Summary: The Canadian Health Care System

The Canadian health care system, unofficially known as Medicare, is financed along sectoral lines. Certain sectors, which include all “medically necessary” hospital and physician services, are financed entirely through a single payer, publicly funded, universal insurance program (Lewis et al., 2001). Conversely, private financing—either through private insurance or out-of-pocket payments made by the individual—is permitted in supplementary sectors such as drugs, dental services, cosmetic surgery, home care, and long-term care (Steinbrook, 2006). This division of financing therefore prohibits the coverage of hospital and physician services using private financing. This forecloses the emergence of a parallel “two-tier” model of health care financing

The principle of “public payment, private practice” for “medically-necessary” hospital and physician services have been instituted by the Medical Care Act, creating policy legacies that reinforce institutional barriers to change (Abelson et al., 2004). However, passive privatization is occurring in Canada due to new technologies, with life-saving innovations such as drugs and genetic therapies emerging as the future of health care therapy (Flood et al., 2006). Yet, these innovations fall outside the scope of core services that receive public coverage, serving as an example of the limits to the principles underlying health care in Canada. Ironically, these non-core services are taking up an increasing proportion of provincial health care budgets (Ballinger et al., 2001). Thus, unless Canadians are prepared to broaden the definition of “medically necessary” to be more inclusive, they must be prepared to look at alternative options to funding these services, such as “two-tier” or for-profit delivery

Applying Australia as a specific example, it can be rationalized that the introduction of a parallel public and private system in Canada could be economically miscalculated. Australia’s health care system incorporates both parallel public/private and co-payment models in an attempt to balances public financing with out-of-pocket payments and private insurance (Tuohy et al., 2004). Historically, private insurance has been declining in Australia for a variety of reasons. In the late 1990s, the Australian government attempted to address these various reasons to increase the private insurance market through unprecedented levels—over $2 billion per year-of public subsidy. These efforts were successful in reversing the decline, but only occurred through a highly debatable use of public funds (Tuohy et al., 2004). Thus, Australians were paying taxes to support both systems, creating a highly unstable system marked by economic uncertainty that could similarly plague a “two-tier” system in