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Ivey International Centre for Health Innovation

Is it time for user fees in Canadian healthcare?

  • Liam Wicken
  • |
  • Apr 16, 2018
Is it time for user fees in Canadian healthcare?

Like the debate around allowing a two-tiered health system in Canada, the topic of allowing user fees in our publicly-funded healthcare is hotly contested. For decades, proponents of user fees have hailed the possible benefits, typically that they deter wasteful use of precious healthcare resources and that they save the government money. With these potential benefits, why haven’t user fees caught on?

Under the Canada Health Act, insured persons have first-dollar coverage for all insured services, meaning that they cannot be charged a single dollar for services covered by Medicare. About 70% of healthcare services in Canada are publicly funded that fall into the first-dollar coverage category, with the remaining 30%  privately administered and paid for, typically through private insurance and with various user fees like copays and deductibles. Unlike the copayments and deductibles used in private health insurance, however, the typical form proposed user fees would take is a small fee charged to patients when they visit a family doctor or an emergency room.

The major argument used by proponents of user fees is that they help raise government revenue. With rising healthcare costs from an aging population and increasingly expensive drugs and medical technology, surely any action to save cost should be considered, right? Evidence in the Canadian context actually points to the contrary. While revenues may rise, corresponding decreases in healthcare use from increased costs may offset any gains. For instance, from 1968-1971 Saskatchewan experimented with a copayment scheme for family physician and hospital services. The result of this program was to decrease overall physician visits, especially among low-income families, without any actual reduction in overall health system costs. Beyond the offset from decreased use of services, any exemptions to user fees for low-income groups, aimed at improving system equity, would further cut into revenues.

The second main argument is that user fees will cut down on wasteful use of medical resources. By incentivizing patients to consider whether or not their medical issue is worth a small fee at the doctor’s office or emergency room, overcrowded hospitals will be relieved of worry-warts. While wasted resources are a real concern in Canadian healthcare, simply reducing care does nothing to improve overall system efficiency, and may in fact lead to worse outcomes as people avoid necessary care. After Quebec introduced a cost-sharing scheme for drug prescriptions in 1996, it was found that elderly and low-income patients were avoiding taking their essential medications and, consequently, were ending up in expensive emergency room visits more often.  The situation in dental and non-insured medical care can provide some evidence for this. This phenomenon is seen in Canada in the estimated 6 million low and middle-income Canadians who avoid dental care because of costs, some of whom require expensive, insured medical treatment after their conditions worsen. Additionally, an estimated 10% of Canadians do not fill their prescriptions as directed as a result of costs, mostly among those who are uninsured and in poor health. After seeing the negative effects user fees have in our existing health and dental industries, especially on poor and aging populations, why would we want to extend these exclusions to our publicly-funded health system?

We can see that the cost-saving and waste-negation arguments in favour of user fees might not hold water. It may be possible, however, to navigate around these problems with proper policy, like exemptions for low-income or aging populations and proper incentives for physicians and hospitals to encourage efficient services. Further, Canadians are already used to paying over $900 per year out of pocket for health costs, in addition to about $700 per year for private health insurance, so adding a few smaller charges for hospital or doctor’s visits is not that far off. After all, many other highly-developed countries have implemented some sort of user fees in their healthcare systems.

So what is the real reason why user fees haven’t stuck? The answer often goes overlooked: that they are incredibly unpopular in Canada. After Quebec experimentally introduced user fees for doctors visits in 2010, overwhelming public opposition led to it being quickly denounced and consequently discarded, despite potential revenues of $500 million per year. As Canadians we pride ourselves on our accessible and high-quality healthcare, and user fees are not part of improving our health system in the public eye. While pressure mounts on the pro-user fee side whenever Canada looks at reducing its deficit, it is important to remember that one of the fundamental reasons for adopting universal public health insurance in Canada was to eliminate obstacles to accessing proper hospital and medical care for all Canadians. In the Canada Health Act it is stated that the primary objective of Canadian health care policy is to “protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers.” Debate on introducing user fees will continue in Canada, nonetheless, especially as calls for reform in Canadian healthcare become more pronounced.

Liam Wicken is a Research Analyst at the Ivey International Centre for Health Innovation. He is a fourth year BA student in economics, with interests in healthcare economics, public finance, and health policy.