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Private health care is no remedy for an ailing system

The role of the private sector in health care has been expanding for decades. Why hasn’t it delivered its promised benefits?

Canadian PoliticsHuman RightsQuebec

As the right-wing populist CAQ (Coalition Avenir Québec) government continues to peddle privatization as the solution to the province’s health care woes, progressive organizations throughout Québec are sounding the alarm about the creeping establishment of a two-tier health care system. This overview and critical analysis of the situation in Québec is a translation of the fourth part of a series on health care in Québec published in April 2022 by IRIS (Institut de recherches et d’informations socioéconomiques), Québec’s leading progressive research institute.”

The Québec government has announced plans to begin “rebuilding” its health and social services system, and none too soon. The COVID-19 pandemic clearly showed that the top-down, hyper-centralized health care system is failing to meet the public’s needs and is placing its workers under undue strain. A parallel private system is increasingly seen as a solution to these problems. But would it really improve access to health care for Québecers?

The role of the private sector in health care has been expanding for decades. Why hasn’t it delivered its promised benefits already? This article reviews the main arguments in favour of private health care and shows why it cannot improve health care and social services in Québec.

Private financing

In a privately financed health care system, households must pay private providers directly for medical care or take out private insurance to cover the cost—much the way dental, vision and psychological care work now. Most experts reject this approach because a large segment of the population would be unable to afford private insurance.

However, some argue that people should have the option of buying private insurance for services covered by Medicare. Those who could afford the insurance would then be able to seek medical care in the private sector. Such “duplicate” insurance is currently prohibited; private policies are not allowed to insure services that are covered by Medicare. This ban prevents the development of any real market for basic care and an exodus of professionals to the private sector, as few people can afford to pay for medical treatment out of pocket.

Allowing duplicate insurance and creating a two-tier medical system would therefore exclude the less affluent. It would also cost more overall. Though proponents of the private sector often criticize bureaucratic red tape in the public sector, the administrative costs of private insurance are four, five, even ten times higher than those of Medicare, since insurance companies cannot achieve the economies of scale of a universal public plan.

Private insurers are also less efficient: a much higher proportion of the money they collect in premiums from plan members goes to non-medical expenses, such as administrative costs, marketing expenses and dividends to shareholders. In 2011, Canadians paid $6.8 billion more in premiums for private health insurance than the cost of the medical services they received in return.

Québec’s prescription drug insurance plan is a good example of the consequences of a hybrid public-private system. The people who have private insurance are mostly in the workforce and therefore tend to be younger and healthier. The public plan covers everyone else, i.e., those who would be a financial burden on the private plans. As a result, drug insurance in Québec is very lucrative for private insurers while the public plan runs a huge deficit. This has nothing to do with their relative efficiency: the system is designed to generate profits for the private sector and losses for the public sector.

Private health care delivery

Instead of private financing, advocates of privatization are now calling for a greater role for the private sector in delivering medical services. They want more services to be provided by private facilities, even if the funding of these services remains public. They argue that a parallel private system would take some of the pressure off the public system.

What would private health care contribute to the system? Clearly, it couldn’t be human resources. There is already a shortage of health and social service personnel in Québec and a private system doesn’t produce clones: its personnel often come from the public system, exacerbating the staff shortage there. In addition, the private sector relies heavily on the public education system to train its staff. So the private sector does not contribute new human resources and cannibalizes the public sector more than it relieves the pressure on it.

The private sector’s contribution would therefore be in the form of private investors financing the development of private facilities. These investors would naturally want to extract profits, so the private facilities would have to generate a sufficiently attractive return. It is no coincidence that major private clinics such as Rockland MD, Clinique Dix30 and Opmedic are located near affluent neighbourhoods and not in Montréal’s Hochelaga-Maisonneuve district: they’re not looking for patients to treat but, first and foremost, for lucrative business opportunities.

The profit imperative that drives private health care tends to conflict with accessibility and quality of care. For example, Québec’s family medicine groups (FMGs), the vast majority of which are private organizations, have yet to fulfill their promise of improved access to family physicians. The history of the FMGs also shows that private investment is not enough to develop a sufficiently profitable private medical sector in Québec, and what the advocates of private care basically want is a private health care industry bankrolled primarily by public funding.

