How can we improve Canada’s ailing health system? Economist Maria Lily Shaw highlights lessons from the UK and Sweden

This episode of Hub Dialogues features host Sean Speer in conversation with Montreal Economic Institute economist Maria Lily Shaw on her recent policy paper, “Real Solutions for What Ails Canada’s Health Care Systems: Lessons from Sweden and the United Kingdom”. They discuss Canada’s lacklustre health-care performance compared to peer countries and what reforms we can adopt that would provide better outcomes for Canadian patients.

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SEAN SPEER: Welcome to Hub Dialogues. I’m your host, Sean Speer, editor-at-large at The Hub. I’m honoured to be joined today by Maria Lily Shaw, an economist at the Montreal Economic Institute. She’s the author of the new policy paper, “Real Solutions for What Ails Canada’s Healthcare Systems: Lessons from Sweden and the United Kingdom“. I’m grateful to talk to her about the paper, including its key insights and analysis, and the potential lessons for Canadian policymakers. Thanks for joining me, Maria Lily, and congratulations on the paper.

MARIA LILY SHAW: Thank you so much for having me.

SEAN SPEER: Let’s just start with a basic question. Why do you think carrying out this kind of comparative analysis is important? And why did you choose Britain and Sweden as the competitors? 

MARIA LILY SHAW: Well, it’s important because we saw with the pandemic, how hard it hit our health-care system. And in a way, it did limit our freedoms because governments had to implement policies that would reduce the stress on our health-care system. So, as part of this project, we asked ourselves, “How can we make it so this type of stress is no longer an issue in the future?”

The reason why we turned to the United Kingdom and Sweden is because these two countries managed to transform their health-care systems that were previously a lot like our own, meaning monopolistic and primarily government-run. So, with some constant reforms, their systems are now more flexible, capable of meeting the needs of their population in a timely manner, whose costs are similar to, or lower than, a lot of provincial health-care systems in Canada.

And most importantly, really, one of the main reasons why we actually chose these two countries is because, despite these major transformations, they managed to maintain the universality of their systems. Meaning the quality of access was maintained throughout all the reforms, and the reforms they introduced to achieve this transformation also promoted the participation of entrepreneurs in the provision of health care. They also increased the number of doctors on their territory and encouraged collaboration between government-run institutions and the independent sector.

SEAN SPEER: So, they started where we are, and they’ve managed to, as you say, transform their health-care systems in a way that seems to be producing better outcomes. We’ll come to the question of the nature of those transformations in a minute. But let’s just start with a conversation about those outcomes. As you mentioned, a big issue in the world of Canadian health-care policy in recent weeks and months has been that of capacity and resiliency. The British and Swedish health-care systems outperform ours with respect to medical personnel, equipment and technology, and broader capacity. 

Do you want to talk a bit about how they perform relative to ours as a kind of starting point for why we ought to be interested in what they’ve done?

MARIA LILY SHAW: Absolutely, and it’s kind of the result of these reforms. So, the way they perform today, in many respects, like you said, is better than a lot of provincial health-care systems. If you look at the number of physicians per 1000 population, they outnumber us, even the number of nurses which we are quite high up in the ranking usually, but they still outperform us in respect to the number of nurses per 1000 population. Even the wait times are less long, let’s say in Sweden and the UK. We do have benchmarks that we have to respect because if they surpass, let’s say, six months, it becomes a bit more dangerous medically. But even if Sweden and the UK also have those benchmarks, they manage to operate on these people sooner, which is just better overall for the wellbeing of the patients in the population.

SEAN SPEER: Okay, that’s great. I would point out to listeners that this is a 69-page paper so there’ll be limits on how much we can cover in this conversation. But as you say, on some key metrics, Sweden and Britain outperformed Canada when it comes to the performance of their health-care systems. 

On the question of the transformations that got them to this place, do you want to unpack for our listeners some of the key changes that were made and maybe highlight a few that you think had the biggest bang for the buck, so to speak?

MARIA LILY SHAW: Absolutely, well, I have three that immediately come to mind. The first one being that Sweden did end up removing their prohibition on duplicate health insurance, meaning that their population could, starting in 2010, buy for themselves a health insurance that would cover the cost for care that would already be covered under the public system otherwise. So, if they want to have an operation that is already medically covered with the public insurance scheme, they could still end up having that same operation in an independent facility and the cost is covered by this insurance. And the reason why this is important is because right now, in a lot of Canadian provinces, this is actually not allowed as people can’t buy a duplicate health insurance, which means that if they want to receive, let’s say, an operation on their knee, this is usually an operation that’s covered under the public insurance scheme.

