Northern Exposure: The Growth of Private Canadian Health Insurance

Introduction

I’ve always been fascinated by the relationship between the U.S. and Canada. Most of the time, we like to think our neighbor to the north is polite, amiable, and content to let us steal the spotlight on the world stage. We also tend to think that Canadians are pretty much like us, albeit with a different accent and a serious hockey obsession. Pierre Trudeau, Canada’s charismatic prime minister of the late 70s and early 80s (and father of current Prime Minister Justin Trudeau) was quick to point out otherwise.

The elder Trudeau was also an ardent student of health policy and would be fascinated by how the health systems of both countries have evolved. It’s no secret that the American system suffers from a complex bureaucracy, significant costs, and unequal access, but Canada’s nationalized system has drawbacks of its own, such as a lack of prompt access to services, coverage gaps, and old technology. Private Canadian health insurers have seized the opportunity to provide supplemental programs like dental insurance, enhanced drug plans, other standard insurance benefits, and in-demand offerings like wellness and mental health services. As a result, there is much more awareness and perceived value to these products among Canadians, and private carriers are continuing to add to their value proposition through personalized user experience, tailored customer care, and novel complementary services through partnerships with technology-based firms.

As Canada’s national health care system continues to work through its challenges, private carriers will continue to play a significant role in the Canadian healthcare system that continues to evolve along with the needs and demographics of Canadian society.

Canadian Health Insurance: A Brief Overview

Known as “Medicare,” Canada’s national health care system is an interlocking set of 10 provincial and three territorial health systems, which share certain common features and basic standards of coverage.¹ Most provincial and territorial governments offer and fund supplementary benefits for certain groups (mainly low-income residents and seniors), such as drugs prescribed outside hospitals, ambulance costs, and hearing, vision, and dental care.² Other constituents who do not qualify for publicly funded coverage may pay these costs directly, be covered under an employment-based group insurance plan or purchase private insurance.³

Today, larger demographic forces in Canadian society are affecting the national health care system. With Canada’s aging citizenry – the 85+ segment is one of the fastest-growing age groups and currently 2.3% of the population⁴ – a recent study revealed that the average wait time between referral and treatment was a median 25.6 weeks.⁵ Another significant factor is the redistribution of workforce demographics, with younger full-time and contract workers who are demanding supplemental perks such as wellness and mental health counseling. As a result of these elements, plus the comparative expense, restricted offerings, and limited physician and technology access through the national system, Canadians are turning to private carriers more than ever.

Make Way for Private Insurers

Private insurers’ supplemental offerings include dental coverage, drug plans, vision care, and other major insurance offerings including life, short- and long-term disability, critical illness, accident, and hospital indemnity. Enhancements such as user self-service, omnichannel access, and in particular, complementary service partnerships that offer innovative, technology-based products continue to make private insurance a popular and growing option among Canadians.

Private insurers are also influencing the greater ecosystem by diversifying distribution channels to accommodate different consumer needs; proactively controlling costs; adding operational efficiencies; and diversifying revenue sources to boost profitability. Although the growth of private insurers in Canada further exemplifies health care inequality, especially between rural and urban residents, Canadian lawmakers can potentially design policies that can guarantee access for all and minimize how the growth of private insurance detracts from this objective.

Final Thoughts

As the prime minister who was charged with implementing Canada’s Medicare program in the late 60s, Pierre Trudeau never could have imagined the rapid growth of private insurance, despite rising health costs and long-term, chronic health conditions making it inevitable. Although many Canadians still support Medicare’s underlying values such as a democratic “social safety net” for all, a rising tide continues to embrace private insurance as well as the enhanced features that private insurers can offer. As younger constituents, contract workers, and more affluent citizens continue to sign on for its personalized services and advanced offerings, private insurance will continue to shape the future of Canada’s health care system and reform efforts in the years ahead.

¹ “Canada’s Health Care System,” The Government of Canada, www.canada.ca
² Ibid.
³ Ibid.
⁴ “A Portrait of Canada’s Growing Population Aged 85 and Older from the 2021 Census,” Statistics Canada, www.statcan.gc.ca
⁵ “Waiting Your Turn: Wait Times for Health Care in Canada, 2021 Report,” Mackenzie Moir and Bacchus Barua, The Fraser Institute, 2021