of funds in a scheme which, as presently structured, positively invites bankrupting overuse and abuse by both physicians and patients. The re-allocation must be done, however, not by government fiat, but by using the public's self-interest to guarantee the money is sensibly and judiciously used. For this happy outcome, I believe MSAs provide the only workable solution in both Canada and the U.S., as Singapore has proved.


1. Priest L. Wait for surgery can prove deadly. Toronto Star, October 16, 1993.
2. Cutbacks in funding cited as tumor becomes inoperable --- cancer doubles as surgery delayed. Toronto Star, January 8, 1994.
3. Platiel R. Patient forced to U.S. for surgery. The Globe and Mail, Toronto, Canada, May 30, 1995.
4. Priest L. Heart surgery backlog hits all-time high --- patients waiting up to 7 months in game of 'Russian roulette.' The Saturday Star, Toronto, Canada, October 14, 1995.
5. Brown D. and Onesi M. Doctors angry at province turn away pregnant women. The Globe and Mail, Toronto, Canada, August 10, 1996.
6. Goodman WE. Health care in Canada: face-to-face with reality. J Med Assoc Ga 1993;82(12):647-650.
7. Goodman JC. Medisave accounts in Singapore yield positive results. J Med Assoc Ga 1993;82(12):661-663.

Dr. Goodman is an otolaryngologist in Toronto, Ontario, Canada, who joined the Ontario's doctors' work stoppage on June 11, 1986 in protest of the government's intrusion into medicine, and a member of the Editorial Board of the Medical Sentinel.

Originally published in the Medical Sentinel 1997;2(1):16-18. Copyright ©1997 Association of American Physicians and Surgeons.

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