But let’s say they’re on a waitlist, and it’s taking too long, and it actually prevents them from working. And I say this as an example, but I know that this is actually something that does happen. While they’re waiting on the waitlist, they can’t work because they’re in too much pain, they’re waiting for the operation on their knee. But because they can’t prescribe to a duplicate health insurance policy, they can’t go seek this operation in an independent facility because they don’t necessarily have the means to pay the full cost out of pocket, which is actually the situation right now in a lot of Canadian provinces. 

Another policy that was absolutely key to the transformation of their health-care systems was the fact that they do not prohibit the practice in both public and private institutions simultaneously, which is again, the case in a lot of Canadian provinces right now, meaning you can’t be a doctor and practice the same medical procedure in a public institution and in a private institution at the same time. So, this really freed up a lot of time for physicians who wanted to practice in both sectors at the same time. And finally, one of the most important reforms that I can think of with their transformations is the fact that they transferred the funding of their hospitals from historic budgets to activity-based funding. And this is important because it actually makes it so that the funding follows the patient. 

So, when a patient is treated in a hospital, that hospital receives a certain amount of money depending on the treatment that was given. They know exactly how much they will receive per patient. And they want to attract more patients, because this is their source of revenue, which is not the case in the hospitals and a lot of provinces here because they are still funded through historical budgets, meaning they will receive an amount of money that depends on the activity they had the year before.

SEAN SPEER: That’s great. And I would just emphasize that Maria Lily has just given a truncated description of what is outlined in great detail in the paper, in terms of how these two countries have through these types of reforms, transformed their health-care systems. Let’s talk about the question of mixed practice in a moment, but I want to pick up the points you made about duplicate insurance, maybe a kind of two-part question. 

The first is, as you alluded, this isn’t done uniformly across the country. We presently have some provinces that enable duplicate insurance, with respect to hospital and physician services, and some that don’t. So maybe, if you could provide a bit of colour on that? 

And then the second question, which I suspect, some listeners may wonder, is how has Sweden and the United Kingdom enabled a mixed insurance model without creating the kind of inequities whereby those with the ability to pay are able to get faster and better service compared to those who are stuck in the public model because they don’t have the means to acquire their own private insurance yet?

MARIA LILY SHAW: Well, just to answer the first part of your question, there are provinces that actually don’t have the prohibition on duplicate insurance. These would be Newfoundland and Labrador, Nova Scotia, New Brunswick, and Saskatchewan. So, they managed to offer this type of service to their population who, I suppose, would want to buy such an insurance and be able to seek care for services that are normally funded by their public insurance scheme, but they can still pay for it with, alternatively, with a private insurance plan in a clinic that would be independent from the government sector. But the majority of our provinces and the majority of our population is actually subject to the prohibition on duplicate health insurance. 

As for this fear of creating a type of two-tiered system by introducing duplicate health insurance, it is a fear that we hear often and it’s one that I, of course, understand. But they managed to avoid creating a two-tier system by embracing the help of entrepreneurs in their overall system. Now they have, of course, government-run institutions, and they also have independent institutions. But they don’t fixate on who will give the care, meaning is it going to be a public physician? Is it going to be a private doctor? They don’t think they own that problem; they actually focus more on who will pay for the service. So, it doesn’t matter where you receive the service, there is a way to receive public funds if it’s an operation that is already deemed medically necessary under the public insurance plan. 

So, by basically financing the access to activities of their physicians, no matter where the service is rendered, it kind of undermines the arrival of a two-tier system because they’re more open to financing the efforts of entrepreneurs and private doctors in their activities in the independent clinics, let’s say. But still, in Canadian provinces’ systems, it’s a new concept. Of course, it’s a fear that’s rational. But if we think about it, right now, it’s, in a sense, already a two-tier system because if you go into a clinic that an opted-out physician is working in—an opt-out physician is when they decide to no longer be remunerated by the public insurance scheme, and instead, into the opt for being renumerated by their patients. But they still have the same skills, it doesn’t really matter where they’re operating, but they’re still able to provide a certain level, the same level of care. 

