Why we need to change the revenue model for health care

There are three options when a service or product costs more or is perceived to cost more than it should – agree to pay more, find a similar product for lesser cost, or refuse to purchase.  All of these options are valid in health care, including the last one – with funders deciding that some services, drugs, diagnostics will not be paid for. At the moment it seems that politicians believe that the only solution to increased health care cost is to reduce expenditure, rather than exploring ways to increase revenue.

We do need to talk about increasing revenue in health care. How to get that increased revenue is an important question. Options include general taxation, through specific health taxes that do not enter general revenue streams, through co-payments, through third party insurance, and through private payment.

One of my biggest frustrations in the discussion of health care reform is the tendency of opponents of reform to at this point reduce the discussion qualitatively to either status quo or an “American style system”.  I have a sense that there is a willingness to open debate about funding and I have little time for those who want to set up a binary argument as a way to shut down debate.  France and Sweden have developed revenue generation and parallel care pathways that function well and bear no resemblance to the American system.

There are three reasons why we should increase revenue and investment in health care.

First, we have an immense unmet need for health care that we currently are not addressing.  Many problems go untreated and some of these have a significant and predictable long term social cost, yet never make the preferred status of wait list priorities.

Second, we have hypocrisy in current health care coverage.  Politicians apparently believe that people should pay privately for their dental care, foot and toenail care, physiotherapy, and drugs because these are “luxuries”.  Integrity suggests we either pay for all of our health needs, which will require increased revenue, or we allow patients to buy any component of their health care as they have the means to.

Third, and most importantly, we need new revenue to rebuild the health care system in the way that we want it.  Right now, most governments cry fiscal distress, that they must limit health care expenditures.  That condemns us to mending the wheelbarrow when we need a different vehicle.  On the balance sheet, we are mostly operational, and little capital.  We need system investment as much as we need ongoing operational spending.

I know we are very high amongst OECD nations in terms of spending and we rank very poorly in comparison on many quality indicators.  Without fundamental system change, not just a change in spending, we will ever be thus.  We really do need a thoughtful discussion.  Like those who turn the public private conversation into status quo versus “American”; those who deal with rising costs only by limiting expenditures are choosing an easy ideology and failing us all.

The comments section is closed.

  • Najma Ahmed says:

    It would behoove all of us to remember that when a Universal Health Care was first introduced in Canada, health care was far less expensive and far less complex. Diagnotics, medications, internvention and technologies were far less complicated and thus less expensive. The needs of the population were different. Issues like chronic disease, complicated ICU treatments, infertility treatments, multimodal chemotherapeutics, MRIs and PET scan didn’t exist.

    Health care has changed, the populations’ needs have changed. We have to do more for more people within the fiscal envelope that exists. Let’s be creative and figure out how best to achieve this end. Perhaps Mark MacLeod has a point. We don’t have to be like the Americans. Its not all in or all out. Very few things in life are that black and white – so why are we so stuck with a funding model for Health care delivery that is now 50 years old. Time to move forward and try new things.

  • Karen Born says:

    To learn more about how health care is funded in Canada, please read stories from the healthydebate.ca archives:

    Public and Private Payment for Health Care in Canada

    What is Driving Health Care Costs?

  • Rick Janson says:

    Part of our inefficiency is the significant portion of our health system that is private. Across Canada about 30 per cent of our system is completely private, in Ontario a bit more than that.

    This is glaringly obvious when you see the international comparisons. Most of those European countries have a much smaller private portion of their health system. If we wanted to be more “efficient” and manage our dollars better, we would have public dental coverage, drugs, eye exams and more.

    The status quo is precisely the American model for almost a third of our health system. And we’ve seen how well that works.

    And to compound our problems, we have NeoLiberal governments privatizing significant portions of the public delivery, leading to problems around fraud, inefficiency, the need for significant monitoring, the running of competitions, allocations for profit, etc. We know, for example, in Ontario we are paying a very significant premium to have community-based medical lab testing done at private for-profit labs. When the government commissioned RPO Consultants to look at the issue, the smallest least efficient hospitals in the province were performing this testing for a third less than their private counterparts. The governments answer? Stop the hosptials from doing community-based testing.

    By expanding the scope of Medicare, and by bringing inefficient private care back into the public sphere, we would likely be doing much better on these international comparisons.

  • Cat Taylor says:

    Amen to this. The sad reality is for the majority of Canadians until they experience something that truly illustrates the system’s reality, prefer to take the status quo road in attitude rather than the harder reality that the current system is broke and requires urgent intervention and remodeling.

    Canadians all play a vital role in reshaping this and must assume a responsibility, rather than expect government at any and all levels to continue to bandage and provide for all health needs.

    Such an important debate we need to all have!


Mark MacLeod


Mark Macleod is an orthapedic surgeon and the past president of the Ontario Medical Association. He lives in London, Ontario.

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