Canada should consider a drastic overhaul to its healthcare system in order to ward off a potential crisis, the Organization for Economic Co-operation and Development warned in a report on Monday.
The Paris-based think-tank released its September 2010 economic survey of Canada, highlighting a number of concerns, including the rising household debt-to-income ratios, overpriced homes and the burden of a rapidly aging population.
But the most controversial recommendations centered on healthcare.
Scrapping the current universal system and implementing a private-public hybrid program could help Ottawa fix the ailing healthcare sector, the report said.
The OECD calculated that public health spending has increased by an average of 8% over the last decade, while the tax base has only increased by an average of about 4%.
Unless the federal and provincial governments want to raise taxes or cut back on other social services, they should consider user fees, the report suggested.
The measure might also encourage healthier lifestyles, if users were forced to pay for certain services.
From a market standpoint, user fees could help reduce the burden on the public system and force the government to operate its programs more efficiently.
“If even only a small portion of the population chooses to opt out of public insurance and purchase private insurance for core services, the presence of competition from private plans would give politicians and managers of the public plan a strong incentive to operate more efficiently and reduce costs, since otherwise they would lose market share,” the report stated.
Such changes would require revisions to the Canada Health Act, which is unlikely in a minority government.
It also raises the issue of queue-jumping, a key concern for supporters of Canada’s universal healthcare system.
The healthcare focus of the 2010 economic survey also matches well with what the Canadian Medical Association and provincial governments have already stated: that the system is on shaky ground.
The current federal-provincial funding agreement expires in 2014, and may need some creative re-tooling, with an eye towards more privately-funded solutions.
Plan sponsors will undoubtedly be keeping close tabs on the situation as well, as any decision to include more private options will impact the operation of employer-sponsored coverage plans.
While the pitch of a healthcare renewal or overhaul — depending on your perspective — stole most of the headlines, there were other important findings from the OECD report.
The group estimates that the Canadian economy won’t be able to grow more than 1.6% per year between 2010 and 2017, more than a full percentage point less than over the past decade.
To help speed up the growth rate, the OECD said Ottawa should allow more foreign ownership of industry and examine ways to reform the employment insurance program.