So, for those who are seeking services in those types of independent clinics, because there is no duplicate health insurance, it is limited to the people who can pay for all the full costs out of pocket, it’s not everyone who can actually do that. By allowing a duplicate health insurance policy to flourish in a province, you’re allowing more people to be able to access those services. And it’s important because there are hundreds of physicians who have opted out for X number of reasons from the public scheme to go into their own practice, which is not a bad way to practice. It’s just that it’s limiting the access to these hundreds of physicians who have decided to opt-out.

SEAN SPEER: Those are fascinating insights. By enabling mixed insurance models, we arguably make the system more egalitarian than is presently the case. It’s also worth just observing in passing that we presently have hybrid insurance systems outside of hospital and physician services, right? When it comes to drugs, dental, and long-term care, Canadians are accustomed to having mixed public-private insurance models. And so, it’s not only Sweden and Britain. We can look to our own experience in other health-care services as a basis to understand how something like this might work. 

Now, the elephant in the room, oftentimes, for these types of conversations is the Canada Health Act. Do you want to talk a bit about the extent to which the CHA enables or impedes some of the reforms that you outlined in the paper?

MARIA LILY SHAW: Yeah, well, of the six the reforms that we actually suggest doing in order to mimic the performance of Sweden and the UK, the magic of it all is that it doesn’t; it’s in accordance with the Canada Health Act. So, there’s nothing in the Canada Health Act that says that we can’t increase the number of doctors, that we can adopt electronic patient records, that we can’t remove the prohibition on dual practice. And even though there are so many provinces that actually impose this prohibition upon their population, it’s not the CHA that’s forcing them to do so, it’s because they’re so afraid of losing the federal funding, the important chunk of money that the federal government gives them every year, that they restrict themselves and keep them from just embracing the independent sector and they may adopt basically restrictions that aren’t necessary to the respect of the CHA. 

And I think of a province like Nova Scotia, which doesn’t prohibit duplicate insurance or doesn’t prohibit mixed practice, meaning that their positions can practice in both the public and private sectors simultaneously. And they still receive federal funding every year, despite the openness to the independent sector. So it’s more of a fear of not receiving the funding than the fear of the independent sector at this point, perhaps.

SEAN SPEER: That’s fascinating. In other words, in the minds of Canadians and provincial health policymakers, the CHA has come to represent, conceptually, a bigger obstacle to reform than it may be practically.

One of the things that I really liked in your paper was the discussion and analysis of medical education in the provinces of British Columbia and Quebec. When we talk about health care capacity, there’s a lot of discussion around the number of beds per share of the population and so on, but less deep thinking about the way that we educate and train medical professionals. 

So, let me just throw it to you. What did you find with respect to admissions and residency in the province of B.C. and Quebec? And to what extent is our health care capacity problem, fundamentally, a human capital issue?

MARIA LILY SHAW: Oh, that’s a really interesting aspect, actually, because what I saw is that there are, for those who don’t know maybe, there are medical school quotas in all provinces across Canada. So, they put a limit on the number of students that can actually be admitted into the medical programs of the province, which makes it so that there is a limited number of doctors who graduate after eight years of education, and that if all of them actually graduate, let’s say in Quebec, we can admit 969 students every year. But that doesn’t mean that we’re going to have 969 more doctors in eight years, it depends on how many people actually finish the program. And the residency places after that, of course, depend on the medical school programs—medical school quota, sorry—because they know that there won’t necessarily be an unlimited amount of doctors who graduate because there’s a quota. 

So, it’s hard to find a place if you’re in a cohort that did really, really well, so maybe the residency places didn’t necessarily expect that and you’re gonna have a hard time finding a place in the residency program. But in Sweden and the UK when they were doing these transformations, they had the same problem that we did, meaning they were also afraid of lacking doctors. They were wondering, “Where, with all these new institutions, these new clinics, you know, where are the doctors gonna come from? How are they going to keep treating patients?” 

But they didn’t just stand there and be paralyzed by that problem. They searched elsewhere, they thought that there were solutions to this problem and that was by bringing in doctors from other countries, by increasing their medical school quota, and just overall, expanding the scope of work also of their other medical professionals, like nurses and pharmacists. We can always do the same again, there’s nothing keeping us from doing that. And just eliminating medical school quotas in general, it would be a great reform to increase the number of doctors on our territory.

SEAN SPEER: If we could go back to the question of the transformations in the UK and Sweden. Maria Lily, I know that you’re an economist and a policy analyst, not a political analyst, but political economy is obviously part of these types of conversations. The National Health Service has much of the same cultural resonance as Medicare in Canada. 

