Imagine your first car. Your paper route pays for gas. Your parents pay for insurance. Without parental co-funding, you would be riding your bicycle.

Every country in the world, except Canada, uses some element of private funding to keep its medical system on the road.

Every country pays for doctors and hospitals using a mix of tax dollars, through government, and private money, through insurance or cash payments. Most developed countries outperform Canada.

Obsessed With Australia

Medicare activists use Australia in almost every presentation, article, and conversation about healthcare. Australia is their poster child for how private funding fails.

Here is the argument:

Australian medicare lags behind Canadian medicare.

Australia allows private funding.

Therefore, Canadian medicare would deteriorate with private funding.

It is a bit like saying: Cancer can cause baldness. Jack is bald. Therefore, Jack has cancer.

But the argument often emphasizes a change in performance also:

Australia once had a great tax-funded medicare system.

Australia allowed private funding. Performance deteriorated.

Ergo, private finance causes poor performance.

This begs the question. Furthermore, it assumes Australia was once great and credit the greatness to public funding. What’s more, it assumes that problems in Australia will show up in Canada (more on this below).

But the confusion goes deeper. It paints private funding as all or nothing. It is like saying: If an aspirin overdose is lethal, then aspirin is bad at any dose.

And it confuses whole versus part. If there is some private funding in Australia, the whole system exemplifies private medical care. That is like saying: This tire is made of rubber, so the whole car must be rubber.

Private Funding vs. Confused Funding

For simplicity there are four major kinds of funding (with a rainbow of blends):

Single-Payer public funding — Every dollar spent on medically necessary care comes from taxes. Only Canada does this.

Co-funding — Medical care is funded partly with taxes and partly with private funding.

Sectoral funding — Taxes cover care for specific groups of people.

Private funding — Medical care receives no tax funding.

The only pure form is Canadian single-payer care. All other countries use a blended approach.

Australia uses co-funding. Most care happens in a co-funded environment. But this pulls us into a discussion about delivery. Funding and delivery are separate concepts.

Delivery requires its own blog, but since Australia allows some fully private hospitals, we need to address it briefly.

Three Reasons to Hate Private Care

Some people hate the idea of patients using their own money to buy care at private hospitals.

Here’s why:

A) Equity — Some patients will get care faster than other patients. That is not fair.

But it happens all the time in Canada. Injured workers get preferential treatment, and over 217,000 patients left Canada for care in 2017.

When asked about patients leaving Canada to avoid long wait lists, a DM of health in BC said years ago, “If we could stop them at the border, we would.”

B) Private hospitals cause longer waits in the public system —

If a doctor shortage exists, it will get worse if we let doctors work outside the public system.

Given that we have unemployed surgeons in Canada, the concern does not apply here. Even if it did, restricting physician freedom in a system that rations care opens up another debate.

C) Cream Skimming — Private hospitals would steal all the easy patients leaving the hardest cases for the public system.

I tackled the cream skimming myth in a recent blog.

Hospitals become great by doing hard cases.

Furthermore, ‘easy patients’ only pay well when government arbitrarily fixes the price of care too high. The cream evaporates if hospitals compete to offer the highest quality of service at the lowest price.

Is Canada Radical?

Every royal commission, regardless of political leaning, calls for change to medicare.

Australia tops up public funding for medical care with private money, much like our parents helped finance our first cars.

We would never blame our car’s performance on our parents, but for some reason, people blame co-funding for Australian performance.

Canada holds a radical position on funding. It is hard to communicate how extreme Canada is in the world. It is like saying everyone must wear the same colour clothes, eat the same meals, or drive the same cars.

Radical might be fine, as long as patients get great access to care and providers are treated with dignity.

We should stop obsessing over Australia, or any other blended system, and focus on how to make our system better. That mean being open to different ways to fund the system, while still providing care for all regardless of ability to pay.

Photo credit: Pexels.com Ethan Brooke

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Bonus Video

If you want to learn more about funding, check out this lecture by Carolyn Tuohy. She is no friend of doctors or private finance. But she offers a great overview.

Pay attention at 33:00 where she talks about, “How do we control the power of providers in healthcare?” Our rigid single-payer model leaves no alternatives for innovation other than at the negotiating table.