Private Health Insurance in Canada

Although a majority of Canadians hold some form of private health care insurance -- most commonly obtained as an employment benefit -- private insurance finances only 12% of health care expenditures in Canada and its financing role is essentially limited to complementary coverage for services not covered by public insurance programs. Private supplementary insurance for services covered by the public insurance system does not exist in Canada. This limited role for private insurance in health care reflects the core policy vision for health care financing in Canada, which emphasizes equal access to medically necessary health care, especially physician and hospital services. Compared to many other countries, Canada's private health insurance market is relatively uncomplicated, viewed in terms of either the products offered or the regulations imposed. Although Canadians regularly debate the relative split between public and private finance overall, and a small set of advocates have persistently pressed for a greater role for private insurance, private insurance has not figured prominently in Canada's health care policy debates, which since the late 1960s have focused on the publicly funded health care system. Three Canadian health care policy challenges, however, are drawing the role of private health insurance into the centre of policy debate. The first has been the emergence in the last ten years of long wait times for some common, high-profile services such as orthopaedic surgery, eye surgery, diagnostic imaging, and cancer treatments. These wait times have fuelled advocates for parallel private finance alongside public insurance and for loosening restrictions on supplementary private insurance. Such advocates were emboldened by a landmark 2005 Supreme Court of Canada ruling (Chaoulli vs. Government of Quebec) that, in the presence of excessive wait times in the public system, Quebec's statute prohibiting private insurance for publicly insured services violated Quebec's Charter of Rights. Though the ruling has only narrow application to Quebec, the judgement has given momentum to those advocating for a fundamental change in the role of private insurance in Canadian health care. The second element drawing private insurance into the centre of policy debate is the growing importance of pharmaceuticals in the modern pantheon of medically necessary therapies. Prescription drugs are excluded from the core services covered by Canadian Medicare, so the majority of pharmaceutical costs are privately financed. Many Canadians, however, are either uninsured or underinsured for prescription drugs. This has prompted many to call for an expansion of public financing for prescription drugs (National Forum on Health 1997;Commission on the Future of Health Care in Canada 2002;Senate of Canada 2002). Some proposals call for full public coverage that would supplant the currently large role of private insurance in this sector; others, call for various types of public-private partnerships to ensure universal coverage. All of them force the question of the desired role for private insurance in this increasingly important and expensive sector of health care. Finally, policy makers and system analysts increasingly appreciate the interactions between the publicly and privately financed components of the overall health care system. Unequal access to privately insured services can lead to unequal access to and use of publicly insured services. Both Stabile ( 2001) and Allin and Hurley ( 2008), for instance, find that other things equal, those with private drug insurance use more publicly financed physician services (an effect unlikely to be driven by selection. This type of evidence prompts hard questions regarding the scope of policies necessary to achieve objectives set for the publicly financed health system. This chapter reviews the role of private health insurance in Canada. It begins with a brief overview of the Canadian health care system; considers the historical path that led to the current role for private health insurance; examines the current market for private health insurance; assesses the evidence for how private insurance contributes to or detracts from health financing goals; and offers some concluding comments on private health insurance in Canada.