So, do you want to just talk a bit about the transformation process in the UK and Sweden, the extent to which they faced political opposition, and how people feel about those health-care systems today in the aftermath of those changes?

MARIA LILY SHAW: Yeah, well, just like here, one of the obstacles that they had to face was the changing of government. So, when when the government arrived, they were very pro-market, they wanted to introduce more independent clinics. And so, the reforms kind of went along with that, but if that government was overturned a couple of years later, those reforms are actually, in one case, withdrawn in Sweden, and they kind of took a step back and it limited patients at that moment. 

As for the UK, it kind of did the same thing; there was a first attempt at what they call the internal market, meaning expanding the role of entrepreneurs. There was a first attempt to do that. It took a couple of years, but they realized that there were too many things that kind of went wrong and they tried to do it too quickly. And there was still too much political involvement. They were really reluctant to delegate decision-making to managers and doctors because the careers of politicians were on the line and dependent on the success of the program, and so throughout their reforms, of course, there were bumps in the road. But what really helped in both cases is when they gave greater autonomy to the medical institutions themselves. 

So they introduced, actually, reforms that created a new type of hospital in the UK, called Foundation Trusts. Foundation Trusts are actually just normal hospitals, to begin with, and once they prove themselves through actually a star system, so once a public hospital achieves a three-star rating—it’s one of their ratings that they put actually put online for all the population to see how well their hospitals are doing—but once they achieve three-star rating, they can apply to become a Foundation Trust. And once they’re approved, they actually have a greater level of autonomy, whether it’s for their operations, the management of the hospital itself, the way they finance themselves. And so, no matter what government is in place, that hospital, becomes kind of at arm’s length from the government in power, even if it is still funded, obviously, by taxpayer dollars.

SEAN SPEER: That’s interesting. These were cases where transformation was driven primarily through policy and political change. And that may be one way in which we see significant reform to health-care systems across the country. But another potential avenue is jurisprudence through the legal system. 

The paper outlines, for instance, the Supreme Court case in Quebec last decade, called the Chaoulli case; there’s also, of course, Cambie Surgeries v. British Columbia that’s making its way through Canada’s judicial system. If you want to maybe just talk a bit about these cases, and the extent to which they themselves might open the door to some of the reforms described in the paper.

MARIA LILY SHAW: Well, the Chaoulli case that happened in Quebec was back in 2005, and that challenged the constitutional validity of Quebec’s prohibition on duplicate health insurance for, like I said, publicly insured services. Now, we did have a favourable ruling with the Chaoulli case, but for several reasons, it didn’t exactly have the impact we were all expecting it would have because well. First of all, it overturned just the prohibition on duplicate insurance because of the government in place at the time, they only allowed Quebeckers to purchase duplicate insurance for three very specific operations. 

So, it’s very hard for an insurance market to flourish, to grow if it can only sell three products, basically. And it’s for cataracts, hip replacements, and knee surgeries. So, these three operations are eligible for duplicate health insurance, but because there’s only three and because those are actually much more common in an older population. I mean, there are tons of reasons why a duplicate health insurance market didn’t actually grow from that decision. And they also increase the fines related to physicians going dual practice. So, there are a lot of reasons why this didn’t actually have the impact that we were expecting. 

As for the Cambie case, which is ongoing, it’s actually a bigger challenge to the provincial health law, simply because they want to knock down every single restriction that is impeding the development of an independent sector in BC. So, this includes the ban on duplicate health insurance, but it also includes the ban on extra billing so that doctors right now can’t charge patients above what they would receive from the public insurance scheme when they opt-out, and the ban on dual practice, so they want to knock down all of these regulations. So, it’s an even bigger case than the one that we find Quebec back in 2005. And if it has a favourable ruling, that one has much more potential of having the results that we’ve seen in Sweden and the UK.

SEAN SPEER: Well, in the meantime, provincial policymakers ought to be preparing for that potential eventuality and if they are, the first thing they should do is read Maria Lily Shaw’s paper from the Montreal Economic Institute. The paper is “Real Solutions for What Ails Canada’s Healthcare Systems: Lessons from Sweden and the United Kingdom”. Listeners can find it at the Montreal Economic Institute website. Maria Lily, congratulations on the paper, and thanks for taking the time today at Hub Dialogues to share its key insights and your findings.

MARIA LILY SHAW: Thank you so much.