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Fraser Institute: Australian Health Care System an Example for Canada in Reducing Costs and Waits for Treatment

CALGARY, ALBERTA -- (Marketwire) -- 02/25/13 -- Australia's universal-access health care system, which outperforms Canada across many measures of access and outcomes, offers important lessons for Canada on health policy reform, argues a new report from the Fraser Institute, an independent, non-partisan Canadian think-tank.

"Canada is at a crossroads: government health spending is among the highest in the developed world, yet Canadians endure some of the longest waits for medical treatment," said Nadeem Esmail, Fraser Institute director of health policy studies and author of Health Care Lessons from Australia.

"It's time for Canadian governments to stop throwing money at our fundamentally broken system. Australia is a fine example of a universal health care system that puts patients first. Canada would be wise to follow its lead on cost-sharing, activity-based funding, and private-sector involvement."

Health Care Lessons from Australia is part of a Fraser Institute series examining the way health services are funded and delivered in other developed countries with universal-access health care systems. The nations profiled all aim to achieve the noble goal of Canada's health care system: access to high-quality care regardless of ability to pay.

The report includes an introduction from Hon. Janice MacKinnon, finance minister in Saskatchewan's former NDP government, highlighting Canada's urgent need for health policy reform.

She writes that while the need for change is widely recognized, it's difficult to achieve when the debate is too often marked by ideology. As an example, she cites what she calls "myopic and predictable" arguments from public sector unions and other defenders of the status quo that any involvement by the private sector will usher in American-style two-tier health care.

"The debate needs to be moved beyond the stark choices in North America to consider other OECD countries whose systems are less expensive and feature shorter waiting lists and better outcomes," MacKinnon writes.

In comparing Canadian and Australian health care, the report notes that Canadian government health expenditures (age-adjusted) were 26 per cent higher than Australia's in 2009. In fact, Canada's health spending as a share of GDP was the highest among all developed nations with universal-access health care. At the same time, Canadians are forced to endure poor access to medical professionals and medical technologies as well as some of the longest waits for treatment in the developed world.

Australia's health policy framework differs from Canada's in the following important ways:


--  Cost-sharing for outpatient medical services 
--  Some private provision of hospital and surgical services 
--  Activity-based funding for hospital care 
--  Broad private/parallel health care sector with taxpayer support and dual
    practice

"Emulating the Australian health care system would not require a marked departure from the current tax-funded, provincially managed, federally supported health care system in Canada," Esmail said.

"An Australian approach to health care in Canada would primarily require important changes to financial flows within provincial tax-funded systems, a greater reliance on competition and private ownership, and public support for private insurance and care."

The report suggests that the Canadian health care system would be greatly improved if provinces adopted reforms based on Australia's proven framework for providing high-quality universal-access health care at reasonable cost:


1.  Consider adopting activity-based funding for health services and
    allowing private provision of hospital and surgical services.

Global budgets (the dominant form of hospital funding in Canada) disconnect funding from service provision. Conversely, activity-based funding, where funding follows the patient, creates incentives for hospitals to treat more patients and to provide the types of services that patients desire. The result is a greater volume of services from the existing infrastructure, reductions in waiting time, and improved quality and efficiency.

Introducing private provision inside a competitive framework also results in better system performance while ensuring access to quality health care. Importantly, private providers create greater competition, putting pressure on all providers (whether public or private) to operate more efficiently.

"Canada and Australia share the same goals for a health care system that provides patients with timely access to high-quality care, regardless of their ability to pay," Esmail said.

"Canada would take important steps towards fixing its ailing health care system if we adopted some of the policies that work for Australia."


2.  Consider allowing private health care and insurance, implementing
    financial incentives for the purchase of insurance, and paying some
    portion of costs for private care. Canada's provinces should also
    consider allowing dual practice for physicians to maximize the volume of
    services provided to patients in both public and private settings.

Australia's superior health care performance is in part the result of a vibrant private parallel health care sector. The private sector in Australia plays a large role in both financing and delivering health care, most specifically elective surgery.

"When patients use the private parallel health care sector they free up resources in the universal system for patients who have opted not to seek private care. In Australia, supporting the private parallel sector may have helped reduce wait times and has helped contain health care cost increases," Esmail said.

Australia also allows physicians to work in both the public and private health care sectors rather than requiring them to opt out of the universal system. This has the benefit of making more efficient use of highly skilled medical resources.


3.  Provinces should consider implementing cost-sharing regimes for
    universal health care with reasonable annual limits and automated
    exemptions.

A lack of cost-sharing (i.e. when patients are required to pay for a portion of their insured medical services) has resulted in excessive demand and wasted resources in Canada's health care system. Cost-sharing encourages patients to make more informed decisions about when and where it is best to access the health care system, thus increasing the cost efficiency of health care (ultimately reducing total spending) and improving access to treatment for those in need. Cost-sharing policies have been shown not to have an adverse effect on health outcomes as long as low-income populations are exempt.

Follow the Fraser Institute on Twitter / Like us on Facebook

The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

Contacts:
Fraser Institute
Nadeem Esmail
Director of Health Policy Studies
(403) 216-7175 ext. 422
nadeem.esmail@fraserinstitute.org
Twitter: @NadeemEsmail

Fraser Institute
Kendal Egli
Communications Specialist
(416) 363-6575 ext. 235
kendal.egli@fraserinstitute.org
www.fraserinstitute.org

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