Fraser Forum

More successful universal health-care countries employ some form of cost-sharing

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More successful universal health-care countries employ some form of cost-sharing

Canada lags behind its international peers on several key indicators of health-care performance, notably wait times for treatment and availability of resources. This poor performance, despite ranking among the top spenders, suggests a need for reform. However, major hurdles exist due to false perceptions about policies in more successful universal health-care countries including the requirement for patients to directly share the cost of treatment.

Indeed, a recent report published by the Fraser Institute finds that such cost-sharing requirements are not only compatible with universal coverage, they are the norm.

Among 28 OECD members with universal health-care coverage, the vast majority (22) expect in one way or another that patients share the cost of care. These include countries such as Australia, France, the Netherlands and Switzerland—all well-recognized for superior performance on numerous health-care metrics (including shorter wait times). Canada is part of a minority of only six countries where cost-sharing is not expected, joining the ranks of Hungary, Denmark, Czech Republic, the United Kingdom and Spain. None of these countries (with the possible exception of the U.K.) are recognized as top performers. And even the U.K. has a robust private health-care sector where patients may incur direct charges and cost-sharing arrangements.

In fact, unlike Canada, most universal health-care systems expect patients to share the cost of care through deductibles, co-insurance and co-payments. Deductibles are an amount up to which an individual is exposed to the full cost of care, after which insurance covers expenses. Under “co-insurance” requirements, patients are responsible for a percentage of the cost of each unit of care. And co-payments are fixed payments for each unit of received care.

Of course, the size and method of cost-sharing differs depending on the country and area of care. For primary care, the majority (16/28 or 57 per cent) employ either co-insurance or co-payments. Patients seeking care in New Zealand, for example, can expect co-payment ranging from NZD $15-$50 (C$11.98-$39.94) when accessing primary care (for those under 65) while patients in Norway can expect to pay NOK 155-334 (C$19.92-$42.92).

 Co-Payments and co-insurance
CountryDeductibleOutpatient PrimaryOutpatient SpecialistInpatient acute
Czech RepublicNoNoNoNo
New ZealandNoYesNoNo
United KingdomNoNoNoNo

For outpatient specialist care, 18/28 (or 64 per cent) countries reported using cost-sharing with three countries (Denmark, Hungary, Ireland) only using it under specific circumstances (e.g. choosing to see a specialist without a referral or choosing to be referred as a private patient). For example, Australian patients seeking specialist care can expect to pay an average fee (in 2020) of AUD$80 (C$70.74) for a consultation. In other countries this fee is substantially lower, such as in Belgium where the co-payment for a consultation for a regular patient is €12 (C$15.78) or €3 (C$3.95) for those with preferential reimbursement.

Finally, cost-sharing is less commonly required for acute inpatient care. Among these 28 countries with universal coverage, 14 (or 50 per cent) employed some form of cost-sharing for inpatient hospital care. French patients, for example, are required to pay for a percentage (20 per cent) of care, flat fee of €24 (or C$31.56) per hospital stay if they require procedures that cost more than €120 (C$157.82), alongside daily fees for accommodations. Switzerland, on the other hand, expects patients to share in 10 per cent of the cost of acute inpatient care (alongside a flat daily fee) after they’ve reached their chosen deductible. Whereas two countries, Italy (for unwarranted use of emergency services and those who want private services delivered inside the hospital) and Australia (for those who decide to be treated as a private patient) only have this as a requirement under certain conditions.

Overall, systems of patient co-payments or co-insurance payments are far more common than general deductibles, which are routinely employed by only two countries (the Netherlands and Switzerland) and sometimes employed in two others (Germany and Ireland) for core medical services.

All of this raises an obvious question. Why do other countries use these cost-sharing measures?

Economic theory suggests that a system of “first-dollar” coverage, where individuals are not subject to any financial cost of care, can lead to excess demand for medical care and loss of “social welfare.” Cost-sharing mechanisms have been shown to reduce the use of outpatient care without necessarily resulting in adverse consequences for the average population because cost-sharing requirements are usually accompanied by various “safety nets” designed to protect vulnerable patients from falling through the cracks. These safety nets include caps on out-of-pocket spending and exemptions for vulnerable populations (low-income families and individuals with chronic conditions, for example).

There’s much to learn from other countries with universal health care especially systems that perform better than ours. It’s time for Canadians to improve the health-care discourse by moving past the taboo that avoids discussions about the potential benefits of cost-sharing to curb excess demand and inappropriate care.

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