Ban on dual practice

In addition to the prohibition of duplicate private insurance, one of the obstacles to private medicine in Québec is the existing ban on dual practice. A doctor cannot practice simultaneously in the public system and the private sector: they must choose one or the other. The purpose of this rule is to ensure that all resources are available to care for the public and to prevent the diversion of some resources to serve only the interests of the wealthiest. Because private health care is so expensive, the market for it is limited and it is difficult for physicians to serve it exclusively. As the majority of physicians cannot afford to stop billing the state, most stay in the public system.

According to private sector advocates, ending the ban on dual practice would allow doctors to earn more money by seeing more patients, thereby increasing the supply of services and helping to reduce wait times. However, we have a telling example of the possible consequences of abolishing Québec’s ban on dual practice: the case of medical imaging.

Since the 1980s, an exception to the ban has allowed radiologists to practice in the public system as well as privately. This has facilitated the migration of technicians to the private sector and contributed to the emergence of a labour shortage in the public system, which is preventing public facilities from operating at full capacity and lengthening waiting lists. It has also created an incentive for radiologists not to reduce wait times in the public system, so they can offer patients who can afford it faster service at their private clinics.

The outcome of this inefficient arrangement is that Québec has more medical imaging equipment (such as MRIs) than other Canadian provinces because of the private facilities but performs fewer or similar numbers of exams per capita. This setup has also made radiologists among the highest-paid physicians in Québec, with an average income of $875,293 in 2018-2019, not counting the profits from their private clinics.

This mix of public and private financing and service delivery illustrates the adverse consequences that can result from private investment in a health care system.

The fantasy of entrepreneurship

Beyond financing and service delivery, private health care, according to its supporters, brings to the table the ingenuity of entrepreneurs, who are better able to find creative solutions to the system’s problems. In this view, the lure of profit will give these entrepreneurs the power to resolve the issues in the system.

The creativity of workers in community and non-profit organizations suggests that returns in the form of profit are not the decisive factor in improving services to the public. Creativity is fostered far more by autonomy from technocrats and managers than by the profit motive, whether the local organizations enjoying such autonomy are public or private.

In Québec, the public Local Community Service Centres (CLSCs), internationally considered one of the most innovative models in the Western world, have been hijacked by conservative social forces (doctors and business) who prefer a private service delivery model (polyclinics and FMGs).

Conversely, the arrival of entrepreneurs eager to extract profits from the health and social services system has had undesirable effects in a number of cases. For example, some placement agencies saw an opportunity during the pandemic. They poached workers from the public system and then sold their services back to the system at very high rates, pocketing substantial profits in the process. Labs that perform tests and analyses have a similar business model and are also taking advantage of the shortage of resources in the public system.

Private health care: solution or problem?

This article has outlined how private financing and delivery of health care undermines the health and social services system. The adverse effects of the various forms of privatization include reduced accessibility, inefficiency and higher costs. Some people are proposing an expanded role for the private sector as a solution to the problems in the health care system. The government should be wary of this approach. Instead, it should commit to the refinancing and decentralization of the public system that many have been urging for decades.

Finally, it should be noted that the development of a health care industry is likely to strengthen the voice of pro-private sector economic and political actors in debates about health and social services in Québec. In both the United States and Canada, the growth of the private sector has led to intense lobbying for private interests by the insurance companies and the pharmaceutical industry (which hold big stakes in drug insurance, among other things). As we have seen, these interests are largely incompatible with the common good.

Translated by John Detre.

Guillaume Hébert is a researcher at IRIS (Institut de recherches et d’informations socioéconomiques), where he focuses on issues related to Québec’s health and social service system, public finances, and housing. His work is widely published in Québec’s progressive media outlets and he is also a frequent guest commentator in the mainstream media. He holds a master’s degree in political science from the Université du Québec à Montréal (UQAM). Follow him on Twitter @Guillaume__H.


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